A program designed to snare millions of dollars in human smuggling proceeds is stalled as Western Union and Arizona officials disagree on whether the state has the authority to broaden its dragnet to other states.
Western Union suffered setbacks this week in federal and state courts but plans to appeal.
U.S. District Court Judge Stephen McNamee refused Wednesday to temporarily suspend Arizona’s Financial Crimes Task Force from its attempt to seize money transfers from 28 other states through Western Union into Mexico.
The task force investigates money laundering of “coyotes,” or human smugglers. But McNamee’s ruling won’t allow the task force to get to work immediately because Western Union is planning to appeal a previous defeat that came Monday in Maricopa County Superior Court.
Western Union and state authorities have cooperated since 2001 in seizing the money of suspected human smugglers, said Francis J. Burke, attorney for the worldwide money transmitter.
In past investigations, Arizona’s attorney general would seize money coming and leaving Arizona, but Western Union contends the state is now violating interstate and foreign commerce laws in its most recent investigation by seeking money flowing into Mexico from other states, Burke said.
According to court documents, investigators target people who have sent $500 or more that they determine to be for human smuggling.
Western Union will hold the money and tell the customer who comes to pick it up to call a toll-free number, which is answered by Spanish-speaking investigators who interrogate the customer, Burke said.
Cameron Holmes, an assistant attorney general who oversees the money seizures, said investigators will release the money if they determine it is legitimate. But 60 percent of the time, the callers will admit outright that it is for human smuggling.
Investigators have fielded as many as 50,000 calls over the years and have never lost in court when someone challenges the seizure, Holmes said.
Gov. Janet Napolitano said in March that the state had seized $15 million in 12,000 wire transfers in the previous year.
Burke said the state’s new, broader approach is intrusive to someone in another state who has no connection to Arizona to have to explain a money transfer that never even went through the state, Burke said.
Burke said the new approach also threatens the company economically since 733,000 transfers a month are sent from the 28 other states to Mexico.
“Our business in Arizona has gone down to a trickle,” Burke said.
Word has gotten out that customers will have to go through an interrogation to get their money back, which goes against the Western Union promise of speedy service, Burke said.
Holmes said it is difficult for average citizens to comprehend the financial scale of the human smuggling trade, and the Valley is a hub for it.
He said the investigators have to target other states because local smugglers have gotten wise to police tactics and now wire around Arizona to evade investigators. He said the conspiracy connects back to Arizona, which gives the state the right to seize money in the other states.