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interview: mike wald

 

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Wald is a former FBI agent and is a commander at IMPACT, a South Florida police agency which tracks black peso and other money laundering crimes. IMPACT is a consortium of several South Florida police departments; the program is fully self-funded through money seizures from drug dealers and money launderers. This is the edited transcript of an interview conducted in 2000.

VIDEO: Follow the Money-A Cautionary Tale. Watch a video report on the controversial tactics Mike Wald's organization, IMPACT, employs to fight drugs.


...Could you explain what IMPACT is, what's its purpose, and why it was started?

South Florida IMPACT is a group of [twelve] law enforcement agencies... that was formed to combat drug money laundering in South Florida. ...

Now as I understand it this money which you believe to be illegal money or drug money [is seized]. What do you do with the money?

We seize drug money. We forfeit that drug money in courts. And then the drug money is used to further the activities of the task force [and] pay [its] bills so it doesn't become a taxpayer burden. The remaining money is used to fund other law enforcement type projects, and if there's any left, goes back to the various police departments who have to by statute use [it] for law enforcement purposes.

So it's kind of ironic that it's drug money funding law enforcement.

Yes, it's drug money funding law enforcement. That has been going on for a lot of years in the drug arena. There is a lot of money, a lot of property [that] has been seized over the years by state, local and federal agencies and put back into the war on drugs and other crime. ...

I know that the drug czar and Janet Reno have both said positive things about IMPACT and some people say it'll be a model for what is done nationwide by local communities in this area. Give me an idea of the record of the organization over the last six years, in terms of money seized, arrests, and where it's gone.

Since inception, South Florida IMPACT has either seized, been responsible for the seizure of, or been involved in the seizure of approximately 150 million dollars in drug currency. There have been approximately 500 or so arrests. There have been a large number of individuals deported through INS...and [IMPACT has seized] about 27,000 kilos of cocaine, which is an awful lot of drugs. That money has gone to agencies all over the United States...

Now, the operation depends on confidential informants. How do you like to describe them? Operatives?

Confidential informants, confidential sources. They are the mainstream of most proactive police work. And we could not operate without them. No one in the drug arena, no law enforcement agency, can work without sources. They are the lifeblood of our operation. ...

How are they paid?

When I arrived in South Florida in 1985 a kilo of cocaine wholesale was about $14,000 to $15,000. 15 years later, the cost of a cocaine kilo is approximately the same. They're paid on a percentage of what it is we are able to seize and successfully forfeit through court action. ... Your commission would be based on how directly your information led to enforcement. If we seized a lot of dope...and if your information led to that, we would pay you for it, depending... on how critical your information was. How directly did it lead to the seizure? With money, it's different. If you were one of our sources of information and you provided us information which directly, after investigation, led to a seizure--and then a successful forfeiture--you would receive fifteen percent of what we forfeited. ...

So these are not informants, then, like someone who's been caught in a criminal act and is working off their conviction in order to get a lesser sentence?

In most drug work informants who are "working off a beef"--which is the terminology used--they abound. In this business they do not. They're people who have very little, if anything, to do with drugs. They are strictly financial people involved in financial matters, who have the opportunity to determine situations, identify individuals, and give us information that leads to seizures of money and often drugs.

Now, I was told that you have contracts with these informants or operatives. It's not just a handshake thing that's going on?

We document all informants that we use in standard police procedure, which is identifying them, giving them rules and regulations, having them sign off on the conditions [under] which they operate. We do not empower them to do anything illegal. They are not employees...

And is it a one-to-one relationship between this agency and that informant? Does somebody have like a stable of informants? Is there a subcontract you go to who has informants?

...You develop them. You find people who you believe are in a position--they may not even know they're in a position--to provide you with information. They might not even know that the information they have access to is of value to you. So sometimes we find them and we develop informants.

Have you got an example of somebody you found?

... A businessman who would sell products and material to Colombia could tell the Colombian businessman that he'll take his payment in the form of U.S. dollars in cash on the streets of Miami. If indeed a businessman were to do that, the Colombian businessman who owes him a debt would jump at it because he can buy those dollars very cheaply in the form of cash drug dollars on the streets of Miami.

The individual who will deliver the cash to that businessman works for a Colombian-based drug money launderer. By receiving his payment in the form of cash dollars in Miami, it gives us an enforcement opportunity to identify who it is that drops that money. That may lead to all types of enforcement. And this man is a businessman. He's not a narcotrafficker. He's not a money launderer. He's a businessman.

So you might approach that businessman?

We might definitely approach that businessman. We might approach a business who sells to Colombia or to Venezuela or Ecuador and ask him if anybody has offered to pay him in cash. And if he accepts it we can identify who that individual is and then have a target to work on the street.

Let me back up for a second and get some basic definitions here. You mentioned Colombia. What are the main countries that are involved in this money brokering business?

In the black market dollar peso exchange it is primarily Colombia and then to some extent Venezuela, Ecuador and Panama...The biggest player in the black market dollar peso exchange is the United States.

The Mexicans don't avail themselves of this, even though they're heavily in the traffic. Why not?

Because you can utilize U.S. dollars in Mexico without fear of sticking out. It doesn't work that way in Colombia. A Colombian drug dealer has got to have pesos in Colombia. And what does he really have when he sells his drugs in the United States? He sells them for cash U.S. dollars. They accumulate in New York. They accumulate in Miami. They accumulate in other places. He really needs pesos in Colombia, but what does he have? Dollars in America. So he sells those dollars. He sells them to a Colombian money broker who will give him pesos for those dollars.

...

So you're a Colombian businessman and you want dollars. How does that interface with the drug industry?

... A Colombian drug lord...successfully gets his drugs into Miami we'll say. The drugs are sold for US cash. The drug dealer therefore has a large stash of U.S. cash sitting in Miami... It does him no good. He can't use it. He wants pesos in Colombia to avoid detection because you don't spend U.S. dollars in Colombia; you spend pesos. He sells that money to a Colombian purchaser who is a money launderer. He is a money broker. He sells it to him for about 1,200 pesos per dollar. That's a deep discount, because the exchange rate in the newspaper--if you look at it today--is going to be approximately 2,000 pesos per dollar.

Why would the drug dealer do that? Because he wants pesos in Colombia and his profit percentage is so high, he doesn't much care. He's gonna get 1,200 pesos per dollar. His investment is only about 300 pesos per dollar in the whole drug event. So he walks away with a pile of pesos delivered to him, right into his hand, in his home, in Colombia. He takes no risk. He no longer owns those drug dollars in Miami. He could care less if they're seized. He's made his profits. He's out of the equation.

Now you have a Colombian money launderer, who is a money broker, who owns this money sitting in Miami. The money is still in the hands of the doper's employee. It has to get from the doper's employee to the broker's employee. That's the vulnerability. That's the window we try to peer through, look through, see who's doing what, and make a seizure. Again, if we're good enough and we're lucky enough and we hit it just at the right time we can not only seize the funds--we can go right back to the dope. ...

Mexico's different, right?

Completely different. Mexico is a whole different ball game. The Mexicans get their drugs from the Colombians. Therefore, they have to pay the Colombians a percentage of their drug profits for the raw material that they distributed in the United States. That money enters the black market dollar peso exchange--but it does so within Mexico, from correspondent bank accounts back to the U.S. The rest of the cash--their end of it, their half of it--they can keep in the form of U.S. dollars, because U.S. dollars don't raise an eyebrow in Mexico. ...

Now...money is money. If it's no longer the drug dealer's money and he's conducted some transaction with some other individual who's not a drug trafficker, why is it drug money anymore?

Drugs are sold for money, you know, they're not sold for checks, they're not sold for credit card purchases, they're not paid for with anything other than U.S. cash, 99.9% of the time. That money is narco currency. It has narco character to it. Now, it may enter legitimate commerce. And there are people that say that once it enters legitimate commerce it therefore loses its narco character. And if it went to an innocent owner with plausible deniability--and I'm using a lot of catch words here, but those are legal type phrases in this genre--then possibly it has lost its narco character. But when it passes hands surreptitiously after two people play beeper tag in Miami for twenty-five minutes and meet in a Home Depot parking lot and one guys gives another guy a satchel full of a million dollars U.S. cash--that's still narco currency. There is nothing legitimate about that transaction. Nobody transacts business that way.

When you seize money like that, do people come and challenge you?

They often do. It's not the only way we seize money. We seize money from bank accounts as well. But this type of seizure that we're talking about--cash seizures on the street--often times you see this transaction, you stop them, and you question them. You make a legitimate probable cause stop for some infraction of some type. Or if they're not in automobiles or out on the street you can just go up to them and ask them. The law permits it...

Your target is the money?

Our target is any way we can disrupt the drug industry. We want the drugs and we want the money. All of us in this business here in Miami--and everybody here at IMPACT--have worked drug cases for years and seized a lot of drugs and locked up a lot of drug people. Untold metric tons of cocaine have been seized coming into the U.S.

When I arrived in, in South Florida in 1985 the cost of a kilo of cocaine wholesale was about $14,000 to $15,000. It is fifteen years later. The cost of a kilo of cocaine is approximately the same on a wholesale basis. Now, there are a lot of variables at play. But with all the druggers that we've sent to jail, all the cocaine we've seized, one would assume that the price would have gone way up. It's the same, okay? We have a much better shot...taking their profits than we do taking their drugs. This is a wide-open country. You can't protect the borders of this country against drug dealing. It's an impossibility...

I know there's been criticism in the sense that what you're really after--that law enforcement is becoming addicted to the money. It's easier to deal with, you can use it for your own purposes, and you've been diverted from the real object--which is the drugs.

Yes, we've heard that criticism, that the money is self-sustaining and that we're after the money now. However, you can't argue with 27,000 kilos of cocaine. This task force, which is an anti-drug money laundering task force, has seized more cocaine than the individual departments would have ever seized in a six-year period of time. So... a) we have proved that going after the money results in serious seizures of the drug, and b) yes, the money works very, very well because this task force doesn't cost any taxpayer anywhere in the country any money at all. We get no federal funds, no state funds, no local funds. It's all self-sustaining. And a lot of the money [that we've seized] has gone back into social programs...This money is all used for very worthwhile purposes. And yet we've still seized more drugs than we would have without the program. . . .

...The question's been raised--in order to get close to your targets, do you actually have to launder money for them?

On occasion we do launder money for the "bad guys"...Sometimes the only way to identify targets is to proactively take contracts and launder money for the Colombian brokers.

And explain that to me--take contracts? I'm not sure I understand.

Well, if a Colombian money broker has purchased the money from a drug dealer, the money sits in the U.S. He bought that money to sell it to a legitimate Colombian businessman to pay legitimate debts. Most of the debtors will not accept that money in the form of cash so he has to hire people, give out contracts to take that cash and get it into the U.S. banking system.

How do they do it?

Well, you get it in by structuring it in cash--making deposits under $10,000 using multiple accounts. You take cash and you buy money orders which reduces the volume of cash that you have. And then you put the money orders into the bank as if you were a business. You combine all that money in bank accounts and send it to one big account. And then you can do wire transfers off that bank account.

Once the money's into the banking system, you can manipulate it any way you like. Colombian money brokers have legions of employees in Miami and New York that do nothing but get drug money into U.S. banks. And that's a fact. We have documentary proof. We know it. We have identified over 10,000 bank accounts in New York and Miami that have been utilized to launder drug funds.

...Colombians and others will open bank accounts, allow others to use those bank accounts, for money laundering purposes and/or pay the percentage of it. It happens in Miami and New York every day. It's primarily a Miami/New York syndrome, although we have proof that it happens in Detroit, Chicago, Boston and a number of other places, and sometimes in California as well. ...

And then this money is used, as you said, to pay debts. But that's to buy commodities or facilitate trade? I mean, what is the money generally used for? Why does the businessman want it?

The vast majority of this drug cash is sold to businessmen in various formats--wire transfers, cash, checks, money orders, to pay legitimate debts in the U.S. And yes, this is a very positive event for the U.S. economy, especially the South Florida economy, because most of the businesses are here. The drug money laundering industry has not hurt commerce in the United States whatsoever. But we have to realize where this money originates. It's drug money and by allowing this to happen we facilitate the drug dealer. ...

You're a business in the United States. You get an order from somebody in Colombia, but you get paid by a third party. [How do you know if it's narco currency?]

You get paid through an account--either a wire transfer or a check, or series of checks. Let's say you sell a hundred widgets to a company in Colombia for $10,000 and you get $2,000 checks from five different bank accounts in Queens, New York. Is that not an awkward from of payment? Five checks from accounts with different names on them in Queens--and you're in Colombia? That's an awkward form of payment. Yes, it's a form of payment that no one questioned before. But I guarantee you that's narco currency.

But is it illegal for me to take that kind of money?

If you don't know any better and therefore you're an innocent owner of that money, you have plausible deniability. But [U.S. Customs] has published a wonderful document for businesses that describes the dollar peso exchange and says "If you're paid this way, you'd better be careful because it may well be--and probably is--narco currency." So if I were to walk into your widgets manufacturing facility and explain to you that a Colombian may pay you in an awkward form of payment that is derivative of narco currency and you say, "Screw it. I'm gonna take it anyway." Then there's a strong possibility someone will find the correct statute to use and seize your money. ...

So some of your critics say--and you know, these are federal law enforcement primarily, who are upset that there's a local law enforcement operation that's in the money laundering business--your work really doesn't affect the traffickers. They say that you don't really change the amount of drugs that are available and that really what you're doing is setting up just another self-perpetuating bureaucracy--a self-funding situation. You're out there looking for your budget all the time.

The federal agencies still do this same type of activity. They do. Nothing has changed. They still do it. They just have more controls on it now, but they do it. We took $150 million worth of drug proceeds out of circulation, out of the drug dealers, the money brokers, and that whole system that they have in place. We took those profits out of the system--converted into use by the American system, the American public, okay? And took 27,000 kilos of drugs off the street and arrested over 500 people, and deported a large number of people. ...

...I interviewed a DEA supervisor out in LA who said that...over the last twenty years of his thirty-year career, his people would always urge him to bust money...

Money's valuable because, yes, you can use it. Cocaine--you seize cocaine, you burn it. You destroy it. It's gone. You seize money--not only have you hurt them, you've taken their profits. They've done all their work. They've done everything they had to do to make their profit. They've made the profit and boom--you take it away.

In effect, you really piss them off. You cause disruption--major disruption. Everybody's profit is gone. Who owes who money? Now it's a real nightmare. And yes--the money is of value to American society. You put it right back into the system. You supplant tax money with it. ...

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