by Pat Muir
Steve and I read the written agreement to find our tasks were as we had discussed. The surveillance and background checks we were to do did not include contractors providing services to Swift’s businesses, such as security monitoring, landscaping, pest control services, and telecommunication. We were to identify these services and notify the DEA, who would investigate them. The DEA would also ascertain details of the ownership of Swift’s businesses and investment property and check the backgrounds of the stakeholders. They would perform other undercover operations as needed. The plan included our continuing investigation of Flynn’s murder. I could see that the bulk of the effort was going to be performed by the sheriff’s department. I just hoped that Thompson or the lieutenant had negotiated a good split on the seizure of assets. The plan made it clear secrecy was essential. Warrants to search Swift’s bank accounts would not be sought until clear physical evidence of money laundering had been established. The plan requested that hours spent on the project be logged daily into our new internet-connected computers, which were accessed by passwords known only to Thompson, Steve, myself, and a specific person in accounting.
Ten days later, Drew Ryan sent us a nearly complete list of the businesses and property that Larry Swift owned, either directly or indirectly, and that he managed. Swift owned several properties in Los Angeles and Las Vegas. Drew said not to bother with them. They were clearly for investment purposes and were handled by a property management company of good repute. In San Diego county, Swift and his associates owned a motel, a mobile home park, two apartment buildings, an amusement park, an equipment rental center, three car washes, two liquor stores, three check cashing establishments, two pawn shops, a jewelry store, and two office buildings, in one of which he had his office.
Drew gave us a briefing on money laundering. “The easiest way is to mix drug cash with money generated by legitimate businesses. It has to be done at a quantity level where the extra drug money does not make the business appear excessively profitable. Thus, you first need large cash generating and consuming businesses such Swift’s check cashing establishments, the liquor stores, and the pawn shop.”
“You’re saying that Swift very well fits the profile of a money launderer?” I asked.
“That’s right,” replied Drew. “We didn’t look into it until after you told us that Flynn had been murdered. We thought his letter was just from spite. Now we think there is a strong likelihood that Swift is deeply involved.” He paused. “Money to be laundered has to be delivered. Delivery could be to any of his businesses or to his or any of his employee’s homes. The money could be delivered by a courier, by a delivery service such as FedEx, United Parcel Service, or even the US postal service. We want you to surveil these places of business to determine if drug money is brought into them. We will surveil residences, usually an undercover operation. Mr. Jackson thought it would be a good idea for you to start by driving around all these properties, surreptitiously of course, to get a feel of how to conduct that surveillance.”
Steve and I nodded in acknowledgement.
“Another way of laundering money is to pay off invoices in cash,” said Drew. “That means the cash disposal problem is passed to a third party. Buying equipment for cash, as might be done at Swift’s equipment rental yard, is a possible area for that. Buying jewelry for cash is another way of laundering the cash. That’s where the pawn shops and the jewelry store might come in. The key is how to take this illegal cash and put it in the bank without raising suspicion. Remember, banks have to report any cash deposits of ten thousand dollars or more to the Internal Revenue Service, a requirement of the Bank Secrecy Act. So, large cash deposits have to look legitimate.”
Steve and I decided first to drive together to Swift’s office building in San Marcos, one of three in a U-shaped configuration, with his facing the one on the other side of the U. Each building was the same size, two stories, with ten thousand square feet on each floor, having outside walkways at each end for access to the upper floor. Swift owned just one building in the complex, which contained his ground-floor office of about six thousand square feet. The remainder of the ground floor was comprised of an attorney’s office and a shipping and mailing service. On the upstairs floor was a real estate broker, a marriage counseling service, an accountancy firm, a photography studio, a computer repair service, and a civil engineering consultancy.
Steve and I agreed that a camera-equipped vehicle in the central shared parking lot would readily be noticed. Better to surreptitiously mount a surveillance camera on one of the other two buildings to monitor the comings and goings to and from Swift’s office. We spent the rest of the day checking out Swift’s property and businesses in the north part of the county.
The next day, we toured property and businesses in the south part of the county, which is poorer than the communities of the north. Consequently, we found all of Swift’s cash checking businesses there. We also noticed an unmarked armored car attending one of these businesses, from which the car operators carried metal boxes in and out. Steve and I thought cash was being brought in and checks from those living pay period to pay period were being brought out. We saw Swift’s liquor stores doing a rattling business, as were his pawn shops. I had to admire how well these stores were located to serve their respective clients.
Thompson stopped by our office at the end of the day and asked how we were doing on the money laundering issue.
“Twenty-eight billable hours between us,” I answered.
Thompson did not appreciate my sarcasm. It was reflected in his voice when he asked about our progress on Flynn’s murder. When I told him there’s been none, he remarked, “You’d better hustle to pin it on Swift or his associates so we can get a search warrant of the man’s home and office that could lead to our discovering money laundering details.”
“I think we are doing more work than the DEA,” I volunteered.
“You’re right,” replied Thompson. “I had to propose that in order to get a good share of the assets from seizure.”
Steve and I split up the tasks, with him doing the bulk of the field work and me getting names, addresses, and phone numbers of Swift’s employees. Steve began his work by placing a video-camera-equipped vehicle in a parking lot close to one of Swift’s businesses. He would do this randomly to avoid being noticed both by day and by night. By getting such equipped vehicles delivered to him, he would be able to monitor about one business per week.
I started my work by asking the California Employment Development Department (EDD) for a list of the employees of Swift’s businesses. In order to avoid the request getting back to Swift, I made the request in tranches. I would ask data for several adjacent businesses that might include one of Swift’s liquor stores. I would make the request for perhaps three check cashing businesses of which only one was owned by Swift. EDD wanted the requests to go through official channels, so each tranche took three weeks. As I got the employee names and social security numbers, I would request addresses of each person from the Social Security Administration.
CHAPTER 16
I had a surveillance team check on Swift’s armored car crew. They followed the armored car at the San Marcos National Bank in the late afternoon. Swift, carrying a briefcase, went into the bank, escorted to its entrance by one of the armored car crew. Later, Swift exited the bank carrying the same brief case. The team could not discern whether the briefcase was heavier before or after the bank visit. They followed the armored car back to Swift’s office, where the owner went in carrying the briefcase. The two-man crew of the armored car waited outside for a couple of hours before a Swift employee came out to give them a series of labeled metal containers. The armored car then proceeded to modest neighborhood of nearby Escondido, where one of the crew entered a house, whose address the team noted. They followed the armored car to another house, where the remaining driver locked the car and entered that address. The surveillance team concluded these addresses were the homes of the car drivers.
> The team watched both addresses during the night and saw no activity. They watched that last driver leave his home at 6:45 a.m. and drive the armored car to pick up his companion. The armored car was driven to Swift businesses located furthest away, namely in the southern part of the county, arriving at the opening time of that business, a car wash. One armored crewman entered the business carrying a single marked container. After five minutes or less, that man exited carrying the same container. The surveillance team deduced change cash was being delivered and sales cash and receipts from the previous day were being picked up. In the case of the liquor stores and the check cashing establishments, they reckoned substantial cash was being delivered and mostly checks and charge card receipts were being picked up.
The team followed the car throughout most of the day, including stops for lunch and coffee breaks. Around three o’clock, they saw Swift exit his office carrying a briefcase. He got into the armored car, which stopped at no less than three different banks. The team and I concluded Swift was trying to minimize the deposit to each bank. They tailed the armored car another day and observed an identical procedure, with the exception that the bank withdrawals and deposits were made by a Latino man from Swift’s office. The homes of the armored crew were watched for several days, and no suspicious activity was observed. We concluded the armored car and its crew played no role in receiving drug monies.
I took on the task of monitoring Swift’s office. Contacting one of the business owners in the complex about installing a camera might lead to the word getting back to Swift. The same could be true for the complex property manager. I wondered what to do, but then I got lucky. A vacancy occurred in a ground-floor office in the building nearly opposite Swift’s office. With Thompson’s approval, I rented it, even though I had to lease it for six months with a deposit of two month’s rent. Thompson was not happy at the expenditure and complained about how much staff and money were being spent on the case. I told him I could see no alternative and that the office could be a good staging area when we made arrests. He asked Steve and me to do as much site investigation ourselves as possible. I informed the broker handling the lease that I was a private social worker handling cases referred to me by the sheriff’s department. In that way, the sheriff’s office could reasonably supply the business references the broker demanded. I had technical staff from our office set up the video camera after business hours, a camera with a wide-angle lens able to see both the entry to Swift’s office and any transactions in the parking lot. I had the camera view through a hole in a window curtain to avoid the camera being seen from the outside.
Since Flynn had reported Bert Swanson being involved in receiving drug cash, I needed to check him out. I parked an unmarked car equipped with a camera in a guest parking spot viewing the park office. I changed to a different car and a different parking spot every second day. I looked at the camera recordings each time I changed out the car. There were no regular persons bringing in bags possibly filled with cash. That also included Bert Swanson. I was lucky enough to find a guest parking area near his own mobile home and perform the same exercise. The answer was the same: negative.
By six weeks into this money laundering investigation, I had obtained the names and addresses of about a third of Swift’s employees. Steve and I began to look at their backgrounds and, to our surprise, found hardly any of these employees had a criminal record. If there was one, it involved minor theft or vandalism from many years back or a DUI (driving under the influence). We began to think that if the business employees were not felons, then the businesses were operated as legitimate enterprises.
At the same time, Steve had done some weeks of surveillance on four of Swift’s businesses. “I saw nothing unusual in any of the businesses,” he said. “I saw no large bags being brought in or out on a regular or irregular basis. All money going in and out of the businesses came via the private armored car.”
“But the surveillance team has followed the armored car a few times and has never seen money being brought into or out of it except at the businesses,” I said.
“The armored car crew members have no criminal records. It makes it very unlikely they would participate in illicit operations,” said Steve. “Has your camera viewing Swift’s office seen anything?”
“No, it hasn’t,” I replied dispiritedly. My mood fully reflected the change in our office address to Cope St.
We discussed what we had learned with Thompson, who set up a meeting with Jackson and Drew Ryan at the DEA office a few days later. There, Steve and I reported our initial finding that Swift’s businesses were being operated legitimately and did not appear to be used as drop points.
Jackson and Drew asked a few questions. Then Ryan reported, “We have conducted surveillance of Swift’s home and have not seen bags that might contain drug money brought to or from the house, and that includes overnight… Now, none of Swift’s businesses and property are solely owned by him. They are owned either jointly, though partnerships, or through privately held S-type corporations. Many of these owners are citizens of repute who have invested with Swift. Even Mr. Jackson’s banker is one of them, and he reports that Swift has given him an excellent return on his money. There are, however, a couple of shareholders with criminal backgrounds and a few more whom we have been unable to track down. They have foreign addresses, or they are corporations registered in the Cayman Islands or Panama, where we are unable to determine the underlying ownership. One of these owners, Cookerby Enterprises, is known to us from an undercover operation as being a drug front. In addition, Swift works with an associate called Rafael Arzeta, whom the Mexican police suspect of being a ranking member of a drug cartel.”
He paused as we took this all in. “Given the criminal and suspicious characters surrounding Swift, there is no doubt in our mind that he is running a sophisticated money laundering operation. And Arzeta is there to represent the criminal interests.” Steve and I looked at each other. Ryan continued. “We don’t have enough information to get a warrant to search Swift’s office. We suspect the drug money is being brought in there somehow.” He looked at me. “Has your surveillance of Swift’s office turned up anything?”
“It’s only been operating for three weeks,” I replied, “and I haven’t seen anything of significance.”
“Too bad,” said Ryan. “Keep at it… We have infiltrated the crew that cleans Swift’s office and the offices in the adjacent buildings. Our informant told us Swift’s office is divided into two, the larger portion having small bays equipped with desks, computers, and file cabinets. The entire lower portion of that building has been reinforced to prevent breaking in though the walls. We suspect the ceiling is similarly reinforced. The smaller portion has a security entrance from the larger portion and no other exit or entry. The cleaning crew entered the inner office to clean there and found it very well organized…no loose papers or cluttered desks. There were three computers in that inner office and a large free-standing safe. The main office is fully alarmed; its entry door is doubled, like a secure bank entrance. We would like you to get inside the office on some pretext to get a quick look at their operations.”
We said we would.
I had an undercover deputy follow Swift into one of the banks. He reported Swift took out three colored vinyl money bags from his briefcase and gave them to the teller. She counted the contents behind the thick translucent polycarbonate wall and then gave him a receipt. The deputy could not discern how much money she’d counted. “I would have been too obvious if I leaned in farther,” he remarked. Then the teller produced three additional colored money bags clearly containing preordered amounts. Swift signed a receipt for them. On a different day, Steve found the procedure replicated at one of the other banks. Money in and money out, we thought. The difference in the two would largely be laundered cash, but what was the difference? How could we tell without knowing how much cash was used by the check cashing businesses and the liquor stores?
I went to the leased offi
ce frequently to examine the recorded data. I was looking for a regular coming and going of somebody with a bag. If Swift were money laundering in sufficient quantity to have a cartel representative in house, then I would be looking for large quantities of cash being brought in. Jackson had reminded us that dollar bills are forty-three mils (thousandths of an inch) thick, 2.61 inches wide, and 6.14 inches long. One million dollars in hundred-dollar bills, the currency preferred by drug dealers, would weigh twenty-two pounds. Thus, such a million dollars could consist of ten stacks of one hundred thousand dollars, each 4.3 inches high, which would fit comfortably in a regular briefcase.
I monitored Swift and Arzeta coming and going. Rarely did they bring or leave the office carrying anything. I concluded they personally were not carrying drug monies into the office. I had Steve monitor the daily number of customers going to the check cashing businesses, since we reckoned they were the largest consumers of cash. They averaged about two hundred persons each day…six days per week. Steve also entered the stores on the pretense of asking for change and reckoned the average check cashed was around two hundred fifty dollars. From these figures, we calculated each check cashing establishment consumed about fifty thousand dollars per day. Thus, the three such establishments plus the liquor, pawn, and jewelry stores could be consuming almost two hundred thousand dollars per day. It would be easy to hide drug money of half this amount in the daily cash deposits. This gave us an idea of what we should be looking for. We could look for a one-million-dollar package in one hundred bills delivered once every ten days or a one-hundred-thousand-dollar package delivered every day. Only then did we realize delivering solely one hundred bills to the check cashing businesses would be impracticable. If, as we believed, they were operated as legitimate businesses, then they would need a mixture of different sizes of money bills that adequately met their customer’s needs. Delivering only one-hundred-dollar bills to them and having them depend on local banks to give them change would surely raise suspicions. This reasoning led us to expect the drug money for Swift’s operations to be brought in as packages of one hundred to two hundred thousand dollars in a mixture of bills carried in daily or every other day. That would require a regular briefcase, not a purse or a lunch bucket.
