The case of a gold importer who raked in billions of dollars from illegal mines allegedly run by South American crime groups shows how the importer, when faced with a roadblock, adapted swiftly and continued apace.
Juan Pablo Granda, operations manager at NTR Metals, a metals-refining company based in Dallas, Texas, has been accused of helping to run a scheme through which his company's Miami branch purchased gold from illegal mines in Peru allegedly managed by criminal groups, thereby helping them to launder money. The story was first reported by Bloomberg, which took a close look at the revealing case file.
As Bloomberg noted, beginning around January 2013, Granda and other associates conspired to commit money laundering by sending billions of dollars to Latin America "with the intent to promote the carrying on of organized criminal activity, including illegal gold mining, gold smuggling and the entry of goods into the U.S. by false means and statements, and narcotics trafficking," Homeland Security Investigation (HSI) Special Agent Colberd Almeida wrote in an affidavit filed March 10 (see document below).
According to US customs import records cited in the case file, NTR started to buy gold in Peru in late 2012. The affidavit says that in 2013, NTR had declared an estimated $980 million in gold imports from the country. The figure is staggering, all the more so considering that in 2012 NTR had only imported $73 million, and gold imports from Peru were close to zero the year before.
But by the end of 2013, Peru stepped up its fight against gold smuggling, something InSight Crime noted in its coverage. In December that year, authorities seized gold destined in part to NTR at Lima's international airport. Controls and checks intensified as a result, leading to a massive decline of NTR's imports from Peru -- from an estimated $980 million in 2013 to only $79 million in 2014.
Nonetheless, illegal gold routes only took another path. Peruvian smugglers began moving illegally mined gold into neighboring countries, from which the minerals were sent to the United States. As figures from the affidavit show, after Peru's illegal gold crackdown, NTR imports from Ecuador and Bolivia grew by $485 million. At the same time, the US company imported gold from other countries in the region, most notably Colombia, as well as Chile, Guyana and the Caribbean.
SEE ALSO: Peru News and Profiles
In total, between 2012 and 2015, NTR imported over $3.6 billion dollars in gold from Latin America. Authorities believe Granda and his associates cut off competitors by offering quicker payments to costumers, and personally traveled to Peru and neighboring countries to meet with their sources of illegal gold.
Intercepted WhatsApp conversations show the defendants were well aware of the illegal nature of their business. In one telling exchange reported in Almeida's affidavit, Granda remarks: "I'm like Pablo [Escobar] coming to Ecuador to get the coke." The conversations also show the defendants bragging about the quantity of gold smuggled by their respective "mules," young men they hired to carry the illegally mined gold out of Peru.
In exchange for the illegal gold imports, Granda and others allegedly wired billions of dollars to their sources. Intercepted chats show the defendants were aware of the criminal ties of their costumers, and that some of them had links with drug trafficking.
Neither the affidavit nor the indictment filed on March 23 (see document below) gave any references as to the names of the individuals or specific criminal groups controlling the mines that allegedly supplied NTR.
Representatives from the Southern District of Florida, the US court in charge of the case, were contacted by InSight Crime but declined to comment on the investigations of Granda and his associates.
Granda was arrested on March 15 by US authorities in Miami. If found guilty, he faces up to 20 years in prison. NTR Metals, which fired Granda, has not been placed under investigation.
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Granda's case shows how quickly criminal distribution chains can adapt to changes in law enforcement. Instead of importing from Peru, where authorities had stepped up efforts to crack down on illegally-sourced gold, the importers simply moved their operations to neighboring countries. Authorities in the United States believe that it was the same Peruvian gold, just imported from a different country, and Granda's brash Whatsapp messages seem to bolster this argument.
To this end, the company also seemed to depend on local operators as well. Granda allegedly used the shell companies to export an estimated $47 million of illegal Peruvian gold between 2014 and 2015. Authorities also believe Peruvian middlemen helped Granda and his partners to obtain the documents required by customs authorities, and organize the shipments. Furthermore, one of the arrested middlemen said Granda had the help of Prosegur, a transportation company specializing in moving high value goods, allegedly carried the illegal gold to the storage points before the minerals were shipped outside the country. Prosegur has denied all ties with Granda and his associates.
Much of the success of these smuggling rings depends on the complicity of corrupted officials. Peruvian authorities believe that between 2013 and 2016, Granda exported illegal gold through four front companies registered at a notary owned by Francisco Villavicencio Cárdenas, a congressman and member of Fuerza Popular, a party led by Keiko Fujimori, daughter of former President Alberto Fujimori, reported La República.
Gold mining has long fed organized crime groups across Latin America, and the astonishing amount of gold smuggled from Latin America speaks to an increasing demand for the precious metal. According to a report by the World Gold Council, the global demand for gold has increased steadily for the past few years, reaching 4,309 tons in 2016. As legal mines cannot meet the market's needs, unlawful extraction sites controlled by criminal groups cover the shortages.
The percentage of illegally mined gold varies significantly across Latin America. In 2013, estimates from the Global Initiative against Transnational Organized Crime (GITOC) indicated that about 28 percent of all the gold extracted in Peru was illegal.
Illegal mining is tied to a panoply of other related criminal activities. A 2016 GITOC study highlighted several instances of sex trafficking in illegal mining areas across Peru. According to the report, an estimated 2,000 sex workers were working in the town of an illegal gold mining site known as Delta 1, in the Madre de Dios department. A staggering 60 percent of them were minors.
Another report by US non-profit Verité uncovered cases of forced labor in illegal gold mining in Madre de Dios. Young men were forced to work in extreme conditions and for no pay for six days, and would only be allowed to keep what they found on the seventh day, a dynamic that led to severe debt bondage.
SEE ALSO: Coverage of Gold
But illegal gold mining, in Peru as much as elsewhere across Latin America, is also deeply linked with the drug trade.
"Gold smuggling goes hand-in-hand with narcotics trafficking," Assistant US Attorney Frank Maderal was reported by Bloomberg as saying during a hearing on Granda's case.
Indeed, gold is an excellent means to launder the money derived from drug trafficking, because of its universal value and difficult traceability. A confidential source cited in Almeida's affidavit said he is aware of Peruvian drug traffickers receiving millions of dollars in the United States, and then smuggling the cash back to Peru to purchase illegally mined gold in the country. The minerals are then sold to refineries in the United States and elsewhere, and the criminals receive wire-payments in return.