A California subsidiary of Rabobank, a Netherlands-based financial institution, recently forfeited $368.7 million after it admitted to not investigating or reporting hundreds of millions of dollars in suspicious transactions that were likely linked to organized crime in Mexico. A plea agreement suggests the bank engaged in money laundering.
Assistant U.S. Attorney Daniel Silva, who prosecuted the case, said it was the largest forfeiture ever in the history of the Southern District of California, the federal court district that covers San Diego. Much of that money is going to local law enforcement in San Diego who helped investigate the case. The San Diego Police Department received $20.8 million, and the Chula Vista Police Department received $5.9 million — nearly 10 percent of that agency’s entire budget.
I sat down with Silva and the IRS agent who led the investigation in the Rabobank case — but who asked not to be named because of other ongoing investigations — to talk about some bigger money laundering issues in the border region and how they go about combating them.
Money laundering is a broad term, and it includes all the ways people conceal money and profits that they’ve earned illegally. It can include bulk cash smuggling (imagine someone stuffing wads of bills in their clothes and bags and trying to sneak it across the border), the layering of cash deposits (placing money in different bank accounts and moving it around to make it seem like you earned money in a legal way, rather than just depositing a conspicuous $10 million sum), hiding the money in real estate and more.
“To launder money, you can get very creative,” Silva said. “It’s limitless.”
San Diego’s border with Mexico has some unique money laundering issues because of the illicit drug trade and other related criminal activity. Drug organizations in Mexico need to both get their profits back into Mexico, but also convert U.S. dollars into Mexican pesos to use the money they’ve earned.
There are a couple of forms of money laundering unique to the border.
One, Silva said, are “funnel accounts.” Those involve setting up a bank account in which people from multiple states have access. Doing so allows people to deposit money from Chicago and New York, for example, into the same account, where it’s withdrawn by someone in San Diego, who takes it south.
The other form of money laundering unique to the border is trade-based. Because of all the legitimate trade that happens at the border, it’s easy for someone to over- or under-invoice goods to cover up monetary transactions.
There have been cases like this involving the Los Angeles Garment District, where the Sinaloa cartel used several businesses that imported goods from Mexico to move their money from drug sales, kidnappings and other illegal activities.
“There is this little cottage industry of these professional money launderers and that’s who we try to go after,” Silva said.
Investigations start in various ways.
“Banks have quite a bit of evidence, but I wouldn’t go as far as to say that’s the source or primary inspiration for our investigations,” Silva said. “Our investigations start in a variety of ways. There’s no straightforward way in which they start. You get a tip from other agencies, you get a tip from certain people you know, you do review some of the filings that the banks do have on file.”
Disgruntled business partners or even things on the news that seem weird can flag investigators, the IRS agent said. But once an investigation starts, some of the first clues come from banks.
“We follow the money, so one of the first things we try to see is how a person is banking, how they’re spending their money, where their money is coming from, so by nature, we always go and look at the bank records first,” the agent said.
Silva said they generally focus on actors, not financial institutions. But in the case of Rabobank, investigators had been following individuals, groups or businesses under suspicion of financial crimes, and they all had the same bank.
“They all seemed to end up at Rabobank,” Silva said. “As we reached out to them, we found more and more troubling statements to the point where we said, ‘We need to open an investigation into the financial institution itself.’”
- Another illegal flow between the United States and Mexico is that of American-made guns, fueling the violence that plagues Mexico, Honduras, Guatemala and El Salvador. (Associated Press)
San Diego County’s Role in Family Separations
Last week, KPBS reported that an asylum-seeker was separated from her U.S. citizen child at the border. When U.S. citizen children are involved, San Diego County’s Child Welfare Services can play a role in family separations, taking the child into custody, after which they will either end up in the care of another relative in the United States or in the foster care system.
At least 54 U.S.-citizen children have been transferred to Child Welfare Services as “asylum referrals” since July, KPBS reported. The referrals are tracked by family, not individual child, so it’s possible that multiple siblings have been separated, but only counted once in this data.
This type of separation happened before the Trump administration.
According to data the county sent me in June, it has been involved in these types of cases for years, though it only started tracking the numbers of these types of referrals in December 2014.
In 2015, there were 297 referrals. In 2016, there were 116. In 2017, there were only 49 reported, but in 2018 the numbers have gone up.
The data that I received from Child Welfare Services between January and mid-June showed 72 asylum referrals. Including the number of referrals reported by KPBS, the total so far for the year is at least 126.
Haitians in Tijuana Find Their Voice
As a community of Haitian migrants has continued to make Tijuana home over the past couple of years, they’re finding outlets to share their culture, history and their migrant experience.
Tijuana’s Cultural Center, CECUT, showcased several Haitian dance performances Sunday. You can watch some of the performances that took place here.
A Beautiful Perspective profiles a Haitian upstart radio station in the Mexican border city. Another member of the Haitian community in Tijuana has written a book, “Sobrevivientes: Ciudadanos del Mundo,” or “Survivors: Citizens of the World,” which describes the migration of Haitians from Brazil to Tijuana.
San Diego and Tijuana Officials Discuss the Region’s Future
For the first time in four years, San Diego and Tijuana officials convened at City Hall last Thursday to affirm their commitment to strengthen and invest in the economic future of Cali-Baja as one region.
At the meeting several trade and tourism groups — Tijuana Commission of Tourism, World Trade San Diego, San Diego Regional Economic Development Corporation and the San Diego Tourism Authority — shared updates on future binational projects.
“This is an opportunity to come closer together across the border at a time when many forces are trying to separate us instead,” San Diego City Councilman Chris Ward said.
Among many joint projects, Council members discussed the future of the Tijuana River, the road to completion of the problem-plagued Desert Line and efforts to increase the region’s tourism.
Tijuana Councilwoman Ivette Casillas Rivera said 10 kilometers of the Tijuana River have been cleaned in an effort to improve the region’s beaches and boost binational tourism.
“I’m not an engineer, but it was tons of dirt, tons of tires, tons of plastic that we removed from that kilometer the river,” Rivera said.
The Tijuana River is located on the border between California and Mexico and feeds into the Tijuana River Estuary — a national reserve in Imperial Beach. The river has a history of pollution and untreated sewage-tainted water that often contaminates San Diego beaches when it rains.
The San Diego Water Board, California’s attorney general and the Port of San Diego and the cities of Chula Vista and Imperial Beach have all sued the U.S. International Boundary and Water Commission — the agency that deals with cross-border water issues — over the untreated waste from the river to flow into the Pacific Ocean, alleging violations of the Clean Water Act.
Rivera said the city looks forward to directing more funds toward cleaning and increasing regulations on the river when next year’s government is elected.
Baja California Railroad representative Jorge Izquierdo also gave an update to the Desert Line project, a binational freight rail project that would run from San Diego, through Tijuana and Tecate, and into Imperial County. Izquierdo said once the company has all permits and legal requirements, rehabilitation work on the railway is expected to last 24 months.
— Kayla Jimenez