The leader of an international money laundering organization is scheduled to be arraigned this afternoon on federal charges that allege he moved millions of dollars in drug money for organizations that included the Sinaloa Cartel.
Gurkaran Singh Isshpunani was arrested on September 14 in Buffalo, New York as he attempted to enter the United States from Canada. A federal magistrate ordered Isshpunani held without bond and directed that he be transported to Los Angeles, where he arrived last night.
The indictment specifically alleges that the hawala network transferred more than $4.5 million in narcotics proceeds and was involved in the trafficking of 29 kilograms of cocaine and approximately 90 pounds of methamphetamine.
However, during the course of a four-year federal wiretap investigation by the Drug Enforcement Administration’s LA Strike Force and IRS – Criminal Investigation, authorities seized a total of $15,467,293 in bulk United States currency, 321 kilograms of cocaine, 98 pounds of methamphetamine, 11 kilograms of MDMA (“ecstasy”) and nine kilograms of heroin.
Isshpunani and the others are charged in a 36-page indictment that outlines the workings of a “hawala,” which is an alternative form or method of money remittance which operates outside of traditional banking or financial systems. Through hawala transactions, only the value of the money is transferred, not the money itself. The hawala system transfers money via a network of brokers known as “hawaladars.” According to the indictment, Isshpunani is a hawaladar who is a part of a network of Indian men who move money based on a trust system.
The indictment explains that, in its most basic form, a hawala needs at least two brokers who are typically located in separate countries (but can be located in different cities within one country). The transfer of monetary value occurs between the brokers based solely upon the trust that exists between the brokers. Thus, there are no promissory instruments or any legally binding features of the hawala system. The necessary trust and long-established connections between brokers are typically based on familial, ethnic, religious, regional and/or cultural grounds. Often, a given hawala network consists of many brokers operating in multiple countries around the world in which all brokers are in contact with each other and money movements can occur in a variety of directions from one country to another.