ARCHIVED Skip navigation.To Contents     To Previous Page     To Next Page     To Publications Page     To Home Page

Abuse

Cocaine, heroin, and marijuana are abused at high levels in the PC HIDTA region. Cocaine, especially crack, is the primary cause of drug-related deaths, emergency department visits, and treatment admissions to publicly funded facilities in Philadelphia. Heroin abuse is increasing in the HIDTA region; declining purity has caused some abusers to seek alternative methods of abuse, such as injecting larger doses or injecting more frequently. Heroin abuse in the region is becoming more common among teens and young adults, who initially inhale the drug but typically progress to injection as addiction sets in. Marijuana is the most widely available and commonly abused illicit drug in the region. The availability of high-potency marijuana, both Canadian and locally produced, is increasingly enticing new users.

A rising number of teenagers and young adults are abusing CPDs in the PC HIDTA region. Such abuse often occurs in social settings in which party attendees bring a number of CPDs--such as opioids, stimulants, or depressants--and exchange them for pharmaceuticals that other partygoers bring. This activity is commonly known as pharming. Many teens believe that drugs prescribed by a doctor are not as harmful as illegal drugs such as cocaine, heroin, and methamphetamine and, therefore, are not as dangerous. However, treatment providers indicate that the abuse of CPDs often serves as a gateway for adolescents and young adults to abuse other drugs, such as heroin, cocaine, and methamphetamine. Once addicted to controlled prescription narcotics, abusers often switch to heroin because of the drug's higher availability and lower price. Similarly, abusers of controlled prescription stimulants sometimes "graduate" to crack abuse; treatment providers believe that some abusers of controlled prescription stimulants such as amphetamines--Ritalin (methylphenidate) or Adderall (amphetamine)--may begin to abuse methamphetamine if that drug were to become more widely available.

Methadone abuse is a developing problem in the PC HIDTA region. Availability of the drug for illicit use results, in large part, from patients in opioid treatment programs who sell portions of their take-home doses of the drug. According to treatment providers, many methadone abusers are using the drug in combination with benzodiazepines in an attempt to achieve a heroin-like effect. Many methadone abusers acquire benzodiazepines from patients who obtain the drugs by prescription, keep some for themselves, and then sell the rest.

To Top      To Contents

Illicit Finance

Drug traffickers in the PC HIDTA use various money laundering techniques to move and conceal illicit drug proceeds and finance their operations. The means used to transfer illicit funds varies by group and includes smuggling bulk cash; using money services businesses (MSBs); conducting electronic wire transfers; structuring bank deposits and money order purchases; commingling drug proceeds with funds generated through legitimate businesses; purchasing real estate and vehicles; operating front businesses; and using smart cards, automated teller machines (ATMs), and prepaid stored value cards. Bulk cash smuggling is the illicit transfer method most often cited by law enforcement in the PC HIDTA region. Law enforcement reporting indicates a decrease in the use of traditional financial institutions by traffickers to launder illicit drug proceeds because the traffickers have become aware that banking officials are readily identifying illicit financial activity through Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs). Additionally, some DTOs launder drug proceeds through casinos in southern New Jersey and Pennsylvania.

Colombian, Dominican, and Mexican DTOs and criminal groups typically transport drug proceeds in bulk from the PC HIDTA region to New York City, the Southwest Border area, Mexico, or other drug source locations. These traffickers use private vehicles, commercial vehicles, freight transportation companies, shipping containers, and package delivery services to transport and ship their bulk cash. They often conceal bulk quantities of cash in hidden compartments of vehicles or in shipments of commodities such as furniture, car parts, electronics, or produce.

Colombian, Dominican, and Mexican DTOs also use U.S.-based MSBs--particularly money transmittal and check-cashing businesses--to launder proceeds, frequently in conjunction with bulk cash smuggling. These DTOs also send significant amounts of money through MSBs to Colombia, the Dominican Republic, and various locations in Central and South America. Mexican DTOs often wire structured amounts to collection points along the Southwest Border, where the electronic wires are cashed and the money is smuggled to Mexico.

Colombian DTOs use prepaid credit cards to launder drug proceeds in the HIDTA region. They use illicit funds to purchase prepaid credit cards that are generally redeemed in Colombia for pesos. Some DTOs consider this method to be preferable to the Black Market Peso Exchange (BMPE)3 because it involves a lower exchange rate. Open-system prepaid cards are payment mechanisms that allow cardholders to access global credit and debit payment networks. The manner in which existing regulations apply to these financial products is unclear, and some of these products may be used without forming a traditional account-holder relationship with a depository institution. This lack of account-holder relationship enables card holders to anonymously transfer unlimited amounts of money across global payments networks.

Many DTOs in the HIDTA region, particularly Dominican and Asian organizations, transport drug proceeds to Atlantic City, New Jersey, where they launder the funds through casinos. Some DTOs are increasingly transporting drug proceeds to Pennsylvania's casinos in Bensalem and Chester. These DTOs purchase betting chips with large amounts of drug proceeds, pass some time in the casino, and then exchange their chips for cash. Commercial casinos, which are classified as financial institutions and are regulated by the Bank Secrecy Act (BSA),4 are susceptible to money laundering and are often used by criminal groups to launder illicit proceeds. Casinos are attractive venues for money laundering schemes because they offer many of the same financial services as banks, regularly process large volumes of cash, and enable money launderers to legitimize illicit proceeds by claiming them as gambling earnings.

Some traffickers in the region, particularly Asian DTOs and criminal groups, often use cash-intensive "front" businesses to launder illicit drug proceeds. Businesses such as auto repair shops, beauty and nail salons, car washes, construction companies, tattoo parlors, and travel agencies are used by traffickers to conceal illicit drug funds among seemingly legitimate daily cash transactions. Members of Asian DTOs and criminal groups also transport drug proceeds in bulk, in the form of cash and money orders, to Canada, where they deposit them into Canadian bank accounts before electronically wire transferring the proceeds to source countries. Asian DTOs and criminal groups also launder drug proceeds by structuring bank deposits and participating in real estate fraud.

Retail-level drug dealers in the PC HIDTA region often launder drug proceeds through the purchase of consumer goods (clothing, expensive jewelry, and luxury vehicles) and real estate, and through the use of front businesses, including some recording studios and businesses that promote rap music.


Footnotes

3. The Black Market Peso Exchange (BMPE) is a system in which Colombian traffickers receive Colombian pesos in Colombia in exchange for U.S. dollars in the United States. Peso brokers facilitate this process by selling Colombian trafficker-owned U.S. dollars located in the United States at a discount to Colombian merchants, who use the funds to purchase U.S. goods.
4. A casino or a card club that is duly licensed or authorized to do business as such and has gross annual gaming revenue in excess of $1 million is a financial institution under the Bank Secrecy Act (BSA).


To Top      To Contents      To Previous Page      To Next Page

To Publications Page      To Home Page


End of page.