​Sinaloa Cartel's Latest Money Laundering Scheme Involved Turning Cash into Gold

By May Wilkerson 03/03/15

Drug trafficker Carlos Parra-Pedroza, aka Don Walt, could face 20 years in prison.

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Drug cartels are nothing if not resourceful. When European mega-bank HSBC was busted for laundering $881 million in drug money in 2012, Mexico’s Sinaloa cartel moved on to another scheme: trading their profits in for gold.

The scheme’s alleged ringleaders included a kingpin named Carlos Parra-Pedroza, also known as Don Walt or by his other alias, “Walt Disney.” He and 31 others have been charged with laundering more than $101 million in drug money, as part of what the U.S. Attorney in Chicago is calling a money-laundering organization (MLO).

The case highlights the bank’s immunity to the judicial system, the Daily Beast points out. Whereas HSBC issued a public apology and got off with a fine, the members of the MLO could face up to twenty years in prison for laundering one-eighth of that amount in cash.

In the MOL’s scheme, drug earnings were used to purchase 24k gold and gold jewelry, which was sent via Fed Ex to a refinery and melted down. The refinery then paid the gold’s price per ounce to the drug suppliers in Mexico.

A recording of Walt speaking to a confidential informant reveals some of the challenges he faced in running the scheme. For one, the lack of education among cartel members posed problems. “The bad thing is that these guys don’t even know the word ‘school,’ only know how to shoot,” Walt said.

He explained that the cartel was ruthless in its punishment of MLO members if any cash was seized, even if it wasn’t the members’ fault. And their punishments, in typical drug cartel fashion, were nothing to scoff at. “The reason why I’m scared is because then they’re going to cut our balls off without it being our fault,” said Walt. “They’re good at beating everyone up…And they’re good at saying, ‘It was you.’”

Walt cited an incident in which a courier was brutally coerced into taking the blame for a mishap that he didn’t cause: “I think they even cut his fingers off,” said Walt. “Even, I would’ve agreed.”

The HSBC, on the other hand, did not receive the same treatment from the cartel. “At last report, nobody at HSBC was missing any digits,” writes Michael Daly of The Daily Beast.

Also, the banking giant was able to conduct their illicit dealings more openly. The MLO had to keep everything undercover by using elaborate coding in their emails and messages. For example, “let’s go to the beach” was code for “make an appointment” and colors were used to signify different days of the week. Couriers used the unique serial number on a dollar bill to confirm their identity during a cash delivery.

Walt pleaded not guilty in Chicago federal court. He and his 31 co-defendants were arraigned and could spend 20 years behind bars. The bankers at HSBC faced zero jail time because, as the Daily Beast notes, the bank is “too big to jail.”

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May Wilkerson is a writer, comic and Managing Editor @someecards. Co-host of the podcast Crazy; In Bed w/alyssalimp. She is also the top Google result for "insufferable lunatic." Follow this insufferable lunatic on Twitter.

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