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The flood of money began with drug sales in at least 15 states and ended up in bank accounts in Mexico, according to documents filed in U.S. District Court in Tucson. Prosecutors say the scheme was made possible by a corrupt bank manager in Rio Rico and at least 18 people recruited to open 89 fraudulent bank accounts.

Enrique Monarque Orozco pleaded guilty to helping orchestrate the scheme from January 2017 to April 2019, including by sitting next to the owners of the fraudulent bank accounts as they opened the accounts, handing them cash to deposit, and telling them where to wire the money, according to court documents filed Nov. 2.

Nearly all the deposits to these “funnel accounts� were less than $10,000, the threshold for alerting federal regulators, according to court documents.

Federal prosecutors say the conspiracy was aided by Carlos Vasquez, who was the manager of the Wells Fargo branch in Rio Rico while the alleged money laundering occurred. Vasquez was indicted in September 2019 and pleaded not guilty to federal bank fraud charges.

Money wired to Mexico

When Monarque or a “handler,� as prosecutors called them, arrived at the bank with a new recruit, Vasquez would escort them to a desk to open an account, according to court documents. Vasquez then gave the account information and bank cards to the handler and told them how to evade detection. He wired money to accounts in Mexico on 48 occasions, prosecutors said.

One of the alleged handlers, Francisco Sanchez Moreno, was accused of recruiting people, many of whom were citizens of Mexico, to open accounts. Those accounts would then receive “large incoming cash deposits from various locations across the United States,� according to a March 13 criminal complaint.

Sanchez reportedly said he would pick up account owners in Nogales, Arizona, and take them to the Wells Fargo branch in Rio Rico. He said he was not paid and was not involved in transactions. Instead, Sanchez said he opened an account so he could send money to his cousin in Mexico. The money came from checks that were presigned by people he did not know, which he deposited into other people’s accounts.

Sanchez reportedly said the “accounts were either funded by drug traffickers or that his cousin, a construction worker, had been working very hard,� according to the complaint.

In many respects, the scheme was similar to other cases of laundering cash through banks in Arizona and elsewhere, including a human-smuggling conspiracy that moved more than $1 million from banks in 31 states to bank accounts in Arizona, as the ÃÛÌÒÓ°ÏñAV reported in January 2018.

Funnel accounts established tactic

In Buffalo, New York, a personal banker for Bank of America pleaded guilty in 2018 to opening 36 bank accounts to launder $8.4 million for drug traffickers in Mexico, mostly through about 1,100 cash deposits in various states, according to a Department of Justice news release.

A manager of a Wells Fargo branch in Harlingen, Texas, was indicted in July after federal prosecutors accused him of arranging withdrawals of drug proceeds from August 2016 to April 2018, according to documents filed in federal court in the Southern District of Texas.

As funnel accounts proliferated in recent years, several of the largest national banks changed their policies on cash deposits. In the Rio Rico scheme, a policy change at Wells Fargo prompted a change in how the money was laundered.

From early 2017 to May 2018, the scheme in Rio Rico involved deposits made in other states that were withdrawn in Rio Rico or wired directly to banks in Mexico.

During that period, Wells Fargo did not require depositors to identify themselves. Authorities were able to identify 12 depositors who previously faced drug-trafficking charges and five who were members of a Chicago street gang, according to court records.

But the Rio Rico conspiracy was forced to change tactics in May 2018 when Wells Fargo stopped allowing cash deposits by anyone other than the account holder, according to court documents.

Bank policy change hampers scheme

Wells Fargo changed its policy in 2018 to protect the “privacy and security of our customers’ accounts,� said Michael King, a spokesman for Wells Fargo.

To better protect those accounts, “we put in place a policy that prevents nonaccount owners from making cash deposits into consumer accounts,� King said. The change was not in response to a new regulation.

The bank’s decision prompted Monarque and his co-conspirators to start smuggling cash from Mexico to Rio Rico, where the money was then wired to bank accounts in Mexico. Monarque told Homeland Security Investigations special agents he bought dollars at currency exchange houses in Nogales, Sonora. He made about $10,000 to $15,000 annually to bring the dollars into the United States, have the funnel account owners deposit the cash, wire the money to banks in Mexico, and convert it to pesos.

A spokesman with the Financial Crimes Enforcement Network at the U.S. Treasury declined to comment. An Oct. 15 advisory from the agency said “policies of certain large national banks to restrict third-party cash deposits for private customer accounts seem to have lessened the use of funnel account activity.�

Monarque also faced charges in Santa Cruz County Superior Court, where he was sentenced in August to 2.5 years in state prison, the Nogales International reported. Monarque offered a tearful apology at a sentencing hearing and his lawyer described him as a 51-year-old father of three with no prior criminal offenses. He owned a car wash and hair salon in Nogales, Sonora, and maintained several properties there, the Nogales International reported.

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