Crime and Punishment

Expert on Money Laundering Arrested for … Well, You Can Probably Guess

paper moneyBenjamins (image: Tracy O via flickr)

NPR’s headline for this item correctly hyphenates “money-laundering expert,” and I certainly applaud it for that. But that phrase is still ambiguous, because it could mean someone who is an expert at money laundering or someone who is an expert on (the subject of) money laundering. My headline is therefore better, because while it appears to be undisputed that Prof. Bruce Bagley is an expert on money laundering, he allegedly was not that good at it once he decided to try it himself.

I’m assuming that not being caught is an important part of the money-laundering curriculum.

Bagley, 73, is a professor and former associate dean of the Graduate School of International Studies at the University of Miami, and has long specialized in Latin American studies, especially drug trafficking and security issues. While Bagley’s bio page at U of Miami is currently (and recently) blank, a bio at Swansea University [now also deleted] says the following:

In addition to his academic pursuits, Dr. Bagley has occasionally served as an expert consultant for the United Nations …, for the U.S. Government (Department of State, Department of Defense, Department of Justice, the Federal Bureau of Investigation, and the Drug Enforcement Administration), and for several governments in Latin America (Colombia, Ecuador, Bolivia Panama and Mexico) on issues of drug trafficking, money laundering and public security.

Emphasis added. Bagley recently edited and co-wrote Drug Trafficking, Organized Crime, and Violence in the Americas Today (2017), described by scholarly reviewers as “a must-read volume” and “a very useful primer” on the subject. While there are lots of references to money laundering in that book, I noticed that none of them occur in any of the sections that Bagley himself wrote. That could be because, according to the indictment released Monday, he was actually laundering money himself at the time, and so might have wanted to lower his profile on that topic a bit.

The indictment alleges that Bagley was part of a conspiracy to launder the proceeds of a Venezuelan bribery and corruption scheme. It says he incorporated a company in Florida (the indictment calls it “Company-1,” which is a terrible name for a company), and in late 2016 opened a bank account on its behalf. Though Company-1 had “minimal activity,” in November 2017 somebody started depositing about $200,000 a month in its account. Prosecutors allege that the initial transfers came from a “purported food company” in the United Arab Emirates, and later ones from a “wealth management firm” based there. (I started to write “[purported]” there too, but then I decided that this firm probably does “manage wealth.”). The source accounts allegedly “belong to and are controlled by a Colombian individual,” and it might or might not be a coincidence that Colombia is next door to Venezuela.

Anyway, each time a deposit was made, Bagley and another person (“Individual-1”) would allegedly visit the bank together. Bagley would get a cashier’s check for 90% of the amount, payable to a company owned by Individual-1, and then would wire the rest to himself. During the 18 months or so this went on, Bagley allegedly received about $300,000 this way. According to NPR, when Bagley and Individual-1 visited the bank to do this, on at least one occasion “they discussed the fact that the funds were derived from bribes and other corrupt means,” which at least suggests Individual-1 was wearing a wire.

These details suggest to me that Bagley may have exaggerated the degree to which he is, in fact, an expert on money laundering, because he certainly sucked at it. I don’t know for sure, but I strongly suspect that the sudden commencement of large and regular transfers into a previously dormant account is going to raise a red flag somewhere, particularly if those transfers are coming from a purported food company in the Middle East and are going to a company that doesn’t seem to do anything, much less sell food. And I also would have thought that the number of shell accounts used by a money launderer would exceed two (Company-1’s account, and Bagley’s personal account). But again, I’m not the expert here.

The Miami Herald reported that just last month, Bagley served as an expert witness for the defense in a drug-trafficking trial. “He’s incredibly credentialed,” the defense attorney was quoted as saying, “and he was a great witness for us.” The attorney said that as an undergraduate he had taken Bagley’s course on “Drug Trafficking in the Americas” at the University of Miami, and remembered Bagley telling the class that it was a historical review, “not a how-to course.” Evidently not.