Chapter Seven

 

THE MARLBORO MURDERER

 

 

 

 

"The crooks keep so far ahead of us, we'll never completely close the net."

 

The US Department of Justice

 

 

 

 

 

 

Colonel Hector Moretta Portillo, sporting a nifty, multi-braided, starched white uniform, held a privileged place in the Mexican army. As a relative of a former President, he was an accredited member of his country's delegation to the United Nations. In his spare time he sold gold and whiskey.

 

Stocky, 5 feet 6 inches, with black hair and a black mustache, at one point in his career --- while on holiday at the home of the Minister of Interior on the island of Cozumel --- he was murdered. Press reports noted that his bullet ridden body was found floating face down in the swimming pool and that his killer was still at large.

 

A few years after his assassination, he turned up in Santo Domingo as Colonel Gomez, an officer in the army of the Dominican Republic and a relative of a former president. Sporting a brand new, nifty, multi-braided, starched white uniform, in his spare time he sold sugar.

 

But in 1988, when clients complained to the authorities that the Colonel’s sugar was non-existent, just as his gold and whiskey had been, he was arrested. Under questioning, he told the Dominicans that his name was Michael Austin Smith, which might be the closest he's ever come to telling the truth because that is his name, except it wasn't the name he was born with. Although it was only later revealed that he’d used as many as 30 aliases, when he came into this world, in Brooklyn, New York, in 1955, he was Michael Sporn. He changed his name to Austin somewhere along the line, adding Smith to the end of it whenever it suited him, much the way he changed, almost effortlessly, back and forth from fluent Spanish to the broken English you'd expect from your average, well connected, Latin American Colonel.

 

By the time the ‘90s came along, he was Hector Portillo again, alive and well living in New York. Now his angle was cigarettes.

 

Knowing how the world is awash with commodities in the parallel markets --- you can buy and sell just about everything, from oil, pork bellies, precious metals and timber, to grain, steel, precious stones, sugar, gold, whiskey and cardboard boxes --- he was taking aim at the lucrative, well established traffic in Marlboros.

 

An ideal commodity for a con, not only is the brand name instantly recognized, it is globally traded outside the manufacturer's normal distribution routes. For all sorts of reasons, gargantuan parcels of legitimate Marlboros are forever spinning around the world through divers wholesale channels: A state tobacco monopoly buys too many and needs to sell the surplus; a cargo gets stolen that needs to be fenced; a middle man buys a shipment at an advantageous price and wants to unload them for a fast profit; someone defaults on a payment and needs to sell the cargo to recoup costs.

 

In many Third World countries, notably the former Communist bloc, Marlboro plays an additional role, as a kind of currency. Cases of cartons are often the icing on the cake, the bribe that caps a deal. In Russia, for example, you barter with dollars then throw in Marlboros. In fact, for years, the best way to get a taxi on the streets of Moscow was to wave the familiar red and white box, a signal that you've got something to offer which even non-smoking taxi drivers can use.

 

It's the old joke about the soldier with his single pack of Marlboros, which he sells to another soldier for a dollar. The second soldiers sells it to a third for two bucks. The third sells it to the fourth for $3, and so on until the price reaches $10. The soldier who paid that for the pack rips it open and starts smoking. The other soldiers are aghast. What's wrong, puffs the soldier with the cigarettes? Pointing to the Marlboros, the first soldier explains, they’re not for smoking, they're for buying and selling.

 

So Austin cooked up a scheme to sell 100 containers, 4.8 million cartons, of non-existent Marlboros. Enough cigarettes to supply the entire Russian Confederation for four months, the bait was more than handsome enough to attract the attention of literally thousands of middlemen who were constantly prowling the parallel markets, hungry to deal. But flogging something in this game was not like finding some tourist and selling him the Brooklyn Bridge or the Mona Lisa. To make the scam work, he had to create what is known as "evidence of reality." He had to convince some relatively sophisticated buyers that the product was available and, at the same time, that he had access to it.

 

In order to cover those bases, Austin in the guise of Portillo, scripted a few variations of the same story. One went: factories in Mexico that Philip Morris had closed were back in operation producing fraudulent Marlboros. Another claimed: factories that never had anything to do with Philip Morris were banging out counterfeit Marlboros. A third was: through his connections with the Mexican government, he'd acquired the cigarettes illegally and wanted to move them as quickly as he could. He supported all three with official-looking documents proving that the cigarettes were, in fact, waiting for him in Mexico.

 

He needed to make the punters believe they were getting a bargain, but that was the easy part because P. T. Barnum was right: there’s a sucker born every minute. Austin knew from experience that you beat them by playing to their greed. That when you dangle easy profits in front of guys who live for easy profits, half their brain shuts off --- the half warns, when something is too good to be true, it generally is. So he built into the equation plenty of room for everyone to make a killing off his back. He put out the word that he was looking to wholesale each container for a nominal $160,000, about $3.33 a carton, or roughly 15-cents on the retail dollar.

 

Now, commodities of any kind, whether they're on clandestine offer in parallel markets or moved openly in any market, are bought and sold on letters of credit. One bank guarantees payment to another bank without money changing hands before the cargo does. The buyer pays his bank and it’s the bank that holds onto the money until the seller delivers the cargo, which the seller does as soon as the buyer's bank promises to pay for it. The system is predicated on mutual trust between banks, guaranteeing that payment has been arranged and will be made. It makes sense because, when high-priced cargoes are at stake, there's little reason for either the buyer or the seller to trust each other.

 

Understandably, before a bank will make any such guarantee, specific documents are required. Austin needed to provide: bills of lading that adequately defined the cargo; a certificate of inspection, to affirm that the cargo, as described by the bills of lading, was on board a ship going to the buyer; a certificate of freshness, which is peculiar to the cigarette business so that the buyer knows his assets have not passed their sell-by date; and a certificate of insurance to protect the cargo.

 

Forged papers were never a problem as he had access to people who could forge anything, including passports. But maritime transport documents listed the name of the ship carrying the containers, and the whereabouts of the ship, plus the cargo on board, which were all things that anyone with a little know how could readily verify.

 

So, to get the scam going, Austin decided he needed a ship.

*****

 

 

David Wilson was a fool.

 

At times too gullible, at other times too susceptible to avarice, he was the sort of man who was always just within arm's reach of the next get-rich-quick scheme. Having long ago convinced himself that he was more savvy, more talented, than he really was, he was the sort of man who was only too willing to gamble with his family's future by staking his own money for pie in the sky.

 

Born in England in 1944, Wilson studied to be an accountant, but he never qualified as a CPA and wound up calling himself a "financial adviser." He did tax returns for small firms and dabbled in whatever business ventures came his way.

 

Basically, he was an man. The people who hired him to handle their bookkeeping spoke well of him. The police never found any evidence that Wilson was personally involved in any criminal activities. However, because he wasn't above the odd minor-league fiddle --- he toyed with dubious offshore shelters and loved to show clients how to pay their personal taxes out of company funds --- it wasn't long before he was operating on the fringe of some intelligent, well-connected, company-owning criminals. They were the ones who told him about the untold wealth on offer in Marlboro cigarettes. He could taste the millions pouring in. They were the ones who told him that a plugged in Mexican Colonel was looking for an accountant in Europe, preferably in England because of the language, to set up a company to buy a ship. It was a perfect match. In Portillo, Wilson saw someone offering him the biggest get-rich-quick scheme of his life. In Wilson, Austin had a stooge.

 

The two men promptly struck a deal and on Portillo’s behalf, Wilson bought a company called Alamosa Ltd in the Isle of Man, housed it at his office in Lancashire and went in search of someone to finance a ship. He found the backing they needed in Norway, where a fellow with shipping interests agreed to put up $2.8 million to purchase a 3400 ton bulk carrier built in 1970 called the Gregory.

 

On paper, the business was sweet for everybody. The vessel would be purchased by Alamosa, then transferred to Wilson Overseas Ltd. a holding company registered in the Bahamas. For his money, the Norwegian would be the main shareholder of Wilson Overseas which meant that he would retain title to the ship. As a bonus, for every ten containers of cigarettes the Norwegian subsequently purchased, Portillo was willing to throw in one container free. It worked out that, if the Norwegian took the entire cargo, he'd be paid back in full for the ship, and therefore wind up owning it for nothing.

 

Once those papers were signed, Wilson changed the name of the ship to the Lisa Marie, after his youngest daughter.

 

With Wilson running interference for him on the high seas, Austin hoisted an impenetrable shield to protect himself from the land-based punters. He stipulated that none of them could deal directly. If they wanted to buy cigarettes, they had to go through agents, whom he seduced by offering jumbo commissions on each container. When any of those agents asked why Portillo wasn't selling the cigarettes himself, he explained that, because of his position with the government of Mexico, he couldn't be seen to be taking part. It was plausible enough. The truth however was, because the world is filled with agents --- middlemen who earn their living like pilot fish, hanging off the backs of people trading in the parallel markets --- there was no reason for Austin to take any unnecessary risks that might expose his true identity.

 

Then, not even those agents could contact him directly. They were each given his private number in New York, and made to feel all the more special by being sworn to secrecy, made to promise that they would never reveal it. But the best they ever got was someone on the other end saying that Colonel Portillo wasn't in and asking if they wanted to leave a message. The New York number was nothing more than a legitimate answering service.

 

From what little Portillo told him, Wilson soon realized that the really big money was going to the middlemen. So he convinced Portillo to let him sell some containers. His first client was a Scotsman living in Houston named James McMillan, who paid his share in cash. Alamosa then used that cash to refit the Lisa Marie.

 

Had anyone bothered to check which, clearly, no one did, he might have noticed that the Lisa Marie was not a container ship. And even after the refit, there was still no way she could handle 100 containers. But details like that didn't seem to concern Portillo's agents, least of all Wilson who, together with the others sold several times the ship's maximum cargo.

 

Suddenly, there were too many people selling too many Marlboros into this parallel market. But whether anyone of them knew what was actually going on is a matter of conjecture. Then again, if any of those agents did suspect something, it was easy to rationalize that they were only acting only as agents. It was easy to write off minor details, such as whether or not the cigarettes really existed, as Hector Portillo's problem.

*****

 

 

Now that he had a ship, Austin's next step was paperwork.

 

For forged insurance documents, he called on an ex-public school boy, one of those frightfully British "Hooray Henry" types, who'd been thrown out of Lloyd’s of London and was otherwise available for dubious projects.

 

Bills of lading were no problem, either, as they were also easily faked.

 

But to obtain the certificates of freshness Portillo needed the services of a maritime survey company. The most convenient way to arrange that was to invent one called Sealand Maritime Surveyors. And as long as the Lisa Marie was getting overhauled in Miami, Portillo put Sealand Maritime Surveyors there, too.

 

On its letterhead, Sealand’s phone number noted the appropriate 305 area code. However, thanks to Call Forwarding, anyone who dialed the number in Miami was answered by an Englishman in Spain. Except for those odd occasions when someone asked what the weather was, and the Englishman mistakenly explained that it was sunny when Miami was deluged with rain, no one ever suspected that they weren't speaking to a company of surveyors in south Florida.

*****

 

 

Originally, Portillo claimed that the 100 containers were waiting for the Lisa Marie in Vera Cruz, Mexico. Yet, the first batch of paperwork that arrived on David Wilson’s desk stated that 50 containers were loaded in Miami on November 12, 1991, and that when she sailed on the 23rd, instead of going to Mexico, the Lisa Marie was bound for Hamburg.

 

That didn’t necessarily bother Wilson, because he knew that ships were always being rerouted.

 

But a couple of weeks later, he received documents dated December 3, indicating that the Lisa Marie had loaded only three containers of Marlboros and was destined for Naples, Italy.

 

To protect his own clients, he’d agreed with Portillo that letters of credit could not be exchanged until a full inspection of the cargo was carried out at the port of delivery. So he felt confident that everyone’s money was safe. However, the conflicting paperwork bothered him. The more he looked at it, the more he began to think that something didn’t ring true.

 

He wasn’t the only one asking questions. After paying cash for two containers, James McMillan had also signed on as a Portillo agent. Hoping to interest a group of punters in some or all of the 50 containers supposedly en route to Hamburg, he’d set up a December 2 meeting at the Rotterdam Hilton. His idea was to bring all his prospective clients together into one room and make a great pitch. To entice them to the meeting, he’d furnished them with copies of the November 12 documents.

 

One of McMillan’s prospective clients read the documents and got an odd feeling in his gut. It struck him as one of those too-good-to-be-true deals. And he had enough common sense to seek professional advice. He forwarded copies of the paperwork to the International Maritime Bureau.

 

They landed on the desk of the IMB's director, Eric Ellen. A former Chief Constable for the Port of London Police and an acknowledged world-class expert in maritime fraud, Ellen instantly spotted the fly in the ointment.

 

The bill of lading showed the containers on board the Lisa Marie to be numbered 440001-440050. Although every container bears its own serial number, because they are constantly on the move around the world, with each one carrying different cargoes to different ports, finding 50 consecutive numbers like that on one ship is as much a virtual impossibility as finding 50 cars in a traffic jam with consecutively numbered license plates.

 

Ellen notified the Dutch police and the Dutch police raided McMillan's meeting.

 

The Scotsman's excuse was that he was merely acting as an agent. He swore that he firmly believed the cargo existed and reminded the police that he'd even put his own cash on the line. He said, if you don't believe me, ask David Wilson.

 

When Wilson heard of McMillan's arrest, he demanded to know where the ship was. So did Wilson's Norwegian backer.

 

By phone, supposedly from New York, Portillo reassured them, explaining how, at the last minute, he'd diverted the ship to Hong Kong to deliver a cargo of cigarettes there. That sounded plausible enough Then, he added, that instead of sailing through the Panama Canal and into the Pacific, the Lisa Marie was taking the long way, via South Africa and the Cape of Good Hope.

 

As bizarre as that sounded, because Wilson wanted to believe, he did believe. That is, until January, when he received a distraught phone call from the Lisa Marie's captain.

 

Having failed to reach Portillo through the answering service in New York, the captain wanted Wilson to know that the ship had taken water into the engine's cooling system and that he’d been forced to limp into his scheduled port of call, Puerto Cabello, Venezuela, where he was stuck, awaiting repairs.

 

Venezuela? In a panic, Wilson and the Norwegian jumped on a plane and flew to South America. They found the Lisa Marie there, sure enough, with 50 containers securely strapped down onto her decks. But when they ordered the crew to open the containers, all 50 were empty. Immediately, Wilson took steps to stop the ship from leaving Puerto Cabello, then began notifying his clients that the whole thing was a scam.

 

On the night of March 5, two men forced their way into Wilson's house. Their faces shielded by ski masks, they tied his hands behind his back, frog-marched him into his garage and, at point-blank range, shot him twice in the head.

*****

 

 

There were a lot of things that David Wilson didn't know when he arrived in Venezuela looking for the Lisa Marie.

 

He didn't know that Puerto Cabello is one of the main drug transit ports for Colombian cocaine. He didn't know that numerous police authorities around the world were collecting evidence which suggested that Austin, still as Portillo, had Colombian drug contacts. He didn’t know that to hedge his bets, Austin had secretly purchased a second ship, the Wei River, and was working the same swindle without him. He didn't know that Austin had already put out a contract on his life.

 

Among Portillo’s new clients was a man in Greece who'd agreed to take five containers for just under $1 million. Austin forwarded the necessary paperwork to show that the cargo had been loaded in Houston and that the Wei River was expected to sail to Holland on February 24. In fact the Wei River was still in dry dock.

 

With the Greek’s money, he bought a third ship, the Infanta, and supplied new agents, who in turn supplied new clients, with identical paperwork for identical cargoes on the Wei River and the Infanta.

 

Before long, almost as if he was drunk with success, he’d boldly invented ownership of the six other ships, six ships he knew nothing about, having picked names out of a hat, and had forged documents to prove that the promised cargoes were loaded and on the way.

 

With tens of millions of dollars at stake and Wilson, his major liability, now eliminated, Austin convinced himself that he was under no further threat. He especially didn’t fear the police, firmly believing that international cooperation among the law enforcement agencies was as non-existent as his cigarettes.

 

And in that assumption, he was fundamentally correct. It would take months before the FBI and Customs in the States, and the numerous authorities throughout Europe, all of whom had, at some point, been alerted to Austin’s scam, started comparing notes. And then, not every agency was willing to share whatever it knew about Austin. In fact, the only thing that worried Austin was that this game, just like genuine Marlboros, also had a sell-by date. He knew he could fend off disappointed customers and their hassled agents only so long. He understood that unless he moved on soon, his excuses and, invariably, his luck, would run out. But not just yet.

 

It was still going too well.

 

An agent in California sold $1.6 million worth of Portillo's phantom cargo to a businessman in Hong Kong. A month later, when the cigarettes hadn't arrived, the man in Hong Kong refused to be placated any further and changed the tone of his complaints from mild to very angry. So the California middleman switched gears, turned the man’s anger around and sold him another $800,000 worth.

 

A second punter took the documents given him by an agent to his bank to secure a letter of credit. The bank pointed out a whopping 40 errors, leading them to conclude that this was a hoax. But the client didn't want to know. The bank's officers spoke to him until they were blue in the face. The client insisted they pay out. And they did.

 

To avoid his day of reckoning, Portillo planned to cover himself with the perfect excuse, a sinking ship. And there is every reason to believe he planned to sacrifice the Lisa Marie.

 

The 50 empty containers he'd taken to Puerto Cabello were to be filled with drugs, or arms, or both, which he intended to off-load on the high seas off the coast of South Africa. As soon as the containers were empty again, he would scuttle the ship. Because Hector Portillo didn't really exist, the Mexican Colonel would also sink without a trace. Then, with his profits from the cigarette fraud, the money he’d raise on the drugs and/or the arms, plus whatever he could collect on the ship's insurance, he intended to live in the lap of luxury for the rest of his life.

 

And he might well have gotten away with it had he not murdered David Wilson.

*****

 

 

In an earlier guise, this time as Michael Smith Austin, he claimed to have had dealings with the Pentagon. According to sources who are usually referred to as "well informed," he’d once tried to arrange a defense contract as a supplier in the aerospace industry. Later, as Portillo-unmasked, Austin made claims to the FBI that he had, and still maintained, connections with the CIA. Not surprisingly, neither the Pentagon nor the CIA ever admitted to knowing him.

 

However, as Austin told the story, the markers he held with the CIA were for the minor role he played, this time under the banner of Colonel Rodriguez, a Nicaraguan army officer, in the Iran-Contra affair.

 

It turns out that there was a Nicaraguan Colonel Rodriguez involved with Iran-Contra, a fact made public by the US Senate Hearings. And sure enough, during a television program about Iran-Contra, a man claiming to be Rodriguez was dredged up for the cameras. He didn't look anything like Austin, but that doesn't necessarily mean anything. The man on camera may or may not have been the real Colonel Rodriguez.

 

It is known, though, that when Austin was arrested in the Dominican Republic, as Colonel Gomez, he confessed to several crimes, among them fraud and dealing in forged passports. It is, therefore, reasonable to expect that he would have been charged and brought to trial. It is equally reasonable to expect that, after pleading guilty, he would have been sentenced to prison in the Dominican Republic. Except, at the very last minute, the Dominicans set him free.

 

The official reason was that he'd been released "by instructions of the judiciary." But no one is quite sure what that means. And the judiciary never offered any explanations.

 

Initially, Austin said he’d bribed someone $1 million to get out of Santa Domingo. Then he changed his story, claiming that unnamed American authorities had arranged his release as a thank you for his help in Iran-Contra.

 

If he did, in fact, have some connection with the CIA, and the more you know about them the more you realize that anything is possible, especially the most unlikely affiliations, it didn’t seem to help him this time.

 

The Lancashire Constabulary opened an incident room into Wilson's murder on the morning of March 6 and, as the investigation became more complex, more officers were called in to help. At one point, and for a period of nearly six months, there were over 100 policemen working full time on the case.

 

On July 15, some 17 weeks after David Wilson was assassinated, Austin was arrested in New York on his way to pay $3.2 million in cash for an apartment in Trump Towers. He was charged with murder and ultimately extradited to Britain. His trial took seven weeks, but the jury only needed two hours. In February 1995, they convicted him of first degree murder and sent Austin to jail, without the possibility of parole, for the rest of his life.

 

The hired gunmen were eventually found, prosecuted and sentenced.

*****

 

 

There is some suggestion that, just during the Lisa Marie stage of the scam, each of the 100 containers Portillo claimed to have had were sold as many as five times. There were customers in Bulgaria, Poland, Italy, Denmark, the United States, Hong Kong, Austria, Sweden, Greece, France, Germany, Belgium, the United Arab Emirates, China, Holland, the UK, Australia, Singapore, Jamaica, Bermuda and a man purporting to represent the Russian Army. No one is sure how many times he sold the cigarettes he claimed to have on the Wei River and the Infanta. Even less certain is the amount of money he generated with the six ships that didn’t exist. Records show, however, that David Wilson, in the name of Alamosa Ltd, opened bank accounts in several countries and moved money through Switzerland, Belgium, Holland, Luxembourg, Germany and Britain. The largest account was at the Bank of Greece in Rotterdam. But the most active account was in the name of a holding company registered in St. Kitts, which was placed with Credit Suisse in Zurich.

 

It is also known that three weeks before the murder, Portillo set into motion some very specific steps to get money out of Switzerland. In particular, he contacted, negotiated with and then engaged a professional money laundering service operating out of the UK.

 

For a fee, this bunch will reliably move any amount of money in any direction for anyone who employs them. They run a full-service underground banking facility, dealing in all aspects of money laundering, in addition to providing a host of affiliated functions --- notably forged documentation, smuggling, drug trafficking and arms dealing.

 

And their track record is impressive. Some years ago, members of this group sold $6 million worth of illegal arms to the government of Sierra Leone, which almost simultaneously, fell to a coup. The shipment was, therefore, never delivered. The money for the guns, minus expenses, was returned to an official whose death was reported in the papers, just like Hector Portillo’s liquidation in a Mexican swimming pool. That same official has since turned up in Europe, living on the arms’ money.

 

There is reason to believe that Portillo had also secured this group's help in whatever his proposed drugs/arms deal was in Puerto Cabello and engaged them to sink his ships.

 

The police uncovered evidence that, within a day or two of Wilson's hurried flight to Venezuela, Portillo arranged overnight accommodation in Zurich for 7-9 people. There is also evidence to show that a day after those 7-9 people arrived in Switzerland, they traveled from Zurich to New York, and that at least three of them arrived on the same flight.

 

Walking into the cavernous International Arrivals Hall at JFK, the three deliberately got onto three different lines for US Customs. As they were legally required to do by American law, all three affirmed that they were bringing cash into the country. The proper forms were filled out and because the only restriction on anyone bringing in more than $10,000 is that the money be declared, once they did that, all three were permitted to go about their business. Together the three declared a total of $700,000.

 

Unfortunately, at no point did anyone at Customs notice that three large cash declarations had been made by people arriving off the same flight. In fact, it was only when the British asked Customs for certain records that they became aware of this delivery.

 

Still, it is not the cash from Zurich to New York that makes this a money laundering story. There is a neat twist in the tail.

 

Only a relatively small amount of Portillo’s money has ever turned up. If he did make tens of millions of dollars, no one has been able to find it. According to the FBI, Portillo, or Austin or Sporn, didn't live like a man with tens of millions of dollars. And at his trial, he denied that any of these millions existed. The amount officially claimed as lost, by those few punters and agents who were willing to come forward, puts the total at $20 million. Yet four unrelated sources have confirmed that, at one point, the main Credit Suisse account contained $80-$90 million. And a few people close to the case are convinced there was more. A lot more. So the question is, how much was there and what happened to it?

 

Consider the fact that the discrepancy between the amount admittedly lost and the amount that went through just that single Credit Suisse account, stems entirely from one simple premise: that many of the people involved with this matter can't come forward because they have no way of legally accounting for the money they put into the deal.

 

That's a common phenomenon in con games. It's also a factor in money laundering. The suggestion is, then, that Portillo was working both. That he was conning some people while offering others --- certain, very specific people --- a way to wash substantial amounts of dirty money. That this wasn't merely a sting turned sour because of a murder, that it was a gigantic and adroitly managed money laundering operation --- a major sink purpose-built to accommodate major players.

 

Portillo stole what he could from the punters and washed what he could for his heavyweight clients, bringing their money out the other end of the cycle; as genuine cigarettes that he purchased in the parallel market; or as a phony insurance payment on the non-existent cargo; or as money easily moved from one numbered account to another.

 

Money laundering explains why no one has ever found the missing $20-$90 million.

 

Money laundering explains why no one is ever likely to.

 

 

 

*****