“The biggest crime in American history”
Part 8: $200 million a month, all cash
This is Part 8 in an ongoing series:
PART 1: Apollo Global, deep pockets with ties to the NBA, Jeffrey Epstein, and Buzzy
PART 2: The earliest days of Sears Roebuck, the CIA, and United Fruit
PART 3: 1950s and 60s: Buzzy at Princeton, the CIA messes with mind control, Leon Black’s dad
PART 4: Beverly Hills in the 1960s, 70s, and 80s
PART 5: Buzzy the banker.
PART 6: In business with criminals
PART 7: Everyone in this story owns planes
PART 8: “The biggest crime in American history”
PART 9: “A stealth invasion of the U.S. banking industry”
PART 10: Jeffrey Epstein’s tutor
PART 11: Richard Nixon and Adnan Khashoggi
PART 12: The Dechert Report
PART 13: Nazis at the Waldorf Astoria
PART 14: Hitler’s American business friends
PART 15: Epstein teaches at private school
PART 16: The Emirates and the NBA
PART 17: Pablo Escobar in a Celtics hat
PART 18: A new kind of superrich
PART 19: The NBA goes to Abu Dhabi
PART 20: Steve Bannon and Jeffrey Epstein
PART 21: A Robert Ludlum spy thriller
BY HENRY ABBOTT
Holding capital in the form of currency is very costly. Not only are secure storage and transportation of currency prohibitively expensive, but also the opportunity costs in terms of lost earning power are substantial. These problems can be overcome by depositing the money in a financial institution which takes custody of the currency, pays interest on the balances, and can transfer funds anywhere in the world.
For the Medellin Cartel, the problem became the money—the physical $200 million a month in cold, hard cash. Storing it, moving it, taking care of it … was too much work.
One source told me that this is a story about “the biggest crime in American history.”
America didn’t always have a grand-scale cocaine problem. Before the 1980s, according to testimony to the committee, cocaine entered the nation with difficulty, much of it one kilo at a time, smuggled in luggage. It cost $60,000 a kilo.
Maybe you remember Harlan Waksal, a character from the clique, including Martha Stewart, from the Imclone insider trading scandal. In is youth he was arrested with a kilo of cocaine in the Miami airport. That was how it worked in 1981.
Then several powerbrokers of the business banded together, in 1982, to form the Medellin Cartel. During the years of the U.S. government’s covert operations in support of the Contras, the infrastructure of narcotrafficking blossomed.
“Weapons for the Contras came from Panama on small planes carrying mixed loads which included drugs,” explains the report. “The pilots unloaded the weapons, refueled, and headed north toward the U.S. with drugs. The pilots included Americans, Panamanians, and Colombians, and occasionally, uniformed members of the Panamanian Defense Forces.”
But the report continues: “Drug pilots soon began to use the Contra airstrips to refuel even when there were no weapons to unload.”
Was this a Contra-support operation with a drug sidecar, or … vice-versa?
The drug component grew impossible to ignore. The report has dozens of eye-popping examples, including:
Julio Zavala was arrested in San Francisco. In a drawer, authorities found cocaine, an M-1 carbine, a grenade, “drug transaction letters,” and $36,020 in cash. A CIA bigwig visited prosecutors. Zavala produced some letters claiming the cash really belonged to the Contras. The government returned the cash, with interest.
The State Department had funds for humanitarian assistance to the Contras, and Kerry’s committee goes to much trouble to establish that they awarded it to four organizations “owned and operated by narcotics traffickers” (SETCO AIR, DIACSA, Frigorificos de Puntarenas, and Vortex).
The Washington Post reports that pilot Gary Wayne Betzner was one of the most talented of the many pilots who carried arms to the Contras. The Costa Rica ranch of American John Hull was an important refueling stop. Betzner “landed near the ranch of John Hull, an American who has acknowledged supporting the Contras and who has been alleged to have been a CIA employee. Betzner said Hull watched silently as a load of machine guns and explosives he flew to the ranch was unloaded and replaced by 17 duffel bags and five or six boxes filled with cocaine. Hull met a second flight on a strip near Voice of America radio transmitting towers near his ranch, a flight that exchanged small arms and land mines for between 15 to 17 duffel bags of cocaine, Betzner said.”
The price of cocaine tumbled to $9,000 a kilo, habits were formed, and the stage was set for an American epidemic and all the heartache that entails.
Meanwhile, the Medellin Cartel’s problem was too much money.
The cartel sought out brilliant Miami-based accountant Ramon Milian Rodriguez. As he explained to the committee years later, he set it all up and it worked beautifully. The cash from bulk cocaine sales was delivered to safe houses around North America. Couriers knew those addresses, so the money only stayed there for a hot second before it went to other, much quieter houses, with walls, electric gates, and families living inside. There, armed men loaded cash into boxes with the logos for a real company Milian Rodriguez created for the cartel: Consolidated Courier Services. The boxes were perfectly designed for money. Filled with hundreds, they held a couple million dollars each. The boxes were collected onto pallets, and delivered to the Braniff or Eastern Airlines depot at Miami airport.
Senator Kerry: Was the Eastern station manager or the Braniff station manager on the payroll of the cartel?
Mr. Rodriguez: No, sir. The Eastern and Braniff people were Noriega men.
Senator Kerry: They were Noriega people?
Mr. Rodriguez: Yes, sir.
Milian Rodriguez had met with Noriega personally, and struck a deal. For roughly one percent of the haul, he says Noriega agreed to provide three things:
Complete security for the money from the moment it touched down, including army protection.
Immediate credit for cash deposits (bypassing bank waiting periods).
“And third,” he testifies, “we required access to Panamanian assets, wherever they may be. And when I speak of assets, I speak of political and diplomatic sources, the use of diplomatic passports, diplomatic pouches, as well as access to information.”
Part of that third point was intelligence. “We’re talking about the use of radio frequencies, schedules, Coast Guard schedules or Navy schedules,” says Milian Rodriguez. Among the things Noriega offered the cartel: the name of every U.S. anti-drug agent in Medellin. Milian Rodriguez says the cartel invited them all to a party, and when they showed up, brazenly bragged they were guests of the cartel.
The cartel paid Panama’s president, General Manuel Noriega, an average of $10 million a month; Milian Rodriguez says he tended to those payments personally.
Dr. Norman Bailey was a National Security staffer at the time. He testified: “Human intelligence, electronic intercepts and satellite and overflight photography that taken together constitute not a ‘smoking gun’ but rather a ‘twenty-one cannon barrage of evidence’ of Noriega’s involvement in criminal activity and drugs.”
On November 1, 1985, Noriega met with the head of the CIA, William Casey. This we know not from some salacious report, but from the memo Casey wrote about it. There’s no disputing they were in some kind of relationship—Noriega played a major role in supporting the Contras. “Other US officials,” the Kerry committee reports, “concluded that Casey had ‘let Noriega off the hook.’”
Panama became a haven for money laundering. An Eastern pilot testified that his plane landed in Panama, and was met by armed officers, who loaded his cargo into armored cars. The pilot asked about the cargo, and learned it was money.
Milian Rodriguez testified there were about 140 banks in Panama and the cartel had accounts at maybe all of them. (One of the banks: BCCI, which became its own scandal of terrorism finance, influence, intelligence, and arms dealing.) He would make cash transfers from one account in the bank to another, which would make the money in the second account untraceable to him, the cartel, or Noriega. And then he’d have money that could be electronically transferred anywhere in the world. He said that after expenses, the laundered proceeds that belonged to the cartel, all went back to the United States.
In the Panama branches of major international banks like Citibank, Citicorp, Bank of America, and First National Bank of Boston, Milian Rodriguez testified he would make it known he had business to conduct in New York. “They had to sort of remember,” he told the Senate Committee, “that this type of money required some respect that they might not give other types of money. We did not want them talking about it, we did not want them cooperating with American authorities if they expected to continue having our business, and that there are plenty of examples of bankers that, you know, were involved knowingly.”
The bank would send a limo to the airport when he landed in New York. “They have a special representative,” he told the committee, “for people like me.” The people he met with, he said, were not listed in the bank directory. So that everyone could maintain plausible deniability, the whole meeting would take place without names.
Mr. Rodriguez: In every instance the bank knew who they were dealing with.
Senator Kerry: What do you mean, who they were dealing with? They were dealing with Milian Rodriguez.
Mr. Rodriguez: They were dealing with Milian Rodriguez, who represented money from South America, and their corresponding banks in Panama knew where the money came from because we required certain things from them. We required—let’s take a case of something that’s called back-to-back loan. I have an individual that wants to borrow $1 million in the United States, and he’s practically destitute in the United States. So we go to the bank’s Panamanian office, place $1 million on deposit there and issue instructions to lend out of their American bank $1 million to so and so unsecured. We would subordinate the $1 million in Panama to guarantee the American loan, but they knew what they were doing. It wasn’t like they didn’t have an inkling what the purpose was.
Senator Kerry: Money speaks.
Mr. Rodriguez: Marvelously.
Milian Rodriguez also detailed how he would personally handle Noriega’s monthly payments, which, for whatever reason, tended to go to banks in France. In a typical month, Noriega would get $10 million. The Dutch “ABN bank,” he said, “was a favorite.”
Milian Rodriguez would also move money on behalf of American intelligence—for instance in support of the Contras.
Mr. Rodriguez: I had the contact man who supplied me with the needs for cash, the locations and the agents that they were going to use to receive the money. When contact was made with me, I would deliver on it, any country, any place.
Senator D’Amato: Mr. Chairman, if I might just ask at this point, Milan, were the people who received this money aware of the fact that this was drug money, the proceeds from drug money?
Mr. Rodriguez: Let’s put it like this, Senator D’Amato. The Contra peasant in the field did not, but the men who made the contact with me did. At that time I was under indictment. I mean I was red hot, and it was surprising to me to be contacted.
By 1988, Milian Rodriguez says, the cartel had “a very diversified portfolio” of real estate, CDs, stocks and bonds in the United States. He would routinely purchase certificates of deposit in $100 million increments. Milian Rodriguez joined boards, for instance of the Ponce de Leon Savings and Loan.
Milian Rodriguez says that by 1983 he had delivered the cartel a fortune in clean U.S. assets worth $11 billion. For reference, in 1983, the richest person on earth had $1.2 billion, according to Forbes. In 1983, an NBA team sold for $17 million. So that’s almost ten times the money of the richest person on earth, or 750 times the cost of an NBA team, reportedly invested with the help of major banks in a totally legal U.S. portfolio.
Where is that money now? Who has that money?
Milian Rodriguez was climbing into his Lear Jet in Fort Lauderdale when he was arrested, with $5.4 million in cash, in 1983. (He says Noriega betrayed him.) The cartel quickly replaced him with someone, he says, from Harvard Law School.
“Everybody likes to believe that the cartel members look like the guys on Miami Vice: They all stick drugs up their nose and they all dress extravagantly,” he says. “They’re all college educated, all reasonably sharp, all extremely wealthy and influential. You know, it’s something to be feared.”
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