Drugs and Money: Laundering Latin America's Cocaine Dollars

By Robert E. Grosse | Go to book overview

Chapter 5

Early Cases, 1970s and Early 1980s

Before entering into a detailed discussion about major drug money laundering schemes, a few examples from the 1970s and early 1980s will help illustrate the way in which launderers operated during that period.

The best known early drug money launderer during the 1970s was Steven Kalish, who began as a marijuana smuggler in the 1960s and then expanded into cocaine smuggling and money laundering in the 1970s. Kalish was both a smuggler and a launderer; in those days, the two activities had not yet become as specialized as they developed in the 1980s.

Kalish began his drug-running career in his hometown near Houston, Texas, in the mid-1960s. He dealt in marijuana, which was the drug of choice for college students at the time. As his income rose from buying and selling marijuana, he began to develop mechanisms for getting large quantities of cash into the banking system. At the time, there was no particular effort by banks to question the source of large or small cash deposits, so Kalish was able to funnel huge amounts of cash into Houston-area banks without attracting the attention of law enforcement agencies.

When his business reached the level of hundreds of millions of dollars of marijuana, and increasingly, cocaine, he significantly diversified his channels of money laundering. In addition to making large cash deposits in local banks, he shipped millions of dollars to the Cayman Islands for deposit in numerous accounts there. He also set up accounts in Panama, taking advantage of the lax concern about money laundering and drug trafficking there in the early 1980s.

Because of the opportunity available in Panama, Kalish built up an enormous cash shipment business there in the early 1980s. He found that by bribing General Noriega and other members of the Panama Defense Forces, he was able to obtain privileged access to the Panama City airport, where he repeatedly brought

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