First read diamond laundry (part one), diamond 47th (part two), jewelry fence (part three), of the investigation.

by Andrew Bast found at nyinquirer

 Fencing in Manhattan's Diamond District has turned deadly. Late on a June afternoon in 2003, teams of federal agents and detectives shut down 47th Street to traffic and arrested 11 jewelry merchants in the Diamond District, including Roman Nektalov, who owned a 30-year-old mainstay on the block, Roman Jewelers, and his son, Eduard. The two, along with nine others, were laundering immense amounts of Colombian drug money.

Diamonds and gold are an ideal means for cleaning cash. According to a Government Accountability Office report on terrorist financing, “Diamonds can be used in lieu of currency in arms deals, money laundering and other crimes. Diamonds are also easily smuggled because they have high value and low weight and are untraceable and odorless.” In fact, the threat from the jewelry industry has escalated so much that, as of the first of the year, the Internal Revenue Service now requires jewelry retailers to comply with anti-money laundering regulations.

Experts contend that the practice is common and has been going on for decades. A former U.S. Customs Agent of 36 years explained how crooks would setup shell companies in New York and Bogota, and they would ship, in one instance, thirty 500-pound transmissions made of pure gold. It was an especially resourceful scam because even if customs agents happened to inspect the shipment, what’s threatening about a transmission, especially if it’s heading from Alpha Auto in New York to Carros Calientes in Bogota?

Photo of hammers -- not from mentioned case -- from flickr

 In the Nektalov case, the drug lords piled up profits, all in cash. With it, they’d buy gold on 47th Street, which they could sell to refiners back home in Colombia for pesos. It was the best kind of laundering operation – one that avoided financial institutions entirely, and in turn, the IRS. While investigators tracked $1 million exchanged for gold, prosecutors said that the actual amount laundered to Colombia was vastly more.

Still, there was a hitch. Customs officials will scrutinize a satchel of gold bullion. So what a 50 year-old Diamond District caster named Jaime Ross provided, in addition to secrecy and silence, was a way to even hide the gold itself. He cast millions of dollars worth of gold into common household objects and then, simply, painted them black. The cartel laundered their drug money with nuts, bolts, a pipe wrench estimated to be worth $10,000 and even a golden hammer.

“The jewelers may not be drug lords,” said James B. Comey, the U.S. attorney in Manhattan at the time of the Nektalov bust, “but they’re every bit as important to the success of those drug endeavors as the dealers themselves.”

Then, on a pleasant evening in May following Eduard Nektalov’s arrest, as he walked from Roman Jewels to his black Bentley parked in a garage on 48th Street, a long-haired man dressed in black walked up behind him, drew a .48-caliber pistol and unloaded a single bullet into the back of his head. After Nektalov collapsed on the sidewalk, the gunman shot him twice more in the back.

Nektalov’s father went to trial two months later and was found guilty of money laundering. For an operation that spanned two years and washed millions in drug money, he was sentenced to five months in prison. A year later police nabbed the gunman who killed his son. While it appears to be a hired killing, who’s behind it remains a mystery.

See Part V diamond black market for the final installment: "Since Time Immemorial" . . .