National Drug Intelligence Center   New York/New Jersey High Intensity Drug Trafficking Area Drug Market Analysis 2009   April 2009   UNCLASSIFIED

Abuse

Heroin, cocaine, and marijuana are abused at particularly high levels throughout the NY/NJ HIDTA region. According to data from the Treatment Episode Data Set (TEDS), the number of heroin-related treatment admissions to publicly funded facilities in the region exceeds that of any other drug. (See Table 2.) The number of heroin-related treatment admissions steadily increased from 2004 (79,117) to 2006 (89,387), before dropping to near 2004 levels in 2007 (79,253), the latest year for which such data are available. An increasing number of teenagers and young adults are abusing diverted CPDs in the NY/NJ HIDTA region. Many teens believe that drugs prescribed by a doctor are not as harmful as drugs such as cocaine, heroin, and methamphetamine and, therefore, are not as dangerous. However, treatment providers indicate that the abuse of diverted CPDs often serves as a gateway for adolescents and young adults to abuse other drugs. For instance, controlled prescription narcotics abusers who become addicted to the drugs often switch to heroin because of its higher availability and lower price. Similarly, abusers of controlled prescription stimulants sometimes "graduate" to crack cocaine abuse.

Source: Treatment Episode Data Set, data run date February 13, 2009.

The abuse of heroin poses a significant threat in the NY/NJ HIDTA region. According to data from the National Drug Intelligence Center (NDIC) National Drug Threat Survey (NDTS) 2008,14 more than 22 percent of state and local law enforcement agencies in the NY/NJ region--more than twice the nationwide percentage of 9.8--identify heroin as the greatest drug threat to their jurisdictions. Further, nearly 68 percent report that heroin availability is moderate to high in their areas. (See Table 3.)

*Data run date July 1, 2008.
**Nationwide percentage for MDMA is less than 0.1 percent.

The heroin threat has seriously impacted Nassau and Suffolk Counties. The Nassau County Police Department indicates that in the first half of 2008, the number of heroin-related overdose deaths (12) was 50 percent higher than the number of overdoses for all of 2007 (8). Additionally, the number of heroin-related arrests in Nassau County increased 40 percent from 2007 (151) to 2008 (211). Suffolk County authorities, facing a similar heroin problem, have established a new unit within the Narcotics Division of the Police Department to monitor only heroin-related overdoses and investigate overdose deaths. In response to the heroin threat, legislators in both Nassau and Suffolk Counties passed laws that require law enforcement authorities to establish and implement a Drug Mapping Index web site, which will be available to the public when operational. The web site, publicized as the first of its kind in the nation, will map arrests for possession and sale of heroin and will include the nature and class of the arrests; the alleged offender's age; and the date, time, and location of the arrest. Finally, the Nassau County law also requires law enforcement officials to notify school officials in the county when an arrest is made for heroin possession and/or sale.

Cocaine is abused at relatively high levels in the NY/NJ HIDTA region; cocaine-related treatment admissions increased each year from 2004 through 2006 before declining in 2007; cocaine-related treatment admissions are second only to heroin, according to TEDS data. According to NDTS 2008 data, nearly 43 percent of state and local law enforcement agencies in the NY/NJ region identify cocaine, either powder cocaine (11.1%) or crack (31.8%), as the greatest drug threat to their jurisdictions. (See Table 3.) Further, more than 53 percent identify cocaine, either powder cocaine (9.4%) or crack cocaine (44.4%), as the drug that most contributes to violent crime in their jurisdictions--more than triple the percentage for any other drug.

Marijuana is the most widely available and most commonly abused illicit drug in the region. The availability of high-potency marijuana, both Canadian and locally produced, is increasing in the region, leading to a rising number of treatment admissions for marijuana abuse. According to NDTS 2008 data, 27.2 percent of state and local law enforcement agencies in the NY/NJ region indicate that marijuana is the greatest drug threat in their jurisdictions. This is more than twice the nationwide rate of 11.3 percent. (See Table 3.) Further, according to TEDS, the number of marijuana-related treatment admissions increased each year from 2004 through 2007.

Methamphetamine abuse in the NY/NJ HIDTA region is low. According to the NDTS 2008, less than 10 percent of state and local law enforcement agencies in the region indicate that powder methamphetamine availability in their jurisdictions is moderate to high, significantly lower than the nationwide rate of 44.3 percent. Those reporting moderate to high availability of crystal methamphetamine were even lower at 6.5 percent. (See Table 3.) The abuse of methamphetamine is spreading outside the established population of abusers, fueling concern among law enforcement officials and treatment providers that it may become more widespread. Abuse of the drug, once concentrated among patrons of some nightclubs in New York City, is now spreading to a wider cross section of the population, including younger and more affluent abusers. The number of methamphetamine-related treatment admissions has fluctuated since 2004, but increased 23 percent overall from 2006 (807) through 2007 (990).

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Illicit Finance

New York City, as one of the world's principal financial centers, the economic capital of the United States, and a central market for the international jewelry and precious metals industries, provides diverse money laundering opportunities for DTOs. Most DTOs operating in New York rely on multiple methods, including bulk cash smuggling, money transmissions through money services businesses (MSBs), structured deposits in traditional depository institutions, front companies, and real estate purchases, to launder illicit drug proceeds.

Traffickers, particularly Mexican DTOs, are increasingly smuggling bulk cash from the NY/NJ HIDTA region to Mexico in private vehicles and tractor-trailers. Once bulk cash is smuggled into Mexico, it is either deposited by traffickers into Mexican financial institutions, repatriated to the United States for reintroduction into the U.S. financial system, used by traffickers in Mexico for operational expenses, or smuggled in bulk farther south to Guatemala, Panama, Colombia, or other Latin American countries.

Many DTOs in the region use MSBs to launder drug proceeds, frequently in conjunction with bulk cash smuggling. Colombian and Dominican DTOs send significant amounts of money through MSBs in New York to Colombia, the Dominican Republic, and locations in Central and South America. Mexican DTOs often transmit illicit proceeds in structured amounts through MSBs to collection points in Southwest Border states, where the transmissions are cashed, and most of the money is then smuggled across the border. Many MSBs in the Jackson Heights area of New York also are used to facilitate drug money laundering.

New York is a primary location in the United States for Black Market Peso Exchange (BMPE)15 activity, including money pickup operations.16 Colombian DTOs routinely use the BMPE to launder illicit proceeds generated in the New York/New Jersey HIDTA. A portion of bulk cash smuggled from New York across the Southwest Border is wired to other international locations, such as Panama, Hong Kong, and mainland China for use in the BMPE.

Some DTOs in the HIDTA region also are increasingly structuring17 cash deposits in unusually small amounts at both traditional financial institutions and MSBs. This technique is similar to traditional structuring,18 but involves amounts usually under $1,000 to minimize potential scrutiny and the chance that a Suspicious Activity Report (SAR) will be filed by a bank official.

Traffickers also exploit traditional depository institutions to facilitate money laundering activity through the use of correspondent bank accounts19 between international and U.S. banks. Many of the largest international and U.S. banks are located in the NY/NJ HIDTA region; traffickers routinely exploit them by structuring cash deposits into accounts at U.S. banks in New York City and elsewhere, wiring the proceeds through correspondent accounts to U.S. branches of international banks in New York City. The traffickers then wire proceeds to overseas accounts. Additionally, Colombian and Mexican DTOs move drug proceeds through traditional depository institutions by depositing money in U.S. bank accounts and then withdrawing the money locally or in other states or countries from automated teller machines (ATMs); they also move the funds by wire transfer.

Money launderers also use privately owned ATMs to launder illicit drug proceeds. The lack of regulatory measures monitoring these privately owned machines makes them extremely vulnerable to misuse by criminals. Private ATMs are generally placed inside high-traffic businesses in the region and are loaded with drug proceeds. The funds are withdrawn by cardholders, and the ATM owner's bank account is credited electronically for the transaction as well as a service charge.

Footnotes

14. National Drug Threat Survey (NDTS) data for 2008 cited in this report are as of February 12, 2009. NDTS data cited are raw, unweighted responses from federal, state, and local law enforcement agencies solicited through either the National Drug Intelligence Center (NDIC) or the Office of National Drug Control Policy (ONDCP) High Intensity Drug Trafficking Area (HIDTA) program. Data cited may include responses from agencies that are part of the NDTS 2009 national sample and/or agencies that are part of HIDTA solicitation lists.
15. The Black Market Peso Exchange (BMPE) is a system in which Colombian traffickers receive Colombian pesos in Colombia in exchange for U.S. drug proceeds located in the United States. Peso brokers traditionally facilitate this process by selling Colombian trafficker-owned U.S. drug proceeds located in the United States at a discount to Colombian merchants, who use the funds to purchase U.S. goods, typically in free zones.
16. Money pickup operations involve the collection of cash from drug traffickers by workers of peso brokers for placement in the financial system for further use in BMPE-related transactions.
17. A person structures a transaction if that person, acting alone, or in conjunction with or on behalf of other persons, conducts or attempts to conduct one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements under Title 31. "In any manner" includes but is not limited to the breaking down of a single sum of currency exceeding $10,000 into smaller sums, including sums at or below $10,000. The transaction or transactions need not exceed the $10,000 reporting threshold at any single financial institution on any single day in order to constitute structuring within the meaning of this definition.
18. Traditional structuring (see previous footnote) refers to structuring in financial institutions and money services businesses (MSBs). Bank Secrecy Act recordkeeping rules for MSBs require presentation of identification at time of transaction and entry into a wire transfer log for transactions of $3,000 or greater.
19. A correspondent account enables financial institutions to provide banking services, including interbank funds transfers, to one another.

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