Ex-Banker Gets 10 Years in Drug Money Scheme

BROWNSVILLE, Tex. —  In a case that highlights the complicity of white-collar bankers in the murderous cocaine trade, a former officer of a swank American Express subsidiary was sentenced Friday to 10 years in prison for laundering the immense profits of a top Mexican drug lord.

Between 1990 and 1993, Antonio Giraldi was one of the rising stars at American Express Bank International’s boutique-like headquarters on the penthouse floor of the Rodeo Collection in Beverly Hills, where he extended generous lines of credit to an exclusive group of foreign millionaires.

But his top client, who purported to be an influential Mexican rancher, was in fact a henchman for Juan Garcia Abrego, one of the mostwanted fugitives in the United States and Mexico. And the $30-million portfolio that Giraldi handled for him was not built on petroleum and auto parts investments, but on Abrego’s ruthless cocaine empire.

“This case demonstrates how necessary it is for a large international drug organization to have the aid of a banker if it wants to flourish,” said Assistant U.S. Atty. David Novak, who prosecuted the case in southern Texas, where the investigation began. “Sometimes you can do a little more damage with a pen than with a gun.”

Indeed, Giraldi’s crimes--a federal jury found that he repeatedly lied on bank documents to conceal the source of his client’s wealth--were all on paper. But the results were no less devastating.

American Express’ international banking division has been stuck with nearly $19 million in bad loans, which went into default after federal authorities seized the cartel’s assets. Abrego, whose gunslinging gang has been linked to high-level Mexican officials, was given the means to legitimately purchase a Blockbuster video franchise in Houston and finance the development of a luxury country club in Harlingen, Tex.

“People don’t see it because it’s not readily apparent, but tainted money is like a disease--a cancer that just kind of spreads out,” said a veteran Drug Enforcement Administration official in Los Angeles who has investigated numerous money-laundering cases. “It goes far beyond business. It gives drug dealers a voice in communities and local politics. It corrupts the system.”

Giraldi, 38, who is from a prominent South American banking family and holds a master’s degree in international studies from Georgetown University, has insisted that he had no reason to suspect his client of illegal dealings.

His lawyer, Christopher Milner, contended that Giraldi is the victim of a power struggle between zealous law enforcement authorities and the American banking industry. “He ended up being a scapegoat, a whipping boy, paying the price for the sins of the industry, as opposed to his own,” Milner told U.S. District Judge Filemon Vela.

Giraldi, who is free on $700,000 bail pending his appeal on the 10 money-laundering and seven fraud-related convictions, said: “I hate drugs and what they do to people.”

He was sentenced Friday along with his former assistant at American Express Bank, Maria Lourdes Reategui, 46, who was found guilty of conspiracy to launder funds and other violations of federal banking law. Reategui, who said she was raised in Colombia by nuns, received a 3 1/2-year term and was expected to surrender to authorities Monday.

The scandal, which raises questions about how much a bank should know about its clients, has been expensive and embarrassing for American Express Bank, a subsidiary of the giant American Express Co.

Company officials, who paid attorney fees for Giraldi and Reategui, initially determined that neither employee was responsible for any wrongdoing. But after the trial ended in June with multiple convictions, the bank cut off all legal assistance. Authorities have hinted that they may try to hold the bank criminally liable.

In the meantime, the bank has begun to close three of its five international offices in the United States, including the posh Beverly Hills branch where Giraldi once worked. American Express officials insist that the move is for streamlining only, not a reaction to potential losses from the unpaid loans.

“It is clear that this case underscores the need for extreme vigilance,” said Pamela Hanlon, a spokeswoman at the New York headquarters of American Express Bank, which earned $104 million last year. “But we at American Express Bank believe that we do, indeed, have a very strong program of compliance.”

The case against the two American Express bankers followed a complex and circuitous trail that authorities uncovered five years ago at the McAllen border crossing in Texas.

It was there that U.S. Customs officials saw a stream of couriers from a Mexican money-changing house as they headed to a Texas bank with satchels stuffed full of $100 bills. Undercover agents spent two years feeding cash into the exchange houses to see if the money was being laundered.

When authorities busted the ring in 1992, they were surprised to discover that the Texas bank account where the cash was being deposited was backed by a $1-million letter of credit--issued by the Beverly Hills branch of American Express Bank International. The letter of credit, in turn, was backed by the holdings of a Cayman Islands company, which authorities traced to Ricardo Aguirre Villagomez--a gas station manager who is suspected of being the top money launderer for Abrego’s powerful Matamoros cartel.

That is when investigators focused their attention on Giraldi, who had handled Aguirre’s finances since 1989, first at the Banker’s Trust Co. in New York and then at American Express.

During the monthlong trial, prosecutors accused Giraldi of repeatedly violating U.S. banking laws by lying to regulators about how he met Aguirre and about how Aguirre amassed his wealth. Although those lapses may seem minor, authorities say, they opened the door for more than $30 million in drug profits to flow into the U.S. banking system.

Aguirre, also named in the indictment, is believed to have faked his own death and gone into hiding.