A Nogales, Sonora small businessman who organized a scheme to open fraudulent bank accounts in Arizona in order to wire money back to Mexico was sentenced at Santa Cruz County Superior Court to 2.5 years in state prison.

Enrique Monarque Orozco, 51, was sentenced by Judge Thomas Fink on Aug. 24 after he pleaded guilty to one count of illegally operating an enterprise, a Class 3 felony. Days later, he was arraigned at U.S. District Court in Tucson on federal charges stemming from the same scheme, which allegedly involved the participation of the branch manager of the Wells Fargo bank in Rio Rico, dozens of other co-conspirators and more than $10 million in funds “funneled” into Mexico through U.S. bank accounts.

According to Monarque’s pre-sentence report filed at the local court, as well as the federal complaint against him and other related documents, he and a co-conspirator with the initials M.C.G.G. recruited people during the year-and-a-half leading up to August 2019 to open bank accounts at the Wells Fargo bank branch in Rio Rico.

The accounts were opened with cash supplied by Monarque, and subsequently controlled by Monarque and other co-conspirators for the purpose of wire-transferring funds to bank accounts in Mexico while disguising their source and ownership.

Monarque reportedly told investigators that he used the Wells Fargo in Rico Rico because he was friends with the bank manager there, who knew Monarque was using third parties to open the accounts. He said the manager encouraged him to come to the branch to open more accounts because “it looks good for him,” but added that the reason he used that branch was because he knew staff wouldn’t report his activities, ostensibly because of his relationship with the manager, who was identified in Monarque’s pre-sentence report by the initials C.V.

Carlos Vasquez, the former manager of the Wells Fargo branch in Rio Rico, was indicted on federal charges in October 2019 along with a woman named Maria Concepcion Gonzalez Garcia, and both are still awaiting resolution of their cases. In the complaint filed against him, Vasquez was accused of helping create the accounts, despite knowing that the people whose names were listed on them were not the true account-holders.

The accounts were generally opened with cash amounts totaling less than $10,000. But once they were opened, investigators say, the accounts began receiving large cash deposits from bank branches in Arizona and elsewhere in the United States. The funds were then wire-transferred to Mexico.

According to the complaint against Vasquez, he personally executed 48 wire transfers to Mexico from the so-called funnel accounts.

For his part, Monarque claimed that his interest in the scam was to operate a currency arbitrage, by which he would change pesos to dollars at a “casa de cambio” in Nogales, Sonora, bring it across the border to Arizona in amounts below the $10,000 reporting requirement, then have the account owners deposit it at the Wells Fargo for transfer back to Mexico. He claimed that he made a profit of $10,000 to $15,000 per year by taking advantage of the differing exchange rates on each side of the border.

Monarque reportedly acknowledged to investigators that the dollars from the casa de cambio likely came from drug trafficking, but said he didn’t ask any questions out of fear that he’d be suspected of being an informant for the DEA.

Separate sovereigns

A number of people who allowed the funnel accounts to be opened in their names have been prosecuted and convicted already in Santa Cruz County Superior Court, including one Nogales, Sonora woman who said she was recruited by a woman with the same initials (M.C.G.G.) as Gonzalez Garcia and promised $95 for her participation.

Monarque reportedly told investigators that, in addition to his bank scam, he owned a car wash and hair salon in Nogales, Sonora, and maintained several rental properties in the city. He estimated that his annual income from those activities was approximately $35,000 – something that Judge Fink noted during the Aug. 24 sentencing hearing.

“Many of the people who appear before me commit crimes because of very desperate economic circumstances, and I believe that lighter sentences are appropriate for those people who are facing extreme poverty and demands on them as such that their judgement is affected by their poverty and their extreme circumstances,” the judge said, adding that Monarque fit a different profile.

Still, he gave Monarque, who offered a tearful apology and who defense lawyer Roberto Montiel described as a 51-year-old father of three with no prior criminal offenses, the slightly mitigated sentence of 2.5 years that was recommended by the County Probation Department.

Montiel also noted that Monarque now faces prosecution in federal court for the same activity that earned him a state conviction – something that’s allowed under the “separate sovereigns doctrine,” which permits the federal and a state government to criminally prosecute the same person for the same conduct.

The federal complaint accuses Monarque of being involved in the scam from January 2017 until August 2019, a period for which law enforcement agents identified approximately 89 funnel accounts allegedly being operated by his organization.

Until May 2018, the complaint alleges, the scam involved “many individuals, known and unknown, in no less than 15 states,” who deposited cash into funnel accounts. The people depositing the cash reportedly included convicted drug-traffickers and people who believed the person asking them to make the deposit was a drug trafficker. Agents also reportedly used jail records, tattoos and open source media to identify five co-conspirators as members or associates of a criminal street gang in the metropolitan Chicago area.

But then the bank – identified in the complaint only as “Bank A” – changed its policy to prohibit cash deposits from people other than an account’s signer. At that point, the complaint says, “the organization’s typology adapted and Monarque and co-conspirators smuggled U.S. currency from Mexico to the United States.”

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