Despite numerous investigations against him, an Argentine aviation tycoon was able to exploit aircraft registration loopholes in the United States to help traffickers across Latin America source drug planes.
Frederico Machado, an Argentine businessman and owner of two Florida-based aviation companies, was arrested pursuant to an Interpol red alert on April 15 in Argentina’s Neuquén airport. Machado may soon be extradited to the United States, where he is accused of being part of a complex drug trafficking conspiracy.
On February 26, Machado was indicted, along with seven others, in the US District Court of Eastern Texas for the alleged purchase and illegal registration of aircraft under foreign corporations and individuals. The planes were used to traffic cocaine, according to a US Department of Justice press release.
Court documents allege that Machado used his Florida-based aviation company, South Aviation Inc., to purchase aircraft, which were illegally registered with the United States Federal Aviation Administration (FAA) by the Aircraft Guarantee Corporation (AGC), a company owned by two co-conspirators. The aircraft were then exported and sold in foreign countries, where FAA credentials reportedly make it less likely that planes will be inspected.
The AGC allegedly registered thousands of aircraft with the FAA in Onalaska – a town in eastern Texas without an airport.
Several illegally registered aircraft were exported to foreign countries and used by transnational organized criminal groups to smuggle large quantities of cocaine destined for the United States, according to the indictment. Proceeds from the subsequent drug sales were then transported to from the US to Mexico and used to buy more planes and cocaine.
Machado has allegedly functioned as an aircraft broker for drug smugglers since at least 2011 and has been implicated in high-profile money laundering cases in the US and Argentina, although his recent criminal ventures indicate that brokering aircraft was just the tip of the iceberg.
InSight Crime Analysis
Planes carrying drugs continue to be a favored smuggling method that authorities across the region have struggled to stop. These flights often land in remote locations and, if detected, the planes are often burned and the traffickers are long gone by the time authorities arrive.
The scale of Machado's organization reveals a relatively unexplored piece of this puzzle - namely, how traffickers get access to so many planes in the first place.
The aircraft purchased by Machado and illegally registered by ACG were explicitly used for drug smuggling across Latin America, according to the US indictment. Aircraft acquired by Machado have been seized transporting drugs in Colombia, Venezuela, Ecuador, Belize, Honduras, Guatemala and Mexico. Planes were also sold to a convicted drug trafficker in Sinaloa, Mexico. One was later seized in Belize carrying 2.3 tons of cocaine.
SEE ALSO: Argentina News and Profile
In the early 2010s, Machado’s name first appeared in connection to two high-profile scandals in Argentina: a drug trafficking case involving the sons of Argentina’s former Air Force commander José Juliá (1989-1993) and the “Route of the K-Money” (La ruta del dinero K) scandal. Aircraft involved in both cases – one used for drug smuggling between Argentina and Spain and another used to transport bulk sums of embezzled state funds – were linked to Machado’s company, South Aviation Inc.
Criminal charges against Machado in the US also accuse him and his co-conspirators of orchestrating a Ponzi scheme related to the acquisition of aircraft. According to the indictment, Machado recruited investors to purchase of aircraft that were dysfunctional or non-existent. Investors allegedly placed their funds in an escrow account managed by Machado’s co-conspirators, which he then used to fund distinct criminal ventures. When the sale of the aircraft did not materialize, Machado secured new investors to obtain purchase deposits that were used to refund previous investors.
“Investigators found millions of dollars being sent to Machado, who was funneling some of the money into mineral mines in Guatemala,” Ernesto González, a federal prosecutor in the case, told WFAA, a Texas-based news station.
Machado has been also linked to illegal mining in Guatemala, according to El Périodico. In January 2020, Guatemala’s congress accused Machado of being involved in illegal gold and silver mining in the eastern department of Chiquimula.
Guatemalan politicians who spoke to El Périodico said that Machado had financed the campaigns of various presidential candidates in Guatemala, including former president Jimmy Morales (2016 – 2020), to whom Machado apparently lent planes and his private helicopter, on multiple occasions. Sources also reported that Machado had repeatedly bragged about financing the campaigns of current President Alejandro Giammattei and former presidential candidate Sandra Torres.
On April 21, Guatemalan prosecutors opened an investigation into Machado's financing of political parties in the country.