October 03, 1990
Undercover Investigation Uncovers
WASHINGTON - Fifteen individuals, five automobile dealerships and two
insurance company agencies were charged with money laundering, cash
reporting and mail fraud violations in complaints unsealed today in
federal court in Manhattan.
Thirty one new cars valued at $880,700 also were seized as part
of an undercover investigation into the laundering of narcotics
money by car dealers and automobile insurers. They include six
Mercedes Benz, six Mazdas, six Nissans, seven Acuras, five Fords and
The arrests, searches, and seizures are the result of a joint
undercover investigation conducted by the Office of the U. S.
Attorney for the Southern District of New York, the Internal Revenue
Service and the Drug Enforcement Administration, assisted by the
United States Postal Inspection Service.
The investigation, code-named, "Operation Drug Wheels" revealed
that employees of the automobile dealerships, with the assistance of
the insurance company employees, were aiding narcotics dealers by
knowingly accepting drug profits in cash for the purchase of
automobiles and concealing the identity of the purchaser and the
cash. According to U.S. Attorney Otto Obermaier, this is the
largest investigation of its kind in the nation to date.
Four of the criminal complaints filed yesterday charged a
conspiracy to commit a money laundering offense, money laundering, a
conspiracy to violate the cash reporting requirements and a
violation of those requirements. These complaints each allege that
in the past convicted narcotics dealers purchased cars for cash from
the defendants and the defendants assisted in disguising the true
ownership of the vehicles -- dealers. The complaints each further
allege that the automobile dealers, some with the collaboration of
the insurance agencies, recently sold or attempted to sell a fleet
of new cars for cash to federal undercover agents posing as
narcotics dealers. In each instance, as the complaint alleges, the
undercover agents spoke openly of their drug trafficking and the
source of their cash.
Allegations are made that the dealers and insurance agents
assisted in concealing the true ownership of the automobiles in
order to protect the identity of the purported drug dealers, their
customers. Each of the four criminal complaints also alleges that a
search of the records maintained by the Department of the Treasury
revealed that the necessary cash receipt forms were almost never
The fifth complaint charges an automobile insurance agency and
two individuals with committing mail fraud offenses involving the
concealing of the true ownership of any of the automobiles purchased
and ordered in the undercover operation.
For further information, contact Mary Ellen Luthy of the U. S.
Attorney's office at (212)791-1937.
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