Oil Wells Seized In ICE Money Laundering Case

n ICE investigation into a drug Amoney laundering scheme resulted 3 Red Flag Indicators in the January 25 seizure of an Arizona • Frequent or unusual use of trust funds in oil company and 43 oil wells in business transactions or financial activity. northwest Pennsylvania. • Financial transactions to countries known to be tax havens. A number of the company’s trusts and • Frequent use of nominee business owners acting bank accounts in Europe were also seized as representatives in transactions. as a result of the investigation, which stemmed from the 1981 drug smuggling The seized company, Shaboom Oil Inc., conviction of Paul Hindelang. headquartered in Phoenix, Arizona, owned numerous operating wells and Safeguarding America Through “Like no other case in recent memory, this held the mineral rights to approximately Financial And Trade Investigations investigation demonstrates our perseverance in tracking down the ill-gotten gains of 1,100 acres of land in the Allegheny Volume II: No. 1 • February 2005 international crime lords,” said Jesus Torres, National Forest in northwest Pennsylvania. ICE’s Special Agent-in-Charge for . In addition, ICE seized all ownership Inside this Issue shares of Shaboom Investments Inc., In the 1970s, Hindelang headed one of the a holding company based in Panama Cornerstone Investigations Updates: country’s biggest marijuana smuggling that owns the oil company. Selected Recent Cases ...... 2 enterprises, operating out of Florida. He Industry Alert: Stopping The Flow pled guilty to importing roughly 250 tons The oil company and associated assets seized Of Counterfeit Drugs ...... 3 of marijuana into the and in January were valued at $6.5 million— conspiring to import an additional bringing the total seized from Hindelang’s ICE Agents Honored For illicit investments to more than $70 mil- Intellectual Property Protection ...... 4 150,000 pounds. lion.The investigation into Hindelang’s ICE Case Updates: As part of his 1981 plea agreement, remaining drug funds continues. Intellectual Property Crime and Hindelang agreed to forfeit $640,000 Telemarketing Fraud ...... 4 to U.S. authorities—a sum that he said ICE worked with the Monroe County (Fla.) then represented the total of his illegally Sheriff’s Office in the effort to locate and Cornerstone Calendar ...... 5 earned assets. target Hindelang’s assets. $ However, federal investigators Cornerstone is U.S. Immigration later learned that Hindelang had and Customs Enforcement’s (ICE) squirreled away millions of dol- comprehensive investigative lars of his ill-gotten drug funds initiative for fighting financial in a veritable maze of offshore crime, trade fraud and accounts and corporations in intellectual property crime. Switzerland, Panama, the Cayman The Cornerstone Report is a Islands and numerous other loca- quarterly bulletin highlighting tions. Hindelang admitted in key issues related to ICE financial 1997 that he had turned over his and trade investigations. drug fortune to a Costa Rican accomplice who managed his funds from a Swiss bank account. ICE’s investigative efforts to expose Hindelang’s holding resulted in the seizure of $50 Toll-FFree Tip Line: million from his accounts in 1-8866-DDHS-22ICE 1998. An additional $15 million An ICE investigation into drug money laundering led to www.ice.gov in illegal drug proceeds was the seizure of an oil company and 43 oil wells (similar seized in 1999. to the one pictured above) in January. Cornerstone Investigations Update: Selected Recent Cases

Page 2 of 5 Six Indicted In The indictment alleges that Isidro Garza, a ances for his personal use. Raul Garza is also Volume II: No. 1 Scheme to Steal tribal gaming representative, used the oper- alleged to have stolen money from the February 2005 Tribal Casino Funds ating accounts of his tribe’s Lucky Eagle Kickapoo Community Health Services, the (San Antonio,Texas)—Six people, including Casino in Eagle Pass,Texas, for his own tribe’s health care provider. benefit, even using a corporate credit card a Texas state representative and a former trib- Isidro Garza’s son Timeo, a member of the to fund approximately $40,000 in expenses al leader, were indicted for their alleged roles Texas legislature, was also charged in the for an unsuccessful political campaign. in a scheme to steal a total of more than indictment, as were other members of the $900,000 from the Kickapoo Indian Tribe. Also named in the indictment is Raul Garza, Garza family and a local attorney. a former leader of the Kickapoo tribe, who The individuals named in the Dec. 9, 2004, The investigation was conducted by ICE in is alleged to have taken $213,000 in cash federal indictment face various charges of cooperation with the Internal Revenue withdrawals from the casino and used the conspiracy, theft, money laundering and tax Service, the FBI, and the Inspector General’s casino’s credit cards to purchase two all-ter- violations in a scheme to defraud the tribe office of the Department of Interior. of hundreds of thousands of dollars. rain vehicles, furniture and household appli-

ICE Investigation Leads To Prison trips to Libya since 1995. In several of ICE investigators worked with the Internal Sentence For Terror Financier these trips, Alamoudi had met with offi- Revenue Service, the FBI and other compo- (Washington, D.C.)—A prominent leader of cials of the Libyan government to discuss a nents of the Department of Justice to American-Islamic political and charitable plot to assassinate Crown Prince Abdullah, investigate Alamoudi’s dealings and to organizations was sentenced to 23 years in the de facto ruler of Saudi Arabia, by bring the case to conclusion. prison October for his role in a bizarre financing and supporting two Saudi dissi- scheme to assassinate a prominent member dents living in London. of the ruling family of Saudi Arabia. Abdurahman Alamoudi, a naturalized ICE Cracks Massive Drug Trafficking, American citizen originally born in Eritrea, Money Laundering Scheme (Norfolk, $2 Million pleaded guilty to charges that he had violat- Va.)—A large-scale ICE investigation of Seized ed U.S. terrorism-related sanctions when he drug and money laundering in the U.S. traveled to and engaged in unlicensed com- southeast resulted in the dismantling of a merce with Libya. In addition, Alamoudi massive drug trafficking organization in was charged for his role in helping to January—with over 30 arrests in Virginia, transfer hundreds of thousands of dollars Maryland,Texas, Georgia, Kentucky and from Libya to finance the assassination plot other states. and for making false statements on his nat- The results of “Operation Blowfish,” uralization application. announced January 26, capped a lengthy According to court documents, Alamoudi, investigation into an international traffick- the founder of the American Muslim ing ring that moved marijuana, cocaine, Council and the American Muslim and crack cocaine from Mexico through Foundation, had made at least 10 illegal Texas to the southeastern United States. In addition to the indictments of 36 peo- 3 Red Flag Indicators ple for a wide range of offenses including • Use of multiple accounts to transfer funds to drug trafficking, money laundering and same foreign beneficiaries. firearms violations, agents seized $2.3 • Wire transfers from companies or individuals million in cash and 16 pieces of property. located in countries known to be bank or tax havens. The investigation was an interagency Moving money between business and personal A major ICE investigation into drug traffick- • effort that included ICE, the DEA, the IRS ing and money laundering in the southest accounts. and the Peninsula Narcotics Enforcement United States led to cash seizures of $2.3 Task Force. $ million and more than 30 arrests. Industry Alert: Stopping The Flow Of Counterfeit Drugs

Page 3 of 5 riving a silver This case illustrates that counterfeit phar- Porsche 911 and maceuticals have emerged as a big Volume II: No. 1 D 3 Red Flag Indicators February 2005 dining on $1,000 din- business—and one which criminal organi- • Frequent and unusual use of money orders in ners with his girl- zations are prepared to exploit for profit. business transactions. friend, Mark Kolowich of San Diego pre- • Commingling of business and personal funds in These sales represent a serious liability for sented himself as a savvy businessman who bank accounts. the pharmaceutical industry and its had made a fortune selling Viagra and investors, as well as to the American people, other prescription drugs over the Internet. who contribute millions of tax dollars each But in reality, he was the organizer of one of year to research, develop and test new drugs. the nation’s largest criminal operations for Furthermore, patients also are potential trafficking in counterfeit pharmaceuticals. victims of this dangerous form of counter- On January 21, 2005, a federal judge feiting crime, since fake drugs don’t adhere in San Diego sentenced Kolowich to serve to standards for safety and effectiveness. 51 months in prison and to forfeit sub- The quality and potency of these fake stantial cash proceeds associated with his drugs—often produced in overseas facili- compromise consumer safety. Consumers, criminal enterprise. ties that aren’t regulated by U.S. health and health care professionals and business lead- safety standards—isn’t guaranteed. A total of 16 defendants from California, ers should be aware of the threats posed by $ Florida, Mexico and the Bahamas were The bottom line is that while the U.S. fake drugs. charged as the result of a cooperative pharmaceutical supply remains the safest in investigation involving ICE and a number the world, the infusion of counterfeit For more on ICE intellectual property investi- of other federal and local agencies. drugs into the supply line could serve to gations, visit us online at www.ice.gov.

Telemarketing Fraud Case Update Major Drug Money Launderer ICE Returns Recovered Funds To Telemarketing Scam Victims Nabbed In Mexico U.S. Prosecutors Seek Extradition n previous editions of “The Cornerstone elderly man who had fallen prey to a IReport,” we’ve written about ICE’s efforts phony “lottery winnings” scheme. ose Alvarez-Tostado, the accused financial to combat telemarketing scams through manager for one of Mexico’s largest drug Frequently, those who have been defrauded J investigative efforts like “Project COLT’ and cartels, was arrested in Mexico City in late in telemarketing scams don’t report their “Operation Roaming Charge.” January on charges related to organized losses to the authorities because they’re crime and money laundering. His criminal As telemarketing scams have grown increas- ashamed at having been taken. But as these activities made him one of ICE’s top targets. ingly sophisticated in recent years, more vul- cases illustrate, reporting the scheme could nerable victims have lost untold millions of be the first step toward identifying the per- In 1998, Alvarez-Tostado was indicted in Los dollars to these financial predators. Worse yet, petrators, recovering your losses and, ulti- Angeles for his criminal activities. He was even in cases where the scammers are identi- mately, ensuring that these scammers don’t alleged to have collected more than $40 mil- fied and put out of business, it’s often difficult exploit other victims. $ lion from drug sales and to have transferred to recover funds that victims have lost. the funds from the United States to Mexico Red Flag Indicators on behalf of Amado Carrillo Fuentes, head of However, two recent telemarketing 3 the Juarez drug cartel until his death in 1997. fraud cases resulted in happy endings Predators • Frequent unexplained movement of funds between U.S. for the victims, thanks to the work of and Canadian bank accounts. The 49-year-old Alvarez-Tostado, designated ICE investigators. In October 2004, ICE • Use of nominees as bank account owners or signatories. by President Bush as a “foreign narcotics agents returned $8,200 to a man in Victims kingpin” in 2001, has been one of ICE’s Ten Lincoln, Neb., who had lost $8,200 to • Sudden or unexplained depletion of savings accounts, Most Wanted fugitives for seven years.The telemarketing con artists operating out especially by elderly account holders. U.S.Attorney’s office in Los Angeles is of . In a separate case, ICE • Statements by bank customer indicating possible expected to request his extradition to the victimization by telemarketing scheme. recovered and returned $3,800 to an United States. $ Spotlight On ICE Investigators ICE Agents Honored For Intellectual Property Protection

Page 4 of 5 n recent months, Manufacturers of American (PhRMA), a Plitt, Phillip Reed, Michael Godfrey, Volume II: No. 1 Iseven ICE agents leading industry association. Shin was Thomas Kim, Dawn Gabel and David February 2005 have been recognized honored for his role spearheading inves- Collins were honored for their roles in for their leadership tigations in Los Angeles that led to the the 15-month-long investigation. and commitment to protecting intellectual seizure of more than 30,000 counterfeit These cases represent only a fraction of the property rights through aggressive investi- Viagra tablets, as well as the arrest and numerous ICE investigations into intellec- gation of counterfeiting and piracy. conviction of several key figures associat- tual property crime around the world. In ed with counterfeit pharmaceutical traf- • In January 2005, ICE Special Agent Yong Fiscal Year (FY) 2004, ICE arrested 218 ficking. Shin now represents ICE at the Chin was awarded the “Intellectual intellectual property rights violators (up National Intellectual Property Rights Property Excellence Award” by the from 132 the previous fiscal year) and Center in Washington, D.C. Pharmaceutical Research and brought 140 indictments (twice the num- • In November 2004, six ICE employees ber of FY 2003). In addition, ICE, along were recognized by the Department of with U.S. Customs and Border Protection, Justice for their work in “Operation seized more than $138 million worth of Buccaneer,” an investigation targeting a counterfeit goods in FY 2004. $ global network of cyberspace gangs responsible for pirating billions of dol- Want To Find Out More lars worth of pirated software over the About ICE And Internet. “Operation Buccaneer” was one Cornerstone of the largest investigations into Internet-based copyright crime ever con- ? ducted, and the first federal investigation Visit us on the web at ICE Special Agent Yong Chin received the of Internet software piracy to extend “Intellectual Property Excellence Award” in across international borders. ICE’s James www.ice.gov/cornerstone January.

ICE Case Update Ringleader In Organized Retail Theft Scheme Gets Jail Time

rom 2001 to 2003, Mohammed Khalil the average retail price for the items.The FGhali oversaw an organized criminal stolen goods were then delivered to ware- ring that moved and sold millions of dol- houses, from which they were shipped and lars worth of goods stolen from retail sold throughout the United States under the stores in the -Fort Worth area. A fed- name of “Sunshine Wholesale.” eral judge closed the book on Ghali’s crim- In addition, during the course of the inves- inal activities on February 2, when Ghali tigation, it was learned that Ghali had was sentenced to 14 years in prison fol- made inquiries as to how much it would lowing his April 2004 conviction. ▲ ▲ cost to have the prosecutor and case agent ▲ Learn more about money laundering, trade Ghali’s criminal ring orchestrated a major killed by gang members. fraud, intellectual property crime and other organized theft operation under which financial crimes. ▲ ▲ A joint investigation that included ICE, the ▲ thieves were paid cash for items shoplifted Find out how you and your industry can Fort Worth Department, the IRS, the or otherwise stolen from convenience stores, participate in the Cornerstone partnership. ▲ ▲ Food and Drug Administration and others ▲ supermarkets and other retail establishments. Learn how to spot common “red flag” led to Ghali’s arrest and conviction on indicators of criminal financial activity. ▲ ▲ ▲ The goods included baby formula, pharma- charges that included theft, money laun- File an online complaint about copyright ceuticals, cigarettes, health and beauty aids, dering and criminal conspiracy. In addi- infringement, counterfeiting and other nicotine gum and other items. Upon receiv- tion, six members of his organization pled intellectual property violations. ▲ ▲ ▲ ing the stolen property, Ghali’s organization guilty, receiving sentences from probation Access more resources related to ICE financial and trade investigations. would pay the thieves up to 50 percent of to 30 months in prison. $ Cornerstone Calendar

Page 5 of 5 To develop the •February 3–4, 2005—Senior Special •Feb. 10–13, 2005—Cornerstone Section Volume II: No. 1 Cornerstone partner- Agent Martin Reyes, ICE Cornerstone Chief Joseph Gallion attended the annual February 2005 ship between ICE and Liaison for San Juan, Puerto Rico, offered International Association of Financial the private sector, a presentation on ICE financial and trade Crime Investigators executive board Cornerstone is conducting aggressive out- investigations at the 2nd Annual Puerto meeting in Las Vegas, Nev. reach to industry groups throughout the Rican Symposium of Anti-Money •Feb. 24, 2005—Kevin Delli-Colli spoke United States. Laundering, hosted by the Association of at the Investment Company Institute’s Puerto Rican Bankers. Recent and upcoming events include (ICI) Anti-Money Laundering Workshop the following: •Feb. 7–11, 2005—Kevin Delli-Colli in , Mass. •Dec. 6, 2004—ICE’s Kevin Delli-Colli, and Brock Nicholson, Deputy Section •March 17, 2005—ICE Director of Deputy Assistant Director for Financial Chief of the Terrorist Financing Investigations Marcy M. Forman will and Trade Investigations, offered a pres- Operations Section, represented speak at the Anti-Money Laundering entation at the Financial Action Task DHS/ICE on the U.S. delegation at Compliance Conference hosted by the Force (FATF) Meeting of Experts on the the Financial Action Task Force (FATF) Security Industries Association (SIA) Typologies of Money Laundering and conference in Paris, . in . $ Terrorist Financing in Moscow, Russia. •Feb. 9–20, 2005—ICE Commercial and •Dec. 13–17, 2004—Senior Special Fraud Unit Chief F. Gary White and Trade In Fiscal Year 2004, Agents Armando Astorga and Aristedes Transparency Unit Section Chief David ICE’s Cornerstone unit Jimenez hosted a seminar on financial Eoff attended the World Customs conducted more than investigations and money laundering Organization (WCO) meeting in Did You 950 outreach presentations for South American law enforcement Brussels, .They will attempt to Know? on financial and trade crime officials in Lima, Peru, sponsored establish a Commercial Fraud Working to more than 11,600 by the Organization of American Group to address issues that adversely industry representatives. States (OAS). impact government revenues and security.

The Official Newsletter of Cornerstone Invitation For Cornerstone U.S. Immigration and Customs Enforcement (ICE) is the largest inves- Report Article Submissions tigative arm of the Department of Homeland Security (DHS). The Cornerstone Report covers a broad range of topics related to ICE’s mission is to secure the homeland by enforcing immigration and financial investigations and potential customs laws and by protecting U.S. commercial aviation and federal vulnerabilities in the financial and facilities. Cornerstone, ICE’s comprehensive enforcement initiative trade sectors. focusing on financial and trade fraud investigations, is a key compo- We strive to present clear thinking nent of that mission. by knowledgeable observers that can be read with ease and pleasure In addition to financial and money laundering investigations, Cornerstone targets commer- by both professionals and a general cial fraud, smuggling and trafficking, export and trade violations and intellectual property audience, and we’re happy to review unsolicited submissions for potential crimes. ICE’s global reach allows the agency to investigate these crimes around the world. publication in the newsletter. The Secretary of Homeland Security has determined that the publication of this newsletter If you would like to submit an article is necessary in the transaction of business required by law of U.S. Immigration and for publication or simply find out more about how you can participate Customs Enforcement (ICE). in the Cornerstone initiative, drop us an e-mail at [email protected].