U.S. Seizes Over $31 Million In Connection to Sanchez-Paredes Family, Drug Trade

The Manhattan U.S. Attorney said Wednesday that it seized more than $31 million from nine bank accounts with links to a Peruvian family allegedly involved in drug trafficking and money laundering.

Manhattan U.S. Attorney Preet Bharara said seizure warrants were issued in September 2012 for the nine American bank accounts that were used by members of the Sanchez-Paredes family to launder proceeds from cocaine trafficking.

The Sanchez-Paredes family is well-known in Peru for its alleged role in the international drug trade. The family has been under investigation by Peruvian law enforcement authorities since the early 1980s, the IKN blog reported.

“While this allegedly notorious drug trafficking family may be beyond our reach, the proceeds from their decade’s long money laundering scheme are not,” said Bharara. “With this forfeiture complaint, we continue to take the profit out of crime by seizing $31 million that allegedly represents the proceeds from their international narco-trafficking.”

The Sanchez-Paredes family has repeatedly denied any involvement in drug trafficking.

Authorities believe the family has used mining companies, farms, real estate investments, transportation firms and others to launder profits from drug trafficking. The Attorney General’s office pointed to two mining companies owned by the family, CIA Minera Aurifera Santa Rosa SA, known as Comarsa, and CIA Minera San Simon, which are believed to be used in manufacturing cocaine.

It said that in 2007 Peruvian authorities confiscated 125 tons of calcium oxide, which is used in both gold mining and cocaine production. The calcium oxide was bought by Comarsa and San Simon, but authorities found that Comarsa’s calcium oxide purchases exceeded the amount required in gold mining.

“This suggests that Comarsa is not actually involved in the business of mining gold, but rather in the business of producing cocaine,” the Attorney General’s office said. “Other companies managed by the Sanchez-Paredes DTO [drug trafficking organization] appear to be nothing more than shell companies, created for the sole purpose of laundering drug money.”

The family’s San Simon mine was at the center of a violent feud between family members in 2011 over control of its profits. The feud pitted the father of the clan, Manuel Sanchez-Paredes, against five of his six children.

The dispute over the control of the gold mine, which began in 2010, resulted in a deadly gun battle between security guards of the rival family members in 2011 in the south coast city of Ica.

Peru is one of the world’s biggest producers of cocaine, along with Colombia and Bolivia.

Drug trafficking in Peru and the drug markets were covered in a 2005 U.S. Embassy report, released by Wikileaks:

Diplomatic Cable Background

Wikileaks
S E C R E T SECTION 01 OF 03 LIMA 001344

SIPDIS

NOFORN

E.O. 12958: DECL: 03/10/2030
TAGS: PINR SNAR PE EXIM
SUBJECT: (U) DRUG TRAFFICKING AND DRUG MARKETS IN PERU
(C-CN5-00090)

REF: A. SECSTATE 34029
¶B. LIMA 1171
¶C. 04 …

id: 29245
date: 3/21/2005 16:18
refid: 05LIMA1344
origin: Embassy Lima
classification: SECRET//NOFORN
destination: 03LIMA5174|04LIMA5755|05LIMA1171|05SECSTATE34029
header:
This record is a partial extract of the original cable. The full text of the original cable is not available.

—————– header ends —————-

S E C R E T SECTION 01 OF 03 LIMA 001344

SIPDIS

NOFORN

E.O. 12958: DECL: 03/10/2030
TAGS: PINR SNAR PE EXIM
SUBJECT: (U) DRUG TRAFFICKING AND DRUG MARKETS IN PERU
(C-CN5-00090)

REF: A. SECSTATE 34029
¶B. LIMA 1171
¶C. 04 LIMA 5755
¶D. 03 LIMA 5174

Classified By: Polcouns Alexander Margulies.  Reason:  1.4(c).

¶1.  (U)  The responses in this cable reference the questions
posed in Ref A.

¶A.  (S)  Describe cocaine trafficking organizations in Peru?
Do they typically specialize in one drug activity?  What is
their average size?  How are they structured?  Are they
vertically or horizontally integrated?

—  Until the mid-1990s, Peruvian and Colombian traffickers
generally shipped multi-ton quantities of cocaine base via
air directly from the jungle labs of Peru’s coca leaf source
zones to Colombia for conversion to cocaine HCL.  The
combination of air interdiction, law enforcement efforts, and
the enormous expansion of coca leaf production in Colombia
led to a reduction in coca leaf production in Peru.  The
successful air interdiction also prompted Peruvian
traffickers to begin processing cocaine base into cocaine HCL
and to develop new markets (Brazil).  Peruvian traffickers
also reached out to Mexican drug trafficking organizations to
bypass the Colombian intermediaries.  In recent years, the
success of Plan Colombia eradication has increased the demand
for Peruvian cocaine production.  Since the mid-1990s,
Mexican trafficking organizations have transported multi-ton
quantities of Peruvian cocaine to Mexico by maritime routes,
with the U.S. and other countries as final destinations.
Most of these organizations have been identified as Mexican
Consolidated Priority Organization Target List (CPOT)
operating independently of Colombian trafficking
organizations.

—  Cocaine trafficking organizations in Peru are
decentralized and operate in a horizontal manner.  They
appear to be primarily based on clan or family ties.
Narcotraffickers have their agents purchase coca leaf and
base from individual farmers (cocaleros) or cocalero clans.
We are seeing a greater production of cocaine base in small
Peruvian mom-and-pop operations.  Narcotrafficking groups
exist in a horizontal network, and traffickers seeking
product for export will often purchase cocaine HCL from other
groups in order to amass the desired quantity for shipment.
No one cocaine trafficking group dominates the trade from the
coca field to the export platform.

—  The Oscar Rodriguez Gomez organization in Ayacucho offers
a good example of how a clan narcotrafficking organization is
structured and operates.  Rodriguez has a history of
providing cocaine HCL and base from the Apurimac-Ene River
Valley (VRAE) region to Colombian and Ecuadoran buyers.  He
utilizes family members to conduct all important facets of
his operation from the acquisition of precursor chemicals to
the oversight of the laboratory used to convert cocaine base
into HCL, as well as transporting funds into Peru and
exporting the finished product out of the country.  Not all
of the people employed by Rodriguez are family members.  He
also retains an attorney to conduct the organization’s money
laundering activities through “straw” purchases of properties
and businesses.

—  Opium trafficking appears to be based on clan or
family-based organizations, with no dominant group.  Opium
poppy cultivation, the production of opium latex and
morphine, is primarily concentrated in the north-central part
of Peru, with some poppy cultivation also reported in the
Huallaga valley (a coca source zone).  There is no/no
evidence of a strong linkage between opium and cocaine
producers in Peru.

¶B.  (S)  Who are the major cocaine traffickers in Peru?  What
are their nationalities?  How large are their organizations?

—  Fernando Zevallos Gonzalez, who was named a a Drug
Kingpin last June, has long been the major drug
trafficker/money launderer of Peruvian nationality (RefD).
Other significant traffickers in the Peruvian context include
Oscar Rodriguez Gomez, Napoleon Zamora-Melgarejo
(Peruvian-based), Manuel Rivera-Niebla (Mexican-based), and
Miguel Arevalo-Ramirez (Peruvian, Mexican, U.S.-based).
Additional information related to investigations of these
traffickers should be sought from DEA HQ.  There do not
appear to be any large-scale trafficking organizations on the
scale of the Colombian cartels.  Rather there exists a
horizontal web of traffickers who deal with each other, and
who are available for recruitment by Mexican and Colombian
organizations to assemble cocaine HCL and cocaine base for
export.

¶C.  (S)  What role to Colombian and Mexican cocaine
traffickers play in Peru’s drug trade?  At what point do
Mexican and Colombian traffickers establish ownership over
Peruvian or Bolivian cocaine?  How often do they finance
cocaine loads up front?  How do they pay for the services of
Peruvian drug groups?

—  Colombian and Mexican cocaine traffickers create the
demand for cocaine HCL and base in Peru.  The Colombians
appear to be more willing to advance money for cocaine
deliveries, or to pay once the cocaine is delivered within
Peru, whilst the Mexicans seem to prefer to pay once the
cocaine is delivered to Mexico.  The arrest of several
Mexican traffickers in recent major drug busts indicates that
the Mexican organizations are involved in preparing the
cocaine for shipment from Peru to Mexico.

¶D.  (S)  How is cocaine base brokered in Peru?  Are there
cocaine base markets similar to in Colombia?

—  As described above, cocaine base is either produced by
the narcotrafficking organizations themselves, or
increasingly, is bought directly from cocaleros who establish
maceration pits on their farms.  Cocaine base and cocaine HCL
is commonly bought and sold between trafficking
organizations.  There are also anecdotal reports of cocaine
base being used as currency in coca growing areas.

¶E.  (S)  How much cocaine base is processed into finished
cocaine in Peru and how much is transported to other
countries for processing?  How much cocaine base is
transported directly to Mexico or Colombia for further
processing?

—  Whereas through the early 1990s Peru mostly exported
cocaine base to Colombia, in recent years traffickers began
producting cocaine HCL in Peru for export to Mexico and
Europe by maritime routes, and to Colombia, Bolivia and
Brazil by land and riverine routes.  The following chart of
Peruvian National Police seizures illustrates this shift:

—          Seizures of Cocaine HCL and Base in Metric Tons
2002     2003     2004     2005(Jan-March)

HCL             3.2      3.25     7.11     4.48

Base            8.4      3.76     5.76     0.5

The extent to which the cocaine HCL being exported requires
further processing is unknown at this time, but DEA will be
addressing this issue in its “Breakthrough Study,” which is
scheduled to commence in August.

¶F.  (S)  What trends characterize prices for cocaine base and
cocaine HCL in Peru?

—  While the price for cocaine base and HCL appears to be
rising recently, there are no steady long-term trends
concerning the price for cocaine base and cocaine HCL in
Peru.  The price depends upon a number of factors and can
vary region-by-region:  the price for coca leaf in Bolivia
and Peru; the price for precursor chemicals; the overall
demand for cocaine base and HCL in the particular region; law
enforcement efforts in the area; and the amount being
purchased at one time.  We have seen prices in regions vary
by up to 50 percent from one month to the next.  The general
price range in Peru is from $1000-1500 for a kilo of HCL.

¶G.  (S)  How do drug groups in Peru launder their funds?
Where do they keep or invest their illicit income?

—  The Zevallos organization laundered funds through its
now-defunct airline, Aero Continente.  That and other
narcotrafficking organizations also employ various other
means to launder funds, including bulk money smuggling; the
hundreds of poorly regulated casinos in Lima and other
Peruvian cities; and investment in tangible assets such as
properties, businesses and conveyances.  Peruvian coca
growers and traffickers occupy the low-profit
production/processing end of the business, while Mexicans and
Colombians reap most of the profits from the higher-value
transport and wholesaling of the drugs to/in the U.S., Europe
and Brazil.  Consequently, the profits earned by Peruvian
traffickers is often small enough to launder without danger
of it appearing on law enforcement agencies’ radar screens.
The de facto dollarization of Peru’s economy, as well as its
largely informal nature, also facilitates the laundering of
narcotrafficking proceeds.  (See Post’s INCSR submission on
Financial Crimes and Money Laundering in Ref C for additional
information on money laundering).
STRUBLE

=======================CABLE ENDS============================

 

This record is a partial extract of the original cable. The full text of the original cable is not available.

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