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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

Wednesday, July 25, 2018

Luxury Watch Dealer Sentenced To 24 Months In Prison For Laundering Narcotics Proceeds For International Drug Organizations

Joseph Stern Used Sales of Luxury Brand Watches to Conceal Approximately $2,000,000 for Mexico-Based Drug Trafficking Organizations

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOSEPH STERN was sentenced to 24 months in prison for his role laundering money related to his concealment of narcotics proceeds generated in the United States through the purchase and sale of luxury watches by the company at which STERN was employed.  A jury convicted STERN on May 26, 2017, following a 10-day trial before U.S. District Judge John G. Koeltl, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Joseph Stern ran his own shadow banking system to turn dirty drug money into new luxury watches, allowing millions of drug dollars to be laundered through the U.S. and back to Mexican drug cartels.  Thanks to the dedicated work of the DEA, the time has come for Stern to pay for his money laundering crimes.”    

According to the charging documents filed in the case, as well as the evidence developed at STERN’s trial and statements made during the sentencing proceedings and earlier court appearances:

For years prior to his arrest in May 2016, STERN fostered and profited from a cycle of crime and money designed to facilitate the secretive movement of funds from the U.S. to Mexico under the cover of a seemingly legitimate business.  As part of that cycle, narcotics organizations based in, or with contacts in, Mexico, sold narcotics, including heroin and marijuana, for cash in the U.S., including in the Bronx, Manhattan, Brooklyn, and Baltimore.  Money couriers then transported the cash from those sales to the defendant, who would accept bulk cash in amounts as large as $200,000 in clandestine hand-offs taking place on the street or in isolated areas within his workplace. 

STERN disposed of that drug money in various ways, principally by using the cash to extinguish debts owed to his employer by Mexico-based customers who, in turn, had incurred debts to Mexico-based narcotics operations.  STERN’s Mexico-based customers would sell watches, sourced from STERN, to narcotics organizations, which used those items and purchases as a substitute for the narcotics proceeds earned by their organizations in the United States. 

Through this cycle of drugs and money, STERN facilitated a shadow banking system for international drug organizations, while taking a percentage of the cash that he moved on behalf of this criminal network.         

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In addition to the prison term, STERN, 62, of Brooklyn, New York, was sentenced to three years of supervised release, including six months of home confinement, and was ordered to forfeit $1,899,700. 

Mr. Berman praised the outstanding work of the Drug Enforcement Administration in the investigation of this case.

This case is being handled by this Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorneys Noah Falk, Benet Kearney, and Andrew C. Adams are in charge of the prosecution.

Drug Trafficking
Financial Fraud
Press Release Number: 
Updated July 25, 2018