ILLEGAL DRUG PROFITS - STATEMENT OF IRVING B NATHAN DEPUTY ASSISTANT ATTORNEY GENERAL - CRIMINAL DIVISION DEPARTMENT OF JUSTICE - BEFORE THE SENATE GOVERNMENTAL AFFAIRS COMMITTEE

• NCJ Number: 65001
• Author(s): I B NATHAN
• Date Published: 1979
• Length: 27 pages
• Corporate Author: US Congress
• Sale Source: National Institute of Justice/
• Language: English
• Country: United States of America

Annotation

THE FINANCIAL ASPECTS OF ILLICIT DRUG TRADE IN THE UNITED STATES AND SOME OF THE MEANS BY WHICH THE FEDERAL GOVERNMENT COULD REMOVE PROFITS AND INCENTIVES ARE ADDRESSED.

Abstract

IN 1978 THE FEDERAL GOVERNMENT SEIZED HEROIN, COCAINE, AND MARIHUANA WHICH WOULD HAVE RETAILED ON THE STREETS AT APPROXIMATELY $3.2 BILLION. THIS FIGURE REPRESENTS ONLY A SMALL FRACTION OF THE UNDETECTED CASH FLOW. RETAIL SALES OF ILLICIT DRUGS ARE ESTIMATED TO BE ABOUT $58 BILLION ANNUALLY. ONE OF THE HARDEST HIT AREAS OF DRUG TRAFFICKING IS SOUTH FLORIDA, WHICH IS THE PRINCIPAL ENTRY POINT IN THIS COUNTRY FOR COCAINE AND MARIJUANA SHIPPED FROM LATIN AMERICA. THIS FACT IS REFLECTED BY THE FEDERAL RESERVE CURRENCY SURPLUS HELD IN FLORIDA BANKS WHICH REPRESENTS 77 PERCENT OF THE ENTIRE FEDERAL RESERVE CURRENCY SURPLUS FOR THE UNITED STATES. IN ADDITION TO THE HEALTH RISKS WHICH THESE DRUGS PRESENT TO THE NATION, MONEY GENERATED BY ILLICIT DRUG SALES POSES OTHER DANGERS FOR THE ECONOMY. THE MONEY IS ALMOST ENTIRELY UNREPORTED AND UNTAXED, CREATING A LOSS OF FEDERAL TAX REVENUES. FURTHERMORE, THE DRUG TRADE HAS AN ADVERSE IMPACT ON FOREIGN BALANCE OF PAYMENTS. THE NORMAL ECONOMY IS DISRUPTED WHEN THERE ARE SUCH LARGE FINANCIAL RESOURCES IN THE ILLEGAL SECTOR. USUAL LAW ENFORCEMENT TOOLS RARELY AFFECT THOSE HIGH ECHELON INDIVIDUALS WHO PROFIT FROM ILLICIT DRUG SALES. FORTUNATELY, CONGRESS HAS RECENTLY PROVIDED MORE EFFECTIVE LEGISLATION INCLUDING THE CONTINUING CRIMINAL ENTERPRISE STATUTE AND THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATION STATUTE. IN ADDITION, PROVISIONS OF THE BANK SECRECY ACT COULD ALSO PROVE INCREASINGLY IMPORTANT IN ASSISTING FINANCIAL INVESTIGATIONS AND PROSECUTIONS. THE DEPARTMENT OF JUSTICE STRIVES TO EDUCATE PROSECUTORS AND INVESTIGATORS CONCERNING THE ADVANTAGES OF THESE LEGISLATIVE TOOLS THROUGH LECTURES AND WORKSHOPS CONDUCTED NATIONWIDE. THE KEY TO SUCCESSFUL IMPLEMENTATION OF THESE STATUTES IS THE CLOSE COORDINATION OF THE INFORMATION, EXPERTISE, AND EFFORTS AMONG THE INVOLVED FEDERAL AGENCIES. FINALLY, CERTAIN ASPECTS OF THE TAX REFORM ACT OF 1976 WHICH PROVE DETRIMENTAL TO ENFORCEMENT EFFORTS IN THE NARCOTICS AREA SHOULD BE MODIFIED. (LWM)