Crime 'franchise' hub in Denver
The Denver Business Journal
March 3, 2006
Michael Perrault
denver.bizjournals.com/denver/stories/2006/03/06/story3.html
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Federal and state authorities are working to permanently close a metro Denver counterfeit documents ring allegedly masterminded by a Mexico-based crime family they believe operates in at least 33 states, churning out tens of millions of dollars worth of fake IDs.

For months, investigators and prosecutors say they have been working quietly to shut down what they say is an extensive, international fake-document network involving more than 50 people working in Denver.

In one real estate scheme alone, fake documents were used by illegal aliens to purchase more than 300 homes valued at $51 million. Authorities say that some document forgers paid "franchise fees" upwards of $15,000 a month to participate in the phony documents network.

Authorities believe the key to finally shutting down the network will be extraditing fugitive Pedro Castorena-Ibarra, who investigators believe is behind the extensive alleged fraud that has touched hundreds of metro Denver businesses and created serious national security concerns.

Investigators from the Department of Homeland Security, the U.S. Immigration and Customs Enforcement and numerous other law enforcement agencies -- sometimes by infiltrating the network or through informants -- have been shutting down "cell" operations one by one and making arrests.

Together, the individual cases add up to an operation that's massive in scope and that has surprised even seasoned prosecutors with the U.S. Department of Justice.

"This criminal organization represents one of the largest and most sophisticated document fraud rings ever uncovered -- so much so that it set up franchises in most major U.S. cities and counterfeited dozens of types of documents," said Marcy Forman, director of investigations for U.S. Immigration and Customs Enforcement.

"As long as Pedro Castorena-Ibarra is a fugitive in Mexico, he will continue to send people into the United States or he'll continue to recruit people in the United States to use various techniques and produce these documents," said Jeff Dorschner, a spokesman for the U.S. Attorney's Office for the District of Colorado.

"The Justice Department and Department of Homeland Security have substantially disrupted his organization by seizing the equipment they use and putting the people who are responsible in prison," Dorschner said. "But as long as Pedro Castorena-Ibarra is a fugitive, he will be able to continue to recruit new people, acquire new technology and continue to perpetrate this crime."

In metro Denver, more than 50 people have been linked to a "cell" that used dozens of computers, color printers, silk screen presses and other devices inside apartments, motels, storage facilities and homes from Aurora to Wheat Ridge, Dorshchner said.

The workers, government prosecutors allege, created one-stop shopping for everything from fake alien registration cards to Social Security cards, counterfeit drivers' licenses, birth certificates and insurance cards, said Carl Rusnock, a spokesman for U.S. Immigration and Customs Enforcement.

"This is a situation where they were making all sorts of fraudulent documents," Rusnock said. "If you wanted a 'green card,' drivers' licenses from any state, a Social Security number. It was absolutely phenomenal the scope and the quality of the operation."

Those who wanted the fake IDs in metro Denver often went to a business near West 30th Avenue and another near West Eighth Avenue and Federal Boulevard, where they paid $60 to more than $500 for each document, depending on the complexity, investigators said.

"These tools help the criminal conceal his identity, gain access to places and benefits to which they should not have access, and can facilitate identity and other forms of theft," said Bill Leone, U.S. Attorney for the District of Colorado. "They serve as a one-stop shop not only for illegal immigrants, but for drug smugglers, money launderers and potential terrorists."

The volume and quality have astounded even veteran investigators and prosecutors, including Assistant U.S. Attorney Joe Mackey, who has spent years working to close the Castorena-Ibarra fraudulent document ring organization.

The leaders of the ring allegedly were so bold that they charged "franchise fees" of as much as $15,000 per month in order for "cell" leaders to open up shop in U.S. cities, from Denver and Los Angeles to Chicago, Atlanta, Lincoln, Neb., and Des Moines, Iowa.

Money earned from the operations was funneled to Mexico and elsewhere, investigators say.

400 investigations in L.A.

In Los Angeles alone, investigators seized thousands of counterfeit documents with an estimated street value of $20 million. That case sparked 400 investigations, and investigators believe that network had ties to 50 cities. American Express Corp. lost an estimated $2 million from the fraudulent operations as money was wired across country and into Mexico.

Not only do such documents spark concerns about potential security problems, they're also having a major impact on businesses that unknowingly hire illegal immigrants or banks that unknowingly lend money to unqualified borrowers.

In a recent case here, the Office of the Inspector General for both the U.S. Department of Housing and Urban Development and Social Security Administration joined forces to identify a network of mortgage brokers, real estate agents and others who were using fake documents to get Federal Housing Administration-backed loans for illegal immigrants.

In one case alone, the counterfeit documents were used to purchase 300 homes valued at $51 million. The FHA insurance fund lost millions of dollars in metro Denver last year because of the schemes, investigators said. Dozens of people have been prosecuted or face deportation as a result of the crimes.

"The tremendous extent of the Castorena family organization's fraudulent document ring creates immeasurable problems nationally and internationally," said Jeffrey Copp, special agent in charge of the Denver office of U.S. Immigration and Customs Enforcement, which includes Colorado, Idaho, Montana and Wyoming. "We will likely never know all the terrible ramifications supported by the counterfeit documents this organization created."

Heavy presence in Denver
In metro Denver, law enforcement officials have arrested, prosecuted or deported more than 50 people and have seized at least 20 manufacturing labs related to the Castorena family organization. They confiscated tens of thousands of blank IDs, computers, nine handguns and more than $100,000, investigators said.

The situation eventually turned violent when the competing Los Acapulcos organization allegedly set up shop in metro Denver and sparked a rivalry for the lucrative business. Local law enforcement officials teamed with federal and state investigators to quell a number of assaults and confrontations.

Although Castorena-Ibarra was indicted last July, he is a fugitive and is believed to be hiding out in Guadalajara, Mexico, investigators said. His brother, Francisco Javier Castorena-Ibarra, entered into a plea agreement for money laundering charges related to the production and sale of fraudulent and counterfeit immigration IDs. Chief U.S. District Court Judge Lewis Babcock sentenced him in February to more than 11 years in federal prison for aggravated identify theft, conspiracy to commit money laundering and other crimes related to manufacturing and selling fake immigration documents.

What has set this case apart is not only the scope of the operation, but also the fact that the organization has developed the technical ability to produce high-quality, difficult-to-detect documents.

"Thirty years ago, if you wanted to produce a really good-quality fraudulent document, you had to have some major equipment and a lot of expertise," Rusnock said. "But technology has advanced so much that you don't need two decades of expertise and you don't need all that equipment."

For that reason, the case warranted investigators from the Department of Homeland Security office in Denver, U.S. Immigration and Customs Enforcement, Social Security Administration's Office of Inspector General, the Internal Revenue Service Criminal Investigation Division, the U.S. Postal Inspection Service and others.

The Colorado Bureau of Investigation and the Federal Bureau of Investigation also have been involved in tracking down those responsible for mortgage insurance fraud due to fake documents.

Dorschner said law enforcement officials and prosecutors also want to close the operation because it produces thousands of "breeder documents," which they describe as quality fakes that allow illegal aliens and others to obtain legitimate documents.

"Once you have a legitimate document, you're in the system and much less likely to be detected," Dorschner said. "It's a problem for people here illegally, but also a problem because people could come to the U.S. and do us harm."

Federal Housing Administration-backed loans for illegal immigrants

So this means that I helped put the the illegals in homes, right?