Illicit Finance

A primary concern for traffickers in many illicit transactions is the transfer of drug proceeds from the Milwaukee area and, often, from the United States to other countries. Transfers take place through shipments of bulk cash and, more recently, through the use of money remitters and other electronic methods. Many Hispanic traffickers transport large portions of their drug proceeds to friends and family in Mexico, using either private or commercial vehicles. Hispanic traffickers also transfer funds by money remitters--most of whom are unlicensed--and, more recently, by converting drug proceeds to stored value cards and then mailing the cards to locations around the world. African American criminals, who are less apt to route their drug proceeds outside the HIDTA region, often purchase tangible items that denote wealth or status, such as high-value vehicles, vehicle accessories, or jewelry.

DTOs and criminal groups use front companies to launder drug proceeds. Restaurants, clothing stores, used car dealerships, and offices related to the construction industry are commonly used by traffickers on the south side of Milwaukee as fronts for drug enterprises. Some unscrupulous construction companies hire illegal immigrants and offer to pay their wages in drugs instead of currency. The employees gain the benefit of receiving hidden, nontaxable income but subsequently must either sell or trade the drugs to acquire cash. Traffickers on the north side of Milwaukee are more likely to use barber shops, beauty salons, used car lots, and car washes to launder proceeds from drug sales.

A significant and growing money laundering trend in Milwaukee enables dealers to invest drug proceeds in residential real estate. In one type of scheme, a dealer purchases a residential dwelling and reports drug proceeds as rent in addition to rent actually received from legitimate tenants. In a more complex scheme, a dealer purchases a property that he then immediately sells for a substantially increased price to an indebted associate, who obtains a mortgage to purchase the property. The dealer receives the profit from the sale, seemingly legitimizing the income, while the associate typically defaults on the loan, defrauding the bank.

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