On June 23, 2021, the Department of Justice unsealed a criminal complaint and affidavit filed in the Southern District of Florida that alleges a vast scheme to launder money through illegal gold mining. The DOJ charged Jesus Gabriel Rodriguez, Jr., the CEO and President of Transvalue, Inc., a South Florida-based armored car service, with one count of conspiring to commit money laundering. The affidavit attached to the complaint alleges that Rodriguez conspired with employees of a South Florida-based gold refining company to import thousands of kilograms of illicitly-sourced gold from Curacao worth millions of dollars, and then use his company’s fleet of armored trucks to thwart the anti-money laundering (“AML”) program of a U.S. precious metals refinery receiving the gold.
As we have blogged, gold is an especially effective medium for money laundering because it has universal and readily ascertainable value and is difficult to trace. Curacao, a Caribbean island with no gold mines, is commonly part of the route for gold illegally mined in, and smuggled out of, South America (including Venezuela) and Africa.
Gold and Money Laundering
As the affidavit explains, Miami has become a major international gold trading hub for both legal and illegal gold from Latin America. Illegal gold mining is a significant problem throughout Latin America and in the Andean region. For example, illegal mining has helped contribute to the destruction of large swaths of the rainforest. Illegal mining typically occurs in remote jungle areas and, as a result, is difficult to police and often controlled by organized crime and smuggled along the same routes as narcotics. Most of the gold imported to the U.S. enters through Miami International Airport (MIA) and multiple major gold refineries are based in South Florida.
The international gold trade is a common means for bad actors to launder the proceeds of illegal mining, narcotics, corruption, and other criminal proceeds. Criminals often trade illegal gold through illicit shell companies using false documents. The gold is typically smuggled through third-party countries, such as Curacao, and then sold to refineries in the U.S. in an effort to obscure the true source, ownership, and origin of gold from foreign and U.S. law enforcement. In a typical money laundering scheme involving gold, criminals receive wire transfers to the bank of their choice once the gold arrives at the refineries. On the surface, the payment appears to be for a legitimate gold-sale transaction, and not from any underlying criminal activity.
Rodriguez’s Alleged Scheme
The complaint against Rodriguez alleges that from about March 2015 to September 2016, he used his industry experience and contacts to facilitate the importation of thousands of kilograms of illicitly-sourced gold being flown into the U.S. from Curacao. The sellers of the gold were allegedly co-conspirators located in the Caribbean and the buyers were co-conspirators based in South Florida and Latin America. These buyers earned volume-based commissions by procuring gold for a U.S. precious metals refinery, NTR Metals (now Elemetals LLC).
In March 2017, NTR pled guilty to one felony for failing to maintain an adequate AML program that came to light during an ongoing probe into gold imports from South American countries. As part of its plea, NTR agreed to a $15 million fine and to cooperate with any ongoing investigations, including, it turns out, the investigation of Rodriguez.
According to the affidavit, Rodriguez purportedly helped his co-conspirators evade the AML policies and procedures of NTR Metals, including the refinery’s policy of not buying gold from Curacao. Specifically, Rodriguez allegedly used his company’s fleet of armored trucks to pick up gold shipments at MIA and transport them to several different South Florida gold refineries, including NTR. Customs records show that NTR imported over $3.6 billion dollars’ worth of gold from Latin America and the Caribbean from 2012 through 2016.
In one purported example of the scheme, NTR imported thousands of kilograms of gold between March 2015 and September 2016 that was worth more than $141 million into the U.S. from a company located in the Cayman Islands (“Company A”). In each instance, the same gold was reported to U.S. Customs as having originated in Curacao, and a few days later reported as having originated in the Cayman Islands. As part of the scheme, Company A flew gold from Curacao into MIA with couriers who hand-carried the gold on these flights. Upon arrival to MIA, a customs broker hired by Rodriguez cleared the gold through U.S. Customs. The courier would then immediately board another flight to the Cayman Islands and transport the gold there. Once the gold was in the Caymans, a co-conspirator notified Rodriguez when Company A’s shipment was going to be arriving back in Miami from the Caymans. Transvalue would then physically transport the gold from MIA to NTR when it arrived from the Caymans. If Transvalue sent an invoice to NTR for Company A’s shipments from Curacao to Miami, NTR employees would reach out to Rodriguez to change the invoices and thus conceal that the gold was coming from Curacao since NTR would not purchase gold from Curacao.
On a technical note, the criminal complaint and affidavit charge Rodriguez with conspiring to launder money, in violation of 18 U.S.C. § 1956(h) by transporting funds (cross-border movements of gold and wire transfers from the United States to the Cayman Islands) in and out of the United States, in order to promote an underlying specified unlawful activity (“SUA”), in violation of 18 U.S.C. § 1956(a)(2)(A). The alleged SUAs that the scheme was promoting were the entry of goods by means of false statements, in violation of 18 U.S.C. § 542, and entirely foreign offenses – specifically, violations of Curacao laws against illegal mining, false statements in customs declarations, and gold smuggling. As we have blogged, the government apparently does not have to prove under this “international” prong of the money laundering statute that the transported funds at issue previously were obtained through the SUA.
Rodriguez is currently out on bail and a preliminary hearing is scheduled for July 23, 2021. The investigation and prosecution of Rodriguez is part of “Operation Arch Stanton,” a partnership between federal, state and local law enforcement agencies to identify and prosecute the highest-level drug traffickers, money launderers, and other transnational criminal organizations.