A former Prudential Securities broker in Miami has been sentenced to 10 years in federal prison and ordered to forfeit $250,000 for his role in laundering drug money. Some believe the case could trigger greater scrutiny of money laundering in the securities industry.
Edilberto J. Miranda, known as "Fast Eddy," had been a producer in Prudential's Coral Gables, Fla., office for seven years until 1994, when the firm terminated him for lack of production, sources say. Following a lengthy federal investigation, trial and ultimate conviction earlier this summer, Miranda was sentenced Aug. 29 for laundering at least $250,000 in funds belonging to cocaine-traffickers. Two of his former clients, sitting in federal prison on drug convictions, provided the damning evidence, in exchange for a chance to reduce their own sentences.
Assistant U.S. Attorney Jena King, who prosecuted Miranda for the Southern District of Florida, suggests he may have actually laundered some $5.5 million over many years and netted more than $300,000 in commissions in the process. Many of these alleged transactions occurred beyond a five-year statute of limitations and were not figured into the 23-count indictment and two-count conviction. Most of the drug money originated in the United States and was taken out and wired back in.
"He was very sophisticated," King says. "He used his knowledge of the securities industry to run circles around us."
King says it's doubtful that Prudential knew of Miranda's activities, adding that Prudential managers testified at trial that Miranda lied to them, and violated firm policies, including filing dishonest account documents that misstated the source of funds.
Prudential Securities would not comment on the case.
Charles Intriago, publisher of Money Laundering Alert newsletter in Miami, says the Miranda conviction is important because it's "the first case where a stockbroker has been convicted where no currency was involved. It was a wire transfer," he says.
Intriago says the securities industry has traditionally claimed it had no great concerns about money laundering because, unlike banks, it did not accept cash. There is an assumption, he says, that wire transfers are automatically "clean money" because they come from a bank. But brokers should not assume this, he adds.
"Know your customer," Intriago says. "Know what type of financial activity they're involved in."