DEA Lacks Oversight of Money Laundering Operations
MIAMI, FLORIDA - The U.S. Drug Enforcement Administration
failed to effectively oversee and manage undercover money laundering operations
that move tens of millions of dollars of illegal drug proceeds each year
through a network of government-approved fronts, according to a watchdog
report.
The inspector general's findings, contained in a report published Tuesday, add to concerns about the
potential for fraud and abuse of the important crime-fighting tool that were
laid bare in the recent indictment of a former star agent, Jose Irizarry, for
allegedly conspiring with the same Colombian drug cartel he was tasked with
fighting.
While Irizarry's alleged crimes aren't mentioned in the
report, criticism of the undercover operations he helped lead dates back years.
Nearly a decade ago, then-U.S. Rep. Darrell Issa, chairman of the House
Oversight Committee, accused the DEA of "aiding and abetting cartels"
and blasted the operations as "a high-risk strategy with scant evidence of
success."
The new report suggests that a number of deficiencies
remain, including weak oversight from the Justice Department of what are
supposed to be tightly monitored stings, loose record keeping to evaluate
results and lax control of confidential sources working for the cartels. The
audit also faulted the DEA for failing to submit annual reports to Congress
about the undercover operations, saying the agency has not done so since at
least 2006.
"There is limited Congressional insight into the DEA's
use of this investigative technique involving certain authorized undercover
illegal activities and the benefits it provides to the American taxpayer,"
the report says.
For decades, so-called attorney general exempted operations
have required approval at the most senior levels of the Justice Department.
Through them, the DEA becomes an active part of money laundering schemes with
the aim of targeting high-level traffickers. Agents follow the money by opening
front businesses, buying property and depositing funds into banks to facilitate
transactions on behalf of drug trafficking organizations.
The extent of the DEA's involvement moving dirty money is
unknown but believed to be only a small part of the annual $64 billion in drug
trafficking activity in the U.S. The 72-page report is redacted to exclude the
amount and size of financial transactions carried out by the undercover
operations.
However, the DEA says that the 16 operations reviewed by the
inspector general — 31% of the total that existed during the audit period —
contributed to seizures totaling $1.4 billion in cash and assets, 83 tons of
cocaine, 782 kilograms of heroin or fentanyl and more than 1,400 arrests in the
United States and abroad.
The DEA agreed with the inspector general's 15
recommendations, and said it already has updated its policies twice since the
audit period — fiscal years 2015 to 2017 — to address the report's concerns and
improve oversight of the money laundering operations. It has also added annual
training conferences for investigators involved in the program.
"Significant progress has been made in recent years and
that effort continues today," the DEA said.
Bonnie Klapper, a former federal prosecutor in New York,
said the inspector general's criticism did not go far enough, saying it failed
to address "myriad abuses" within the undercover money laundering
operations.
"Chief amongst those abuses is continuing to launder
vast sums of money without actually making cases," Klapper told The
Associated Press.
In delivering the report Tuesday, Inspector General Michael
Horowitz acknowledged the potential for abuse.
"The risks associated with undercover money laundering
are significant and therefore compliance with department policies and statutory
requirements are critical," Horowitz said.
The report also raises questions about how the income
generated for the DEA from the undercover operations — nearly $8.5 million
during the audit period — is handled. Almost all of those proceeds were used by
the DEA to offset investigation expenses, but the auditors described
"numerous instances" where the DEA violated reporting requirements.
Multiple proposals seeking authorization for the operations contained almost
identical, vague language lacking specific targets and time frames, making it
difficult to assess results.
While Irizarry is not mentioned in the report, his alleged
crimes give greater urgency to the enhanced scrutiny of the operations.
The veteran agent and his wife were arrested in February at their home in Puerto Rico
under a 19-count federal indictment that accused Irizarry of "secretly
using his position and his special access to information" to divert
millions in drug proceeds from the DEA's control.
When The AP revealed the scale of Irizarry's alleged
wrongdoing last year, it sent shockwaves through the DEA, where his
ostentatious habits and tales of raucous yacht parties with bikini-clad
prostitutes were legendary among agents.
Irizarry was hired by the DEA in Miami despite indications
he showed signs of deception in a polygraph exam and had declared bankruptcy
with debts of almost $500,000. Still, he was granted special permission to set
up undercover operations to send money and ship contraband merchandise to
Colombia on behalf of suspected drug traffickers using front companies, shell
bank accounts and couriers.
In total, Irizarry and informants under his direction
handled at least $3.8 million that should have been carefully tracked by the
DEA as part of undercover money laundering investigations
Proceeds allegedly funded the purchase of a $30,000 Tiffany
diamond ring, a BMW, three Land Rovers and a $767,000 home in Cartagena,
Colombia. Irizarry allegedly opened a bank account in someone else's name and
used the victim's forged signature and Social Security number.
Derek Maltz, a former agent who headed the DEA's special
operations division, said that while oversight can always be improved, the
special operations are key to infiltrating transnational criminal networks. He
cited the program's use in Operation Titan, in which the DEA exposed ties
between Hezbollah and major drug cartels in Venezuela, Colombia and Mexico.
"I would hate to see the intense scrutiny curtail DEA's
progress in destroying the dangerous transnational crime networks," Maltz
said. "Administrative mistakes shouldn't overshadow the amazing work done
for many years utilizing this exceptional investigative technique."
Comments
Post a Comment