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May 6, 2016

Eight Named in Indictment that Outlines Scheme to Launder over $60 Million in Narcotics Proceeds through ‘Black Market Peso Exchange’

Filed under: California Defense Attorney — fayarfa @ 2:44 am

SANTA ANA, California – A Mexican national who allegedly led an organization that assisted international narcotics traffickers launder more than $60 million in illicit drug proceeds has been taken into custody, as have three of his associates.

Gustavo Barba, 59, of Guadalajara, was arrested Tuesday evening as he attempted to enter the United States through the Otay Mesa Port of Entry in San Diego. Barba made an initial court appearance in San Diego federal court yesterday and will remain in custody there until a detention hearing scheduled for May 10.

Following Barba’s arrest, special agents with IRS Criminal Investigation and the Drug Enforcement Administration began arresting other defendants named in a 32-count money laundering indictment. A federal grand jury in Santa Ana returned the indictment under seal on July 22, 2015, and the indictment was unsealed today after three other defendants were taken into custody. Federal authorities are continuing to search for three fugitives.

Barba, who is also known as “Gus” and “Gustavo Barba Casillas,” is the lead defendant in the indictment that alleges a series of money laundering crimes, including conspiring to launder narcotics proceeds. Barba operates Barba International, Inc., which has offices in Guadalajara and the Los Angeles Jewelry District and is also charged as a defendant. The indictment describes how Barba’s organization allegedly used a “Black Market Peso Exchange” (BMPE) scheme to convert millions of dollars generated by drug sales in the United States into pesos that are delivered to drug trafficking organizations in Mexico.

The BMPE is one of the primary methods used by drug cartels to launder proceeds generated by drug sales in the United States and return the proceeds to where the cartels are located. The BMPE involves both illegal drug trafficking and legitimate businesses operating throughout the Americas, and the scheme solves problems faced by both groups. Drug cartels have massive amounts of U.S. currency – often in small denominations – that is difficult to transport in bulk or to deposit into financial institutions. At the same time, some legitimate businesses in Mexico want U.S. dollars in the United States to pay domestic suppliers and manufacturers so they can avoid incurring fees and taxes that would result if they wired the money to the United States through legitimate channels.

In a BMPE scheme, a “peso broker” or professional money launderer unites these entities to solve their problems. The peso broker receives narcotics proceeds in the United States and uses this money to pay United States businesses for goods ordered by Mexico-based businesses, which, in turn, pay the peso broker for the goods that will be shipped to Mexico. The peso broker then delivers the money, minus the service charge, to the narcotics traffickers in Mexico. Through a BMPE scheme, narcotics proceeds generated in the United States are moved to Mexico without having to physically cross the border or be sent through the banking system.

“Cutting off the flow of illicit profits to drug cartels is a key component in the battle against international drug traffickers,” said United States Attorney Eileen M. Decker. “As banks implement controls to shut down money laundering and as regulations make it more difficult for drug cartels to move money, these organizations seek out new ways to collect money from illegal drug sales. We are responding accordingly and will continue to target new methods of laundering drug proceeds.”

In addition to Barba, three other defendants have been taken into custody since yesterday. They are:

· Isaias Navarro, 37, of Fullerton, who operated Barba International’s office in Los Angeles, was arrested last night;

· Vidal Gutierrez Vargas, 58, of Whittier, who allegedly facilitated the money laundering operation, was arrested this morning; and

· Gervork Hagopian, 61, of the Windsor Square District of Los Angeles, the owner of a business in the jewelry district, who allegedly received money being laundering by the organization and facilitated the money laundering operation, was arrested this morning.

The three defendants arrested in the Los Angeles area are scheduled to be arraigned this afternoon in United States District Court in Santa Ana.

“This week’s arrests should send a clear message to the Mexican drug cartels that IRS Criminal Investigation and our partners will not tolerate the exploitation of U.S. financial institutions and businesses for the purpose of illicit financial transactions that fund the distribution of narcotics,” stated IRS Criminal Investigation’s acting Special Agent in Charge Aimee Schabilion. “In addition, this week’s actions should send a warning to American businesses that turn a blind eye to the crime they facilitate in an attempt to avoid bank currency reporting requirements, taxes and law enforcement scrutiny.”

Three other individual defendants named in the indictment are fugitives:

· Roberto Castaneda, also known as “the Engineer,” 77, of Guadalajara, who is Barba’s father in law and allegedly coordinated the delivery of narcotics proceeds and tracked the money being laundered by the organization;

· Jose Luis Guizar, 43, of East Palo Alto, a courier for the organization; and

· Leo Alfonso Alvarez, 35, of Edinburg, Texas, who also was a courier.

“This organization was laundering narcotics proceeds for multiple cartels under the guise of legitimate business,” said DEA Assistant Special Agent in Charge Anthony Chrysanthis. “Along with targeting the narcotics trafficking activities of criminal organizations polluting our society with deadly drugs, we will continue efforts with our law enforcement partners to attack the trade-based money laundering schemes these organizations engage in.”

An indictment contains allegations that a defendant has committed a crime.  Every defendant is presumed to be innocent until and unless proven guilty in court.

Each defendant is named in various counts in the indictment. The money laundering charges alleged in the indictment each carry statutory maximum sentences of either 20 years or 10 years in federal prison.

This case is the result of an ongoing investigation being conducted by IRS Criminal Investigation and the Drug Enforcement Administration.

The following agencies provided assistance during the investigation: the Torrance Police Department, the Santa Ana Police Department, the Placentia Police Department, the Irvine Police Department, the Orange Police Department, the Seal Beach Police Department, the Cypress Police Department, the Orange County District Attorney’s Office, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

USAO - California, Central Topic: Financial Fraud       Updated May 5, 2016

Central District of California DOJ / 16-097 / May 05, 2016

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