U.S. prosecutors probe whether Castro government was involved in Medicare scam

Jun. 19, 2012
U.S. prosecutors probe whether Castro government was involved in Medicare scam
by Frances Robles | McClatchy Newspapers

Just two days after alleging that a South Florida man ran a "vast cash-to-Cuba operation," federal prosecutors said they have no proof that the Castro regime is behind a multimillion-dollar Medicare money-laundering scam.

But if the crux of a case filed in U.S. District Court is true - that a network of fraudsters funneled tens of millions of Medicare dollars to Havana - experts say there's no way that much cash could wind up in bank accounts in Cuba without the government there knowing it.

So does check-cashing agent Oscar L. Sanchez's indictment on a conspiracy to commit money laundering charge offer the first shred of substantiation to the long-held theory that the Castro brothers pull the strings behind elaborate plots to defraud Medicare?

Veteran Cuban analyst Maria Werlau said if the money indeed wound up in Cuba's national banking system, "it is almost impossible to conceive that anyone not in the pay of Cuban intelligence would pour millions into Cuban banks."

"Who doesn't know that all Cuban banks are Cuban government banks, i.e. under the total control of the state?" said Werlau, an anti-Castro activist who has studied the regime's banking system extensively.

Prosecutors have accused Sanchez, 46, of being the "financier" for a group that funneled $63 million of fleeced Medicare dollars into banks in Havana. His is the first such case that directly traced money allegedly ripped off from the federal health care program for the elderly to Cuba.

Prosecutors said the money linked to Sanchez - $31 million - moved through an intricate web of foreign shell companies before ending up in Cuba via Canada and Trinidad.

A motion filed Monday seeking to deny bond for Sanchez was unclear on whether the funds ultimately ended up in the Trinidad-based Republic Bank's Havana branch, or in a bank that is run by the Cuban government.

The document did say that the alleged fraudsters' Republic Bank accounts were opened at Republic's branch office in Havana, "and that at least two of those accounts had standing instructions to the bank to wire all money immediately from the accounts to the Cuban banking system."

Werlau said Cuba has long faced allegations of laundering money for both drug traffickers and leftist terrorist groups. Accounts compiled by a series of defectors and other sources were bolstered in 2004 by a $100 million fine levied against a Swiss bank, which was caught buying and selling more U.S. dollars from Cuba than the dictatorship could justify having.

She added that no scam artist "in their right mind" would risk sending money to a country where the government has in the past frozen all foreign business accounts, suggesting that the suspected fraudsters were working for the Cuban regime. But Florida International University law professor Jose Gabilondo said he was unconvinced by the prosecutor's allegations, in part because Cuba charges steep fees on dollar transactions. Launderers who possibly diverted $63 million to Cuba would have lost 10 percent off the top.

"Why would they want to lose $6 million?" said Gabilondo, who has studied the Cuban banking system.

He said the motion prosecutors filed seeking Sanchez's pretrial detention contained charged nationalistic language that seemed aimed to play on anti-Castro sentiments in Miami.

"The motion says Sanchez was 'a capitalist for Cuban banks' and ran a 'cash-to-Cuba operation,'" he said. "I thought, 'Wow, what is that?' I'm very skeptical that there's any relevant link to the Cuban economy or Cuban government."

Two hours after issuing a public statement on the international money-laundering case saying his office would "continue to follow the evidence wherever it leads," U.S. Attorney Wifredo A. Ferrer sent another announcement: "There is no allegation and we have no evidence that the Cuban government is involved in this case."

Gabilondo said he doubts the Cuban government would risk its recent thaw in frozen diplomatic relations by being involved with such a massive scheme. He acknowledged that it would be impossible to keep that much money secret in Cuba.

But, he added, "Awareness of the existence of large amounts of dollars doesn't mean they know where it came from."

In reaction to the case, Republican Congresswoman Ileana Ros-Lehtinen said Tuesday she has reintroduced the Medicare Fraud Enforcement and Prevention Act, so that money cannot be funneled to "rogue nations."

Sanchez's defense attorney Peter Raben declined to comment.

"I am eager to look at the evidence and represent my client," he said. "It's a fascinating case. I look forward to the representing Oscar, and Oscar's looking forward to his day in court."

Former federal prosecutor O. Benton Curtis said it's not hard to suspect that the Cuban government has a hand in the scheme.

"In light of the current allegations, as well as what has been unearthed by law enforcement in other investigations and cases, I do not think that is a terribly unreasonable inference to draw," Curtis said. "However, without more definitive evidence to corroborate such a belief, that is all it remains for now: an untested, unproven theory."

When he tried Medicare fraud cases, seeing suspects and defendants flee to Cuba became "almost epidemic," said Curtis, who is now in private practice in Washington, D.C.

"This is a remarkable case," he said. "It, for the first time, evidences law enforcement's ability to sift through a complex matrix of financial transactions that were intended to mask a massive fraud whose ultimate beneficiaries appear to be residents of Cuba, not Medicare recipients."