Moving the dollars

A truck loaded with 10 illegal immigrants is worth about $25,000 to a human smuggling organization. A successful operation can move three or four truckloads of immigrants from the Mexican border to the Valley every day.

A drop house with 50 immigrants locked inside represents about $125,000 worth of cargo. A midlevel manager in a human smuggling organization might operate three or four drop houses simultaneously.

With numbers like those, it doesn't take long to add up to the estimated $2.5 billion smugglers generate annually by moving human cargo through Arizona. That figure, which comes from court records, only counts the upfront costs to the immigrants, which typically run about $2,500 a head.

So much cash is generated by human smugglers that one of the toughest parts of running their business is moving the money, according to a series of police affidavits related to state efforts to seize the illicit profits.

Their preferred method of moving money is through legitimate wire services, such as Western Union. They also have created a cottage industry of subcontractors needed to keep their business of shipping human cargo going, according to court records.

Beyond prosecuting hundreds of people involved in human smuggling rings on criminal charges, police and prosecutors are going after the money generated by the criminal organizations.

The Arizona Financial Crimes Task Force, made up of agents from federal, state and local agencies, has seized about $17 million in wire transfers believed to be linked to the human smuggling trade since the force was created in 2000. The task force has also brought criminal charges against the owners and employees of several car dealerships and travel agencies that, according to the indictments, supplied smugglers with vehicles and airline tickets to move the migrants through Arizona.

"What you have is a situation where there is a great deal of money available and the competition becomes more fierce, and that leads to greater levels of sophistication," said Mesa police Chief George Gascón. "Anybody that thinks that we in policing are really going to be able to put a dent in this whole thing is not understanding the economic forces at work."

Some of the seizures made by the task force are being challenged in a federal court case, which alleges state prosecutors have grabbed millions of dollars in legitimate transactions from innocent people trying to pay their bills or send cash to family members.

Matthew Piers, a Chicago lawyer who filed a federal lawsuit in 2006 on behalf of several people whose money transfers were impounded, said hundreds of such cases have been documented by the Illinois Coalition for Immigrant and Refugee Rights.

"We fully acknowledge that human smuggling and drug smuggling on the Mexico-Arizona border is a very serious problem well worth the attention of law enforcement," Piers said. "Our concern is how you do it and whether innocent people are being injured in the process. We have little doubt that is happening."

MONEY MEN

Smuggling fees are due when immigrants arrive at a drop house, a place in the Valley where those who just crossed the border are temporarily stashed. The drop house operator will telephone the migrant's sponsor, someone who has agreed to come up with the smuggling fee, with instructions on how to pay. Once the money is received, the immigrant is let go or moved to his or her final destination.

The sponsor is usually a family member who might live in another state or in the migrant's home country.

The method favored by smugglers is to use legitimate wire services such as Western Union and other companies that transfer cash across state lines and international borders, according to Daniel Kelly of the Arizona Department of Public Safety. Kelly is part of the financial crimes task force, made up of agents from DPS, the Phoenix Police Department, the Arizona Attorney General's Office and the U.S. Immigration and Customs Enforcement, or ICE.

Wire payments pose less risk than moving large bundles of cash, Kelly said in a series of court affidavits. They also make it more difficult to link individual smugglers with their criminal enterprise, said Kelly, who would not agree to an interview because of pending court cases.

As recently as five years ago, the human smugglers openly collected their fees by showing up at a local Western Union office or another wire service outlet and simply picking up the money, according to Kelly.

It was not unusual for an individual money man to collect $20,000 per day in wire transfers from dozens of people throughout the country, each of whom was sponsoring an illegal immigrant, according to Kelly.

Payments to a single collector sometimes reached $70,000 per day.

By 2003, the financial crimes task force had begun seizing some of the transfers under state money laundering and forfeiture statutes. Using data provided by Western Union, and interviews with the people sending the money, police identified certain patterns linking the payments to human smugglers, according to Kelly.

Most obvious was an individual collecting tens of thousands of dollars worth of payments from dozens of different people throughout the country, especially when the senders were in certain states known as favored destinations of illegal immigrants, Kelly said.

The smugglers adapted when police started blocking those transfers and seizing the payments.

Rather than having one of their own pick up the money directly, the smugglers started having the payments sent in the names of the immigrants owing the debt. A smuggler would drive a carload of immigrants to the money transmitter, have them pick up the payments in their names, and then collect the cash, according to court records.

That worked for a while. But police began staking out Western Union locations with high volumes of suspicious payments and following carloads of immigrants back to the drop houses where they were being kept.

In drop house raids, police often found "pollo lists," handwritten ledgers that show names, sponsors and amounts owed by each immigrant. The lists frequently include control numbers associated with Western Union payments, according to court records.

The books got their name because the smugglers refer to immigrant-clients as "pollos," Spanish for "chickens."

In 2006, wire transfers tied to human or drug smuggling into Arizona dropped by 90 percent because of the seizures, according to Kelly. But there was no indication human smuggling declined, meaning the industry had found a new way to move its money, he said.

MEXICAN CONNECTION

The latest tactic used by human smugglers is called "triangulation" by the financial crimes task force. Instead of sending the money directly to the drop house operators where the immigrants are being kept, the sponsors wire it directly to smugglers in northern Sonora.

When the payment is received in Mexico, the drop house operator is contacted by phone and the immigrant is released.

An analysis done in February 2006 showed that in a two-month period, about $28 million in wire transfers were sent from the United States to 201 Western Union stores in Sonora, Mexico. Eighteen Western Union stores located in prime human smuggling hubs accounted for about $19 million of those transfers, showing they had become the favored places for the smugglers to pick up the money they were owed, according to Kelly.

Three individuals picked up a total of about $375,000 in money transfers in Caborca, a small town about 60 miles south of the international border, during that two-month time frame, according to court records. Other stores that took in the bulk of the Western Union business in Sonora were located in Altar, Nogales, Agua Prieta and San Luis Rio Colorado.

When police interviewed the people sending the money, many admitted they were sponsors paying the smuggling debts of family or friends.

The bottom line, according to Kelly, is that while Arizona remains the top corridor for human smuggling, wire transfers to Sonora allow all payments to be made through transactions outside the state.

Western Union and other money transmitters have long cooperated with the state's efforts to identify and seize payments connected to human and drug smuggling in Arizona, said Sherry Johnson, a company spokeswoman. But the company balked when Attorney General Terry Goddard began demanding detailed records of every wire transfer of $300 or more from anywhere in the world into Sonora. Last year, the Arizona Court of Appeals sided with the company, concluding Goddard's request was too broad, in part because it demanded information on money transfers neither sent nor received in Arizona.

"Western Union supports the legitimate law enforcement needs of the state of Arizona," Johnson said. "But at a certain point, they were requesting information about customers that didn't touch the state of Arizona. We started hearing from customers that their funds had been seized and that they were having difficulty getting any kind of resolution to it."

The company argued in court documents that billions of dollars in legitimate money transfers are made from people in the United States to family members in Mexico. Known as remittances, those money transfers are Mexico's second leading source of foreign income, trailing only revenue from oil sales, according to studies by the World Bank cited by Western Union.

The most recent World Bank figures show about $25 billion per year in remittances go into Mexico, with the biggest share coming from the United States.

Goddard's office argues legitimate remittances tend to be in smaller denominations, and should be scattered throughout Mexico rather than concentrated in the northern Sonoran region that is the hub of the smuggling industry.

With the money now going to Mexico, the challenge for human smugglers has become getting money into the United States so that people on the Arizona side of the operation can get paid, according to Goddard, whose office handles the legal work associated with the seizures of smuggling payments.

"We have made the process more difficult," Goddard said. "It was just dead easy in the past to simply walk into Western Union and pick up all the money you needed for all of the people that have been smuggled. Now you've got to get cash across the American border. And there are going to be misses in the process. There are going to be seizures and there is going to be disruption."

This is part three of a three part series.