National News

Soon To Be Big In Japan, Jim Beam's Roots To Stay In Kentucky

NPR News - Wed, 2014-01-15 00:05

In a deal worth some $16 billion, Japanese beverage giant Suntory is buying Beam Inc., maker of Jim Beam bourbon and owner of well-known American brands such as Maker's Mark. Industry leaders say it's a reflection of bourbon's exploding popularity in Asian markets, but some wonder if the new owners will preserve bourbon's Kentucky heritage.

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Russia Aims To Implement The Tightest Security In Olympic History

NPR News - Wed, 2014-01-15 00:04

Russian officials say high-tech surveillance and the deployment of tens of thousands of troops are part of the most extensive Olympic security measures ever. The region surrounding host city Sochi is home to Europe's deadliest insurgency, and Islamist militants have proven their ability to strike.

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A Woman Comes To Terms With Her Family's Slave-Owning Past

NPR News - Wed, 2014-01-15 00:03

Kate Byroade had always known her ancestors were slave owners, but she had been told their slaves were treated well. Understanding the truth took her on a difficult lifelong journey. Americans are shy "about calling out the great wickedness of slavery," she says. "We should not be."

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Report: NSA Maps Pathway Into Computers

NPR News - Tue, 2014-01-14 23:33

The National Security Agency has implanted software in nearly 100,000 computers around the world that allows the U.S. to conduct surveillance on those machines, The New York Times reported Tuesday. The software was not implanted in computers in the U.S.

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Minn. Orchestra And Union Musicians End Bitter Lockout

NPR News - Tue, 2014-01-14 22:50

The Minnesota Orchestra and union musicians ratified a new contract Tuesday, ending a 15-month lockout that saw renowned Finnish maestro Osmo Vanska quit as conductor last fall. The three-year agreement takes effect Feb. 1.

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Supreme Court Considers Legality Of Abortion Clinic Buffer Zones

NPR News - Tue, 2014-01-14 21:01

Do boundaries meant to protect patients and staff outside abortion clinics violate the free speech rights of anti-abortion protesters? In 2000, the Supreme Court said no in a case involving "floating" buffer zones. But the issue is back before the court — which now has more conservative justices.

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Battery Problem Reported On Boeing Dreamliner In Japan

NPR News - Tue, 2014-01-14 17:46

Reports of white smoke from a battery compartment have temporarily grounded a Boeing 787 Dreamliner in Japan, nearly a year after all the new airliners were grounded due to a problem with batteries overheating. Tuesday's incident happened on an airliner at Tokyo's Narita Airport that had no passengers aboard.

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IRS Gets Spending Bill Smackdown From Congress

NPR News - Tue, 2014-01-14 16:12

In response to a 2013 scandal, lawmakers are pushing overall IRS funding to a five-year low and ordering the agency to obey the Constitution.

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5 Takeaways From The Omnibus Spending Bill

NPR News - Tue, 2014-01-14 15:49

Regular order. That phrase refers to Congress conducting business in a methodical way, like it used to back before "dysfunctional" came to seem an official description of Washington. A new federal budget working its way through Congress could help restore regular order to Capitol Hill.

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Why The Youth Gap On Obamacare Exchanges Could Be A Yawner

NPR News - Tue, 2014-01-14 15:08

Just about everybody was watching to see how many young people signed up for health insurance during the first three months that the new exchanges were open. Younger people are generally healthier, and their premiums tend to balance out insurers' outlays for older, sicker people.

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Federal Judge Strikes Down Oklahoma Ban On Gay Marriage

NPR News - Tue, 2014-01-14 14:46

U.S. Senior District Judge Terence Kern said the state's constitutional amendment limiting marriage to opposite-sex couples violates the U.S. constitution. Gay marriages are on hold, however, pending an appeal.

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Gen. Dempsey Disputes Gates' Characterization Of Obama

NPR News - Tue, 2014-01-14 14:26

In an interview with NPR, Gen. Martin Dempsey, the nation's top military officer, said he never questioned that Obama "trusted me." In his controversial book, former Defense Secretary Robert Gates said Obama felt the military was trying to box him into decisions.

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Drug cartels have an offer you can (and should) refuse

Marketplace - American Public Media - Tue, 2014-01-14 14:03

More and more, Mexican drug cartels are partnering with small American businesses. The U.S. companies don't ever come in contact with drugs. Instead, they help the cartels launder dirty drug money.

In Mexico, the cartels have a money problem. They literally have more cash than they know what to do with.

If you bring a lot of cash to a Mexican bank, the teller will insist on an invoice or a receipt for deposits of more than $10,000.

It's gotten harder to deposit cash because of new Mexican banking laws. The cartels end up warehousing mountains of money in various stash houses around the country.

When Mexican police confiscated the loot from a cartel business partner, U.S. agent Jere Miles got closer than most of us ever will to $200 million in cash.

"Wall-to-wall, three feet high, to within like a foot-or-two-feet of the entryway to the room. Just stacks of money," says Miles, a deputy special agent with Homeland Security Investigations.

To keep those walls of cash from being confiscated by police, the cartels need a way to legitimize their drug money and show that their revenues were made legally. That's what we know as money laundering. And the cartels do a lot of it here in the U.S.

"We're seeing money come back into the United States as part of the scheme to launder money," says Miles.

He co-manages the Los Angeles office that investigates what is known as trade-based money laundering. In its most basic terms, the scheme involves buying and selling consumer goods to disguise the criminal origins of the money.

For example, imagine the cartel buys a shipment of widgets in the U.S. and pays $100,000. But on the Mexican customs form, the representative of the cartels will lie and report that the widgets cost $200,000.

The widgets are then sold in Mexico.

"I've seen organizations that are willing to invest their money in a product and wait for it to sell. And then they absolutely can make a profit, consistent with the market," says Miles. "But in most cases, the cartels aren't interested in a profit. All they're really interested in is really recouping their money."

Often, the products are sold at a slight loss. But for the sake of example, let's say the widgets get sold at cost. That's $100,000.

From that point, Miles says the cartels "take the $100,000 where they really sold the widgets. Then they take another $100,000 of their own money – the dirty money – and they say, 'See? I sold all these widgets for $200,000. Here's $200,000.' It's a lot more complicated than that. But that is like the basic concept of it."

The law enforcement strategy is similar to the way the Feds went after Al Capone for tax evasion. The Mexican drug cartels make money by selling drugs and murdering their competition. But it is the fraud on the customs paperwork that could compromise them.

"Every crime that they commit just increases the chances of them getting caught," says Miles. "So, I've often asked myself: Why would they do that? Just to beat the duties? Even though it's a minor crime, they still could lose all their product, they could lose all their investment. And I've yet to get anyone to give me a legitimate answer as to why they do it, other than greed. They just want to make a few extra pennies."

Nonetheless, Miles says it would be a mistake to underestimate the business savvy of the guys running the Mexican cartels. Even though the cartel leaders usually have little or no formal education, Miles says, "I would say they are on a par with any CEO of a Fortune 500 company."

Others in law enforcement make similar comparisons.

"We've always believed that cartels operate as if they were a corporation," says special agent Hector Colon, who works for a special branch of Immigration and Customs Enforcement.

Colon says Mexican drug cartels use a criminal version of the chief financial officer.

"They employ people that you could consider to be CFOs, or those people who are responsible for laundering their money," says Colon. "Basically, these individuals... their role and their purpose is to find licit ways to move money, so that they can continue to layer the money through different schemes, so the cartels can then get access to their illicit funds."

He says a cartel CFO will open corporations, or partner with businesses that are willing to move money for the cartels. That brings us back to trade-based money laundering.

Colon runs something called the Trade Transparency Unit, where elite customs agents pour over international trade data. The U.S. has partnerships with nine countries that have agreed to share customs data, and it is developing partnerships with two more countries.

The trade information allows agents to identify inconsistencies.

"In its simplest form, what the system allows us to do is determine that what was actually shipped from one country is what was actually delivered in another," says Colon. "Anomalies that we find in the comparison of that trade data is what allows us to then investigate for trade-based money laundering."

As an example, Colon looks at the trade of gold bullion and scrap gold on his computer. The data is represented by dots on a graph.

"What I'm noticing in this graph is that the value of gold bullion down here is being declared well below the value of scrap gold," says Colon. "And we know that gold bullion is more pure than scrap gold."

Those discrepancies in the paper trail often trip up the criminals and help law enforcement identify money launders.

But what about merchants? Is it easy for them to spot cartel intermediaries trying to launder money?

To find out, I stick with the example of gold, and I visit the jewelry district in downtown Los Angeles. I spend two days cold-calling wholesale and retail jewelers.

Several tell me that they frequently get propositions for major cash transactions on the condition that the deals would be off the books. But they're afraid to speak on the record.

Then I meet Alberto Hernandez. Actually, I have to pass through three separate security doors before I reach him. Hernandez is president of Pegasus Metals. The company buys and sells gold. It also melts gold in a special furnace that can get as hot as 4,000 degrees Fahrenheit.

I tell Hernandez that I've heard rumors about people who come around with bags of cash, looking for deals where there's no paperwork involved.

"We get customers who do ask that. They don't want to report to IRS," says Hernandez.

He always gives them the same answer. "We don't do any cash," says Hernandez.

But downstairs in the same building, retail jewelers sell gold necklaces and bracelets and rings. Many merchants tell me that business is bad. As the price of gold has increased, consumer demand has decreased.

You can imagine how desperate retailers teetering on bankruptcy might rationalize bags of questionable cash.

And it's not just the gold and jewelry businesses. The cartels are diversified. In the past, they've invested in products ranging from kids' toys to plasma TVs.

"We expect this is going to become a bigger problem in the near- to mid-term future," says agent Miles.

Homeland Security Investigations predicts significant arrests and prosecutions related to trade-based money laundering schemes in the coming months.

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