Federico “Fred” Machado, the Argentine businessman who will be extradited to USA accused of laundering drug money, he is also suspected of defrauding investors and lenders out of millions of dollars to acquire jets in which the organization transported cocaine, even for the sinaloa cartel.
In the request to the Argentine Justice, to which he agreed TN, texas prosecutor Ernest González explained the maneuver by which he would have generated profits of $350,000,000 since 2016.
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Like Leonardo Cositortocreator of Generation Zoebut on a much larger scale, “Fred” and his accomplices -Debra Lynn Mercer-Erwin, Kayleigh Moffett and Michael Assad Marcos- are accused of having used the ponzi scheme: the pyramid scheme by which investors are attracted to take loans that were paid with the funds of previous investors.
To understand the fraud and the way in which the gang managed to have a large fleet, it is necessary to explain how the illicit association in which the Argentine is involved operated. Born in Río Negro, Machado is considered a “big fish” of drug money laundering by the Airport Security Police (PSA) and was captured in Neuquén.
The prosecution pointed out that the transnational criminal organization acquired and operated, at least from 2010 onwards, “aircraft from the United States and other places to facilitate the smuggling of drugs and drug proceeds, as well as to launder money”, to through a complex network of companies whose base of operations was the firm Aircraft Guarantee Corp, established in a Texas city with no airport.
First, the plan included the fraudulent use of registrations and titles to hide the true nature, location, ownership, and control of the aircraft. To do this, the Argentine and his criminal associates used trusts and illicit business entities in that country to acquire and register aircraft, to conceal illegal foreign ownership and the true nature of their flights.
However, when the pilots were unable to fulfill the narco mission, the members of the structure canceled the registration of the aircraft and/or transferred the title to other parties “to contribute to the continuation of the concealment of the control, ownership and location of the same”.
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At the same time, they used commercial entities and financial accounts to defraud lenders and investors into paying large sums of money for buy aircraft that do not exist, are legally inoperable, or are unsaleable.
The pyramid scheme of “Fred” Machado for the purchase of drug planes
According to the indictment, since at least 2016, Mercer-Erwin, Moffett and Machado “they devised a plan and artifice, specifically a “Ponzi” scheme, to defraud persons and to obtain money by means of pretenses, representations or promises of a false or fraudulent nature”.
This scheme took advantage of the typical aircraft purchase transaction to trick investors into depositing millionaire figures in a custody account of the criminal organization.
But that sum, agreed to as a loan, was never spent on the purchase of a jet, but instead was used for a refundable deposit. The sales never took place because the aircraft does not exist or because it belongs to someone else.
For example, on September 27, 2019, via South Aviation Inc., one of Machado’s companies in Florida, Miami, the members of the band signed a series of agreements for the purchase of an airplane that was unsaleable.
“It was unsaleable because it belonged to a private airline and was in China”, the prosecutor wrote in the document sent to Procunar, by Diego Iglesas, and studied by assistant prosecutor Matías Álvarez.
On November 12, 2020, another of the firms from Río Negro did the same with an Air India aircraft and it was not for sale. This agreement was for a refundable deposit of $5,000,000 in dollars. Machado signed this agreement on behalf of Pampa Aircraft Financing, another of his firms based in the city where he lived until he had to escape.
The profits obtained were channeled to foreign accounts and investment vehicles through electronic transfers and other means to continue supporting and facilitating the operations of the structure.
How the fleet of narco jets of the gang of Fred Machado was discovered
The US Department of Commerce, the Bureau of Industry and Security, the Office of Export Control, and the Homeland Security Investigations Division launched an investigation. after noticing irregularities in the records of aircraft and that several, on behalf of the accused, were seized or destroyed while smuggling drugs internationally.
The members of the organization tried -by means of another maneuver- get the coveted “N” in front of the queue number indicating that it had been registered in the United States.
That letter on the license plate gave them some leeway to operate: the foreign countries through which they flew were less likely to inspect drug-laden jets or force them to land.
On October 11, 2018, the N241CW jet was purchased by TWA International, from Carlos Rocha Villaurrutiaanother of those involved. That same day he registered the aircraft and presented an International Operations Declaration to fly from Phoenix, Arizona, to Ciudad Juárez, in Mexico. the jet crashed in Venezuela while transporting 1,200 kilograms of cocaine for the Sinaloa cartel.
On October 19, 2019, the aircraft N322BC it landed on a clandestine airstrip in the Cayo District, Belize, where it was found in a state of abandonment. The seats had been removed and the aircraft was configured to transport narcotics.
On December 16, 2019, the jet with the number N939RR was seized in Guatemala with approximately 2,572 kilograms of cocaine. Those two planes had also been registered by TWA International and deregistered following the incidents. The prosecution managed to detect more than twenty similar cases.
Among them, the jet Bombardier Challenger 604 registration N600AM. In January 2011, the Spanish Police discovered 944 kilograms of powdered cocaine hidden inside the aircraft that had arrived in Barcelona from Argentina. The flight was operated by Machado’s South Aviation.
It was the plane of the brothers Gustavo and Eduardo Juliá, sentenced in 2013 to 13 years in prison for drug trafficking and released in 2020.