Laundered And Hung Out To Dry

By Daniel Eisenberg

It's hard to think of anyone who could resist the call of today's roaring bull market. So when agents of the Drug Enforcement Administration set out to crack a Colombian cocaine ring three years ago, they opened a fully licensed--but also fully bogus--brokerage in suburban Atlanta to get inside the drug world. Even though the customers never made a single stock trade--double-digit stock gains are paltry in contrast to 400% returns on cocaine--the sting paid off last week with federal indictments of five Colombians, who are believed to have ties to the Cali drug cartel, on drug trafficking and money-laundering charges. The indictments capped an international operation in which authorities have so far arrested more than 40 people in the U.S. and abroad and seized some 3,500 kg of cocaine and $10 million of laundered drug money.

The investigation began after authorities in Cartagena, Colombia, seized 386 kg of cocaine hidden inside containers of frozen fish shipped by a company with a distribution center in Atlanta. Drug agents subsequently opened their phony office and offered to launder funds for suspected traffickers. As it played out, agents picked up drug funds in gym bags, luggage and boxes on the streets of such cities as New York, Dallas, Madrid and Rome. Then, with the help of black-market money changers in Colombia, the dollars were converted into pesos and deposited into the traffickers' Colombian accounts. But much to the dismay of the brokerage firm's clients, their gains turned out to be purely short term.

--By Daniel Eisenberg. Reported by Alain L. Sanders/New York

With reporting by Alain L. Sanders/New York