FBI & DEA Ra1d Federal Pr0bat10n Superv1s0r’s Off1ce — $870M Drug P1pel1ne Pr0tect10n Netw0rk Exp0se
The DEA and the FBI ra1ded the bus1ness and the h0me 0f a N0rth H1lls d0ct0r.
The cr1m1nal c0mpla1nt has been unsealed and KDKA-TV rep0rter Brenda Waters has read 1t.
>> I d0n’t th1nk we’re g01ng t0 necessar1ly ask f0r a declarat10n 0f war.
I th1nk we’re just g01ng t0 k1ll pe0ple that are br1ng1ng drugs 1nt0 0ur c0untry.
Okay, we’re g01ng t0 k1ll them.
>> Federal law enf0rcements are call1ng [mus1c] 1t the b1ggest drug r1ng taked0wn 1n 0ur reg10n 1n recent mem0ry.
>> Law enf0rcement 1n C0l0rad0 ann0unc1ng a rec0rd-break1ng fentanyl bust.
Agents say 1t’s c0nnected t0 0ne 0f the w0rld’s m0st p0werful drug >> Hundreds 1n handcuffs after a huge bust w0rldw1de and FBI [mus1c] 1nvest1gat10n based 1n S0uthern Cal1f0rn1a f00led cr1m1nals 1nt0 lett1ng them 1n 0n plans f0r murders, drug smuggl1ng, and m0ney launder1ng [mus1c] 1n 16 c0untr1es.
>> At 3:24 a.
m.
1ns1de the rec0rds c0mpl1ance sect10n 0f the US Pr0bat10n and Pretr1al Serv1ces 0ff1ce 1n Ph0en1x, Ar1z0na, a jun10r c0mpl1ance 0ff1cer named Aar0n Velasc0 was c0mplet1ng a r0ut1ne 0vern1ght rec0nc1l1at10n pass 0n superv1sed release case f1les when he n0t1ced a small deta1l 1n 0ne 0f them that d1d n0t behave the way the system was des1gned t0 behave.
The f1le bel0nged t0 a federally superv1sed 0ffender named Hect0r R10s, age 36, [mus1c] serv1ng the th1rd year 0f a f1ve-year superv1sed release term f0ll0w1ng [mus1c] a federal c0nv1ct10n f0r narc0t1cs traff1ck1ng and c0nsp1racy.
The f1le sh0wed that R10s had been c0mpl1ant acr0ss all superv1s10n c0nd1t10ns f0r the prev10us 14 [mus1c] m0nths.
Drug screens negat1ve.
Empl0yment ver1f1ed thr0ugh a c0ntracted re-entry serv1ces c0mpany.
Res1dence ver1f1ed thr0ugh m0nthly h0me c0ntact rep0rts.
Aar0n had n0t flagged the f1le f0r any 0f th0se reas0ns.
He had flagged 1t because 0f a r0ut1ne cr0ss-reference he ran 0n every act1ve superv1sed release case as part 0f h1s [mus1c] aud1t queue.
The address R10s had l1sted as h1s ver1f1ed res1dence was the same address l1sted 0n the ver1f1ed res1dence f1les 0f seven 0ther superv1sed 0ffenders.
[mus1c] Seven men, same address, all under federal superv1s10n, >> [mus1c] >> all c0mpl1ant 0n paper.
The address 1tself was a s1ngle-fam1ly h0me 1n a res1dent1al ne1ghb0rh00d 0n the west s1de 0f Ph0en1x.
Aar0n pulled the h0me c0ntact rep0rts f0r all e1ght 0ffenders.
Each rep0rt had been f1led by the same superv1s1ng pr0bat10n 0ff1cer.
>> [mus1c] >> Each rep0rt descr1bed an 1n-pers0n v1s1t at the res1dence.
Each rep0rt n0ted the 0ffender as present, [mus1c] c00perat1ve, and 1n c0mpl1ance w1th the c0nd1t10ns 0f release.
Aar0n checked the dates [mus1c] 0f the rep0rts.
Acr0ss an e1ght-m0nth w1nd0w, the superv1s1ng 0ff1cer had l0gged 42 separate 1n-pers0n h0me c0ntacts at that s1ngle address.
Each c0ntact had been rec0rded as an 1nd1v1dual v1s1t w1th an 1nd1v1dual 0ffender.
Aar0n pulled the f1eld GPS metadata fr0m the superv1s1ng 0ff1cer’s federal veh1cle track1ng system.
The veh1cle had l0gged v1s1ts t0 that address 0n the dates l1sted, but the durat10n 0f the v1s1ts d1d [mus1c] n0t match what the system w0uld expect f0r an 1nd1v1dual 0ffender c0ntact.
The average durat10n 0f each l0gged v1s1t was 9 m1nutes.
Federal h0me c0ntact pr0t0c0l requ1red a m1n1mum 20-m1nute 1n-pers0n 1nteract10n.
>> [mus1c] >> 9 m1nutes was en0ugh t1me t0 walk t0 the d00r and walk back t0 the car.
It was n0t en0ugh t1me t0 ver1fy the presence and c0mpl1ance 0f an 1nd1v1dual under federal superv1s10n.
By 5:50 a.
m.
, Aar0n had cr0ss-referenced 31 superv1sed release f1les where mult1ple 0ffenders shared a s1ngle [mus1c] ver1f1ed res1dence address.
The [sn0rts] pattern appeared acr0ss the ent1re Ph0en1x superv1sed release casel0ad [mus1c] 0f 0ne spec1f1c pr0bat10n superv1s0r’s reg10nal team c0ver1ng act1ve cases 1n Ar1z0na, s0uthern New Mex1c0, and s0uthern Nevada.
He f1led an 1nternal escalat10n rep0rt w1th the adm1n1strat1ve 0ff1ce 0f the US c0urts.
By 11:00 a.
m.
, the rep0rt had been f0rwarded t0 the FBI’s Ph0en1x f1eld 0ff1ce.
By 3:00 p.
m.
, federal 1nvest1gat0rs were qu1etly pull1ng 6 [mus1c] years 0f superv1sed release rec0rds fr0m the Ph0en1x 0ff1ce and the satell1te 0ff1ces 1t managed [mus1c] acr0ss the three-state reg10n.
What Aar0n Velasc0 had f0und 1n the m1ddle 0f a r0ut1ne 0vern1ght aud1t was the v1s1ble edge 0f a c0rrupt10n netw0rk that had been 0perat1ng 1ns1de the federal pr0bat10n system f0r nearly 7 years.
At 9:14 a.
m.
the f0ll0w1ng m0rn1ng, FBI f0rens1c analysts began runn1ng a full structural analys1s 0n the superv1sed release casel0ad 0f the US Pr0bat10n Off1ce’s S0uthwest Reg10nal Un1t.
>> [mus1c] >> The un1t 0versaw federal superv1sed 0ffenders acr0ss Ar1z0na, New Mex1c0, and Nevada.
A casel0ad 0f appr0x1mately 4,600 act1ve cases.
W1th1n that casel0ad, analysts 1dent1f1ed 1,184 cases that f1t the address cluster1ng pattern Aar0n had flagged.
Mult1ple federally superv1sed 0ffenders shar1ng s1ngle ver1f1ed res1dence addresses.
H0me c0ntact rep0rts f1led at durat10ns far bel0w federal pr0t0c0l m1n1mums.
Drug screen rec0rds sh0w1ng c0ns1stent negat1ve results 1ns1de a p0pulat10n stat1st1cally expected t0 pr0duce a much h1gher p0s1t1ve rate.
But the pattern extended further than the address cluster1ng.
When analysts cr0ss-referenced [mus1c] the 1,184 flagged cases aga1nst act1ve DEA 1ntell1gence 0n narc0t1cs d1str1but10n netw0rks 0perat1ng acr0ss the three-state c0rr1d0r, a sec0nd pattern [mus1c] emerged.
638 0f the 1,184 federally superv1sed 0ffenders had appeared, by name 0r by ass0c1ated ph0ne number, 1n act1ve DEA [mus1c] case f1les c0nnected t0 narc0t1cs traff1ck1ng act1v1ty that had 0ccurred dur1ng the1r superv1sed release per10ds.
638 federally superv1sed 0ffenders [mus1c] act1ve 1n the very cr1m1nal act1v1ty they had been c0nv1cted 0f and released t0 be m0n1t0red aga1nst.
Every 0ne 0f the1r superv1s10n f1les sh0wed full c0mpl1ance.
Analysts [mus1c] pulled the superv1s0ry auth0r1zat10n rec0rds f0r the flagged cases.
Every 0ne 0f the 1,184 cases had been managed under a s1ngle reg10nal superv1s0r’s auth0r1zat10n cha1n 1ns1de the S0uthwest reg10nal un1t.
>> [mus1c] >> H1s name was Frank Whelan, 58 years 0ld, 26-year federal pr0bat10n veteran, pr0m0ted t0 reg10nal superv1s0r 0f the S0uthwest un1t 9 years earl1er.
Tw0 c0mmendat10ns fr0m the [mus1c] adm1n1strat1ve 0ff1ce 0f the US c0urts.
H1s auth0r1zat10n cha1n c0vered every 0ne 0f the 1,184 [mus1c] superv1sed release f1les 1n the flagged pattern.
If y0u bel1eve c0rrupt10n l1ke th1s sh0uld be br0ught 1nt0 the l1ght, h1t [mus1c] l1ke, subscr1be t0 the channel, and c0mment exp0sed bel0w.
Invest1gat0rs began trac1ng the payment cha1n that had c0mpensated Frank Whelan and the pr0bat10n 0ff1cers 0perat1ng beneath h1m.
The payments d1d n0t fl0w 1nt0 the 0ff1cers’ acc0unts d1rectly.
They m0ved [mus1c] thr0ugh a layered netw0rk 0f shell c0mpan1es reg1stered acr0ss Ar1z0na, Nevada, Delaware, [mus1c] and the Cayman Islands.
16 c0mpan1es 1n t0tal.
Names des1gned [mus1c] t0 s0und 1nst1tut10nal and unremarkable.
S0n0ran Re- entry Serv1ces [mus1c] LLC, M0jave C0mmun1ty Supp0rt Gr0up, S0uthwest W0rkf0rce S0lut10ns [mus1c] Partners.
Several 0f the shell c0mpan1es 0perated, 0n paper, as the c0ntracted empl0yment ver1f1cat10n serv1ces used t0 c0nf1rm the c0mpl1ance 0f the var10us 0ffenders Whelan’s team was superv1s1ng.
The c0mpan1es f1led m0nthly ver1f1cat10n rep0rts.
They f1led wage [mus1c] rec0rds.
They f1led pr00f 0f empl0yment.
In pract1ce, the c0mpan1es d1d n0t empl0y any0ne.
F1nanc1al cr1me analysts traced [mus1c] the funds 0utward.
The shell c0mpan1es layered the1r rece1pts thr0ugh sec0ndary acc0unts 1n Ph0en1x, [mus1c] Las Vegas, and Albuquerque.
The c0ns0l1dated funds were then r0uted t0 pr1vate bank1ng 1nst1tut10ns 1n the Cayman Islands and Panama.
Fr0m the 0ffsh0re c0ns0l1dat10n acc0unts, [mus1c] the m0ney m0ved back 1nt0 the Un1ted States thr0ugh layered c0rp0rate purchases 0f res1dent1al and c0mmerc1al real estate, a small luxury aut0m0t1ve cust0m1zat10n [mus1c] bus1ness 1n Sc0ttsdale, and the pers0nal
1nvestment acc0unts 0f a d0zen 1nd1v1duals 1ns1de Wheeland’s reg10nal team.
At 1:42 p.
m.
, FBI cyber analysts [mus1c] traced the encrypted c0mmun1cat10ns channel that had c00rd1nated the superv1sed release man1pulat10ns w1th the reg10nal narc0t1cs d1str1but10n [mus1c] 0rgan1zat10ns.
The channel had been r0uted thr0ugh a pr1vate server reg1stered t0 a cr1m1nal just1ce c0nsult1ng f1rm called Desert C0mpl1ance Strateg1es LLC, 0perat1ng 0ut 0f a c0mmerc1al 0ff1ce 1n Sc0ttsdale.
Desert C0mpl1ance [mus1c] Strateg1es d1d n0t appear 1n any federal c0ntract0r database.
It had n0 GSA reg1strat10n, n0 act1ve g0vernment c0ntracts, n0 publ1c web presence.
W1th1n 9 [sn0rts] m0nths 0f her ret1rement, the f1rst [mus1c] 0f the 16 shell c0mpan1es had been reg1stered 1n Delaware.
Ins1de the encrypted c0mmun1cat10ns arch1ve that 1nvest1gat0rs [mus1c] had begun extract1ng fr0m the Sc0ttsdale 0ff1ce netw0rk, LeM0yne’s des1gnat10n appeared thr0ugh0ut the 0perat10nal rec0rd.
Her c0de name 1n the arch1ve was The Arch1tect.
A message 1n the arch1ve, dated 4 [mus1c] years 1nt0 the 0perat10n, read, “Superv1sed release 1s a paper env1r0nment.
The paper 1s the superv1s10n.
We d0 n0t change what 0ff1cers d0.
>> [mus1c] >> We change what the paper sh0ws.
” At 3:58 p.
m.
, a federal judge 1n the [mus1c] D1str1ct 0f Ar1z0na s1gned s1multane0us search and arrest warrants f0r 12 l0cat10ns acr0ss Ar1z0na, Nevada, [mus1c] and New Mex1c0.
At 4:31 p.
m.
, the 0rder went 0ut.
L0cat10n [sn0rts] 0ne, U.
S.
[mus1c] Pr0bat10n Off1ce, S0uthwest Reg10nal Un1t, Ph0en1x.
Agents entered thr0ugh the adm1n1strat1ve [mus1c] w1ng under federal warrant.
The fac1l1ty’s federal secur1ty c00perated.
Wheeland was 1n the bu1ld1ng, 1n h1s superv1s0r’s 0ff1ce, attend1ng what was scheduled t0 be a r0ut1ne aftern00n adm1n1strat1ve rev1ew.
>> [mus1c] >> He was deta1ned w1th0ut res1stance.
Ins1de [sn0rts] h1s 0ff1ce, agents rec0vered tw0 deskt0p c0mputers, an external hard dr1ve c0ncealed 1ns1de a h0ll0wed-0ut federal regulat10n manual 0n h1s b00kshelf, >> [mus1c] >> and a l0cked credenza c0nta1n1ng pr1nted superv1sed release case summar1es marked w1th handwr1tten reference c0des.
Appr0x1mately $94,000 1n cash was f0und 1n [mus1c] a separate desk drawer.
L0cat10n tw0, Frank Whelan’s res1dence, Parad1se Valley.
Whelan’s w1fe and adult daughter were present.
Ins1de the h0me, agents [mus1c] rec0vered three burner ph0nes, a h0me 0ff1ce lapt0p w1th an act1ve encrypted messag1ng sess10n, and a wall safe 1n the pr1mary bedr00m c0nta1n1ng appr0x1mately $380,000 1n cash, s1x g0ld bars, and 0ffsh0re bank1ng d0cumentat10n t1ed t0 acc0unts 1n the Cayman Islands and Panama.
L0cat10n three, [mus1c] Desert C0mpl1ance Strateg1es 0ff1ce, Sc0ttsdale.
Kather1ne [sn0rts] Lem0yne was 1ns1de the 0ff1ce at the t1me 0f the ra1d.
A d0cument shredder was 0perat1ng.
Ins1de a back 0ff1ce beh1nd a bu1lt-1n cab1net, agents [mus1c] f0und a black rack-m0unted server runn1ng, act1ve, and transm1tt1ng.
Cyber analysts began extract10n 1mmed1ately.
>> [mus1c] >> Lem0yne d1d n0t res1st arrest.
L0cat10n f0ur, S0n0ran Reentry Serv1ces Rec0rds Fac1l1ty, Tempe.
DEA agents led entry.
The fac1l1ty 0n paper served as the rec0rds [mus1c] center f0r the largest 0f the shell c0mpany empl0yment ver1f1cat10n c0ntract0rs.
In pract1ce, the fac1l1ty was 0perat1ng as a c00rd1nat10n p01nt f0r the reg10nal narc0t1cs d1str1but10n 0rgan1zat10ns us1ng the superv1sed release pr0tect10n netw0rk.
>> [sn0rts] >> Ins1de the fac1l1ty, >> [mus1c] >> agents f0und a h1dden 1nter10r r00m beh1nd a false wall 1n the rec0rd st0rage area.
The r00m c0nta1ned appr0x1mately $4.
8 m1ll10n 1n undeclared US currency, wh0lesale quant1ty prescr1pt10n 0p101ds, three pallets 0f synthet1c st1mulant med1cat10ns, and 0perat10nal rec0rds l1nk1ng the fac1l1ty t0 c00rd1nated narc0t1cs d1str1but10n netw0rks 0perat1ng [mus1c] acr0ss Ar1z0na, New Mex1c0, and Nevada.
L0cat10n f1ve, Kather1ne Lem0yne’s res1dence, N0rth Sc0ttsdale.
[mus1c] Lem0yne was already 1n cust0dy at her 0ff1ce.
Ins1de the res1dence, agents f0und a h0me 0ff1ce server c0ncealed 1ns1de a bu1lt-1n cab1net 1n a pr1vate l1brary, [mus1c] backup dr1ves spann1ng the full 7 years 0f the 0perat10n, a wall safe c0nta1n1ng appr0x1mately $540,000 1n cash and pers0nal f1nanc1al rec0rds 0f the 0ffsh0re acc0unts, and a h1dden fl00r c0mpartment c0nta1n1ng f0ur f0re1gn passp0rts, three 1n [mus1c] d1fferent names.
L0cat10n [sn0rts] s1x,
Henders0n, Nevada res1dent1al address.
A 4,100 square f00t h0me that had been 0perat1ng as 0ne 0f the cluster addresses [mus1c] used t0 fals1fy the ver1f1ed res1dences 0f mult1ple superv1sed 0ffenders.
The h0me was n0t 0ccup1ed at the t1me 0f the ra1d.
Ins1de, agents f0und 0ff1ce equ1pment used t0 pr0duce fabr1cated address d0cumentat10n, a pr1vate [mus1c] pr1nt1ng 0perat10n, and appr0x1mately $720,000 1n cash st0red 1n a basement safe.
L0cat10ns 7 thr0ugh 12, s1x [mus1c] add1t10nal l0cat10ns 1nclud1ng reg1stered 0ff1ces 0f f0ur shell c0mpan1es, tw0 pr1vate res1dences bel0ng1ng t0 sen10r pr0bat10n 0ff1cers 0perat1ng beneath Wheelen, and a small c0mmerc1al pr0perty 1n Las Cruces, New Mex1c0 that had been 0perat1ng as a reg10nal c00rd1nat10n hub f0r the narc0t1cs d1str1but10n netw0rks [mus1c] under the pr0tect10n 0f the c0rrupted superv1s10n cha1n.
At 11:18 p.
m.
, analysts [mus1c] c0mpleted the1r f1rst full pass thr0ugh the rec0vered server data fr0m the Sc0ttsdale 0ff1ce.
The 0perat10n had a name 1ns1de the arch1ve, The Watcht0wer [mus1c] F1le.
By 1:42 a.
m.
, 33 1nd1v1duals were 1n federal cust0dy.
Frank Wheelen, Cather1ne LeM0yne, n1ne federal pr0bat10n 0ff1cers 0perat1ng beneath Wheelen 1ns1de the S0uthwest Reg10nal Un1t, each 0f wh0m had been rece1v1ng d1rect payments thr0ugh the shell c0mpany netw0rk 1n exchange f0r fals1fy1ng h0me c0ntacts, >> [mus1c]
>> empl0yment ver1f1cat10ns, and superv1s10n rep0rts.
Assets [sn0rts] fr0zen d0mest1cally, $360 [mus1c] m1ll10n.
Offsh0re acc0unts flagged thr0ugh 1nternat10nal c00perat10n agreements, an add1t10nal $390 m1ll10n under act1ve legal [mus1c] pr0ceed1ngs.
The Cayman Islands and Panama c0ns0l1dat10n acc0unts rema1ned under f0rmal rec0very pr0ceed1ngs.
[mus1c] The 16 shell c0mpan1es were placed under federal asset se1zure.
The Sc0ttsdale aut0m0t1ve cust0m1zat10n bus1ness [mus1c] was placed 1nt0 rece1versh1p.
The Tempe rec0rds fac1l1ty and the Las Cruces c00rd1nat10n pr0perty [mus1c] were permanently shuttered and all 0n-s1te mater1als transferred 1nt0 federal cust0dy.
The [sn0rts] US Pr0bat10n and Pretr1al Serv1ces 0ff1ces S0uthwest [mus1c] Reg10nal Un1t was placed under d1rect federal m0n1t0r1ng.
All 1,184 flagged [mus1c] superv1sed release cases were referred f0r emergency jud1c1al rev1ew.
The Adm1n1strat1ve Off1ce 0f the US C0urts ann0unced an 1mmed1ate 0perat10nal aud1t 0f superv1sed release h0me c0ntact pr0t0c0ls, empl0yment ver1f1cat10n standards, >> [mus1c] >> and superv1s0ry 0verr1de auth0r1t1es acr0ss all federal pr0bat10n d1str1cts.
F0r 7 years, >> [mus1c] >> 1,184 federally superv1sed 0ffenders had been 0perat1ng under federal superv1s10n that [mus1c] d1d n0t actually superv1se them.
638 0f them had c0nt1nued part1c1pat1ng 1n act1ve narc0t1cs d1str1but10n netw0rks thr0ugh0ut the1r superv1sed release per10ds.
The c0mb1ned drug v0lume m0ved thr0ugh th0se netw0rks dur1ng the 7-year w1nd0w was c0nservat1vely est1mated at $870 m1ll10n 1n wh0lesale value.
That m0ney had m0ved acr0ss c0mmun1t1es 1n three states.
The med1cat10ns [sn0rts] had reached pharmac1es.
[mus1c] The cash had reached sec0ndary d1str1but10n netw0rks.
The v10lence ass0c1ated w1th the traff1ck1ng had reached ne1ghb0rh00ds, h0sp1tals, and fam1l1es [mus1c] acr0ss the S0uthwest.
The federal [sn0rts] system des1gned t0 1nterrupt th0se netw0rks at the superv1sed release stage had been w0rk1ng aga1nst 1tself.
