(Bloomberg) — With a soothing score and the big board of Latin America’s biggest stock exchange blinking in the background, the online advertisement by 4TBank promises to reduce economic inequality by making financial markets more accessible. Driving home the message, the camera follows Matie Obam, the chief executive officer of Brazil’s “first CryptoBank,” as she touts the company’s mission while strolling through São Paulo’s financial district.
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“We came to eliminate abusive fees that are suffocating us,” Obam, now 24, says in that 2021 video. “We were born to help you.”
Brazilian authorities say they uncovered something far more nefarious. Police say the company scrubbed hundreds of millions of dollars worth of dirty money for Brazil’s most notorious drug gang — First Capital Command, or PCC — and funneled cash into political campaigns. The alleged scheme was dismantled in August, just two months before voters headed to polls for municipal elections, setting off fresh worries about organized crime’s abilities to infiltrate the top levels of Brazilian society.
Authorities have long pursued the PCC, which operates a narcotics-trafficking ring stretching across five continents. Despite efforts to stop its spread and US sanctions, the gang has managed to evolve over three decades from a jailhouse crew of São Paulo crooks and thugs into a multi-billion dollar criminal enterprise, with some 40,000 “baptized” members and domination over a key cocaine corridor to Europe. To clean its ill-gotten gains, investigators say the organization’s brass is now setting its sights on Brazil’s financial sector and digital marketplaces, including cryptocurrency and online sports-betting platforms as well as its booming fintech industry.
“Far better than finding a bank or a front to launder your money is creating your own bank,” said Lincoln Gakiya, a prosecutor with São Paulo’s Gaeco, the state’s organized crime task force, who estimates the PCC earns $1 billion a year just from drug trafficking.
In all, authorities have requested permission from a judge to freeze over 8.6 billion reais, or nearly $1.5 billion, in assets belonging to 4TBank and its associates, according to investigation documents seen by Bloomberg News. The amount left Fabricio Intelizano of São Paulo state’s civil police, the lead investigator in the case, dumbfounded.
“I had to add it up three times to make sure it was correct,” he said in an interview. “I did it first in an Excel spreadsheet and then on a calculator because I didn’t believe what I was seeing.”
A legal representative for 4TBank said that the money and the transactions are not related to the PCC, “are not related to drug trafficking, arms trafficking, or any other illicit activity wrongly attributed to the payment institution.”
Just weeks after the raid, authorities took down two more allegedly illegal fintechs operating in São Paulo. Police say these unregistered companies conducted transactions worth over $1 billion, and suspect tens of millions of that were tied to organized crime groups and the PCC. Other investigations have also revealed that the organization has poured its money into construction companies, luxury property and car dealerships, as well as city services. Authorities claim that the PCC controls over 1,000 gas stations just in the state of São Paulo, Brazil’s wealthiest and most populous. On Nov. 8, an informant, who prosecutors say was providing law enforcement with details on the innerworkings of the PCC’s money-laundering schemes, was shot and killed at São Paulo’s International Airport.
In more than a dozen interviews with senior Brazilian government officials, investigators and industry leaders, along with hundreds of police documents reviewed by Bloomberg, many have expressed alarm not only over the PCC’s economic might, but its increasing success in blurring the line between legal and illicit businesses. The criminal organization has gone from stashing its cash in metal drums buried beneath the ground to cyber assets that can be spirited across borders and bank accounts at the click of a mouse.
The series of busts has also sparked concerns about lax oversight in the country that boasts more fintechs than any other in Latin America — with over 1,500 in Brazil and counting. Both Brazil’s central bank and the Council for Financial Activities Control, the entity responsible for analyzing transactions linked to money laundering, declined to comment for this story.
Like many of its neighbors, Brazil has long suffered from high rates of crime and violence. But growing fears about insecurity are dogging President Luiz Inacio Lula da Silva at a time when the economy is growing and homicides are falling. His right-wing opponents played up such worries and notched big gains in October’s local elections. The Justice Ministry is now prioritizing combating gangsters and scams, while the president is preparing proposals for constitutional changes that would allow the government to take more aggressive action against them.
Mario Luiz Sarrubbo, the national secretary for public security at the Justice Ministry, said Brazilian authorities are focused on following the money. “It is in money laundering that we will succeed in dismantling criminal organizations,” he said in an interview.
“The PCC is truly in a new, more international phase,” said Bruno Paes Manso, a professor at the University of São Paulo. “By laundering its money, it’s moving the economy” with the capital it’s bringing into it.
The Spread
The PCC formed in São Paulo’s overcrowded penitentiaries in the early 1990s in the wake of a prison massacre, banding together to demand better conditions. Its members used gruesome methods like torture, murder and decapitations to maintain order among inmates and instill fear in rivals.
“They became a legend saying, ‘We were created to protect prisoners,’ yet the first thing they did was kill others,” said Marcio Sérgio Christino, a prosecutor who has investigated the PCC’s origins. “What they want is power.”
Its network has since spread across Brazil’s prison system and its territory. It controls dense urban slums and remote outposts deep in the Amazon jungle, undertaking a catalog of criminal activity including extortion, kidnapping and illegal mining — with many of the operations being coordinated from behind bars.
Regular Brazilians and executives, including billionaire industrialist Rubens Ometto, have been raising alarm over organized crime. A September DataFolha poll found that 14% of the population, or over 23 million Brazilians, say that gangs or militias — vigilante groups composed of current and former members of law enforcement — have been present in their neighborhoods.
The PCC is active beyond Brazil’s borders such as in neighboring Paraguay, where it has committed multi-million dollar bank heists and imposed itself over local competitors. Its network, which the US Treasury Department has called “one of the world’s largest cocaine trafficking rings,” links Bolivian producers to major European mafias, like Italy’s ‘Ndrangheta.
The PCC operates through a horizontal structure whereby many gangsters work autonomously, rather than as a top-down enterprise, said Gabriel Feltran, a professor at ScienesPo in Paris. That’s complicated efforts to dismantle and contain it.
“People think based on Pablo Escobar we are talking about big bosses and family companies, but the PCC is another generation with very sophisticated schemes,” he said.
Those schemes are now entangling millions of unsuspecting Brazilians. In April, authorities in the megacity of São Paulo raided two of its biggest private bus companies that they say were controlled by the PCC. According to investigators, the PCC used the bus lines, which provided transportation for some 700,000 passengers daily, to wash the proceeds from illegal activities like drug sales and robberies. More worrying for authorities is that they injected dirty capital into the companies to win multi-million dollar city contracts.
In other words, the layers of the alleged scam allowed criminals not only to launder their money, “but generate profits from it,” said Gakiya, of Gaeco, who has investigated the PCC for 20 years and maintains a 24-hour police detail after the organization put out a hit on him.
Representatives of one of the private bus companies denied the criminal ties, but members of management were ultimately removed from their posts by the city. Members of the city government and law enforcement have since taken over management of the companies.
The Alleged Scheme
How prosecutors believe the PCC attempts to manipulate markets and elections was on clear display in Mogi das Cruzes, a sleepy suburb of less than half a million people in greater São Paulo, where 4TBank kept its only working office.
In dozens of sleek social media posts, 4TBank offered investors money tips. The company said its platform made investing in cryptocurrencies easier, and said it was “democratizing payment methods” and cutting through the red tape of financial bureaucracy. Instituto4TBank, the digital bank’s community outreach arm, posted videos on YouTube in which its associates are filmed handing out hot dogs and dog food to needy residents and pets as Christian rock plays in the background.
Instead, according to investigative documents, the company was the motor of a scheme to clean “astronomical sums” of money and finance political campaigns in the recent municipal vote. It also swindled investors and helped the PCC send money to Paraguay to buy drugs, the police say.
Investigators only got wind of the alleged scheme after apprehending the smartphones and reviewing WhatsApp conversations of a suspect involved in a drug bust that captured 36 kilos of marijuana and cocaine in Mogi das Cruzes last year. Before that, 4TBank flew under the radar.
The suspect, police would determine, turned out to be Fabiana Manzini, the wife and interlocutor of jailed PCC member Anderson Manzini. Referred to as “Fatso” by his confidants, he has been behind bars for two decades for kidnapping and robbing banks.
Multiple attempts to reach legal representation for the Manzinis were unsuccessful; police who accuse Fabiana of taking part in a criminal organization say she remains at large. A trial has not yet been scheduled, and Fabiana has not been charged.
Investigators say they reviewed thousands of WhatsApp messages in which Fabiana instructed an individual who operated 4TBank on where to move funds, and that individual shared their intention to get three people elected as councilmen in cities throughout the state of São Paulo.
That ringleader, police say, was local businessman João Gabriel de Mello Yamawaki, who lived with his girlfriend, Marie Obam, 49, and her children, 4TBank CEO Matie and Kenzo, 26.
“Check with Fatso about the councilmen campaigns,” Yamawaki wrote in a WhatsApp message to Fabiana, according to the investigation documents.
Investigators said they were taken aback that several other companies allegedly used to launder money were also under Matie and Kenzo’s names.
A legal representative for 4TBank said that Matie and Kenzo Obam were not involved in the alleged scheme.
Although Yamawaki was not listed on 4TBank’s website or on its corporate tax ID, “the company was essentially operated by” him, according to his legal representative; he registered the company to Matie and Kenzo because he wanted to leave it to them as an inheritance. The attorney denied that 4TBank ever had any dealings with the PCC or other criminal organizations. The attorney also said that Anderson Manzini was only a childhood acquaintance of his client, and that the two hadn’t spoken since they were teenagers, until a few years ago when Fabiana sought financial support from Yamawaki.
In all, thirteen people, including Yamawaki, are behind bars on preventative detention, facing accusations of participating in a drug-trafficking criminal organization. Another seven face who those same charges are still at large. No trial date has been set, so no charges been filed.
Meanwhile, preventive measures such as suspension from business activities were taken against 12 people including Kenzo, Matie and Marie Obam. An attorney representing the Obams said the family has “no ties whatsoever” with the PCC, and that Marie was “completely unaware” of the alleged scheme, given that she focuses on her own ornamental flower businesses.
Trusted Locals
Until the alleged scheme at 4TBank became public, Yamawaki was simply known as a 47-year-old savvy, self-made businessman who drove a Mercedes Benz around Mogi das Cruzes.
His Instagram account highlighted his past as a motorcycle-delivery boy, and offered financial advice to 11,000 followers to help “change your life.” He also showcased his apparent political connections. In one Instagram post, the businessman poses with the head of Brazil’s conservative Liberal Party, Valdemar Costa Neto, who Yamawaki called a friend and inspiration. Representatives for Costa Neto — who prosecutors confirmed is not part of the investigation — said the politician poses for photos with people he doesn’t know.
Yamawaki’s attorney said that his client’s intentions when backing candidates “are those normally related to democracy” as Yamawaki has always been interested in politics.
The Obams, who hailed from humble origins in Mogi das Cruzes, were also held in high regard. The daughter of Japanese immigrants, Marie’s father raised orchids for a living and instilled a strong work ethic into his children, said Heitor Chaya, who grew up next door to the family.
Chaya, 45, now living in the city of Campinas, said Marie got in touch with him on social media in 2022 after decades apart and told him about her daughter’s business. An electrical engineer who dabbles in day trading, he decided to invest because of his relationship with the family.
Marie “always spoke well of her daughter, saying she was a studious, hard worker who wanted to be one of the richest women in Brazil,” Chaya said. After seeing initial returns on his money, he gradually increase his investment to over 107,000 reais and recommend 4TBank to friends.
Chaya received fixed monthly returns on his investments. On the biggest tranche, 4TBank paid 3% deposited directly into his bank account each month. But in April, he said, the payments abruptly stopped flowing.
The delay made him anxious. 4TBank told Chaya they were working to fix the problem. After days passed, he contacted his childhood friend, who said the bank’s accounts had been hacked. Then he says he received an email from the company, announcing that a restructuring was underway and that it would repay the initial investment in a years-long process. The message, as well as others sent to a separate clients, was seen by Bloomberg News.
Chaya’s feeling of shock quickly turned to betrayal from someone he once considered family, leading him to take legal action. “It was complete indignation,” he said. “Her mother cared for me, and mine for her.”
Political Ambitions
In the trove of WhatsApp messages uncovered by the police and seen by Bloomberg, Yamawaki corresponded with Fabiana about a strategy to get three people elected to public office. Police say he also discussed using NGOs to increase the organization’s sphere of influence.
The contenders included his girlfriend, Marie Obam, who was running for city council in Mogi das Cruzes. All three people dropped out after the investigation revealed alleged criminal ties, and Marie has been banned from holding public office.
For Intelizano, 44, the policeman, the investigation demonstrated not just the PCC’s financial savvy, but the organization’s long-term political ambitions. He says the investigation has showed members of government were 4TBank’s clients and its next phase will determine if that includes elected officials.
Ultimately, the PCC’s goal is to “take advantage of infiltration of public institutions to win public contracts, get public money and increase their profits,” he said.
–With assistance from Daniel Carvalho, Gabriel Diniz Tavares and Meg Lopes.
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Publish date : 2024-12-02 23:35:00
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