World Finance Corporation - Investigation and Scandal

Investigation and Scandal

WFC came to national attention when an investigation in 1976 by the District Attorney of Dade County, Florida, (along with four other governmental agencies; besides the Dade County Public Safety Office, the FBI, the IRS, the DEA, and the Comptroller of the Currency all participated in the joint investigation) revealed that the WFC held the dubious distinction of being the longest running (and largest) launderer of money for Colombian cocaine smugglers; the investigation proceeded for approximately two years. Somewhat ironically, the law enforcement personnel literally stumbled onto lead, when, during an investigation of a pest-control service called King Spray Service suspected of drug smuggling, two agents of the Dade County Public Safety Office (which, under Donald Skelton, led the investigation until the Justice Department took over) were searching through the company's garbage, in which they found financial records of WFC, recording very large transfers of funds between the bank and the company, along with small amounts of marijuana. The investigation ruined WFC Corp, and it closed in 1980. Simultaneously, overdrafts at the National Bank of South Florida (controlled by WFC after a large payment of cash for equity) prompted an investigation by bank examiners.

Cartaya used the bank as the centerpiece of an elaborate corporate labyrinth, through which the funds and bad loans (to Cartaya and his associates) were filtered and "laundered". An example of the labyrinth: WFC Corp. was 100% owned by the WFC Group, which itself was owned by Cartaya to the amount of %24.7; another %23.3 was held by "Neo-Floridian Development Company"- of NFDC, %54.4 was held by Cartaya, again.

A considerable proportion of the money was funneled through a bank in the Bahamas called the Cisalpine Bank, and from thence to the Vatican Bank to Swiss numbered accounts; this bank was owned by Vatican Bank manager Archbishop Paul Marcinkus and notorious dirty Italian banker Roberto Calvi. Interestingly, the Cisalpine bank seems to have also been laundering heroin profits through the Nugan Hand Bank bank for the Grey Wolves.

The bank was involved with a number of prominent Floridians, such as Walter Sterling Surrey, a stockholder in, director of, and lawyer for, WFC Corp. Kwitny recounts,

Surrey says he came aboard mainly to help start a foreign-based mutual fund for an old client, a Cuban exile who helped found World Finance. He says he dropped out in 1976 when the mutual fund deal fell through, and that he was unaware of any criminal or intelligence activities of the company.

The investigation and its aftermath were marred and dogged by persistent rumors and allegations of corruption and cover ups by various governmental agencies. Jonathan Kwitny writes this of the Justice Department's head investigator, Jerome Sanford:

He says the main investigation was halted by Washington in 1978, after the CIA objected that 12 of the Justice Department's chief targets were "of interest" to it. Sanford says he was told that this meant the men he was investigating were CIA operatives of one sort or another. Florida lawmen who worked with Sanford backed up his story.

Two of the suspects were Richard Fincher and Hernandez-Cartaya. In the aftermath, Florida Attorney General Robert Shevin returned $7,600 in contributions from WFC-connected Latin businessmen. Dade County Democratic chairman Michael Abrams resigned from the board of a WFC-backed insurance company.

Kwitny and Sanford were not the only ones to detect things amiss; Kwitny offers this extract from a House Select Committee on Narcotics and Drug Abuse staff report:

There is no question that the parameters of the WFC can encompass a large body of criminal activity, including aspects of political corruption, gun running, as well as narcotics trafficking on an international level... It is against this background that our investigation encountered a number of veiled or direct references to CIA or KGB complicity or involvement in narcotics trafficking in South Florida.

There were also allegations that 8 of the 12 bank directors were either current or former CIA employees, and that then-CIA director William J. Casey (coincidentally, a Roman Catholic) apparently stymied the investigation for reasons of "national security". And so the two-year investigation ended in the conviction of Cartaya in 1982 for nothing more than tax evasion.