Opinion
Civil Action No. 99-0584-CB-S
July 26, 2000
CONSENT DECREE BETWEEN CLAIMANT JAIME SILVA AND THE UNITED STATES
This civil forfeiture action was brought by the United States seeking,inter alia, the forfeiture of $17,200 in drug proceeds transferred into Nations Bank account number 004282542519, a money market account, held in the name of JAIME SILVA (hereinafter "Claimant") pursuant to Title 18, United States Code, Sections 981(a)(1)(A) and 984, which provide for the forfeiture of any money involved in or traceable to money involved in a violation of the anti-money laundering laws of the United States, namely, Title 18, United States Code, Sections 1956 and 1957. Claimant is the holder of the bank account. This case arises out of the laundering of drug proceeds into Claimant's bank account at the instruction of Colombian money brokers who work for Colombian narcotics trafficking cartels. Accordingly, the United States has probable cause to believe that the fluids in the bank account are subject to forfeiture as property involved in a money laundering offense. Although $17,200 of drug proceeds were wired into Claimant's account on March 11, 1999, through an entity named Frontier Freight, the actual amount currently frozen by the bank is $3,415.19.
The instant complaint was filed against numerous foreign bank accounts, including the account referenced in the text. This Consent Decree applies only to the funds in the referenced account.
Explanation of the Colombian Black Market Peso Exchange
The facts of this case, as alleged by both sides, are entirely consistent with a common scheme for laundering dollar drug proceeds through what is known as the Colombian Black Market Peso Exchange. Under this scheme, Colombian money brokers facilitate the exchange of U.S. dollars and other currencies, principally Colombian pesos, between narcotics traffickers and Colombian businesses, with the money broker earning a sizeable commission for his services. The scheme is successful because drug dealers hold large quantities of U.S. dollars derived from drug trafficking that they need to convert local currencies for use in Colombia, while businesses or individual. in Colombia seek U.S. dollars for imported goods and services, offshore investments, or tax shelters, while avoiding Colombian governmental scrutiny, taxes, duties, red tape, and the less favorable exchange rates associated with "regulated" Colombian currency exchange mechanisms.
In Colombia to only lawful way one can purchase foreign currency is through the "regulated" market, i.e., Colombian bunks, savings and loans, and exchange house licensed to engage in international wire transfers, and through special dollar denominated compensation accounts held in one's own name. The "black market" refers to transactions that occur on the "non-regulated" "free," or "parallel" market that have indicia of illegal activity.
In a typical case, the broker seeks out or is approached by Colombian drug traffickers who hold drug proceeds in to form of U.S. dollars in the United States. The broker agrees to buy to drug dollars from the drug trafficker with local currency at a heavily discounted exchange rate. The broker then finds or is contacted by customers who seek U.S. dollars. The broker negotiates a dollar/pose exchange rate with his customers, usually at rates lower than the "regulated' currency exchange market rate, but higher than the broker paid for the dollars. The customer then tells the broker where the U.S. dollars thus purchased need to be sent or delivered.
Based upon the customer's instruction's, the broker, sometimes in coordination with the drug trafficker, causes drug proceeds in the form of U.S. dollars to be wire-transferred to an account designated by the customer. Occasionally, this account is the customer's own account, but, more frequently, the customer designates the account of a fourth party, i.e., a U.S. vendor of goods or services who has sold such goods or services to the broker's customer that sent the customer an invoice, and is awaiting payment in U.S. dollars. Once the U.S. dollars have been sent to their destination, the broker will give the customer proof the dollars was sent, usually a copy of the wire-transfer request, and will, ask that the customer pay him the equivalent in pesos at the previously negotiated exchange rate, which the broker will transfer, directly, or through intermediaries, to the drug trafficker, in accordance with the drug trafficker's instructions. Such peso payments may be in the form of cash, or in the form of checks made out to fictitious parties, checks in blank payee form, multiple cheeks in small denominations made payable to numerous payees, or in any combination of these forms, so that they are readily negotiable or the equivalent of cash and virtually untraceable.
As was the case in this matter, wire transfers constitute a common form of BMPE dollar payments, but dollars are also delivered to broker's customer, or to a fourth party designated by the broker's customer, in to form of cash and other negotiable instruments, such as cashier's check, postal orders, money orders, or personal checks endorsed in blank.
Thus, without using any formal currency exchange mechanisms, drug traffickers convert drug dollars they held in the U.S. into local currencies for use in Colombia, and Colombian businesses or individuals convert pesos into U.S. dollars that they then use to make investments or to satisfy debts owed to vendors of goods or services. That the overwhelming majority of U.S. dollars purchased through the "non-regulated," "free," or "parallel" exchange market involve drug proceeds is common knowledge throughout Colombia. Moreover companies in the United States, Europe and elsewhere, who do a high volume of business in Colombia and other South American drugsource countries, know or should know about this underground method of obtaining U.S. dollars, particularly in instances where the payment on invoices for goods or services sold to Colombian customers comes not from the exporter's customer directly, but in the form of bulk cash payments in the U.S., the delivery of negotiable instruments made payable in bearer, blank, or third party endorsed form, or wire-transfers from bank accounts in the United States, or elsewhere, that are not in the exporter's Colombian customer's name.
The "Innocent Owner" Defense
Section 981(a)(2) protects "innocent owner" from the forfeiture of laundered drug proceeds. See United States v. All Monies, 754 F. Supp. 1467, 1473 (D. Haw. 1991) (drug money that has been purchased onto black market is forfeitable from the purchaser's bank account, unless the purchaser is an "innocent owner"); United States v. Basler Turbo-67, 906 F. Supp. 1332 (P. Ariz. 1995) (person who knows property was purchased with funds traceable to the black market in Colombia is not an innocent owner; that black market funds come from drug dealing is common knowledge in that country); United States v. Funds Seized From Account Number 20548408 at Baybank, N.A., 1995 WL 381659 (D. Mass. 1995) (wealthy Colombian who purchased 182 dollar-denominated money orders totaling $100,000 was innocent owner because he did not recognize structured nature of instruments). To satisfy the innocent owner defense, a claimant must prove "that he did not know of the illegal activity, did not willfully blind himself to the illegal activity, and did all that reasonably could be expected to prevent the illegal use" of his property. United States v. All Monies, 754 P. Supp. at 1478.
Position of the Parties
The United States contends that the Claimant should have known that it was receiving narcotics trafficking proceeds because it obtained dollars by means of a fourth party through a nonregulated money exchange mechanism, i.e., the Colombian Black Market Peso Exchange. The Claimant contends he is an innocent owner of the funds because he was unaware it was dealing with the Colombian Black Market Peso Exchange and therefore likely to receive narcotics trafficking proceeds.
Agreement of the Parties
Accordingly, Claimant and the United States (hereinafter "the pasties"), under the sound policy of law favoring settlement, without adjudication of any issue of fact or law and, sharing the goal of insuring that legitimate sales and banking channels are not utilized by drug traffickers and drug organizations to launder their illegal proceeds from drug transactions, hereby agree to enter into this Consent Decree.
THEREFORE, on the joint motion of the parties it is hereby ORDERED, ADJUDGED. AND DECREED:
Upon agreement of the parties the Court HEREBY FINDS:
1. The term "Claimant" as used herein includes Claimant's principals, subsidiaries, successors, representatives, agents, designee, assigns, partners, officers; and directors;
2. The Complaint filed in this action states a claim upon which relief may be granted against defendant property. to with, $17,200 of the funds in Nations Bank, account number 004282542519 a money market account held in the name of Jamie Silva. Process was fully issued as to defendant property and all identifiable individuals and entitles that may have a claim to or cognizable property interest in the seized monies have been served and have had constitutionally adequate notice and time in which to file a claim and an answer. This Court has jurisdiction over the parties to this Consent Decree, the defendant property, and the subject matter of this Consent Decree;
3. The patties hereto have entered into this Consent Decree freely and without coercion. The parties to this Consent Decree further acknowledge that they have read the provisions of the Consent Decree, that they filly comprehend its provisions, and are prepared to abide by them. The parties further stipulate that this Consent Decree embodies all of the agreements between the patties and that the parties have not relied upon any representation or statement not included herein;
4. This Consent Decree resolves all issues raised by the United States in its Complaint as to the defendant property and the parties accept this Consent Decree as final and binding as to all issues raised by the United States in its Complaint as to the defendant property;
5. The United States agrees and stipulates to the unfreezing and return of the $3,415.19 frozen in Nations Bank account number 004282542519.
6. The parties hereby waive all rights to appeal or to otherwise challenge or contest the validity of this Consent Decree; and
7. Entry of this Consent Decree is in the public interest.
UPON THESE AND THE BELOW ACKNOWLEDGMENTS AND STIPULATIONS IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1. The sum of $3,415.19 in Nations Bank account number 004282542519 is hereby returned to Claimant and is hereby released from any arrest warrant in rem issued by this Court;
2. Claimant acknowledges that he has been made aware of the operation of a money laundering system known as the Black Market Peso Exchange and the role that system plays in the laundering of drug proceeds that are in the form of U.S. dollars. Claimant also acknowledges that he has been made aware of the role that he plays when he purchases dollars on the Black Market Peso Exchange to purchase dollars, pay off creditors, and/or accept repayment of loan monies from third parties, as well as the role that vendors of goods and services play in the consummation of such money laundering offenses when they accept payment for goods and services in the form of U.S. dollars from third parties who are not associated with the person to whom the goods and services were sold, or to whom funds were advanced,
3. Claimant agrees to use due diligence to ensure that all of his future purchases of dollars are made through either legitimate international banking channels or through those lawful foreign currency exchange houses authorized and licensed by the Colombian "Superintendencia Bancaria" to conduct international currency transfers, or an "Cuentas Corriente do Compensation" (compensation accounts), and to ensure receipt of wire-transfers and checks originate from or are drawn upon accounts held in the name of the individual, entity, or business to whom Claimant loaned money, and/or provided, or agreed to provide, goods or services.
4. Having been put on notice of the operation of the Black Market Peso Exchange, Claimant acknowledges that if he should purchase or accept US. dollars as outlined above in the future, without taking all reasonable steps to avoid accepting drug proceeds as payment, the funds he accepts may be subject to forfeiture to the United States if those funds represent the proceeds of drug trafficking offenses committed in the United States.
5. Claimant hereby agrees that, in addition to any other fine, penalty, or forfeiture which may be imposed, any violation of this Consent Decree will operate for Claimant as an automatic permanent debarment from holding for five (5) years an United States export-import license and as a live year debarment from doing business with the United States and/or any department or agency thereof.
6. Claimant agrees and acknowledges that the United States may enter this Consent Decree on any registry maintained by the law enforcement agencies of the United States of decrees, orders, letters or other documents whereby vendors of goods and services have been put on notice of the operation of the money laundering system known as the Black Market Peso Exchange.
7. Within forty-five (45) calendar days, Claimant, at its own expense, will arrange to have the Consent Decree translated into his native language so that he has a translated copy for his records.
8. The parties shall attempt to resolve informally any disputes that may occur under this Consent Decree. If the parties are unable to reach agreement within ninety (90) calendar days after a mutter has been brought to the attention of one of the parties by another party, the issue may be submitted by either party to the Court for resolution.
9. The United States' agreement to and the Court's approval of this Consent Decree is expressly premised upon the truthfulness, accuracy, and completeness in every material part of the records and information provided by Claimant to the United State. If, upon motion by the United States, this Court finds that any of such records or information failed to disclose material information or directly misrepresented material facts, the United States may request that this Consent Decree be reopened for the purpose of reinstating the United States' civil forfeiture action against any portion of the defendant property released by this consent decree.
10. Claimant covenants and agrees to and does hereby forever release, save and hold harmless the United States and its officials, officers, employees, and agents from any claim, liability, obligation, appeal, action or demand, known or unknown, existing or arising in the fissure, in connection with arising out of, or incident to all properly arrested and/or seized, and/or forfeited in Ibis action, brought by any person or entity.
11. Claimant agrees this Consent Decree does not entitle it to seek or to obtain attorney's fees as a prevailing party under the Equal Access to Justice Act, 28 U.S.C. § 2412, and Claimant, . further waives any rights to attorney's fees, costs, and expenses that may arise under said provision of law or any other provision.
12. Claimant expressly waives any claim or right of action it may have against the United States, or any of its agencies, departments. employees or agents, for violation of its Constitutional, statutory, or personal rights, which may entitle is to collect pecuniary damages, attorney's fees, or costs, including, but not limited to, actions pursuant to Title 42, United States Code, Section 1983, the Federal Torts Claims Act, or any cause of action forte violation of any Constitutional or statutory tights. As to any possible tax obligations owed to the United States the terms of this Consent Decree do not affect the tax obligations, tax fines, tax penalties, or any other tax obligations that Claimant may owe the United States government.
13. The parties stipulate that pursuant to Title 28, United States Code, Section 2465 a Certificate of Reasonable Cause may be entered by the Court.
14. While this claim in the case is completed, for the purposes of enforcing the Consent Decree, the Court shall retain jurisdiction of this action from the date of entry of this Consent Decree for five (5) years. After five (5) years this matter shall be dismissed unless the United States moves for its continuation for good cause shown. The United States shall give notice of any such motion to Claimant or Claimant's successors in interest.