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A Senator in Iowa is calling out the FAA for allowing drug cartels to exploit loopholes in the registration process for drug trafficking. Sen. Chuck Grassley claims the FAA's lenient registration process has created a criminal and national security threat, urging the agency to take immediate action.
Grassley, who is co-chair of the Senate Caucus on International Narcotics Control, released a scathing report on Monday, calling out the FAA for allowing "drug cartels and other bad actors" to improve the global drug trade and threaten national security using loopholes in the FAA's registration process. He released a report, examining the alleged loopholes and how they are being used to traffic drugs internationally.
"Transnational Criminal Organizations often use opaque corporate structures to conceal their drug transportation activities," Grassley's report said. "Air transportation is a favored method for the cartels and a burgeoning industry of illicit aircraft brokers has grown up around it. These brokers exploit vulnerabilities and loopholes in the Federal Aviation Administration's aircraft registry process to place U.S.-registered planes in the hands of TCOs."READ SENATOR GRASSLEY'S FULL REPORT
His report notes that U.S. planes are desirable since they receive less scrutiny from foreign governments and as a result, are better at concealing illicit activities. Grassley is claiming that blind spots in the FAA registration process are posing a serious security risk. In 2020 the Government Accountability Office report noted several failings within the FAA's system, making 15 recommendations for corrections. According to Grassley, over the last four years, the FAA has only fully implemented three of the 15 recommendations.
"Even the simple task of creating the GAO's recommended memorandum of understanding for information sharing with law enforcement has taken the FAA a staggering two years to draft," Grassley said in his report. "To this day, the FAA still has not finalized the agreement."RELATED STORIES:FAA registry attorneys to no longer advise on issues regarding most trustsDrug-smuggling jets andamp; a $240M Ponzi scheme: How the feds made a bizav bust
Grassley alleges that the FAA relies on reactive law enforcement measures to capture the criminals abusing the FAA system. He references a 2023 criminal trial involving an aviation company that was registering drug smuggling planes with the FAA, quoting directly from the trial. In his report, he states that when law enforcement was asked about an attempt to examine to see if the aircraft registered with the fraudulent company had any derogatory information, or information that is criminal in nature, they responded yes. They also noted that over 100 of these planes came back with derogatory information that resulted in a follow-up and in-person interview.
At the same trial, the Director of Intelligence of the Guatemalan Army testified that their military had identified about 500 illegal airstrips in Guatemala. He said soldiers arrived on the scene of a narcotics air event involving a U.S.-registered plane and they took gunfire from 150 people. During the trial, he told the court there were two routes to the area, one blocked off by human barriers and at the other criminals threw spikes to damage the tires of vehicles. Then, an officer with only 10 soldiers in his command, took gunfire from about 150 people. They arrived at the scene with two helicopters for support and the criminals were shooting at their aircraft. They found 54 sacks, with 30 packets of possible cocaine. He also said the criminals had placed a dead alligator on top of the cave to hide the illegal content.
This trial involved Debra Lynn Mercer-Erwin, who was found guilty of money laundering, wire fraud, conspiracy to manufacture and distribute cocaine, and conspiracy to manufacture and distribute cocaine knowing it would be imported into the U.S.
"In the aircraft world, planes registered in the United States and displaying a ‘N' tail number, are coveted as being properly vetted and trusted to legally operate around the world," U.S. Attorney Brit Featherston said. "Mercer-Erwin found ways to exploit the registration process in order to profit from illegally obtained money being paid for her services. Mercer-Erwin became a drug dealer when she became aware of planes she had registered were being used to transport large quantities of cocaine. Mercer-Erwin knew that many of her clients were in the illegal drug business and she hid their identities and the sources of their money in order to reap a large profit. She became a money launderer when she created fake sales of planes that were not actually for sale in order to hide and move drug money. Transnational criminal organizations require assistance to operate in the U.S. and Mercer-Erwin facilitated the drug dealing by exploiting the plane registration process."
For over a decade, Mercer-Erwin used her two aviation companies to commit fraud and help smuggle drugs, all while masquerading as an aviation professional. She would use a trustee for aircraft with foreign owners, allowing the foreign nationals to receive the coveted N-number on their aircraft. An investigation into her other fraudulent activities found that over 1,000 planes were registered to just two P.O. boxes in a small Texas town without an airport. Mercer-Erwin was also involved in a Ponzi scheme that she had run from 2014-2020, involving the fake sale of up to 100 aircraft and involving nearly $500 million.
Grassley's report alleges that the information gaps in the FAA registry system are being actively exploited by criminals. His report notes that a 2020 GAO report examined registration data from 2018 and found that 2,300 aircraft were registered to "likely shell companies" and 3,300 were registered as "noncitizen trusts." The same report also indicated that the FAA will generally accept certification by applicants of their eligibility and aircraft ownership and only perform a limited review of the applicant's information to find any potential fraud. While the process requires a physical address, the report said the FAA accepted a mail drop location or registered agent address as a mailing address without a physical address more than 2,000 times (one percent of all addresses). This analysis found that about 25,000, or nine percent, of all registrant addresses did not match a valid address in the USPS postal verification data.Drug bust in Belize, photo from WFAA
A company can register its plane with the FAA if it has been organized under U.S. laws, its president and at least two-thirds of the managing officers are U.S. citizens. It is under the control of U.S. citizens, and at least 75 percent of the voting interest is controlled by U.S. citizens. Grassley's report noted a tragic example of how criminals are using shell companies to defraud the FAA and register their planes in the U.S. In December 2012, singer Jenni Rivera was killed in a plane crash near Monterrey, Mexico. The plane she died in was owned by charter aircraft company Starwood Management, LLC, registered with the FAA. Cristian Esquino "Ed" Nuñez, who was a Mexican national convicted in the U.S. of falsifying aircraft logbooks and cocaine distribution, had ties to Starwood and had signed FAA documents as the company's manager. Grassley alleges that the plane was old and not safe to fly. That same year, the DEA seized two other Starwood planes and at the time, Nuñez was still trafficking drugs in Mexico until about 2021.
Five years after her death, Homeland Security Investigations investigated a small aircraft registration fraud scheme involving Nuñez's nephew, Carlos Villarrutia. Villarrutia created more than a dozen shell companies to register planes with the FAA. Eight of these planes were found to be involved in narcotic events and involved his uncle, Nuñez. In 2020, the DEA identified another Villarrutia shell company.
Transportation is the most important thing when drug trafficking, aside from the actual drugs. Once the drugs arrive in the base country, they must be transported to other countries for distribution. Cartels and other criminals find inventive ways to smuggle drugs into the U.S., many turning to planes for transport. Many drug busts on U.S. registered planes have traced illicit substances like cocaine and fentanyl to cartels, some of which have been attributed to spikes in fatal overdoses to youth in the U.S. Using a loophole allowing a foreign national to register a plane in the U.S. as long as they first transfer the plane's title to a U.S. trustee can allow drug traffickers to register planes with the FAA.
Once a plane is registered, even by fraudulent or suspicious means, the aircraft is given an N tail number, signaling that the plane is U.S. registered. Some foreign countries are less likely to inspect a U.S.-registered plane for airworthiness or force it to ground while it is flying. Grassley quoted one criminal pilot who explained at a trial that it was easier to register a plane under a trust in the U.S. than to get proper documentation for a Mexican aircraft. He said that many individuals seek this type of registration to "make their plane disappear: and use it for something illegal.
The U.S. Joint Interagency Task Force South is a multiagency initiative developed to detect, monitor and interdict drug loads. With active responses like this, there has been a drop in narcotics flights. A Colombian Air Force Colonel confirmed that there was roughly a 64.84 percent drop in narcotics air events due to the enhanced international coordination.
Grassley is urging the FAA to implement more of the GAO recommendations, including collecting more information from registrants, collecting information on any individual or entity that owns more than 25 percent of the plane, verifying the applicant's and dealer's eligibility and information, increasing registration fees to cover costs for increased efforts, link information on owners and related individuals/entities with significant aircraft ownership responsibilities, and use current data sources to track and identify patterns of activity indicating fraud or abuse.
"While Americans rely on the Federal Aviation Administration to provide smooth transport from point A to point B, criminals are taking advantage of the system to transport illicit goods and make a profit," Grassley said. The FAA's stubborn habit of rubber stamping registrants leaves the door open for drug traffickers and would-be terrorists to wreak havoc in the U.S. and abroad. FAA's failure is contributing to the drug crisis, burdening law enforcement and creating a major national security risk. I'll be pushing to hold the FAA accountable and advocating for a legislative solution to put a stop to this abuse."