INTERNATIONAL PRODUCT DIVERSION; A STREETSMART MONEY LAUNDERING TOOL THAT SLIPS ARTFULLY THROUGH THE CRACKS IN THE SYSTEM

I previously knew him as a Downtown Miami jeweler, a client who smuggled extremely expensive designer bags into the United States through a confederate operating out of the Bahamas. A cut below the quality the European manufacturer imported into America, they were essentially banned here, but my client found a way to source them, and bring the into South Florida, right under the noses of US Customs, who was then focused on stopping the tsunami of cocaine trying to gain entry. Covert shipments were coordinated over shortwave radio, much in the way that drug traffickers communicated much more unlawful transport. 

His lucrative efforts were illegal, and he was eventually sued to disgorge his illicit profits; the attorney for the manufacturer, a former AUSA, is now a Justice on the United States Supreme Court, and he did have to hand over all the payments he had earned, but that's not why he is included here. Years later, he contacted me after dropping out of sight when he was working with Russian organized crime, the kind of business that, once involved, you are not ever able to extricate yourself from, if you get my point.

My client, wearing an old army field jacket, instead of his usual finery, met me on a North Miami street corner, and ushered me into a small apartment where I met his new young girlfriend; he had left his wife and family, and was involved in a nasty divorce; Talk about a lifestyle change, he had gone totally underground.

He handed me the New Jersey Federal indictment in United States vs. Steven Lasala,  and proceeded to educate me about International Product Diversion, an esoteric money laundering technique that I have previously explained in detail on my blog in the past, but which is apparently not widely understood.

   

The point is, the technique relies upon the method through which American manufacturers seek to sell off remaining stocks of consumer goods which are about to expire and become illegal to vend. They export their large inventories abroad, at greatly reduced prices, basically at their net net cost, free of advertising and marketing costs, and profit. The trick is that, in their zeal to unload goods that are imminently worthless for sale, they present an opportunity for laundrymen posing aa foreign purchasers or charitable or nonprofit organizations, who will take these still valuable goods for a small fraction of their advertised prices, return them to the Continental United States, or otherwise divert them from actual export, relabel them and resell them wholesale to retailers, cleaning up the proceeds of crime in the process.

Relabeling expired or soon-to-expire consumer goods is nothing new here in Miami; we had a major case years ago where relabeled expired baby formula make infants sick, and the vendor charged, although he never drew any prison time with his conviction.

Readers who wish to learn more about the subject are urged to access our previous articles, entitled Tradecraft 101 Part One: Money Laundering Through International Product Diversion and A Primer on International Product Diversion.

BTW, in case you are interested, my former client did survive the experience, and reinvented himself, but that's a story for another time. I certainly won't tell you who or where he is, as he deserves his anonymity, and fresh starts are what America is all about.