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Bank Pleads Guilty in Global Money Laundering Case

January 17, 1990 GMT

TAMPA, Fla. (AP) _ An international bank pleaded guilty Tuesday to cocaine-related money- laundering charges, agreed to forfeit a record $14 million and to help prosecutors who say the case has ties to Manuel Noriega.

U.S. District Judge W. Terrell Hodges accepted pleas from two divisions of the Luxembourg-based Bank of Credit and Commerce International and found them guilty, but has not set a date for formally imposing the sentence.

The plea did not affect co-defendants in the $32 million money-laundering case, including top BCCI banking officers and two Colombians the government claims were part of the Medellin cocaine cartel.


Later in the day, however, one of the six banking officials was dropped from the case when conspiracy charges were dismissed. The other cases continued with pretrial motions in a proceeding expected to last five months.

Under the agreement signed Tuesday, BCCI, S.A. and BCCI Overseas Ltd. are to forfeit $14 million in assets frozen earlier by the government. Prosecutors claim that represents profits made from the sale of cocaine in American cities and laundered in a series of complicated worldwide banking transactions.

The banks also are to receive suspended fines and five years probation supervised by the Federal Reserve.

The cash forfeiture was the largest ever by a financial institution in the United States, said Dave Runkel, spokesman for the U.S. Justice Department in Washington.

″I think it’s a good deal,″ said Bonnie Tischler, head of the U.S. Customs Service in Tampa.

But one expert on money laundering said he was surprised and disappointed by the sentences against the bank, which he characterized as lenient.

″It’s pretty outrageous. It’s just a slap on the wrist,″ said Scott Malone, Washington bureau chief of the newsletter Money Laundering Alert. ″All they have to do is return the proceeds of their crime and pay no penalty. It sends the wrong signal to bankers all over the world.″

Sen. John Kerry, D-Mass., said the penalty was legally, morally and politically wrong.

″My impression is when banks engage knowingly in the laundering of money, they should be shut down. It’s that simple, it really is,″ said Kerry, who chairs the Senate subcommittee on terrorism and narcotics.

″We send drug people to jail for the rest of their life, and these guys who are bankers in the corporate world seem to just walk away, and it’s business as usual,″ Kerry told CBS News in an interview Tuesday.

A two-year sting operation called Operation C-Chase began in Tampa in 1986 after an undercover agent conned his way into an international money laundering network. After that, agents helped direct profits from cocaine sales in American cities to Colombia through Panama eventually building a global laundering operation worth an estimated $32 million, investigators said.

Some 30 charges against the two bank entities included tax fraud, laundering activities and failing to report currency transactions over $10,000.

In return for the plea, the government agreed to waive any future charges against the bank that its investigation might uncover.

Hodges approved a gag order to prevent parties in the case from talking to the media, and bank officials and attorneys refused to comment after the agreement was announced.

″I’m going to let the documents speak for themselves,″ U.S. Attorney Robert Genzman said after leaving the courtroom.

In December 1987, some officials at BCCI in Panama, which was the bank used to pass funds to Colombia, contacted undercover agents and arranged a meeting to suggest alternate banking methods such as Certificates of Deposit rather than checks to avoid being caught, prosecutors said.

Agents said they told high level bank officials the money was from cocaine sales.

The agents said BCCI bankers taught them how to use cash to buy CDs, then use the CDs as collateral for loans. The loan proceeds then would be wired into accounts controlled by an agent or smugglers, prosecutors said.

Customs agents claimed the money was intended mainly for Colombian drug traffickers, including the Medellin cartel.

Altogether, more than 80 people were accused of taking part in drug-related money-laundering schemes in Detroit, Philadelphia, Chicago, Los Angeles, Houston, Miami, New York and Tampa and in London and Paris.

The Luxembourg bank is one of the largest privately held institutions in the world with operations in 73 countries.

Facing trial is Amjad Awan, assistant division director of BCCI for Latin America in Miami, who claimed he used to be deposed Panamanian dictator Noriega’s banker and managed a secret account that held up to $25 million. Also charged are Gonzalo Mora Jr., who federal prosecutors claim was the main drug money-launderer in Medellin, Colombia, and Rudolph Armbrect, Mora’s partner.

Late Tuesday, prosecutors agreed to drop charges of conspiracy against Iqbal Ashraf, 39, a manager of BCCI’s Los Angeles office, after his attorneys moved successfully to suppress statements he gave without counsel present.

″When we lost that, we just didn’t have enough evidence left,″ said Assistant U.S. Attorney Michael Rubenstein.

″I’m relieved,″ a tearful Ashraf said as he left court. ″I’m just glad to get this behind me.″

The defense asked the court to prohibit prosecutors from bringing Noriega into the case, a move the defense expects because Stephen Michael Kalish is among the drug kingpins on the government witness list.

Kalish, arrested in 1984 and serving 15 years, has testified that he secured safe Panama banking for his marijuana smuggling ring in 1983 by giving Noriega $300,000. According to the government, Kalish also met with Awan and deposited an initial $2 million into a BCCI account in Panama City.

During U.S. Senate testimony before his arrest, Awan said such a deposit was possible but he had no recollection of it.

Awan told Senate investigators he managed a secret account Noriega opened at the bank’s Panamanian branch in 1982. Awan said Noriega was the only one who could authorize withdrawals from the account, and he denied knowledge of any drug dealing by Noriega or the bank.