US Indicts 14 In Alleged Drug and Money Laundering Scheme Involving Horses

June 13, 2012

The Wall Street Journal on June 12, 2012 released the following:

“By Samuel Rubenfeld

A federal grand jury in Texas voted to return an indictment against 14 defendants in connection with a conspiracy to launder Los Zetas drug money by buying, training, breeding and racing American quarter horses in the U.S.

Among those charged was Miguel Angel Trevino Morales, the leader of Los Zetas, along with his brothers, Oscar Omar Trevino Morales and Jose Trevino-Morales, the Justice Department said.

The indictment, unsealed Tuesday, charges the defendants with one count of conspiracy to launder monetary instruments. It accuses the Zetas of directing part of the cash generated from selling drugs to buy, train, breed and race quarter horses in the U.S.

Miguel and Oscar sent their brother Jose and his wife cash to operate Tremor Enterprises LLC, the business they created for the horse training, the indictment said.

“This case is a prime example of the ability of Mexican drug cartels to establish footholds in legitimate U.S. industries and highlights the serious threat money laundering causes to our financial system,” said Rich Weber, chief of the Internal Revenue Service’s criminal investigation division, in a statement (pdf).

“This attack on one of the Zeta’s most profitable money laundering schemes is an essential front in the war on drugs and will financially disrupt and help dismantle this violent international criminal organization,” Weber said.

The indictment also seeks the forfeiture of several quarter horses, including Tempting Dash, winner of the Dash for Cash at Lone Star Park race track in Grand Prairie, Texas, on Oct. 24, 2009; Mr. Piloto, $1 million All American Futurity winner at Ruidoso Downs on Labor Day, 2010; Dashin Follies; Coronita Cartel; and Separate Fire.

It also seeks the forfeiture of farm and ranch equipment; horse racing equipment; property in Lexington, Okla. and Bastrop County, Texas; and money contained in bank accounts used in the scheme.

Earlier Tuesday, authorities arrested seven of the 14 defendants, including Jose Trevino-Morales and his wife, Zulema Trevino, in Lexington, Okla. Also arrested were Fernando Solis Garcia in Ruidoso, N.M.; Carlos Miguel Nayen Borbolla, Adrian Farias and Felipe Alejandro Quintero in Los Angeles; and Eusevio Maldonado Huitron in Austin, Texas. They remain in federal custody, the Justice Department said.

None of those arrested could be reached for comment.

The New York Times, in a blockbuster 4,000-word story, reported earlier Tuesday about the scheme. The Times reported that an FBI affidavit said the Zetas channeled about $1 million a month into buying quarter horses in the U.S, and that authorities were tipped off in January 2010, when the cartel paid more than $1 million in a single day for two broodmares.

In its report, the paper said it became aware of Tremor’s activity in December 2011 while reporting about the Zetas and learned of the U.S. government probe last month, but agreed to hold the story until Tuesday morning’s arrests.

Among those charged but not arrested is Francisco Antonio Colorado Cessa of Veracruz, Mexico. Colorado Cessa is accused in the indictment of acting as a straw buyer for various horses. In connection with the indictment, the Treasury’s Office of Foreign Assets Control slapped Kingpin Act sanctions [OFAC SDN Sanctions] on him that label Colorado Cessa as a narcotics trafficker.

“Our action cuts Colorado Cessa off from the U.S. financial system and it is yet another signal to Miguel and Omar Trevino Morales, and the Zetas, that OFAC will target their financial and business network wherever it is found,” said Adam Szubin, director of OFAC, in the statement.

The Zetas were designated under the Kingpin Act as a narcotics trafficker by the president in 2009. The group is notorious for its violence; officials blamed the Zetas for a dump of 49 headless and handless bodies in May along a Mexican highway. Since 2009, OFAC has designated several of its top leaders and dozens of its lieutenants.”

US v. Miguel Angel Trevino Morales, et al. – Federal Criminal Indictment

18 U.S.C. § 1956

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Senate votes to end ‘Fast and Furious’ gun program

October 19, 2011

Associated Press (AP) on October 18, 2011 released the following:

“By ANDREW TAYLOR
Associated Press

WASHINGTON (AP) — The Senate voted Tuesday to effectively block the Justice Department from undertaking gun-smuggling probes like the flawed “Operation Fast and Furious” aimed at breaking up networks running guns to Mexican drug cartels but that lost track of hundreds of the weapons, some of which were used to commit crimes in Mexico and the United States.

The 99-0 vote would block the government from transferring guns to drug cartels unless federal agents “continuously monitor or control” the weapons. The amendment’s sponsor, Sen. John Cornyn, R-Texas, called the vote “just the first step towards ensuring that such a foolish operation can never be repeated by our own law enforcement.”

The Justice Department has already stopped the program.

A Justice Department official, who spoke on condition of anonymity because Congress did not ask the department for its views, said the amendment essentially reflects DOJ policy.

In an interview Tuesday with ABC News, President Barack Obama said “we will find out who and what happened in this situation and make sure it gets corrected.”

The vote came as the Senate debated a $128 billion spending measure that would fund Justice Department operations and those of several other Cabinet agencies for the 2012 budget year already under way.

Operation Fast and Furious was a gun-smuggling investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives aimed at tracking small-time illicit gun buyers up the chain to major traffickers in an effort to take down arms networks. In the process, ATF agents lost track of many of the weapons.

Fast and Furious came to light after two assault rifles purchased by a now-indicted small-time buyer under scrutiny in the operation turned up at a shootout in Arizona where Customs and Border Protection agent Brian Terry was killed.

The operation has caused something of a firestorm in Washington and is the focus of an investigation by House Republicans, who have questioned whether Attorney General Eric Holder has been candid about all he knows about the botched operation.

Holder already has called a halt to the practice of allowing guns to “walk” in an effort to track them to arms traffickers, saying in a recent letter to lawmakers that “those tactics should never again be adopted in any investigation.”

In the past two weeks, two gun-trafficking investigations from the Bush administration have surfaced using the same controversial tactic for which congressional Republicans have been criticizing the Obama administration on Fast and Furious.

Emails obtained by The Associated Press show how in a 2007 investigation in Phoenix, ATF agents – depending on Mexican authorities to follow up – let guns “walk” across the border in an effort to identify higher-ups in gun networks. Separately, it was disclosed that ATF agents carried out an operation in 2006 called Wide Receiver that resulted in hundreds of guns being transferred to suspected arms traffickers.

Fast and Furious was designed to respond to criticism that the agency had focused on small-time gun arrests while major traffickers had eluded prosecution.

As recently as 11 months ago, the Justice Department’s inspector general criticized ATF for focusing “largely on inspections of gun dealers and investigations of straw purchasers, rather than on higher-level traffickers, smugglers and the ultimate recipients of the trafficked guns.”

The IG said some ATF managers discourage agents from conducting complex conspiracy investigations that target high-level traffickers.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Justice Department rejects Darrell Issa’s talk of third gun

October 18, 2011

Politico on October 17, 2011 released the following:

By: Josh Gerstein

“No third gun was recovered from the scene of the murder of Border Patrol agent Brian Terry in Arizona last December, the Justice Department said Monday, rejecting suggestions from House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) that irregularities in evidence collected by the FBI at the scene of Terry’s death raise the possibility of a “third weapon.”

Issa has been investigating the case as part of the broader Congressional probe into “Operation Fast & Furious,” a Bureau of Alcohol, Tobacco & Firearms investigation that may have allowed more than 1000 guns to flow from legal U.S. dealers to Mexican drug cartels despite law enforcement suspicions that they were headed to the violent narcotraffickers. Two of the weapons from the operation were found at the scene of Terry’s death.

“The FBI has made clear that reports of a third gun recovered from the perpetrators at the scene of Agent Terry’s murder are false,” Justice Depatment spokeswoman Tracy Schmaler said in a statement Monday evening. “Unfortunately, this most recent false accusation not only maligns the dedicated agents investigating the murder of Agent Terry, it mischaracterizes evidence in an ongoing case. The prosecution arising from the murder of Agent Terry is ongoing. Therefore, further public comment is inappropriate.”

Issa said on CBS’s Face the Nation Sunday that he wasn’t saying anyone tampered with the evidence but that questions about it remained.

“We’re not suggesting [tampering] but when you have tickets that are numbered 2 and 3 and there’s no ticket 1, when agents who were at Brian Terry’s funeral made statements to his mother indicating that there were three weapons, when the two weapons that they have tested don’t conclusively match up — then you look and say, ‘Well, was there a third weapon at the scene? Were there additional people who escaped with weapons?’” Issa told CBS

Schmaler said Issa misunderstood the coding of the evidence and that he was told before his CBS appearance that the Justice Department insisted there were only two weapons recovered.

“When law enforcement analyzes evidence from a crime scene, it refers to some of the items seized as ‘known’ items or ‘Ks’ for shorthand. Certain items were analyzed as ‘known’ items from the crime scene of Agent Terry’s murder, including the two firearms referenced by Chairman Issa and designated by the FBI as Known Specimens ‘K2′ and “K3’. According to the FBI, the item that Chairman Issa refers to as ‘K1’ is a blood sample from Agent Terry, not a firearm. For this reason, it was not listed on the ballistics report prepared by the FBI,” Schmaler explained in the statement.

A spokesman for Issa, Frederick Hill, stressed that Issa’s comments were based not solely on the FBI markings, but also on an ATF agent’s statement to a gun dealer that three weapons were found at the Terry scene as well as similar comments made to Terry’s mother. Hill said Issa would still like Justice Department to make clear whether they believe the bullet that killed Terry came from the seized Fast & Furious weapons or not.

“This is something that Justice needs to clarify and not just get into wordgames about the evidence,” Hill told POLITICO.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


ATF Director to Resign, Agency Sources Say

June 21, 2011
Kenneth E. Melson, ATF Director
Kenneth E. Melson, acting director of the Bureau of Alcohol, Tobacco, Firearms and Explosives, in 2009. (Eric Gay / Associated Press / August 13, 2009)

Los Angeles Times on June 21, 2011 released the story:

Kenneth E. Melson’s exit would be the biggest response yet to the uproar over an operation that allowed the sale of weapons to suspected agents of Mexican drug cartels.

By Richard A. Serrano and Kim Murphy, Los Angeles Times

The acting director of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives is expected to step down because of a controversial gun-running investigation that allowed weapons to be sold to suspected agents of Mexican drug cartels, according to two sources inside the agency.

Kenneth E. Melson’s resignation, which could happen as early as this week, is the most significant repercussion yet from a growing public outcry over the code-named Fast and Furious operation, under which ATF agents watched while straw purchasers acquired more than 1,700 AK-47s and other high-powered rifles from Arizona gun dealers and delivered them to others.

Hundreds of the weapons turned up at crime scenes in Mexico and the U.S., including in southern Arizona last December where a Border Patrol agent was shot to death.

At a House hearing last week, internal government documents showed that Melson was closely involved in overseeing the operation and received weekly briefings. Documents released by Congress showed that he asked for and received log-in information and a link to an Internet feed so that he could watch some of the illegal straw purchases taking place in an Arizona gun store.

Melson became acting director in April 2009 and has remained in place because gun rights groups have held up confirmation of the proposed permanent director, Andrew Traver, head of the ATF’s Chicago field office.

“Traver has been deeply aligned with gun control advocates and anti-gun activities,” the National Rifle Assn. said in January. “This makes him the wrong choice to lead an enforcement agency that has almost exclusive oversight and control over the firearms industry, its retailers and consumers.”

Sources in the agency, who asked not to be identified because the process remained fluid, said Traver could not serve as acting director while his nomination remained under consideration. So it was not clear whether Traver would step in immediately or whether someone else would be named acting director.

“Melson is out,” one source said. “Traver is flying into Washington to meet with the Justice Department,” the ATF’s parent agency. “The administration still favors him because he will do what the Department of Justice instructs him to do.”

But the source said that Traver, although close to Obama through their Chicago connections, did not have “the rank and file” support from agents around the country.

“We need someone permanent in that slot,” the source said. “It’s been five years since we’ve had a permanent director. That’s the rub.”

A second source, also speaking on the condition of anonymity, said “the feeling on the inside is that Melson is going to resign and that they will have Traver in place in Washington to do a press conference and show there is no gap in the leadership.”

Officially, the ATF declined to address the reports.

“Melson continues to be focused on leading ATF in its efforts to reduce violent crime and to stem the flow of firearms to criminals and criminal organizations,” Scot Thomasson, the agency’s chief spokesman, said Monday. “We are not going to comment on any speculations” about his status as head of the agency.

Melson’s resignation would mark the most significant response yet to the outcry over Fast and Furious. But it would probably fall far short of resolving questions in Congress and among Mexican lawmakers over who authorized the operation.

In interviews with The Times, several disgruntled agents have said they were told the operation had been approved at the highest levels in Washington.

The operation marked a rare instance in which ATF agents allowed guns to “walk” into the hands of criminals, ostensibly with the goal of catching higher-ups in gun-trafficking organizations.

“We want to know what felony stupid bad judgment led to allowing this investigation at the highest levels,” Rep. Darrell Issa (R-Vista), chairman of the House Committee on Oversight and Government Reform, said at last week’s hearing.

Sen. Charles E. Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, said in a statement Monday that Melson’s departure would not clear up his committee’s questions.

“It would be a shame if the Justice Department makes Mr. Melson the only fall guy for this disastrous strategy — there’s plenty of blame to go around at both the ATF and the Justice Department,” Grassley said in a statement. “A resignation by the acting director would be, by no means, the end of our inquiry. Congressman Issa and I are eager to talk to Mr. Melson and hear his side of the story as soon as possible.”

A clue to where the congressional inquiries are going might lie in a sealed document that was inadvertently released partially because of the investigation. The document makes it clear that at least one wiretap application under Fast and Furious, in March 2010, was signed by Assistant Atty. Gen. Lanny A. Breuer, head of the Justice Department’s criminal division.

Department officials reacted angrily when the document’s heavily redacted cover letter was recently made public, saying it justified their refusal to turn over other sensitive documents.

One ATF source, speaking anonymously because he was not authorized to speak publicly, called Melson a career Justice Department attorney who “got terrible advice from his inner circle. Ken Melson is an attorney. He was not raised as an agent. …If you spend just 10 minutes in our academy for new agents, you know our mission is to deny guns to criminals. And yet they told Melson this was OK.”

Three agents from ATF’s Phoenix office testified before Issa’s committee last week that they had repeatedly objected but were told to back off surveillance once the guns were transferred to third parties.

“Several special agents in the group, including myself, became increasingly concerned and alarmed at [Phoenix management’s] refusal to address or stop the suspected straw purchaser from purchasing additional firearms,” Agent Olindo James Casa told the committee.

“On several occasions I personally requested to interdict or seize firearms in such a manner that would only further the investigation,” he said, “but I was always [ordered] to stand down and not to seize the firearms.”

Mexican lawmakers believe that at least 150 Mexicans have been killed or wounded with weapons smuggled in the operation. And the ATF has estimated that at least 372 of the guns have been recovered in Arizona and Texas, mainly at crime scenes.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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