San Diego Union Tribune

May 30, 2004 

Patriot Act provides new way to crack down on money smugglers


By JOE CANTLUPE
COPLEY NEWS SERVICE 

WASHINGTON Alvaro Obeso-Valenzuela's sleek silver 1997 Ford Thunderbird drew a crowd of agents when it arrived at the San Ysidro border crossing en route to Mexico. 

"Do you have anything to report over $10,000?" immigration agent Richard Krahn asked Obeso-Valenzuela, peering inside the spotless car. 

"Nada," Obeso-Valenzuela said, according to court records. 
Despite Obeso-Valenzuela's denials, investigators discovered $156,980 in cash in his trunk. 

By law, border crossers must report any cash in excess of $10,000.  Investigators say smugglers like Obeso-Valenzuela have a high success rate of smuggling money much of it drug money into Mexico. 

But the officials expect a little-known section of the Patriot Act to help them battle money smuggling. 

"People have been smuggling a long time. It's been horribly frustrating," said Daniel Burke, supervisory special agent for the San Diego financial task force under Immigration and Customs Enforcement. "This is a step in the right direction to combat money laundering." 

Until recently, anyone who transported $10,000 or more into or out of the United States who failed to file the proper paperwork wasn't necessarily considered a smuggler.  The violation was simply an infraction of a reporting requirement, which
resulted in administrative fines. 

Under the new Patriot Act, however, authorities are empowered to file tough criminal smuggling charges against suspected money launderers. They also are allowed to confiscate the full amount of cash seized from people who fail to properly document money exceeding $10,000. 

Previously, authorities could seize only about 15 percent of the smuggled funds in administrative actions. The bulk shipment of money is one of the most frequently used methods of money launderers. 

Drug proceeds are collected and stored at stash houses before being taken out of the country. 

"Smuggling currency out of the country is relatively easy," said a 1994 report by the General Accounting Office, one of Congress' investigative arms. That assessment is still accurate today, officials said. 

Last year, the government seized $700,000 in cash hidden in vehicles headed from San Diego to Mexico. 

While the Border Patrol conducts routine inspections of vehicles heading into the U.S., officials concede that vehicles heading into Mexico are checked less frequently. 

"There isn't a formalized inspection process of vehicles when they are exiting the U.S.," said Lauren Mack, spokeswoman for Immigration and Customs Enforcement in San Diego. 

"There's the feeling of a greater threat to what comes into the country in the post 9/11 world," she said. "That doesn't mean we don't keep our eye on things going south." 

Since 1998, vehicles entering the U.S. declared transporting $29.1 million in cash, but only $1.1 million was reported for southbound vehicles, according to Department of Homeland Security records. 

Those numbers alone told a story for investigators: A lot more has to be done. 

"We haven't really addressed the vehicle inspections southbound," agent Krahn said. With the Patriot Act, approved by Congress in October 2001, Krahn said he believes there will be many more southbound operations. 

Since Obeso-Valenzuela's arrest nearly a year ago, there have been at least three similar investigations, Mack said. 

San Diego officials learned of Obeso-Valenzuela's plan after Los Angeles authorities monitored him on a wiretap. The Obeso-Valenzuela investigation represented the first time that authorities in San Diego used the smuggling charges included in the Patriot Act, officials said. 

Obeso-Valenzuela is scheduled for sentencing on bulk smuggling, false statements and other charges. He faces a possible prison term of five years or more. 

Obeso-Valenzuela was once deported for illegally crossing into the United States and is also charged with illegal re-entry into this country.

He also has a prior conviction on drug-related charges. 

"With the new provisions in the Patriot Act, we can now impose stricter penalties against criminals who have exploited the system," Mack said.