VZCZCXYZ0563
OO RUEHWEB

DE RUEHQT #0212 0631509
ZNR UUUUU ZZH
O 031509Z MAR 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8576
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7392
RUEHCV/AMEMBASSY CARACAS PRIORITY 2921
RUEHLP/AMEMBASSY LA PAZ MAR 0948
RUEHPE/AMEMBASSY LIMA PRIORITY 2440
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3360
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS QUITO 000212 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR MMALLOY AND MEWENS 
 
E.O. 12958: N/A 
TAGS: SNAR ECON EFIN KTFN EC
SUBJECT: ECUADOR PROSECUTES LANDMARK MONEY LAUNDERING CASE 
 
¶1.  (SBU) Summary:  On February 18, Ecuador convicted seven 
associates of Hernan Prada-Cortez, a drug trafficker involved in 
money laundering.  The convictions are the result of an Ecuadorian 
national police investigation, in concert with DEA, which yielded 
ten arrests and the seizure of assets in excess of $6.5 million in 
¶2006.  The sentences are the first under Ecuador's money laundering 
legislation.  End summary. 
 
¶2.  (SBU)  In October 2005, Hernan Prada was arrested in Bogota, 
Colombia on a provisional arrest warrant and was extradited to 
Miami, where he is currently scheduled to go to trial in May 2008. 
Since 1986 Prada has been suspected of being involved in trafficking 
multi-ton cocaine shipments and accumulating and transporting large 
amounts of drug proceeds.  He was the subject of an FBI 
investigation in 1989, and a federal arrest warrant was issued for 
him based on dangerous drug offenses.  He subsequently fled to 
Colombia. 
 
¶3.  (SBU) A U.S. citizen, Prada requested and received Ecuadorian 
citizenship in an effort to protect his suspected drug proceeds.  In 
September 2005, the Quito DEA office, in coordination with the 
Ecuadorian National Police's vetted Sensitive Investigation Unit 
(SIU), initiated an investigation of his money-laundering activities 
in Ecuador.  They eventually found that Prada, his family members, 
and associates had been investing and dispersing an estimated $50 
million in suspected drug proceeds through numerous front companies 
in Ecuador since 2001. 
 
PROSECUTING PRADA'S RING 
 
¶4.  (SBU) On August 25, 2006, after nearly a year of investigation, 
the Ecuadorian National Police initiated and executed over 300 
seizure and arrest warrants in Quito, Manta, and Guayaquil.  The 
Ecuador SIU located and arrested ten of the defendants.  All were 
personally involved in either the ownership or management of 
fictitious and/or front businesses, or the actual transfer of drug 
proceeds totaling well over $6 million.  One hundred thirty-five 
properties (including penthouses, hotels, commercial lots, and one 
farm) valued at $6.4 million were seized, along with seven vehicles, 
jewelry, paintings, firearms, computers, and numerous financial 
documents.  These were the first arrests and prosecutions based on 
the then recently established Ecuadorian Anti-Money-Laundering 
legislation. 
 
¶5.  (SBU) On February 18, 2008, the Second Superior Court of Quito 
convicted and sentenced seven of those arrested (4-8 year prison 
terms, plus $5000 fine each).  The court ordered the forfeiture of 
all seized properties to the state, and the closing of six 
businesses.  The defendants are currently appealing their 
convictions. 
 
¶6.  (SBU) Comment:  The Prada case is a significant victory for the 
Ecuadorian legal system that has demonstrated that it can bring a 
conviction under the money laundering law, drafted with technical 
assistance from the USG.  Our extensive, productive cooperation with 
the Ecuadorian police contributed directly to this success.  End 
comment.