Cracking the Swiss Connection

ZURICH, Switzerland —  Everything was in place to pick up seven American couriers arriving from New York on Swissair Flight 101.

A Mercedes-Benz minibus stood by outside the air terminal, its last two rows of seats removed to accommodate the expected 14 large Samsonite suitcases. The Swiss chauffeur, a trusted driver for the drug-trafficking Escobar family of Medellin, Colombia, waited at the wheel.

Inside, Julio and Sheila Nasser waited at the rendezvous point. The Nassers, of Barranquilla, Colombia, were two of the biggest drug traffickers in the world, but they also were among the least known--even to international police agencies.

Finally, six of the couriers emerged from the last security checkpoint. The seventh, the one they called “LeRoy,” was last seen being led away by uniformed Swiss customs officers. And they had his Samsonites.

Immediately, Julio rushed the other couriers and their 12 Samsonites to the minibus and fled. At the Hotel Zurich they stopped long enough to complete a new audit of the Samsonites’ contents and assess the LeRoy dilemma.

It was in the hotel suite, the chauffeur later told authorities, that he saw a flood of green. The Samsonites were filled with U.S. currency--much of it used bills, in denominations from fives to hundreds. LeRoy’s suitcases held $308,015. The rest, about $2 million.

A short time later, with the luggage back in the bus, the chauffeur drove Julio to the city’s financial district. At 2 p.m. the Mercedes pulled up to Bahnhofstrasse 45, the four-story gray-stone headquarters of Union Bank of Switzerland. A bank executive was waiting at the curb.

Josef Oberholzer, then the UBS vice president in charge of Latin American accounts, greeted Julio warmly and took the luggage. When Julio and the chauffeur returned after banking hours, Oberholzer still was there, waiting at the door with the empty suitcases and a deposit receipt.

With that exchange, the brazen cash transfer was almost complete. Deposit of LeRoy’s currency was delayed a few days. To the Nassers’ relief, the Swiss authorities were not concerned with the origins of the funds, but merely with the fact that LeRoy had failed to declare the money upon arrival. LeRoy spent two nights in jail and was fined $25,000.

The Samsonite deposits were among the initial installments in a massive shift of Nasser wealth to Switzerland from bank accounts and currency-storage sites in Florida, Panama and Colombia. During the next 18 months, about $50 million would be consolidated in the UBS-Zurich accounts of Julio and Sheila Nasser.

The Nassers were relying on Switzerland’s legendary bank-secrecy laws to put their money beyond the reach of U.S. or Colombian authorities. And for years, the strategy worked. After the first Samsonite deposits in 1979, their accounts grew to $200 million in the cloistered world of Swiss bankers.

Then the rules changed. A series of recently enacted Swiss laws criminalized money laundering by drug and arms smugglers and eased stringent secrecy rules. That allowed U.S. and Swiss authorities to launch criminal investigations into the Nassers. The result: the biggest drug-money seizure in history.

U.S.-Swiss Cooperation

Last March, a U.S. federal judge sentenced Sheila, 54, to 12 years in prison and ordered confiscation of the family’s Swiss wealth.

Julio, 55, still in Colombia, is a fugitive from eight U.S. indictments.

Sheila’s sentencing was the capstone of an investigation regarded as a landmark in U.S.-Swiss cooperation by officials in both countries.

Previously undisclosed investigative files from the federal case against Sheila in Miami show how the Nassers built their fortune and laundered billions of dollars while avoiding international notoriety and law enforcement.

The files, which include a series of signed confessions given to Swiss police by Sheila and others involved in the case, also contain wiretap transcripts, Swiss bank records, intelligence reports and surveillance documents.

The cooperation “should send shudders” through the money-laundering world, said a U.S. drug agent who credited the Swiss with making the historic seizure possible. And Swiss Atty. Gen. Carla del Ponte said bluntly: “You will see, this is only the beginning.”

Although the changes in secrecy laws generally were supported by the Swiss banking community, the Nasser case has shaken the Zurich financial world.

Now-dismissed UBS executive Oberholzer, 62, faces prosecution later this year. He is the most prominent member of the Zurich banking fraternity to be tried since the anti-money-laundering law was passed in 1990. His clientele included other alleged traffickers and the jailed brother of former Mexico President Carlos Salinas de Gortari.

Meanwhile, the Swiss Parliament is considering controversial legislation that would compel bankers to disclose information about suspicious accounts or depositors. Clearly, drug-trafficking profits still hidden in Swiss accounts have never been so insecure.

“Bankers are starting to ask customers to leave their banks,” said Zurich prosecutor Marc Ziegler, a specialist on money-laundering cases. “One problem is that there is still a lot of old drug money around. The bankers are trying to get rid of it. They don’t need these problems.”

How U.S. and Swiss authorities came to seize history’s biggest drug-money prize, and shake up the Swiss banking world as well, is a tale that also traces the rise and fall of an important, yet little-known, Colombian trafficking family.

*

Julio Cesar Nasser David and his wife, Sheila Miriam Arana Maria, both were born to Lebanese emigrants to Colombia who had built their wealth farming in northern Colombia. Their families gave them a combined wedding gift of $50,000 after they eloped in 1961.

The Nassers used the money to finance a successful coffee-smuggling network in the 1960s, and then, in the 1970s, shifted to the most lucrative of all black-market commodities--drugs. In the early years, they concentrated on the booming American marijuana market, and they began growing their own dope.

Julio kept constant vigil over his crops. At harvest time, to protect his investment, he pitched a tent in his field and slept among his plants. Such careful tending paid off. By the late 1970s, the Nassers were delivering an average of 20,000 pounds of marijuana every month to the American drug market aboard their own small fleet of trawlers and freighters--by far the dominant traffickers, U.S. drug agents now say.

U.S. officials also credit Julio with introducing a now-common method of making large dope deliveries. Big Nasser boats, sometimes carrying as much as 80 tons of baled marijuana, would offload to swarms of smaller, faster boats, typically off the Bahamas.

“Julio was the father of the mother ship,” said DEA agent Gary Wade.

He also was regarded in Barranquilla as the city’s richest man and “the lord of marijuana.”

But, by exercising close family control of the organization and avoiding violence, the Nassers remained virtually anonymous beyond their own region. Besides, U.S. agents were less interested in marijuana organizations than in the emerging and more violent cocaine cartels.

Cash From Drug Sales

The Nassers’ drug sales created vast amounts of bulky paper currency. The sheer logistics of moving it, banking it and keeping family control over it was staggering. They turned to in-laws, cousins and friends of relatives to help make deposits, convert cash to checks or transport currency.

One courier who later cooperated with federal narcotics investigators said he personally laundered more than $100 million for Julio and Sheila over several years.

At one point the Nassers tried to ease the cash-processing burden by buying a South Florida bank. “This bank was to launder marijuana drug money,” Sheila declared to Swiss investigators years later.

The purchase deal collapsed, however, when federal regulators swooped in to investigate prior and unrelated illegal banking practices. The couple lost $1.5 million and abandoned any plans to own a bank.

It was about that time, in the late 1970s, that the Nassers got another scare.

One of their cargo boats, the M/V Montezuma, was intercepted in the Caribbean with 58 tons of marijuana aboard. A longtime associate of Julio was arrested, the most serious breach of operational security the family business had ever experienced.

Suddenly there was concern about the safety of family assets everywhere. To protect those assets “from police and judicial investigations in Colombia and the U.S.,” Sheila later explained to investigators, the family turned to Switzerland.

*

Josef Oberholzer, from a small village at the opposite end of Lake Zurich, was only 20 when he took his first job at the staid old Union Bank of Switzerland.

He started as a securities department clerk, but twice left the bank--and Switzerland--for jobs in Tangier, Morocco, where he met his wife and learned Spanish. By the early 1970s, when he returned to UBS to stay, he was fluent in Spanish and called himself “Jose.”

Within five years, Oberholzer was in charge of the bank’s Latin American section, traveling the Spanish-speaking world in search of new business for UBS. None was more important than the Nasser account. He sealed the deal in a 30-minute meeting at the Nasser villa in Barranquilla in late 1978.

He said he had no idea that the couple were involved in drug trafficking--not even when the Samsonite couriers delivered suitcases filled with used currency.

“I never worried about the origins of the funds,” he told Swiss interrogators years later.

Oberholzer used every available device to further protect the Nasser assets in Switzerland. For example, he helped them set up a Lichtenstein corporation--the Solimar Foundation--as a front to further shield their already-secret links to numbered accounts.

In January 1979, with the Lichtenstein paperwork completed, the Nassers put their money in motion. From the U.S., Panama, Colombia and other countries, Nasser funds moved physically and electronically to Switzerland. A substantial amount was converted into stacks of $50,000 and $25,000 cashier’s checks drawn on a Fort Lauderdale, Fla., bank and made out to fictitious Germans named Fritz, Adolf and Herman, then delivered to Oberholzer in envelopes for deposit to the Nasser UBS accounts.

The entire transfer process--including wire transfers from Panama and the Samsonite deliveries from New York--was accomplished over several months. By mid-1980, the Solimar Foundation had $30 million on its books, and UBS Account No. 751.560 held $19.3 million. All of the nearly $50 million was secretly controlled by Julio and Sheila.

Oberholzer managed the funds with great skill, turning that initial $50 million into $60 million almost overnight with shrewd investments in gold bullion and American blue-chip stocks. By the mid-1980s, the Swiss accounts had grown to $80 million, thanks to Oberholzer, who had become a very good friend of the family.

The Nassers also owned ranches, office buildings and retail stores and held bank accounts in many countries besides Switzerland. But they were not enough.

Julio traveled to Medellin, Colombia, in 1982 and 1983 for a series of meetings with drug cartel kingpin Pablo Escobar, U.S. drug agents say, to open a line of supply for a new and more profitable contraband: cocaine.

Again, profits soared. The Nassers hired private planes to haul bulk cash proceeds from America to bank accounts in Panama, U.S. authorities later discovered.

*

In 1984, Sheila obtained a divorce.

Under questioning by Swiss police years later, she blamed their estrangement on Julio’s move into cocaine. But she also acknowledged assisting him in the enterprise. And in other police statements she blamed an affair between Julio and a financial manager at a Barranquilla bank.

U.S. prosecutors regard the divorce as “a sham” conceived to protect many of the couple’s assets that were transferred into her name, including the Swiss accounts. In fact, Swiss wiretaps and copies of telefaxes between the couple showed they commingled their funds and that Sheila continued to manage Julio’s money until Swiss officials froze their accounts in 1994.

Julio’s financial success in the cocaine trade came with considerably more grief than he encountered smuggling marijuana.

In 1986, he was indicted for the first time by a federal grand jury in Louisiana, accused of importing more than a ton of cocaine and 2 million pounds of marijuana. Julio no longer traveled outside Colombia, fearing extradition to the U.S. if he was arrested beyond the jurisdiction of his influential friends in the Colombian judiciary and law enforcement. Sheila said he paid some of those friends a monthly “insurance payment” so he would not be arrested.

U.S. Indictments

Even in Colombia, however, Julio found himself under new pressures. For the first time, he faced threats from local rivals. One of them hired a sicario, a hit man, whose poor marksmanship saved Julio’s life but cost him a painful wound in the buttocks.

After he was hospitalized for a few days, Julio vowed never again to trust anyone.

His paranoia was further inflamed sometime later, when the U.S. Coast Guard seized his prize cargo ship, the Danish-flag coastal freighter Nerma, and its cargo of 5 tons of cocaine. He was indicted again, this time in Florida. Then he found his name on a published list of “the extraditables,” Colombian traffickers whom some Bogota authorities briefly considered surrendering under terms of a long-dormant extradition treaty with Washington.

Julio started moving from one safe house to another. He adopted a code name--”Tono”--and used it even with his family when he made his furtive calls.

Between fears of extradition and conflicts with rivals, Julio lived in constant anxiety. The stress showed on his face. Family and friends started calling him “El Viejo,” the old man.

More violence flared in Colombia. One of Julio’s rivals was killed. While his role in the killing is not clear, Julio said in letters to his family that he expected to be the target of reprisals. Finally, fearing his three grown children might be kidnapped or killed, Julio ordered them and Sheila to stay in Switzerland for much of 1990.

The most-feared Nasser rival died later that year in a blaze of gunfire from sicarios who, Sheila told Swiss police, were paid by her husband. Sheila also confessed her own relief that the rival’s death removed a threat to her family: “I celebrated [the fatal shooting] by drinking a bottle with my children.”

Julio seemed to lament his life at that time. In earlier letters to his family, he said he hoped to someday leave Colombia, give up being someone important in Barranquilla for the peace of being “one of the herd” someplace in Europe. Another time he wrote that he was “very tired of this life, so full of problems that I have led, and I want to be somewhere where I don’t have to be worrying constantly, where I don’t have problems with anyone, and where nobody knows me.”

*

One of Switzerland’s appeals to people like the Nassers was the promise of privacy, both for themselves and their assets.

Before August 1990, bank secrecy was more than a tradition in Switzerland; it was the law. But that month, the Swiss Parliament ended years of debate and silenced cries of international scorn by approving criminal sanctions against drug-money launderers.

Even the banking community finally endorsed the reform. Some of their most prominent and legitimate customers became concerned that their own privacy was jeopardized by doing business with banks that were under intense political and police scrutiny for hiding the illicit profits of drug lords.

Another factor was Switzerland’s encounter with its own drug scene, what one Swiss prosecutor called “a visible black spot” that turned public opinion sharply against traffickers.

“When we found drug dealers on our streets, selling to our children, it was now our problem too,” said Dieter Jann-Corrodi, the Zurich financial-crimes prosecutor who indicted Oberholzer.

Swiss police and prosecutors reacted swiftly to the new law. Barely a month after it was passed, a joint U.S.-Swiss investigation was launched into the financial holdings of the Medellin cartel. The Escobar family, which spent considerable time in Zurich and Lausanne, was targeted.

That investigation led to the arrest of an unlikely money-laundering suspect, the Swiss chauffeur who had driven Julio and his Samsonites to the bank in 1979. It turned out the driver also had assisted the Escobar family for years with financial transactions, according to his own statements to Swiss police.

The chauffeur’s statements in 1993 also provided Swiss investigators with some of their earliest information linking Julio and Sheila to the Escobars and to drug trafficking.

It might have meant little more than a footnote to the Escobar investigation if Sheila had not attracted official attention by seeking approval to buy a home near Lake Geneva. Swiss law requires foreigners to obtain a residency permit before acquiring such property.

Sheila retained an attorney who said there would be no problem, especially if she made some investments in the local economy. Sheila put $400,000 into a Lausanne cafe and filed her permit application. It was an unknowing step toward prison.

By that time in late 1992, funds in the Nasser family accounts at UBS-Zurich approached $140 million. And they were growing at the rate of nearly $1 million a month.

Meanwhile, in Miami, the Nasser family fortunes were taking an ominous turn. On Halloween morning in 1992, teams of DEA agents and a Metro-Dade SWAT team raided the construction company offices of George Tate, a local drug trafficker who, it turned out, was one of Julio’s buyers.

Weeks earlier, Tate had spotted police surveillance near his office. Stopping his Bronco alongside an unmarked DEA car, he rolled down his window and declared: “You’re not smart enough to catch me,” recalled an agent. But on Halloween morning it was Tate who was outsmarted, outmanned, outgunned and finally nabbed scrambling over rooftops in a futile effort to escape arrest.

Key Informants

According to a federal indictment, he had offered to sell 50 pounds of cocaine to an undercover drug agent. The cocaine, authorities said, had been smuggled into Florida by the Nasser family--one of the couple’s two sons and a nephew would be among those indicted. Both are now fugitives.

“Everyone involved in that shipment seemed to be related to Julio and Sheila, either by blood or marriage,” said DEA agent Wade.

The Tate bust and a host of companion arrests also produced a number of key informants, including sources with intimate knowledge of the Nasser money-laundering network. Operation Tentmaker was launched, a wry tribute to Julio’s penchant for sleeping in his marijuana fields.

Within a few months, the U.S. investigation would identify some of the secret Swiss bank accounts. Meanwhile, the Swiss were making progress on their own investigation.

After Sheila filed her application for Swiss residency, Vaud canton police Inspector Marcel Guenat--one of Switzerland’s top financial-crimes investigators--was assigned to examine her background.

Guenat and Lausanne prosecutor Jacques Antenen followed the money Sheila invested in the cafe L’Escale and other transactions. They picked up the leads from the Escobar chauffeur. It all led to Union Bank of Switzerland and what appeared, at first, to be a handful of accounts holding barely $10 million.

Joint Investigation

A freeze order was considered at that moment, but such a big-time drug trafficker must have more than $10 million, Guenat reasoned. He pressed his search further, hoping not to alert Sheila or her banker. The investigators knew it would take only moments, a few strokes of computer keys, to empty all the Nasser accounts into banks beyond Swiss jurisdiction.

About that time, late in 1993, American and Swiss investigators inadvertently discovered each other. Their investigative efforts made a perfect match--the Swiss could find the money, and the Americans could link it to drugs.

Sharing information developed in the Tate case, Miami DEA agents and Assistant U.S. Atty. Paul Pelletier also helped identify more Nasser accounts. And as Guenat meticulously traced the intricate web of interconnected numbered accounts, the vast scale of the Nasser family holdings emerged.

For the next six months, U.S. and Swiss investigators kept their joint inquiries secret as they explored and monitored the Nasser financial network, listened to wiretapped phone conversations and gathered evidence that would establish Sheila’s central role in the family’s continuing drug-trafficking and money-laundering enterprises.

At dawn on Feb. 23, 1994, teams of Swiss police launched a series of raids across the country, arresting Sheila and Oberholzer, confiscating documents and freezing more than $150 million in about 60 bank accounts and investment funds. Today, those accounts total more than $200 million, officials estimate.

In lengthy jailhouse interviews with Swiss police, Sheila later confessed to drug trafficking and money laundering. She even confessed on behalf of Julio, telling police that he “never earned any money legally since I have known him.” But the case was not quite over.

Desperate to avoid being extradited to Miami, Sheila and her family tried to have criminal charges filed against her in Colombia so that Bogota could rush through a competing extradition request. But the Swiss have no formal extradition treaty with Colombia.

*

Julio then contacted associates in the Cali cocaine cartel, according to DEA informants, plotting a commando-style raid by Nasser-paid mercenaries to free Sheila from her Swiss jail by force, if necessary. The Swiss got wind of the plot and increased security.

Early last year, Sheila’s appeals expired. U.S. marshals whisked her to Miami. The case against her, augmented by her detailed Swiss confessions, more than 15 years of bank records and reams of revealing wiretap transcripts, put American prosecutors in a strong position of negotiating a plea bargain.

Finally, last spring, the agreement was accepted by a federal judge who imposed a reduced sentence of 12 years in exchange for her guilty plea to conspiracy charges. She also had to surrender all the family money in Switzerland.

With that, the Samsonite accounts were closed.

Meanwhile, DEA agents say, Julio continues in his lifelong smuggling trade. Last year, drug officers seized a half-ton shipment of cocaine in South Florida that was shipped by Nasser even as Sheila was negotiating with federal prosecutors.

“He hasn’t changed,” said the DEA’s Wade, “except that I don’t think he’s sending his dollars to Switzerland anymore.”

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The Swiss Connection

Federal drug enforcement agents estimate that Julio Nasser and his wife, Sheila Arana, made about $3 billion over 20 years smuggling marijuana and cocaine into the U.S. from their base in Barranquilla, Colombia.

THE DRUGS

* Drugs moved by freighter from Colombia, up to 20,000 pounds per month.

* Speedboats picked up smaller loads

THE MONEY

* Some was laundered through Florida banks.

* Some was transferred to Switzerland from banks in Panama and other countries.

* Some cash was hand-carried to Zurich by couriers.