HomeNewsAnalysisAll Bark, No Bite: How US Bungled Case of 'Major' Money Launderer
All Bark, No Bite: How US Bungled Case of 'Major' Money Launderer

All Bark, No Bite: How US Bungled Case of 'Major' Money Launderer


US authorities alleged in 2016 that Nidal Waked and other members of his powerful and well-connected family in Panama were among “the world’s most significant drug money launderers and criminal facilitators," with clients ranging from Mexico’s Sinaloa Cartel to Colombia’s FARC rebels.

But within two years of his high-profile arrest, Nidal would secure a plea deal admitting to only the smallest of offenses and walk out of jail after serving just about two years.

Nidal's case puts a spotlight on the long arm of the United States government and the consequences that can come with accusations and special designations that don’t hold up in court. Did one of the world’s alleged top drug money launderers get off easy, or did the United States massively overstep without having much of a case at all?

The investigation into the Waked family’s alleged criminal enterprise started with an anonymous tip 10 years before Nidal was arrested in May 2016 at the international airport in Colombia’s capital, Bogotá. His arrest came on the heels of a US Treasury Department designation that accused him of leading the “Waked Money Laundering Organization" with his uncle, Abdul, and six other associates.

(Graphic c/o US Treasury Dept.)

The Treasury Department’s Office of Foreign Assets Control (OFAC) claimed that Nidal and Abdul directed “trade-based money laundering schemes” using “false commercial invoicing, bulk cash smuggling, and other money laundering methods to launder drug proceeds on behalf of multiple international drug traffickers and their organizations.” The laundering network comprised 68 companies, according to the Treasury Department. 

The Wakeds' business empire -- which extends from the banking, casino and construction sectors to hospitality, import and export, the media, real estate, retail and pharmaceuticals -- was immediately impacted. One business lost more than 5,000 employees alone. La Estrella de Panamá, the 167-year-old newspaper Abdul owned at the time, was on the brink of closing down after having to lay off thousands of employees and losing millions due to the sanctions. Abdul later transferred his shares in the media group that owned the paper to free it from OFAC’s restrictions.

The Wakeds wield tremendous influence in Panama. Abdul was among the founders of the Colón Free Trade Zone, one of the world’s largest and a long established money laundering hub. The Financial Action Task Force, an international money laundering watchdog group, once identified the free trade zone in Colón as a “central point of delivery for bulk cash proceeds of drugs.”

The family allegedly laundered dirty cash for a who's who of some of the drug world’s most notorious criminal groups for more than two decades starting in the mid-1980s.

In addition to the Sinaloa Cartel in Mexico and the Revolutionary Armed Forces of Colombia (Fuerzas Revolucionarias de Colombia -- FARC), according to a November 2016 court filing where OFAC summarized its record of evidence against the Waked's supposed laundering network, members of the group were “trusted money launderers” for a number of other drug mafias operating in Colombia, including the Medellín Cartel, the Urabeños, Oficina de Envigado and United Self-Defense Forces (Autodefensas Unidas de Colombia - AUC).

The Wakeds are “willing and able to launder narcotics and illicit proceeds on behalf of any organization as long as the commission is paid,” the Treasury Department alleged.

The Evidence

At first, it looked as though Nidal was going to be found guilty.

“Nidal Waked has a long history of money laundering on behalf of some of the world’s most ruthless and sophisticated drug trafficking and criminal networks,” the Drug Enforcement Administration’s (DEA) then-Deputy Administrator Jack Riley said in a news release at the time of his arrest.

At his bail hearing in January 2017, prosecutors said they had plenty of evidence against him and that he was a flight risk because of his wealth. And in most cases, those accused like Nidal plead guilty. In any given year, according to data from the US Federal Sentencing Commission, anywhere between 95 and 97 percent of those accused of federal crimes plead guilty. But through his lawyer, Nidal pleaded not guilty to the three charges he faced regarding an alleged money laundering conspiracy and bank fraud.

Prosecutor Frank Tamen said that his office had “confidential sources who will testify to knowledge about [Nidal’s] receipt of large sums of currency coming from Mexican traffickers” and “dealings with Venezuelans,” in which he “receives large amounts of money,” according to transcripts of the hearing.

Months later, in an April 2017 court filing, prosecutor Walter Norkin added they had recordings of two telephone intercepts from October 2014. Nidal, he said, is heard “discussing money laundering" with an associate identified only as Ramón. In the first call, Nidal allegedly talked about different options for transferring money to an unnamed entity in Venezuela. In the second, Nidal is apparently heard instructing one of his associates to “alter the amounts written on the transfer documents.”

The March 2015 criminal indictment filed in the Southern District of Florida, however, was much less detailed. Prosecutors accused Nidal of “fraud on a foreign bank” involving the “proceeds of specified unlawful activity.” There was no explicit mention of any links to international drug trafficking organizations or the laundering of criminal proceeds derived from cocaine sales.

In October 2016, a federal judge threw out the indictment against one of Nidal’s co-defendants, businessman Tamas Zafir. The US Attorney’s Office had taken too long to file the charges, the judge said. In the January 2017 bail hearing, Norman Moscowitz, Nidal’s lawyer at the time, argued that the case against Nidal should also be thrown out because of the government’s “failure to exercise due diligence.”

In October 2017, authorities secured a deal with Nidal just a few months after claiming they had incriminating recordings of him discussing money laundering. With time served, Nidal was out less than a year later in April 2018. In total, he spent about two years in jail, avoiding a possible 50-year sentence, the maximum penalty he faced if convicted on all charges.

SEE ALSO: Panama News and Profile

“Nidal made a pragmatic decision, taking a plea for the smallest of the offenses,” Yasser Williams, Nidal’s current lawyer, told InSight Crime.

In the October 2017 plea agreement, Nidal admitted to making fake transactions using falsified invoices in order to move funds -- ranging from about $22,000 to $550,000 -- from a bank in Panama and to another in Miami between 2000 and 2009. He fraudulently secured bank credit for one of his companies from two or more of his other companies regarding the purchase of electronic appliances that never existed. In exchange, prosecutors agreed to drop the other money laundering conspiracy and bank fraud charges, as well as the case against his companies, Star Textile Manufacturing and Vida Panama, which were also co-defendants in the case.

Any links to laundering drug money were never made clear, and prosecutors noted in the plea agreement that “no bank incurred any financial losses from these transactions and all the draws from the banks were repaid on time with interest.”

InSight Crime provided a series of questions via email to a representative of the US Treasury Department about the apparent disconnect between the allegations made against Nidal and the Waked family in the OFAC designation and the outcome of Nidal’s case, but he declined to comment. In an email, a press officer for the US Attorney’s Office in the Southern District of Florida, where Nidal’s case was heard, said prosecutors would not discuss the case or the office’s decision to come to a plea agreement. 

The Justice Department and DEA also declined to comment on InSight Crime’s questions regarding the evidence in Nidal’s case and the deal that was eventually brokered with him.

Before taking the case, Williams participated in a year-long forensic audit of Nidal’s companies covering 10 years. “I basically accepted to take the case based on the results of the forensic auditing,” Williams said. “If there was anything grey or dark in the audit, I would have stepped away, and I didn’t."

Nidal did not provide authorities with any information on his alleged criminal network as part of reaching his plea deal, according to Williams. The cases against the other co-defendants were dropped.

What Went Wrong?

The Justice Department, Treasury Department, OFAC and DEA often coordinate and exchange information and evidence on investigations that involve not only a criminal indictment but also a special OFAC designation, according to Mike Vigil, the DEA’s former chief of international operations who also worked undercover for a number of years in Colombia.

During such high-profile investigations, US agencies also routinely coordinate with their in-country counterparts. In Panama, the DEA has always had a close relationship with local authorities, according to Vigil. However, investigators in Panama don’t always get every detail from the Americans when the US government is leading the investigation and building the case. “[They] aren’t going to be told whether that case is strong or not as a safety net for the investigation," Vigil told InSight Crime.

Several Panamanian investigators and officials consulted by InSight Crime about the Waked investigation wouldn’t speak on the record, but they all told the same story: US officials said they had the evidence and the Panamanians went along with it.

The outcome of the case against Nidal suggests that the evidence laid out by the Justice Department, DEA and Treasury Department was weak. Based on his many years of experience investigating similar cases, Vigil said that prosecutors would never have cut a deal with a defendant if the case was that strong.

SEE ALSO: Coverage of Money Laundering

"I think the judge saw through those charges and that’s why he agreed to a plea deal and sentenced [Nidal] to such a short period of prison time,” he added.

One former prosecutor with the US Attorney's Office, who worked on several high-profile criminal indictments and had direct knowledge of the case, shared Vigil's assessment.

This doesn’t mean that Nidal and other members of the Waked family weren't involved in money laundering, but prosecutors seem to have fallen far short of backing up those assertions and instead made a deal to salvage the case, according to the former prosecutor with intimate knowledge of the case.

'Fighting A Ghost'

Despite Nidal's win in court, the OFAC designation wreaked havoc on the family, so both Nidal and Abdul have filed petitions to be removed from the OFAC list.

“The issue with OFAC and the designations is that you’re basically fighting a ghost,” Williams, Nidal’s lawyer, told InSight Crime.

Before that, the lawyer representing Nidal in 2017 likened OFAC sanctions to “a black box.”

To be sure, in describing the allegations against the family that warranted the special designation, the judge said in a 2018 opinion on Abdul’s appeal that the accusations were made “as if they were fact, but we have no way of evaluating their veracity -- they are wholly untested.”

Still, the judge denied Abdul's appeal arguing that OFAC had violated his due process by giving "insufficient post-deprivation notice" on the basis that it was a "single, artificially extreme argument" that was "unsupported by precedent." 

Essentially, the judge added, Abdul's argument for dismissal was too broad, and the judge ruled that he never "substantially challenged" the designation or asked for "more detail regarding the nature of the allegations."

“You’re put in a very precarious position even though you may not be guilty of money laundering or drug trafficking,” Vigil, who was not involved in this specific case but has decades of experience with similar cases, said about OFAC sanctions.

“Nidal Waked was not one of the world’s top money launderers,” Vigil added, ”not to the extent that the United States built him up to be. They indicated they had all this evidence and testimony and labeled him as the world’s greatest money launderer, but the evidence wasn’t nearly as strong as they put it out to be.”

Yet, while the criminal case has been resolved, Nidal and others with alleged links to the Waked Money Laundering Organization continue to face OFAC sanctions.

*InSight Crime investigator James Bargent contributed reporting to this article. Illustration by Juan José Restrepo, InSight Crime.

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