1. Meetings
News about our group

2. 3 Strikes Quilt
A nifty publicity idea in California

3. US Corporations laundering South American drug money
I tried to edit this article down to a readable length.  There’s a great summary of the laundering process at the end.

4. Lindesmith Drug Policy Foundation Newsletter
Once more, I felt some heavy editing in the interest of time was in order.  Check out the analysis of the Drug Czar’s office and the encouraging momentum towards replacing him.  Also more California news, Human rights (or lack thereof in Colombia, and Supreme Court case on testing pregnant women for drugs.)

5. Symposium this Thursday and Friday
If you want more info., email rjl135@columbia.edu and I’ll give you the full text.  That goes w/ everything here and eventually I’ll try to get it up on the website (which btw I had nothing to do with and Andrew had everything to do with, so 3 cheers for him)

1. Meetings

The next meeting will be this Wednesday from 12:30 to 1:30 p.m. in WJ 101.  We will continue to meet every other Wednesday in WJ101, so mark your calendars for Nov. 8th and 22nd too!

Topics to be discussed at this Wednesday’s meeting include:
- Students for Sensible Drug Policy National Conf. Nov. 17-18
- Colombia Panel
- Website development
- FEHDP Spring Conference
- Rockefeller Campaign
- Budget Questions: fundraising, brainstorming, etc.
- NYU Marijuana law symposium
- Anything else someone would like to discuss

2. 3 Strikes Quilt

 Orange County Chapter of FACTS is putting together a 3-Striker Quilt.
It will have pictures of 3-strikers with non-serious, non-violent offenses.  Our purpose is to gain the attention of the public and California politicians.   We want every 3-striker to be on this quilt. We hope to keep it going, adding panel after panel.

 Each panel is $50 and a photo of the prisoner, with name, offense and length of sentence.    FACTS has a list of 100 strikers that they have judged from their database as the 'Top 100 3-Strike Stories.'  Those donations not assigned to a specific prisoner will first go to the top 100-list.
 For further information, e-mail Barbara at:  HrMsBrooks@aol.com

3. US Corporations Launder S. American Drug Money
                "We've got the Fortune 500 involved in our
                drug-money laundering process."
______________  ==========================================

Tuesday, 10 October 2000

                U.S. Companies Tangled in Web Of Drug Dollars

        By Lowell Bergman

On a rainy day last June, a group of corporate executives gathered in a conference room at the Justice Department for a meeting with Attorney General Janet Reno and other top government officials.

The executives represented some of the pillars of corporate America-Hewlett-Packard, Ford Motor Company, Whirlpool.  The session was not publicized because those at the meeting shared an unlikely and potentially embarrassing problem: their companies, they feared, were being singled out in the nation's war on drugs, and neither they nor the government was quite sure what to do.

With the intensifying federal crackdown on money laundering, agents had been tracking drug money into the accounts of American corporations and their distributors and dealers. In fact, federal officials said, about $5 billion a year in Colombian drug money is used to buy goods and services-from cigarettes to computer chips-from American companies.

What makes that possible is a system known as the black-market peso exchange, a complex money trade that law enforcement officials say has become increasingly important to the Colombian narcotics trade.

The system-really a network of currency brokers with offices in New York, Miami, the Caribbean and South America-is essentially an underground money market that lets the traffickers exchange American dollars for Colombian pesos. Those dollars, which stay in the United States, are then bought by Colombian companies that use them to buy American goods for sale back home.

But the government's efforts to seize that money have put it on a collision course with corporations, which say they are victims with no way of knowing that they and their distributors are being paid with drug money.

As they met on June 6, those executives, lawyers and law enforcement officials found themselves grappling with a conundrum: when does drug money stop being drug money?

How far does a company's responsibility go?

The questions have been confronting law enforcement officials for years.

"What are we going to do?" asked Greg Passic, a former drug enforcement agent who now advises the government on the economics of the narcotics industry. "We've got the Fortune 500 involved in our drug-money laundering process."

Their growing reliance on that system shows how deeply the drug trade has become entwined in the legitimate economies of the United States, Colombia and other nations. Colombian officials said that as much as 45 percent of their country's imported consumer goods are bought with money laundered through the peso exchange.

On the American side, law enforcement officials said the exchange has largely eliminated the trade deficit with Colombia. The market, said the customs commissioner, Raymond W. Kelly, "is the ultimate nexus between crime and commerce, using global trade to mask global money laundering."

So far, no large American company has faced criminal charges. And companies have almost always been able to prevent federal officials from keeping money that has been seized.

But in the last few years, as frustration has risen, the government has taken a tougher line. There have been Congressional hearings intended to put companies on notice by name. Prosecutors have issued warnings and stepped up efforts to seize laundered money.

At the same time, the government has encouraged companies to institute "know your customer" policies similar to those used in the financial industry. The policies gave dealers and distributors techniques for recognizing money laundering. Thus educated, the government thought, the companies would be less able to argue that they simply could not have known.

In drawing the line between legitimate and illegitimate profits, the government must not only prove that the money came from drug deals; it must show that the recipient "knew or should have known" its source.

In the war on drugs, that line has proved very fuzzy.

        Trading Dollars for Pesos

One peso broker recently agreed to describe how the system works.

The process begins when the broker receives a call from a Colombian drug trafficker or his American representative. The two negotiate an exchange rate for pesos, usually 30 percent to 40 percent below the fixed rate.  So $10,000 might be worth 12 million pesos instead of 20 million at the official rate.

The dollars are then delivered to the broker, who promises to deliver pesos to the trafficker's bank account after the dollars are sold to Colombian businesses. The dealer's insurance is the broker's knowledge that to do otherwise would almost surely mean death.

The broker maintains several runners-"smurfs," in law enforcement lingo-who deposit the cash into hundreds of United States bank accounts in amounts of less than $10,000, to avoid scrutiny.

At the same time, the broker's office in Colombia negotiates with business people there who want cheap dollars to buy everything from consumer goods to helicopters.

Usually, that exchange rate is 20 percent below market, so a business owner in Colombia might pay 16 million pesos, instead of 20 million pesos at the fixed rate, for $10,000.

The pesos are then transferred-in this example, 12 million pesos-to the traffickers' accounts. The broker keeps the difference, 4 million pesos in this instance. Then at the businessman's direction, the dollars in the American banks are used to pay for American goods.

The peso brokerage is one part of the process that supplies Colombia with inexpensive goods from the United States and around the world. Colombian authorities said the goods were often smuggled into the country, costing Colombia more than $300 million a year in tax revenue.

Colombia has made collecting that lost revenue a priority. But the black market has considerable appeal because it puts a lot of inexpensive foreign goods on the Colombian market.

The exchange has also increased American exports to Colombia.

"This is positive for U.S. business, there is no doubt about it," said Mike Wald, who runs a consortium of law enforcement agencies in Florida focusing on the peso exchange.  "The Colombian, if he pays less for his dollars, can buy more goods.  That's a pretty obvious economic fact. But we have to realize where this money originates. It's drug money."

        Tangled With Drug Money

Two companies that have turned up in the American government's anti-laundering efforts are Phillip Morris and Bell Helicopter Textron.

Earlier this year, Phillip Morris was sued in the Eastern District of NewYork by the Colombian tax collectors. The federal lawsuit accused the company of being involved in cigarette smuggling and in the laundering of drug proceeds.

In 1995, in Federal District Court in San Juan, Puerto Rico, Phillip
Morris's former distributors in northern South America were indicted for
laundering $40 million in black market pesos.

In another case, Bell Helicopter is challenging the seizure of $300,000
from its accounts, money, according to court documents, that was generated
by drug smuggling.

It was part of more than $1 million that the United States believed was
supplied a peso-exchange broker to buy a Bell aircraft.

The helicopter was seized in Panama at the request of the United States.

The case has become a sore point for American law enforcement in part
because the helicopter was sold to a Colombian businessman linked to the
country's right-wing paramilitaries.

        Seeking Cooperation

The deepening struggle between prosecutors and business executives is
led to the meeting with Attorney General Reno and other government
officials, including Deputy Attorney General Eric H. Holder and Deputy
Treasury Secretary Stuart E.  Eizenstat. The companies invited were
Hewlett-Packard, Ford, General Motors, Sony, Westinghouse, Whirlpool and
General Electric Company, Treasury officials said.

None of the companies returned phone calls seeking comment, except
Electric and Sony. Sony said it would have no comment. But General
Electric's counsel, Scott Gilbert, said his company instituted a strict
compliance program five years ago, after reports that its refrigerators
were being used in money-laundering operations.

        "HOW IT WORKS-Dollars for Pesos: A Black Market"

A Colombian trafficker sells drugs in the United States.

The trafficker contacts a black-market peso broker to launder the

The broker deposits the dollars into banks in the United States and
the trafficker Colombian pesos at 30 percent to 40 percent below market

The broker negotiates currency exchanges with Colombian businesses that
want to sell American goods at home. The rate is usually 20 percent

The businesses instruct the broker to send the dollars to United States
companies, which then ship the goods, often through a network of
who avoid paying tariff. (Source: U.S. Customs Service)

        Copyright 2000 The New York Times Company
4. Lindesmith Center - Drug Policy Foundation
NETWORK NEWS - October 2000

This Issue:

1. Drug Czar Under Fire
2. Medical Marijuana in California: People 1, Government 1
3. Clinton Waives Colombian Human Rights Conditions
4. Supreme Court to Rule on Drug Testing of Pregnant Women

Drug Czar Under Fire
Evidence of shoddy management, invasions of privacy, and possible
illegal activities mount

Drug czar Barry McCaffrey, head of the Office of National Drug Control
Policy, is under fire from a variety of camps for what has become a
pattern of shoddy management, invasion of people's privacy, and possible
illegal activities. Based on a number of reports from a variety of
sources, it seems that the General-turned-Czar runs the ONDCP as if it
was his own personal army - from a high-pressure military-style office
culture to propaganda techniques reminiscent of a military campaign.
Many Americans, including a growing number of Members of Congress, are
beginning to question if a four-star General, with no background in
medicine, psychology or drug treatment, should be directing a civilian
agency charged with reducing drug abuse.

A recent independent review of the drug czar's office, by
PriceWaterhouseCoopers, found the ONDCP to be a troubled bureaucracy led
by a leader, whose management style is driving many professionals to
quit. The 53-page report, commissioned by a House and Senate conference
committee after several Members became concerned about reports of
problems in employee retention at the ONDCP, describes McCaffrey's
leadership style as "aggressive, high-pressure, and military
oriented."    [Blah blah he’s a military type who runs his office like a military operation and his workers are unhappy]…

As reported in Salon.com, the Washington Post, the New York Times and
dozens of other print and on-line papers, it was discovered earlier this
year that ONDCP officials were reviewing and recommending changes to
scripts for such television shows as "E.R." and "Beverly Hills 90210",
as part of a financial agreement with networks that encouraged them to
include anti-drug use or pro-drug war messages in plots of their
fictional shows. The ONDCP reviewed in advance the scripts for over 100
episodes of various TV shows on major networks like ABC, CBS, NBC and
FOX, in some cases even suggesting that certain scenes be changed or
certain lines be re-written. In exchange for broadcasting episodes that
voiced the government's message, the networks received millions of
dollars in financial credit. Additionally, at least six major U.S.
magazines, including U.S. News & World Report, submitted anti-drug news
stories to ONDCP officials requesting that they receive financial credit
for presenting the government's message in their news stories. The
Federal Communications Commission is currently reviewing  complaints
that the ONDCP's manipulation of television content violated the "Payola
Act" requiring producers who receive money or other valuable
consideration for the inclusion of program matter to inform broadcasting
companies that they received such money and inform viewers on what
content is paid for and by whom. Furthermore, the use of taxpayer
dollars to alter what the American people see and hear raises serious
First Amendment issues.

In a July press conference he announced his intention to use the clout of his agency to add anti-drug messages to Hollywood movie plots. During a recent House subcommittee
hearing, McCaffrey told Members of Congress that "as powerful as
television is, some experts believe that movies have an even stronger
impact on young people." Although he insists that Hollywood production
companies won't receive any kind of financial credit for incorporating
his agency's views into their fictional movies, he does admit that his
office will work with producers, directors, and actors to get them to
voluntarily reinforce the ONDCP position. During the July press
conference, McCaffrey told reporters that the new campaign had already
begun through briefings, workshops, roundtables and one-on-one
conversations with movie industry leaders.

McCaffrey's office was also criticized recently for indirectly
monitoring the Internet activities of American citizens in violation of
federal privacy guidelines. These charges stem from the ONDCP's use of
"cookies" to monitor the success of their on-line advertising campaign.

To monitor its on-line advertising campaign, the ONDCP placed cookies in
the computer of every person who clicked on an ODCP ad and went to one
of the agency's web sites. The cookies recorded exactly which ad a
person clicked on, what web site the person clicked on it from, and
which ONDCP pages the user chose to view. The ONDCP used DoubleClick,
the nation's largest Internet ad agency, to place the on-line ads and
devise the cookies. DoubleClick was also charged with compiling the
information to determine how successful the on-line campaign was doing
overall, determining such things as how many people clicked on an ONDCP
ad, which ad was the most popular, and which web sites the ads were most
successful on. Although neither DoubleClick or the ONDCP would have been
able to match the information the cookies transmitted with any specific
person, many civil libertarians expressed concern that it was
inappropriate for a federal agency to be collecting any information on
what web pages citizens were going to and how often. The use of cookies
by the ONDCP also violated federal privacy policies and President
Clinton, upon revelation that the ONDCP was using them, ordered the
agency to immediately stop using them.

But planting "cookies" on the hard drives of web surfers and secretly
taping phone conversations of journalists is child's play compared to
manipulating and manufacturing facts and figures to boost support for
himself and his agency. For example, McCaffrey continues to exaggerate
the number of annual drug-related deaths to both Congress and the media,
often claiming in testimony and interviews that over 50,000 Americans
die from drugs a year- a number not only over three times higher than
what other government agencies estimate, but one that has no apparent
basis in fact. McCaffrey also once claimed, as part of his
anti-marijuana campaign, that Holland, a country with liberal drug laws,
had a murder rate double that of the Unites States. He was forced to
stop making such claims after the facts showed that Holland's murder
rate is less than one quarter that of the U.S. rate.

Most damaging to his credibility, however, is the ONDCP's manipulation
of criteria established to determine the level of success in achieving
their objectives. The ONDCP recently misrepresented the effectiveness of
its $195 million multi-year anti-drug media campaign.  Under Public Law
No. 105-277, the ONDCP and other federal agencies are required to set
"quantifiable and measurable" goals and file annual reports with
Congress detailing the level of progress in reaching those goals.
Congress then uses the measurements to determine if a program should
receive more funding or be eliminated as ineffective.

One of McCaffrey's most touted projects is the ONDCP's anti-drug ad
campaign geared towards 9 to 18 year olds.  [Three paragraphs follow basically saying that while the number of 12th graders who perceive marijuana use as harmful  has dereased while  the number of 8th graders who think that marijuana use is harmful has stayed steady. So in order to justify spending on anti-MJ ad campaigns the ONDCP has switched from using 12th graders as a standard to 8th graders.]

A growing number of Americans are also wondering why this nation is
treating drug abuse as a law enforcement problem at all, instead of a
public health problem to be solved by doctors, psychiatrists, and other
health-care professionals.  This growing body of Americans include
Members of Congress, such as Representatives John Conyers (D-MI), Bobby
Rush (D-IL), Charles Rangel (D-NY), Maxine Waters (D-CA) and Tom
Campbell (R-CA); Governors, such as New Mexico Governor Gary Johnson and
Minnesota Governor Jessie Ventura; nationally syndicated columnists such
as Arianna Huffington and William Buckley; and religious leaders, such
as the Reverend Jessie Jackson.

Some public officials, such as Representatives Maxine Waters and John
Conyers, have even called for McCaffrey's resignation for both his lack
of experience and his willingness to sacrifice the lives of American
citizens at risk for HIV/AIDS in order to enforce a failed drug policy.
Hopefully, the next administration will heed the calls to reexamine the
direction of U.S. drug policy and appoint someone who will emphasize
public health approaches over law enforcement.

Medical Marijuana in California: People 1, Government 1

When Californian voters approved an initiative legalizing marijuana for
medicinal use in 1996, California became ground-zero in the fight to
protect the right of patients to relieve their suffering through the use
of medical marijuana.

In September a U.S. District Judge in California ruled that doctors have
the right to discuss the medical benefits of marijuana and recommend its
use to their patients without fear that federal authorities will take
away their right to prescribe medicine or impose other kind of sanctions
on them. The case stems from threats issued by the Clinton
administration shortly after voters approved Proposition 215,
California's 1996 medical marijuana initiative. Clinton officials warned
Californian doctors that if they recommended the use of medical
marijuana to their patients, then they could face losing their federal
license to prescribe medicine. In response to those threats, a group of
doctors filed a class action suit against the federal government to
block federal officials from prosecuting or sanctioning doctors that
recommended the use of marijuana for medicinal purposes.  The doctors
argued that taking away their licenses or sanctioning them for speaking
with their patients about the benefits of marijuana violated their
free-speech rights. The federal judge agreed, ruling that "[t]he
relevant federal statute does not authorize the government to revoke a
physician's license to dispense controlled substances merely because a
physician 'recommends' marijuana as therapy to a patient.  Any contrary
holding would raise severe First Amendment doubts."  The Judge also
noted that "In the marketplace of ideas, few questions are more
deserving of free-speech protection than whether regulations affecting
health and welfare are sound public policy." The federal government is
appealing the decision and it could ultimately go to the U.S. Supreme

It's not all good news in California, however. In late August the U.S.
Supreme Court issued an emergency stay, sought by the Clinton
administration, barring the Oakland Cannabis Buyers' Co-operative from
distributing marijuana to patients. The Supreme Court decision stems
from a lawsuit bought by the Justice Department against the Oakland
Co-op in an attempt to get the courts to shut it down for violations of
federal anti-marijuana laws.  Rather then raiding the Co-op with armed
agents and arresting people, many of them patients, the feds thought it
would be better to take the civil route and have a judge do their dirty
work. U.S. District Court Judge Charles Breyer, who was first to hear
the case, sided with the Justice Department and ordered the Co-op to
stop distributing medical marijuana to patients.  The 9th Circuit U.S.
Court of Appeals, however, overruled Breyer on appeal and directed him
to issue a ruling protecting the Co-op on the grounds that "medical
necessity" was a recognized legal defense against violation of federal
marijuana laws. The Justice Department, in an attempt to overturn the
ruling, filed an appeal with the U.S. Supreme Court asking the Justices
to issue an emergency stay on the lower court ruling during the appeals
process. The U.S. Supreme Court granted the emergency stay and is
expected to decide sometime after October if it will hear the Justice
Department's appeal of the 9th Circuit decision.

Clinton Waives Colombian Human Rights Conditions

When Congress recently approved a $1.3 Billion military aid package for
the Colombian government's fight against Marxist rebels believed to be
engaged in drug trafficking, Members of Congress conditioned the aid on
Colombia improving its disgraceful human rights record. Last month,
however, when it became obvious that the Colombian military couldn't
reform itself enough to meet the conditions, President Clinton waived
the human rights conditions - essentially giving the Colombian military
a free pass to engage in whatever kind of tactics it chooses in its
struggle against rebels and drug lords, including continuing to work
with paramilitary death squads that have been accused of torturing and
killing civilians.

That Colombia couldn't meet the human rights conditions that Congress
imposed comes as no surprise. The U.S. State Department, in its February
annual report on human rights in Colombia, found that "The [Colombian]
Government's human rights record remained poor...Government forces
continued to commit numerous, serious abuses, including extrajudicial
killings." The State Department report went on to find that
"Paramilitary forces find a ready support base within the military and
police, as well as local civilian elites in many areas."

Even though Clinton waived the human rights conditions that Congress
placed on the aid package, few Members of Congress have criticized the
move. In fact, House leaders are considering giving Colombia another
$99.5 million to purchase more aircraft, ammunition and other equipment
for the counter-narcotic campaign of the Colombian national police. The
additional funding could include, $25 million for a year's supply of
.50-caliber ammunition, $35 million for transport and supply aircraft,
$15 million for an additional Black Hawk helicopter, $5 million for a
Schweizer SA2-37A/38 intelligence aircraft, and $10 million for
antimissile kits, floor armoring and other defenses for Colombia's
existing Black Hawks.

Spearheading the drive to give more arms and assistance to the Colombian
counter-narcotic war are Representatives Dan Burton (R-IN), Benjamin
Gilman (R-NY), and House Speaker J. Dennis Hastert (R-IL).

Supreme Court to Rule on Drug Testing of Pregnant Women

On October 4th the U.S. Supreme Court will begin hearing arguments on
the constitutionality of a hospital's policy of secretly testing the
urine of selected pregnant women for cocaine and providing the local
police with the results for prosecution of those mothers testing
positive. The case, Ferguson v. City of Charleston, will determine
whether or not pregnant women suspected of drug use have a protection
under the Fourth Amendment. The outcome could allow health care
providers to act as agents of law enforcement, violating patient trust
and compromising the provision of sound medical care.
The Ferguson case challenges a policy developed in 1989 by the Medical
University Hospital in Charleston, South Carolina ("MUSC").  MUSC health
care professionals and hospital administrators, working in collaboration
with the police and prosecutor's office, instituted a policy of
searching certain pregnant women and new mothers for evidence of cocaine
use.  Urine tests, normally done to aid medical decision-making, were
instead turned over to the police and used as criminal evidence when the
tests suggested cocaine use.  Female patients who tested positive for
cocaine were then arrested. Search warrants are normally required for
urine tests but Charleston city and state officials argue that pregnant
women meet a "special needs" exception to the Fourth Amendment.
Some of the women arrested were shackled to their hospital beds; others
were arrested shortly before or immediately after giving birth, often
while still dressed in hospital gowns and still suffering pain and
bleeding from the childbirth. Threat-based approaches like Charleston's
have been shown to deter pregnant and parenting women not from using
drugs but from seeking prenatal care and drug treatment, dangerously
undermining fetal and child health. As with other aspects of the costly
war on drugs, the Charleston policy was carried out mostly against
minorities - all but a couple of the 30 women arrested under the program
were African-American.
The testing program, which began in 1989, was suspended in 1993 due to
legal challenges by ten women, including nine women of color who were
arrested for testing positive.  Supporting the women are The Lindesmith
Center - Drug Policy Foundation, the American Civil Liberties Union, and
nearly two-dozen medical and health organizations. If the Supreme Court
upholds the program, the City of Charleston could revive their
drug-testing policy and hospitals around the country could establish
such programs.
For more information:

5. Breaking the Barriers
> A symposium on substance use for consumers, service providers and
> policymakers
> Presented by The Community Advisory Board of the Center for Urban
> Epidemiologic Studies at The New York Academy of Medicine
> Thursday & Friday
> OCTOBER 26 & 27, 2000
> at The New York Academy of Medicine
> 1216 Fifth Avenue, New York NY 10029