How did you get into this business of being a narc?
Passic is a retired special agent for the DEA. He is a former
chief of financial investigations for DEA, specializing in money laundering
issues. He is currently a consultant for the National Drug Intelligence Center
in Pennsylvania. This is the edited transcript of an interview conducted in 2000.
I was working for the Salt Lake County sheriff's office, going to night school.
My dad was a sheriff in Utah, in a small community of 20,000 people. And there
was a drug problem. He went to the Bureau of Narcotics and Dangerous Drug
School in Phoenix, Arizona, to learn more about how you do undercover work, pay
informants, how you do something about drugs. He came back from that school,
and he said, "I think you ought to go into the Bureau of Narcotics." And I
said, "Why? Why the Bureau of Narcotics? I thought you wanted me to be an FBI
agent." And he said, "Take it from me, the drug problem's going to get a lot
bigger, because we are seeing it grow right here on a little local level. We
can't get a handle on it. And the federal government is going to have to jump
into this problem big time. I think you're going to see opportunities to work
overseas." You see, he knew my personality. He knew I was more fit to be a
narcotics agent . . . And two years later I'm sitting in a hotel in Istanbul
doing an undercover deal looking across at this Turkish trafficker--saying,
"You know, Dad, you're probably right." It wasn't the worst thing that
happened to me. It opened the doors to the overseas aspect of drug
enforcement. I spent 15 years over there. I had a chance to actually work on
some of the biggest drug trafficking organizations, in the world. The Turkish
part of the French Connection.
You were overseas in the French Connection and the Turks?
Yes. We were part of the Nixon drug war. We thought this was great. The BNDD
hired 1,600 agents in 1969 through 1971, and went from 400 to 2,000. And in
1971, part of Nixon's drug war was to shut off the French Connection. The
source of supply for the opium and morphine base was Turkey. So the game plan
was pretty simple back in those days. The Bureau of Narcotics and Dangerous
Drugs sat down. Working with the administration, they came up with a plan
where we would give $55 million in foreign aid to the Turkish government to
stop the production of opium--the raw product. Take the opium out of the
conduit into the French laboratories that fed New York's heroin problem. Part
of that deal was that they would allow undercover agents into Turkey to monitor
the success of that program. So I was one of five undercover guys that went to
Istanbul to basically buy morphine base, to see how much was available.
And it worked?
Yes, it sure did. It shut that system down. It changed the way the French
were involved in the business, the way the Turks were. It opened the door for
the Italians. They stepped in, and then round two was the "pizza connection."
But at least we pushed them around. Did we win the war? In my opinion, I
don't know. But I know we won the battles on many occasions. And to the DEA
agents that were out there, we didn't care if we won the war or not--as long as
we won the battle. We were personally challenged by a trafficking group that
would pop up someplace. The pizza connection--the Italians. Colombian
cartels. Cali. And we considered that battle to be the battle of the day, the
effort of the day. That was the most important thing to us. We didn't really
think long range down the road, as long as that trafficking group wasn't
operating after we were finished with it.
Thirty years ago, drug enforcement was pretty centralized. What happened,
When I came on the job, the only other federal agency that was involved was
Customs. Treasury guys. And we were pretty much like the same animal, pretty
aggressive. Therefore, there were a lot of arguments, disagreements, overlap.
In fact, the DEA was created in 1973 to end this intra-US-government drug war.
They figured the war of all wars was over. Customs, BNDD, and the other
peripheral intelligence agencies were brought together, so now we would have a
unified agency addressing the problem. . . .
Why is it so important to follow the money [in order to stop drug
It's the lifeblood of the organization. It's why they do this. They don't
sell drugs because they enjoy selling cocaine or producing speed or growing
marijuana. They do it for the profit motive. So if you want to cause
disruption, if you want to remove their ability to conduct business--and
today's trafficking groups do resemble major multi-national businesses in many
ways--you got to go after the money. We learned that early on in 1989, 1990,
when we first plugged into the Medellin cartel's bank accounts, and to the
Escobar and Gacha accounts. In the first instance, we seized over $100 million
of Gacha's money. He and Escobar had no idea how we were doing it. They
panicked. They assumed that we had informants inside the organization. There
was a cleansing.
There was in-fighting, distrust. In this atmosphere of not being able to trust
each other, the cash flow dried up almost immediately. Escobar was a
billionaire in assets and land holdings in Colombia--Gacha, too. These guys
were actually cash-poor for about a three-week period. Gacha was participating
in a load of 200 keys of coke--which was nothing for this guy--on the north
coast of Colombia. He was spotted by a Colombian police informant who
identified him, and let DEA and the Colombian police know about it. He and six
of his associates were killed in a shootout with the police, trying to put a
load of dope on a boat. The only reason he was out of his safe haven was
because of the financial stress that took place during those seizures.
So we at the DEA headquarters at the time took a step back and said, "Maybe if
we want to go after the Colombian big boys, the approach would be the money
side of the house." Twenty tons of coke in California or fifteen tons in
Mexico--it didn't seem to cause a panic. They didn't seem to care. They
seemed to be able to produce more than we could seize obviously. But when we
would make a seizure on the money side, there was retribution--bloodletting,
mistrust. They were knocked off balance. I think this was the first time DEA
really decided to come up with an approach that went outside of DEA and
included FBI customs, IRS, and the intelligence community to launch an attack
on the financial side. It kind of encouraged us to open the doors or build
those bridges to those agencies and pull them in.
How important is this drug money, say, to the economy of Colombia?
Ironically, right now it hurts, I think, more than it helps. Initially, I
think the infusion of capital from any source is great. It creates jobs, buys
products. From a pure economic sense, an infusion of capital is good for any
country. But after a while, if it's on the dark side, what you create are
systems that are outside of the formal channel. You can't be taxed. You
destroy jobs. If it's cheaper to buy washing machines in Miami, or Aruba, or
Panama, by buying black market drug dollars, why do you want to by an appliance
produced in Colombia? You don't want to. The Colombian tobacco industry is
belly up. Five thousand jobs gone. Nobody buys Colombian cigarettes anymore.
They can buy black market American cigarettes a lot cheaper. There was the
realization that our drug money actually was hurting Colombia's economy, that
it was funding the extremist groups, the purchases of weapons and the other bad
things that go along with it. Colombia and the United States finally came to
the agreement two years ago to really do something about the drug money. It
was something that, five years ago, you really couldn't talk about without
really angering someone.
It's like the evolution of trafficking organizations that you've seen. Take a
look at Escobar. He starts out as a Robin Hood. Steals cars. Robs people.
All of a sudden, he gets a little bit of wealth. He becomes respectable, runs
for political office in Colombia. Builds soccer stadiums. All of a sudden,
now he's a respected person in this community. And then he wants to expand his
authority outside of Medellin. He tries to get involved in Colombian politics
in Bogota. There's resistance. The next thing, he's in an all-out war with
the government. And then you have the implosion. That's the last step of the
trafficking group, if you let it go long enough. Under the old system, we had
a boss who doesn't mind being a kingpin. People honored him and his stature in
trafficking. The last stage of that is implosion. They tend to kill
themselves--the competitiveness of it.
Isn't it helping US companies?
Indirectly, yes. We're selling more to Colombia. It's just reversed. The
trade figures have reversed over the last ten years. There used to be a
surplus in our favor with Colombia. We bought more coffee, flowers and
petroleum products than we sold them. But now it's just the opposite. We sell
them about $4 billion more in products than they sell us. This isn't just
directly, but through their conduits in Panama, and Aruba and Venezuela. So,
in some ways, we're getting some of our drug money at least back into our
economy. But that's a dilemma. We've got the Fortune 500 involved in our drug
What do you mean?
There was a hearing, about a year and a half ago, into Colombian drug money
laundering. An IRS Customs agent and myself were asked to be witnesses
during that hearing, and described the Colombian black market. Customs
provided a hooded witness who was a money launderer in New York. She described
how she laundered money and how the banks had provided her with the ability to
do it over the Internet in an e-mail system. She could just do it at
home--transfer money. They asked her, "Where did you send your drug money?"
And she rattled off basically the Fortune 500. It started from A and went
through Z. "You sent it to all of these American companies?" "Yes. That's
where they told me to send it." It was kind of a tough pill for them to
swallow at the time, because they didn't understand it. It was like, "How
could she make these allegations that we're laundering drug money?" And it
was, "You're not laundering drug money, guys. Your companies are selling
products to people--to distributors, to wholesalers--that accept drug money.
In other words, you got washers and dryers. You sell to Bob's Washer and Dryer
in Miami. If you noticed last year, his sales went up from 50 to 5,000 units.
Well, those washers and dryers didn't stay in Miami. They were smuggled into
Colombia. And Bob--if you go take a look at his books--Bob was paid in $10
million in cash, and third-party checks from a lot of transfers from people who
weren't his customers. I hate to tell you this, but you do have a
responsibility to help. You can't just say, "Hey, we're not laundering the
money. We're selling the products. And we're getting paid in dollars. What's
bad about that?"" Nothing's bad about that unless it facilitates drug money
So when I say "Fortune 500," I just use that term loosely. But in essence, any
company that sells large amounts of their product into the Latin American
market and receives payment from third-party instruments is receiving drug
There was a time, 30 years ago, when they didn't need to launder their
money. How have things changed? When did they start having to go through this
kind of process?
In my first coke case in Colorado, we were buying ounces in Denver. Then we
bought our way up the chain source of supply to Los Angeles. We got a kilo.
Then we rolled him, and one of the guys ended up going down to Peru to buy five
kilos. Colombia wasn't even involved in the cocaine business--the north
Colombians were your marijuana traffickers back in the mid-1970s. . . . Then
they began to see how much cocaine was worth, how valuable it was, and what
Americans were willing to pay for it. Then Colombia started sending up a kilo
or two within their marijuana loads. In fact, they were forcing cocaine down
the throats of their distributors. In Miami, if you picked up 100 keys of
marijuana, you had to take a key of coke. And they said, "Move the coke or you
can't come back and buy more marijuana."
So this distribution system that was set up to distribute marijuana was using
an economic principle back in the late 1970s, early 1980s. They've got the
distribution system. Throw the new product line in there. And then force the
buyer--your customer--to buy the new product, or you can't come back and get
more marijuana. And it worked. It spread cocaine. And finally, it was
interesting because the Cali cartel actually had the connections to Bolivia and
Peru. Medellin was buying their cocaine from Cali to begin with, because they
were closer to the source. It was only after Medellin decided that there's so
much money to be made in the coke side of the business that Escobar, Gacha ,
and the Ochoas decided to move into coke. The problem they had was that
Cali, at that time, actually controlled the main conduit into New York, and
that was what Medellin needed. They needed to have the smuggling vehicle.
Then crack comes in. In the end, who made money from crack?
The Colombians made the most money. There were organizations in New York and
Washington where you saw local traffickers become very wealthy. But they were
vulnerable. They didn't stay around for a long time--maybe a couple of years.
. . . The Colombians learned that, with our crack epidemic, the proceeds went
up. With the proceeds going up, the interest in the wholesale market became
But was crack developed as part of that strategy of retraction in developing
this other market?
No. I think crack was just market-driven. It was easy to ingest. A lot of
the yuppies were having problems with their noses falling off. And it was
like, maybe this is something that isn't quite as dangerous. But it sure was
just as addictive, if not more addictive. All of a sudden, boom, the market
spiked. The profits spiked, and it grew. We saw the organizations grow. We
saw their wealth grow as a result of it.
So the Colombians made more money because a lot more powdered cocaine was
being sold in the States?
Yes. In some ways, it was actually easier for them. On their airdrops, a
brick of cocaine lost value if it was broken up. If it was in any way
fractured, instead of bringing $20,000 in New York, you could only get $15,000.
Crack is basically cocaine base. It was a powder. So you could actually
throw kilos of powder in the gunnysack out the back of airplane. It didn't
matter if it got tossed around or broken up. So as far as being able to
smuggle, it was easier for them, and the profits were still just as high, if
How important has forfeiture been as a tool in this war?
It's getting bad. When I first started in 1971, we had the only forfeiture
laws on the books. If a local police officer had a drug case and wanted to
seize and forfeit a car--back then basically, that's all it was. Cars. To get
money, we had to take it through the federal system, and then we would give it
back to them. What we gained through that was a summary of the case. Who was
the bad guy? How did he work? Who'd he buy from? In the mid-1980s, when
asset forfeiture really took off, it became competitive. Then you had
law enforcement groups that were basically focusing on the asset more than the
trafficker or the dope. The asset was something that they could roll back into
their efforts, and they didn't need to use the federal government. We didn't
have to--DEA wasn't the repository or magnet that it had been back in 1973.
So, in one way, it was good, because more people were brought on line to fight
cocaine trafficking. They were self-funded. The taxpayer didn't have to pay
for the effort. The downside was that we lost that ability to get that
intelligence in the one system, to where we could have a strategic overview of
how the bad guy was operating outside the country. You had to go out and you
had to re-establish lines that, before, were natural. They would come into
your office and share that with you.
How dependent have some of the law enforcement groups become on the money
and assets from those forfeitures?
Some are self-funded--they're totally dependent on the assets. That's not
necessarily bad. Once again, the taxpayers aren't paying for it, but the bad
guy's paying for it. But that shouldn't be the primary reason that you're
involved in the process. In some ways, we developed an approach to the
Colombians that was almost like a system of taxation, as a multi-billion-dollar
industry that was thriving. And we were able to tax it by taking assets away
from it, which we would roll back into the law enforcement effort. But the
system still survived.
I think that caused the US government to look at, "Well, what are we doing
about the system? We're having successes. We're winning battles left and
right. We're making record seizures. We're having disruptions. We're filling
the jails. But the system's still intact. Why don't we come up with a
systematic approach to take that down and stop it? To totally incapacitate its
ability to transfer funds out of the US, instead of just taking what we can
from it. Let's see if we can find the neck and strangle it."
And that's what I think you've seen evolve just in the last couple of years.
You've seen Treasury and Justice actually sit down and say, "We want to take on
the system. We want the agencies to recognize that the system of money
laundering itself in Colombia. The integration of the drug monies with US
commerce needs to be tackled. We need to stop it. We need to shut it down.
What we called success in the past--grabbing a billion dollars from it--they
were great battles, and they were successful battles. And sometimes they were
fought at great costs by DEA guys that gave their lives for that. But we owe
them more--we need to stop the system. We need to find out what makes it
operate." . . . I'm not saying we need to shut down international commerce.
I'm just saying people who trade in commerce and accept drug money have got to
stop doing it, flat out.
In the last few weeks, we talked to a few traffickers in prison in Colombia.
They said that money laundering was not something they even thought about in
the early days.
No. They didn't even know what the laws were. In the late 1970s and early
1980s, when the Colombians actually started moving in the coke market, we
started seeing larger deposits of cash by individual Colombians at the bank.
There were more frequent reports of Colombians just marching into banks. In
fact, south Florida real estate spiked, I think they estimated about five
percent, because Colombians were buying property in south Florida, villas,
racehorses--anything of value. The money was just flying into south Florida.
And there were no laws regulating how much they could deposit and what they
could buy. But then the Treasury laws kicked in. The Bank Secrecy Act and
other restrictions on how much cash you could put into banks, and the reporting
requirements kicked in. Then we started the evolution of no more marching down
to the corner bank and dumping a million, two million dollars in the system.
That stopped. You don't have that anymore. Cash deposits are just about
non-existent... . .
How much better off are we in the overall war on drugs, now that we have
more accurate investigations with money?
Major organizations are not as big as they used to be. You don't have a group
in Colombia that actually can rewrite a constitution or influence a
presidential election--or basically hold hostage an entire government process.
You had that back in 1990, 1991, 1992. But now the money flow into the
political system was exposed, the dangers of it were exposed. Not just what
DEA did but what the other agencies did, and what the Colombians did--bringing
that out into the sunlight and exposing it. And the news media played a
tremendous role in throwing some sunlight on what impact drug money has on a
democracy, on the way a government works. We've all played a role in it. I
think we've all realized that there needs to be a continued focus on the money
side of a dope business if you want to take on the big guys.
A US taxpayer could ask, "Why spend all this money if all we're winning is
battles, and not the war?"
I agree with them. A DEA agent's job was pretty simple. The taxpayer paid me
to do my job in taking out the criminal. The bigger the criminal, the more
challenging it was, the harder it was, but the more gratifying in the end. But
I think that we all kind of mature in the process of that. At the end of it,
we ask ourselves those questions. We still have a system intact today. We
have a problem that's grown in many ways. Maybe we should use some of our
energies and resources, like some of the retired guys out of the law
enforcement agencies. Maybe we need to sit down and brainstorm, kick this
around, and come up with some new ideas. The law enforcement guys were always
looked at as the knuckle-draggers who go out and lock up the guy in jail, and
take his dope and money away. But some of the more creative ideas I think that
I've seen in my career in the government come from just the rank-and-file
agents who came up with an idea. The bad guy is a challenge. But I think I'm
better than he is, right? If I put my best creative ideas to task, I can take
Who won the drug war?
I don't think the war is over yet. But if we back off of it and say, "We lost.
We got our butts kicked," . . . that affects our chances of success down the
road. That's why I don't like to measure it as won or lost. I like to measure
it as, "Am I still engaged? Are we still engaged? Have we still got the
resolve to do something about it?" And that's why I say we're winning, because
we haven't thrown up the flag yet. When the flag goes up, then I guess you can
decide who wins or loses. . . .
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