Published: 06.22.2009

Western Union rejects accusations of 'blood wires'
By Josh Meyer
MCCLATCHY NEWSPAPERS
PHOENIX — The bleeding body of Mexican immigrant Javier Resendiz Martinez drew the attention of police when they raided a bungalow on North 63rd Avenue in Phoenix four years ago after reports of gunshots.
Soon afterward, however, they found payment logs of more than 100 wire transfers to Western Unions in the Mexican town of Caborca — which state and federal officials cite as evidence that the financial-services company and other money transmitters are used by Mexican crime syndicates to help facilitate the smuggling of thousands of people a day into the United States.
Arizona Attorney General Terry Goddard said human smuggling has become a $2 billion-a-year business in his state alone, due in large part to what he calls "blood wires," the payments from family members, friends and employers to smugglers via Western Union and other companies.
In interviews and court documents, Goddard and other Arizona officials have not accused Western Union of a crime.
But they say the company consistently has rejected requests for cooperation, thus undermining efforts in Arizona to go after the crime cartels that control much of the increasingly violent trade in humans, drugs, weapons and laundered cash from their havens in Mexico.
Western Union spokesman Daniel Diaz said Goddard's accusations were "erroneous and inflammatory."
The Colorado-based company cooperates with law enforcement agencies around the world to identify and prosecute illegal activity, said Peter Ziverts, vice president for anti-money-laundering efforts. He said Western Union has instituted numerous procedures to detect illegal wire transfers, including far more aggressive oversight of its thousands of independent money-store operators.
Near the U.S. border, he said, the company caps the total amount that someone can transfer, but it keeps the cap and the time frame secret to avoid tipping off smugglers.
The company has filed more than 30,000 suspicious-activity reports from Arizona, Texas and Mexico in the past year, he said.
"We cooperate . . . and we go over and above what we're required to do," Ziverts said.
Marcy Forman, who heads the investigative arm of the Department of Homeland Security's Immigration and Customs Enforcement division, said Western Union has been cooperating on specific criminal investigations.
"When we need information, we generally don't have a problem getting it," Forman said. "But ours is case-specific. So that may be the difference."
Homeland Security Secretary Janet Napolitano, until recently Arizona's governor and its attorney general before Goddard, had no comment on the litigation or Goddard's ongoing battles with Western Union.
Goddard said that since he took office in 2003, Western Union had denied many of his formal demands for information on money transfers and refused to comply with warrants ordering the seizure of large volumes of suspicious payments — especially those going to Caborca and other known smuggler strongholds across the Arizona border in the Mexican state of Sonora.
Western Union has argued in court that many of Goddard's demands are unconstitutionally broad and violate the privacy of its customers, many of whom are immigrants sending money home to Mexico. Some customers won't want to use Western Union if their money could be seized, it says, although it acknowledges that no transfers have been seized in Arizona in several years.
The company also opposes the state's efforts to get access to the wire-transfer data, calling that unconstitutional.
Some judges have agreed.
Earlier this month, the Arizona Supreme Court ruled that Goddard had overstepped his authority in trying to seize records of wire transfers exceeding $500 from 29 other U.S. states to Sonora.
Western Union hailed the ruling. But Goddard said the decision was narrowly focused and still would allow him to seize some of the payments if they were linked to human smuggling into those other states via Arizona. He likens his request for the data to getting approval for a wiretap: The information helps authorities find suspicious patterns of activity, which they can use for further investigation and possible prosecution.
Goddard said that he was focusing on money transfers because, without them, the human smugglers would be out of business.
According to law-enforcement officials, Mexican smugglers almost always do business in cash. But migrants pay most of the $2,000 or so fee when the trip is completed. To ensure they get paid, smugglers have set up a vast network of fortified stash houses in Southern Arizona to hold their human cargo until the transfers come through. Then they whisk the migrants by van to their intended destinations around the nation.
Authorities say there are about 300 stash houses around Phoenix at any given time, each filled with dozens of migrants. Hundreds more hideaways are scattered throughout the Southwest and in dozens of corridor states where the migrants end up.
After they reach the United States, many migrants are forced to pay two or three times the negotiated fee — and may be raped, otherwise assaulted or killed if they object.
When Resendiz protested at the stash house on 63rd Avenue, he was given a phone and told to call his brother in Philadelphia. Officials said that, as his brother listened in, Resendiz, 36, argued with his captors and was executed.
Authorities contend that tracing the flurry of electronic payments that Western Union, MoneyGram and other firms process is vital to finding the smugglers and their stash houses.
From 1999 to 2001, according to a sworn declaration from Daniel Kelly of the Arizona Financial Crimes Task Force, one group of smugglers laundered more than $10 million through Western Union.
Since 2003, the U.S. Treasury Department and Arizona have fined Western Union a total of $6 million for willful failure to file suspicious-activity reports and other violations. Authorities call that a significant disciplinary action.
"Our system wasn't nearly as robust as it is now," Ziverts said recently.
By 2005, Arizona officials said, their money seizures and enforcement efforts had reduced the flow of smuggling proceeds into the state by $600 million a year. The smugglers began having the money wired from other states directly to associates in Mexico.
That year, Western Union complied with an Arizona state subpoena to provide data for two months of wire transfers to Sonora. Authorities found that in that short window, three smuggling suspects linked to the stash house where Resendiz was killed had picked up 161 wire transfers at a single Western Union store in Caborca. Only one of those payments had originated from Arizona, Kelly said, calling it further proof that state authorities need broader seizure powers.
In all, $28 million flowed during that short period from other states into Western Union stores in Caborca and other Sonoran smuggling hubs.
So Goddard obtained a warrant to seize those suspicious payments, too. Western Union refused to comply, and the impasse took three years to work its way through state courts.
http://www.azstarnet.com/sn/printDS/297991