- The Washington Times - Saturday, August 24, 2002

American policymakers have long balanced a desire to preserve personal privacy with efforts to bolster transparency and accountability in the financial system, understandably prefering to err on the side of privacy. September 11 changed the calculus. The USA Patriot Act, which Congress passed in October, has myriad provisions regarding financial-transaction reporting. Some are more useful than others. A new money-laundering case involving, allegedly, a broker at one of America's most prestigious financial institutions, 200 tons of cocaine and a corrupt Mexican politician highlights one of the law's well-conceived provisions.
Prior to the passage of the Patriot Act, brokerage houses didn't have to report to the government their clients' suspicious activities and could potentially serve, therefore, as the back-door gateway to America's financial system. Today, brokerage houses have to report to the government if they get eyebrow-raising requests from their clients, as banks have long had to do.
But in 1995, when Consuelo Marquez was a broker for Lehman Brothers, those pesky forms weren't necessary, which certainly made things easier for Lehman's compliance arm. So if you happened to be a Mexican state governor with a pile of drug money, an obliging Ms. Marquez could be much more helpful than a regular bank employee.
Federal prosecutors have charged the former Lehman Brothers broker with helping to launder $15 million for Mario Villanueva from 1995 to 2000. For those millions and more, Mr. Villanueva, who was governor of the Mexican state of Quintana Roo from 1993 to 1999, helped usher through 200 tons of cocaine into the United States, via his governor's airplane and bribed police officers, U.S. prosecutors said. He was arrested in Mexico last year after living as a fugitive for two years. America is seeking his extradition.
Ms. Marquez used a "blizzard of transactions" to try to throw off investigators looking for Mr. Villanueva's money, said James Comey, the U.S. attorney for the Southern District of New York. She set up several accounts at Lehman in the name of offshore companies and fictitious third parties, and moved $63 million in and out of internal and offshore accounts, he said.
If Lehman's compliance arm had been forced to file reports to the government on suspicious brokerage activity, Ms. Marquez would have known she could more easily come under fire for her smoke-and-mirrors transactions.
"A lot of people think it's guys with Hispanic names coming in with suitcases full of cash," said Patrick Jost, a compliance expert for Complinet.com and a former government investigator. "This whole private-banking business has been abused," he said, adding that the suspicious activity reporting for brokerage houses helps close a critical loophole.
This is one piece of legislation that, though belatedly enacted, the public should appreciate.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide