Connect with us

News

Magic city undercover

Published

on

Magic city undercover

The first time Lydia Bulas chased a private jet down the runway at Florida’s Lauderdale-Hollywood Airport, it was May of 1983 and America was losing the war on drugs. She was a 31-year-old rookie special agent, slouched in a surveillance car and watching a Cuban load 17 cardboard boxes on to a Learjet. The balding man staggered up the stairs as the twin engines started to whine. She eyed her radio, willing it to crackle to life, but it didn’t comply. The aircraft lurched forward and made for the runway. Finally, Bulas got the call from customs — whatever the man was transporting, he hadn’t signed a form. She roared on to the runway in hot pursuit.

A legion of cop cars joined the drag race, but the jet was picking up speed. Bulas was neck and neck with the cockpit and running out of runway. She swung in front of the aircraft, forcing the pilot to screech to a halt. Revolver drawn, she leapt out into the heat. Agents with shotguns stormed the cabin and tore open the boxes. Inside, they found more than $5mn in cash — exactly what Bulas was looking for. Cartels were importing a then — new drug, cocaine, by plane and boat, but their challenge was sending their profits in cash back to Colombia.

A government audit of the US banking system’s cash flow had recently discovered more than $6bn in unexplained banknotes flowing from banks in South Florida — more than the entire US currency surplus and theoretically enough to sink the actual American economy. So the government dispatched undercover operatives to stop it. But Bulas wasn’t with the DEA or FBI. She worked for the IRS, on a secret operation that had nothing to do with tax refunds. Her boss had issued his staff with novelty business cards that stated their line of work:

OPERATION GREENBACK.
USED CARS, WHISKEY, PEAT MOSS, NAILS, LAND, FLY SWATTERS, RACING FORMS, BONGO DRUMS. WARS FOUGHT, GOVERNMENTS RUN, BRIDGES DESTROYED, UPRISINGS QUELLED, REVOLUTIONS STARTED. TIGERS TAMED, SALOONS EMPTIED, ORGIES ORGANIZED, VIRGINS CONVERTED, COMPUTERS VERIFIED

The Cuban in the Learjet turned out to be Ramon Milian-Rodriguez, a 32-year-old businessman with a masters degree and an arrogance that stunned investigators. “I’m a launderer of narco-dollars for the Who’s Who of drug dealers,” he boasted to federal agents after his arrest. “Nothing else generates this kind of cash. Not even General Motors.” He told them they, “didn’t know what they had here”.

Advertisement
© Tania Franco Klein

Milian-Rodriguez was right. American law enforcement had mistaken the narcotics industry for disparate groups of “cocaine cowboys” but in Colombia, Pablo Escobar was building a violent drug empire that stretched from Medellín to Miami. When Bulas’s colleagues searched Milian-Rodriguez’s office, they found a briefcase stuffed with records that showed he had laundered a staggering $146mn in the previous eight months alone. They picked the lock on his closet and discovered a submachine gun in a sack, helpfully labelled “UZI”. They unzipped another bag and found 28kg of cocaine.

Bulas, who is Cuban-American, couldn’t contain her emotions. “I was very upset that a Cuban would do that,” she recalls. “You come here to this country, they give you a chance to prosper, and you go and do illegal stuff. No. Go back to where you came from.”


When Lydia Bulas was eight years old, her father arrived at their apartment in Havana, Cuba, and started stuffing cash into suitcases. It was 1960, and Fidel Castro’s goons had just informed her grandmother that the family farm now belonged to the government. “My dad was a doctor. He studied medicine while Castro was studying law in the University of Havana, so he knew the guy was no good,” she recalls. He said, “We gotta get out of here.” Bulas was spirited out of the country on an aircraft with her mother, grandmother and brother. Like so many Cuban émigrés, she arrived in Miami hoping for a new life.

But being new wasn’t easy, especially for a bookish kid with glasses. “I was kind of shy, sort of a nerd,” Bulas says. “I went to a Catholic school, and I spoke no English. The teacher happened to be a Cuban lady. She stayed after school with me and taught me. Until I got it right, I never left my desk.” By the time she graduated high school, she was fluent in English, a straight-A student and headed to the University of Miami to study accounting. At night, her mother begged her to go to parties, but she preferred to stay home and study the tax code. In 1975, she took an entry-level job at the IRS answering tax-payers’ questions.

Even for a wallflower, cubicle life was dull. “I’m a Gemini, so I’m always a very active person,” Bulas says. A marriage to a cousin’s friend after college lasted only three years. “I fell out of love with him,” she explains. She eventually tried nightclubs, such as The Mutiny in Coconut Grove, a waterfront drinking hole that came to be known as “Hotel Scarface”, where bartenders were selling more bottles of Dom Pérignon than in any other establishment in the world at the time. She was shocked to see people openly snorting white powder. “My father, when I was little, he once took me to a hospital where all the drug addicts were,” she recalls. “It shocked me so bad that today I can say that I have never even smoked a joint.”

Advertisement
© Tania Franco Klein

By then, drugs had changed Magic City. Bulas watched TV news reports about Wild West-style shoot-outs between rival Colombian drug traffickers in shopping malls. Bullet-riddled bodies were turning up in trunks. “After I started working for the government, I woke up,” Bulas says. While local law enforcement and the DEA struggled to contain the tonnes of cocaine arriving at the border, the IRS became concerned with the spectacular amounts of cash it generated.

One day, a Cuban colleague at the IRS boasted to Bulas about his new job running raids for the “criminal division”. He said they urgently needed Spanish speakers and people who understood numbers. Bulas hoped it might be good for her social life. “You didn’t want to say you worked for the IRS,” she recalls, explaining that people feared she would audit them. “Afterwards I could say, ‘I don’t do taxes, I do criminal division.’”

At a federal training centre in Georgia, Bulas learnt to fire a revolver. She learnt to poke an assailant in both eyes, stamp on his toe, then “kick him in the balls”, she recalls. Instead of a skirt, she wore jeans and a gun on her hip. The glasses were gone. “I felt like it really pulled my ego very high,” she admits. It also gave her life meaning. As only the second woman to join the division, she was eager to make her mark.

In 1980, Bulas was assigned to Operation Greenback, named for the green paper money issued by the Union government during the civil war. The team comprised maths whizzes from the IRS, the US customs service and Justice Department. Being the first Latin woman on the task force gave her an additional responsibility. “I was very, very grateful to this country,” she says, “for having allowed me to become what I was.”

Mike McDonald, the agent in charge of Operation Greenback, wore a sensible, side-parted hairstyle and kept a huge dictionary on his desk. He also liked to pose for photos with a semi-automatic rifle and had a wicked sense of humour. “He was a brain. The most knowledgeable guy regarding money laundering that you could ever meet,” Bulas says. “I looked up to him. He wasn’t like a boss. He was like one of us.”

Operation Greenback quickly outgrew its headquarters at the federal building in downtown Miami and moved into a location recently abandoned by a defunct Miami newspaper. Agents had to steal furniture from their neighbour, the US attorney’s office, in a heist that caused a bureaucratic conflict. Their new headquarters had a pirate-ship vibe. Boxes overflowed with evidence; electric typewriters clattered; people smoked at their desks, if only to mask the smell of rotting food and diapers leaking from bags of garbage taken from traffickers’ homes and awaiting analysis. “It was disgusting sometimes,” Bulas recalls.

Advertisement

“We were just all kids,” recalls Larry Sands, a special agent with Operation Greenback, who colleagues liked to call “Catfish”. “We were young, we were dedicated to the mission.” According to Jonathan Rosen, an assistant professor and organised crime expert at New Jersey City University, Greenback didn’t need guys with guns to beat the traffickers, but “accountants and an army of nerds”. Brave nerds willing to go face to face with international criminals. “Back then, since I was young, I thought I was invincible,” Bulas says.


Bulas spent the early 1980s watching small Miami banks that cops and criminals called Coin-O-Washers. She studied suspicious customers, who pushed in cart loads of cash with a deposit slip gripped between their teeth. Others carried banknotes that reeked of fish, having sat in bags used by seafaring smugglers. Back then, there were no money laundering laws. Banks were required to file a report when someone deposited $10,000 or more, but few bothered to.

One day, Bulas watched a portly Colombian travel agent arrive at the Great American Bank of Dade County, a known Coin-O-Washer. Greenback agents suspected the man, 46-year-old Isaac Kattan, was a major money launderer. But Kattan didn’t strike Bulas as a drug guy. The softly spoken father-of-two drove an old Chevrolet Citation and carried a mysterious purple satchel. She soon learnt that each of his four rented apartments contained a high-speed money counter. Every day she watched him drive trunk-loads of cash to the bank at recklessly high speeds, depositing up to $4mn a day, between meetings at phone booths and parking lots. One DEA agent on his tail often wondered: “Doesn’t this guy ever stop?”

wads of cash under a car seat
© Tania Franco Klein

Tellers at the bank also worked nonstop, counting Kattan’s millions through the night. Though technically he was doing nothing illegal, his behaviour set alarm bells ringing. One morning in 1981, Bulas watched a car thief drive off in Kattan’s car, leaving him stranded outside the bank. (Miami was, by then, the crime capital of the world.) “What the hell?” she said to herself, as Kattan begged bank employees: “No police! No police!”

Bulas and 20 Greenback agents raided the bank. They arrested three employees who were in cahoots with Kattan and seized boxes of documents that revealed the scope of his operation. Every dollar Kattan deposited was turned into a credit for pesos and cashed out in Colombia, leaving a tidy profit for the bank. “We were able to build a case against him,” she says. They could prove he was involved in drugs, but didn’t know how to prosecute him. Then, a stroke of luck.

In February 1981, six undercover DEA and IRS agents followed Kattan all day. They watched him order a Cuban coffee, before he met two men in a flashy Jaguar and handed them a mysterious red briefcase. Agents were ordered to tail the car and “take ’em”. Inside Kattan’s suitcase, they found 20kg of cocaine with a street value of more than $300,000. After they slapped on the handcuffs, agents found $16,000 in cash under his front seat and $385,000 in cashiers’ checks in his briefcase. Inside his purple satchel? Evidence of hundreds of millions of dollars in money laundering transactions. Bulas recalls seeing Kattan’s face staring out from the front page of the Miami Herald, under the headline: SOUTH FLORIDA’S AL CAPONE.

Advertisement

“He was a dead duck,” says Charles Blau, who prosecuted the case. Blau, a Midwesterner from Indiana, knew they’d got lucky. “It was fortuitous, I guess, on our part that the one time that he made a dumb mistake and got in the middle of a drug transaction, we were watching him do it.”

It took just 20 minutes for a jury to convict Kattan of drug conspiracy. On August 17 1981, he was sent to prison for 30 years. The Great American Bank of Dade County became only the second ever US bank indicted for money laundering. One employee was caught in a sting operation that foiled a plot to blow up prosecutors and was sent to prison. Blau, the prosecutor, recalls terrifying a first date by holding a mirror beneath his car, checking for bombs. “I don’t think she went out with me [again] for six months,” Blau recalls. (They’re still married.)

Kattan was just the start. In the first few years of the 1980s, Operation Greenback smashed a total of seven money laundering rings involving 16 narcotics organisations that were responsible for $2bn in trafficked cash. The operation boasted 164 arrests, 211 indictments, 63 convictions and $38.5mn in seized currency. Those days whizzed by like dollar bills rattling through a counting machine, and the team who worked in the former newspaper office were now creating their own headlines. “Heck, we wrote the mission, with accomplishments every day,” recalls Catfish.

© Tania Franco Klein

Bulas was finally enjoying her social life, but work often got in the way. One night she was dining with a girlfriend in Coral Gables when she overheard two men talking loudly in Spanish about “merchandise”. “If these people pay with a credit card, we’re going to follow them,” Bulas whispered. When their main course arrived, they had already left. By then, Bulas had tailed the suspects to a warehouse, which she later discovered was full of drug cash.

Another time, an informant tipped off Bulas to some cash hidden at a Colombian safe house, behind a fake wall. During the raid, Bulas knew the location of the cash, but needed to protect her source. So she told the suspects that her sniffer dog barked when he found banknotes. “I kicked the dog in the ass,” she recalls, adding that it was a gentle kick. When she pulled out the cash, one of the suspects lamented: “Shit, that dog is really good.”

The jaw-dropping stings continued. When Bulas stopped the Learjet on the tarmac in May of 1983, it was the biggest cash seizure in US history and a huge splash for Operation Greenback. Even the suspect, Milian-Rodriguez, recalled the bust fondly. “My arrest was a Hollywood arrest, you can see this in any action movie,” he later said. “The anti-hero gets on his private jet . . . and, all of a sudden, 100 police cars chase you down the runway.” Milian-Rodriguez was later sentenced to 43 years in prison for money laundering.

Advertisement

Yet the jailing of Kattan turned out to be a false victory for Bulas and Operation Greenback. Banks in south Florida were no longer willing to take in truckloads of dirty cash. The party was over. “Miami lost its role as a critical area for money laundering. Our banking system suffered, so did the housing market,” says Bruce Bagley, a former University of Miami professor and expert on money laundering (who, incredibly, was jailed in 2020 for money laundering). Milian-Rodriguez admitted that the $5.4mn on board his Learjet was a “monthly stipend” headed to Panama’s General Manuel Noriega, who was now washing the cartel’s cash and making Operation Greenback harder than ever.


By 1984, Bulas was starting to feel the strain. She was 32 and a single mother, juggling undercover assignments while wrangling babysitters. An unhappy marriage to a Syrian waiter had lasted less than a year, and she had given up on dating. “You don’t want to bring any guy [home] just for the hell of it. If you have a daughter, you have to be careful,” she says. Becoming a mother had made the war on drugs personal. She couldn’t imagine seeing her daughter in rehab or worse. When she took risks at work, Bulas admits, “I did it mainly for her.”

Pablo Escobar and the Medellín Cartel controlled 80 per cent of the world’s cocaine trade at that time. Laundered cash made Escobar rich, and he was eventually added to Forbes’ first ever List of International Billionaires, alongside the owner of car giant Fiat and the Benetton fashion family. He wore a diamond-encrusted Rolex; he purchased a bullet-ridden 1930s touring car purportedly once owned by gangsters Bonnie and Clyde; he stocked his private zoo with a soccer-playing kangaroo and a pair of rare black parrots valued at $20,000 apiece. But his violent trade created misery and death on the streets of Colombia and Miami.

In 1984, at the height of the cocaine boom, McDonald sent Bulas on undercover missions posing as an intermediary. As “Lydia Barrera”, Bulas promised cartel members she could launder dirty cash through corrupt bankers without leaving a paper trail. Once they were on the hook, Greenback agents would launder some of the cash, then follow them back to their stash house, where uniformed agents would seize the money. They called it “ripping” the cash.

“You have to dress like you have money,” Bulas says. She wore fake jewellery and carried herself with extra swagger. After the sting and the big reveal, she led the negotiations too. “If you want to have your sentence reduced,” she told the suspects, “you introduce us to your big guy and tell them I’m very reliable.” It was effective but risky. One night in Puerto Rico, Bulas was partying with cartel members at a disco called Hunca Munca, wearing a blonde wig, when she ran into a friend from high school. She pulled the woman into the restroom and whispered: “You don’t know me!”

Advertisement
two women  seated inside a car
© Tania Franco Klein

Support for Bulas arrived in 1984, when Greenback recruited more female operatives. Former IRS auditor Debbie Crumley, 32, transferred to the criminal division when her husband’s job took the couple to Miami. She arrived from a small-town in Georgia with blonde bangs and a “bless your heart” southern accent, behind the wheel of a burgundy Nissan convertible, blasting Tina Turner’s “What’s Love Got To Do With It”. “I just wanted to do something with some pizzazz,” she recalls. When she teamed up with Bulas, other agents started calling them “Cagney and Lacey” after the television cop duo.

Crumley’s undercover persona was a ruthless businesswoman who casually dealt in millions. “But you also had to be normal,” she explains. “You couldn’t come across as too anxious. You were just a person trying to make a deal and, fortunately, most of the people we did that with believed us.” On every sting, the female agents were told a secret code-word, like “Disneyland” or “daycare”, to summon armed agents if a deal went south. The cartel’s couriers, Bulas recalls, “were little shitheads”.

The bad guys were not stupid, Crumley says. “They figured out they were being followed sometimes, and then they turned the tables on us and started following us.” One time a suspect told her: “I know where you and your husband had dinner last weekend.” Bulas and Crumley were issued specially designed green leather handbags to carry their handguns, which came with speedloaders and hollow-point bullets with more stopping power.

Back in the office, they posed for goofy mugshots for McDonald, who posted them to a fictional IRS Ten Most Wanted List on the wall. In truth, they were the stars of the whole operation. “They were women out of the ordinary,” says Dick Gregorie, a prosecutor who worked on various Greenback cases. “They were every bit as tough as the guys were and they had no problems in standing up to them and making sure they got heard and things got done.” This put some noses out of joint.

Not long after she joined Greenback, Crumley was driving past a suspect’s house late at night. The road was lined by tall trees, and it was pitch black. She noticed a car drawing closer to her rear bumper. Certain that her cover was blown and armed Colombians were on her tail, she radioed Catfish for back-up. “I pulled out my weapon, and I was ready to do whatever I had to do,” she recalls. Agents rammed the car to a stop. “It was one of the agents from Greenback who was playing a trick on me. I remember Catfish saying, ‘You fool . . . she was ready to take you down.’”

© Tania Franco Klein

Another night Crumley arrested two traffickers, a brother and sister, in possession of several kilos of cocaine. The woman had a six-year-old son, Enrique, who found himself at Greenback headquarters with Crumley. “Against his chest he cradled his mother’s empty purse which seemed to act as his security blanket,” she recalls. When his mother told him she was going to jail, tears streamed down the boy’s face. “She showed no emotion,” Crumley recalls. After she took Enrique to social services, his mother received an eight-year sentence, and never once asked about her son, she says.

In their bid to capture bigger targets, Bulas and Crumley set their sights on two Uruguayan launderers named Roberto del Pino and Carlos Sarmiento. They both looked to them like slick South American smugglers straight from Central Casting. Del Pino was the one with the limp. Both had recently turned 30 and had tired of working in a sausage factory and selling books, before finding success smuggling gold into Colombia in del Pino’s wooden leg. After a tarot reader introduced them to some Colombians, they started sending tonnes of cash in twenties, fives and one-dollar bills from Miami and Los Angeles back to Medellín.

Advertisement

The key to their operation was a striking Puerto Rican woman named Maria, who wore skyscraper heels and had the type of jet black mullet made popular by Cher. For a 2 per cent commission, Maria arranged to transfer their money undetected by US authorities, through what she called “a dirty banker”. In the space of a few days in January 1986, the Uruguayans slipped Maria nearly a million dollars in cash from the trunk of their car in a Pizza Hut parking lot. Maria was not her real name. She was Awilda Villafane, an undercover US Customs agent working with Bulas and Crumley, and Operation Greenback’s latest undercover operative. “We would tell her what to do,” Bulas explains.

Soon, del Pino and Sarmiento’s luck started to run out. They had $336,000 in cash and $465,000 in cashiers’ checks ripped from a safe during a raid in October 1985. Two days later, agents seized $1.2mn from the trunk of their Volkswagen Jetta. By then, “Maria” had laundered more than $17mn for the Uruguayans, while helping the government seize around $12mn. This earned Sarmiento an uncomfortable trip to Medellín to explain himself to Pablo Correa. Before Escobar had him murdered, the construction magnate was one of the cartel’s most ruthless drug traffickers. On his return to the US, Sarmiento warned Maria that if they lost any more money, the Colombians would “scrape us off the face of the earth”.

The raids continued, says Bulas.

“They were losing millions.”


In early February 1986, Villafane arrived at the Greenback headquarters with a cassette tape that made everyone sit up. A wiretap had recorded Sarmiento and del Pino complaining about their losses and fretting about Escobar sending someone from Medellín to see “what the hell was going on”. Luis Javier Castano-Ochoa (who is not related to the infamous Ochoa brothers, who co-founded the Medellín Cartel) was a lawyer and politician believed to be the cartel’s main financial adviser and frontman. “We were ecstatic because it was the first time we had someone who was really close to Escobar,” Bulas says. McDonald knew that capturing Castano-Ochoa would put a huge dent in the cartel’s operation. He decided to use “Maria” to lure him into a money-laundering sting. “I guess he trusted [her] very much,” Bulas recalls.

Advertisement

There was rain in the wind on February 7 1986, as Villafane, dressed as Maria, swung into a Burger King parking lot near the airport. Her Colombian connection leaned into her window and said, “The dopers want to meet us.” When the man slipped into the restaurant to buy a Coke, Villafane had a seven-minute window to talk to Bulas through a concealed microphone. Castano-Ochoa was coming, she said. They should scramble a team. “There were a lot of us outside,” Bulas recalls.

In her rear-view mirror, Villafane watched a red Buick Regal pull into the lot. Rain was now beating on the roof of Bulas’s car as she watched two smartly dressed men step out of the Buick. The balding man with closely cropped hair on the sides was Castano-Ochoa, the other was his driver. Villafane followed the men into the Burger King. Inside, Castano-Ochoa found a table away from the other customers. “I am going to take your car,” he told Villafane flatly. “You give me the keys and we are going to have the merchandise put into the trunk.” Villafane realised that if the men discovered the recording equipment whirring under her front seat, she could be killed.

“You can’t take my car because it is registered to me,” she said quickly, and suggested switching to a rental car waiting nearby. Castano-Ochoa pondered for a second, then agreed. Listening to their conversation in her car, Bulas breathed a sigh of relief.

Another of Castano-Ochoa’s men accompanied Villafane to a nearby grocery store to pick up the rental car. He transferred a suitcase and a box from his trunk into hers and drove away. When Villafane delivered the luggage to the Greenback office, agents found it stuffed with $828,000 in cash — enough to warrant an arrest. Six days later, agents surprised Castano-Ochoa at a Holiday Inn and arrested him. In his possession was a briefcase full of documents revealing a cocaine operation involving 2,957kg and approximately $56mn — one of the largest ever smuggling rings discovered on US soil.

three women investigators posing next to a private jet
Lydia Bulas (right) and two colleagues from US Customs next to the aircraft they stopped on the runway in May 1983
Debbie Crumley (left) and Bulas (right) pose for fake mugshots
Awilda Villafane (top), Bulas (middle) and Crumley (bottom) counting money seized during the Ochoa/Sarmiento/del Pino case in late 1985/early 1986

Operation Greenback was now so successful that law enforcement agencies in 35 other US cities adopted its methods. “The best way to get [convictions] is through people ratting or squealing or informing,” explains Bagley, the money-laundering expert. Meanwhile, Isaac Kattan had spent hundreds of hours telling prosecutor Charles Blau exactly how the cartel laundered its cash. “He was probably one of the better teachers I’ve ever had,” Blau says. Those conversations, together with reports from Mike McDonald and Operation Greenback, formed the basis for the money laundering statutes passed into law by Congress in October 1986. Now that money laundering was a federal crime, the stage was set for Castano-Ochoa’s trial.

In May 1987, a court heard that Castano-Ochoa and the Medellín Cartel was responsible for the $6bn in unexplained cash flooding the US banking system. To illustrate his point, Prosecutor Gregorie showed the jury what $2.1mn in cash looked like. “We had to bring it up with the elevators and roll it into the courtroom,” he recalls. During the six-week trial, he introduced colourful witnesses, including the notorious drug trafficker and informant Max Mermelstein, who told the court that the papers found in Castano-Ochoa’s briefcase proved he “was in charge of the entire operation”.

Advertisement

“We had a lot of evidence, so he was toast,” Bulas recalls. She had also convinced the Uruguayans to testify, despite Castano-Ochoa allegedly warning one of them: “I am going to bring your son’s head on a platter.” Sarmiento and del Pino’s evidence helped to send Castano-Ochoa to prison for 16 years. (The smugglers were released for time served and deported.)

Bulas, Crumley, McDonald and the Greenback team celebrated at a local bar with prosecutors. “For me, it was a major trial. This was a major, major player,” says Gregorie. Putting it another way, Catfish says: “The worst thing that happened to Ochoa was Lydia Bulas.” After US Marshals led the Colombian away to a federal US prison, his lawyer quietly approached Bulas, she recalls. “He told me that if I ever decide to leave the IRS he would hire me as an investigator,” she says. (Castano-Ochoa is now free and still involved in politics in Colombia. He could not be reached for comment.)

Bulas continued working with Operation Greenback until it ended in 1993, shortly after Colombian special forces shot and killed Pablo Escobar on a Medellín rooftop as he tried to flee. The destruction of his money-laundering scheme, along with undercover missions at home and abroad, contributed to the spectacular downfall of the Medellín Cartel. Bulas remembers the jubilation in the office when the news of his death broke, but she was in no mood to celebrate. “I was relieved,” she recalls. Bulas retired in 2002, long after the good old days of Operation Greenback were over, she says. After the September 11 attacks in the US, the war on drugs became the war on terror, and she felt there was too much red tape and paperwork. “I said, ‘screw this,’” she recalls. She went to work for McDonald in the private sector, advising foreign banks on how to abide by American laws. It gave her more time to spend with her family.

Bulas is 71 now and lives in Miami with her 42-year-old daughter, her son-in-law and their two-year-old son. When she hangs out with Crumley, they still call each other by their last names, as if Operation Greenback never ended. She even keeps a photograph of Escobar drenched in his own blood, as a memento of her life’s work. Before he was killed, the drug lord spent his final months on the run. At one point, he found himself freezing to death with his nine-year-old daughter in the mountains above Medellín. He looked for something to burn to keep her warm and reached for some sacks filled with $2mn in American greenbacks. In desperation, he lit a match and — poof — up it went.

ABOUT THE PHOTOGRAPHY
Tania Franco Klein is a Mexico City-based photographer. For this article, FT Weekend Magazine invited Klein to create fictional scenes that reflect aspects of this article. These photographs do not contain individuals or locations featured in the story

Advertisement

Follow @FTMag to find out about our latest stories first and subscribe to our podcast Life and Art wherever you listen

News

They quit their day jobs to bet on current events. A look inside the prediction market mania

Published

on

They quit their day jobs to bet on current events. A look inside the prediction market mania

Logan Sudeith, 25, estimates he clocks about 100 hours a week on prediction markets.

Evan Frost for NPR


hide caption

toggle caption

Advertisement

Evan Frost for NPR

Ask Logan Sudeith how many bets he places in a week and he’ll laugh. It’s a comical line of questioning for the 25-year-old former financial risk analyst, who estimates he clocks about 100 hours a week on prediction markets Kalshi and Polymarket. After a while, understandably, some of the bets blur together. What are his net profits, though? That’s a number he’s got at the ready.

“Last month, I made $100,000,” said Sudeith, who does most of his trading from his laptop while bed-lounging in his Atlanta apartment. He’s executing so many orders on the sites, he says, that he has no time to cook. So he DoorDashes every meal.

“My last salary was $75,000 a year, so I left my job to trade full time,” he said

Advertisement

Some of his biggest hauls in recent months include lucrative stakes on Time Magazine’s person of the year ($40,236), the most-searched person on Google last year ($11,083) and a wager on the New York City mayoral race ($7,448). And of course, a couple thousand here, a couple thousand there on questions like, how many times will a sports announcer say “air ball”? And will President Trump use the phrase “drill baby drill” at an upcoming press conference? (Traders had $500,000 on the line on this market.)

“I’m not a fan of Trump, though I do spend most of my day listening to him and tracking what he is doing,” said Sudeith, noting that whatever candidate in the next presidential race is the most friendly to prediction markets has his vote. “I could be a single-issue voter. If they’re super-super heavy anti-prediction markets, it would be hard for me to vote for them.”

Sudeith says he made

Sudeith says he made $100,000 last month on prediction market apps.

Evan Frost for NPR


hide caption

Advertisement

toggle caption

Evan Frost for NPR

The boom of online prediction markets is being driven by the Sudeiths of the world. He’s one of millions of traders logging on every day to services like Kalshi and Polymarket to place high-dollar and incredibly risky bets on the outcome of the world in real time, whether it’s an award host’s turn of phrase to the number of migrants the U.S. will deport this year.

Much like previous financial crazes around meme stocks and NFTs, true believers view prediction markets through a stick-it-to-the-man prism. It’s a movement against the elite establishment, they say, whether it’s the mainstream media, pollsters or government agencies. This growing group of renegade traders maintain that core truths emerge only after thousands of people express their opinions with their pocketbooks.

Advertisement

“Markets are the most efficient way to get to real information,” Sudeith said. “If you’re watching on election night, I think you’ll know who the winners are before the news can report it.”

While the industry may position itself an alternative to the mainstream, the mainstream is embracing it.

CNN and CNBC have struck deals to incorporate Kalshi prediction markets into coverage. The Wall Street Journal‘s owner, Dow Jones, is partnering with Polymarket, as did the Golden Globe awards this year, with announcers updating viewers on Polymarket odds before every commercial break.

Founders of the prediction markets apps say they enable people to turn their opinion into a financial hedge against things like inflation or a government shutdown, yet skeptics say that is twisty and self-serving logic.

“They are gambling sites no different than FanDuel or DraftKings, a corner bookie, or a casino in Las Vegas,” said Dennis Kelleher, chief executive of Better Markets, a nonprofit that pushes for Wall Street reform.

Advertisement

Kalshi says ‘there’s no house,’ not all agree

Traditional gambling often means wagering against “the house,” where the casino acts like the banker, extracting fees and maintaining a competitive edge.

Prediction markets like Kalshi say they’re different.

Advertisements by the company Kalshi predict a victory for Zohran Mamdani in the New York City mayoral election before the polls closed on Nov. 4, 2025.

Advertisements by the company Kalshi predict a victory for Zohran Mamdani in the New York City mayoral election before the polls closed on Nov. 4, 2025.

Olga Fedorova/AP


hide caption

Advertisement

toggle caption

Olga Fedorova/AP

Here’s how they work: A staff member creates “a market,” often after one has been suggested by a user, like what will President Trump say at his next Oval Office briefing?

Then anyone can propose a “strike,” the lingo for a term that’s being bet on, whether, for instance, Trump will say “Greenland,” or “Minnesota,” or some other word or phrase.

Advertisement

Kalshi staff pick what terms will be bet on for both sides of that “yes” and “no” wager.

In order to work, however, there needs to be money on both the “yes” and the “no” side of the market, so Kalshi relies on institutional partners, like the hedge fund Susquehanna International, or everyday users with large enough portfolios to front the cash. This is called being a “market maker.” Kalshi provides financial perks and data access to traders who do this.

But because traders are competing with other traders, Kalshi argues there is no house involved in these transactions.

Several federal lawsuits against Kalshi have challenged this notion, claiming that the Wall Street firms that Kalshi taps are indistinguishable from a traditional “house.”

One suit filed this month in the Northern District of Illinois highlights that the company itself has a separate entity, Kalshi Trading, that supplies cash on the opposite side of trades.

Advertisement

“Thus, Kalshi users are betting against the house exactly the same way it would in a brick-and-mortar casino,” wrote lawyer Russell Busch in the complaint.

Kalshi denies this. Company spokeswoman Elisabeth Diana told NPR that market makers merely price bids and asks and do not have a competitive advantage.

“Market making is completely different from being a house, because a house has monopoly pricing power, whereas market makers compete with thousands of other market makers to take bids,” she said.

The Trump family invests in prediction markets. The administration is taking a friendly policy stance

While the Biden administration sought to rein in this industry, Trump’s regulators are breaking down barriers to allow it to flourish.

More than $2 billion is now traded every week on Kalshi, an amount the company says is 1,000% higher compared to the Biden years.

Advertisement

Polymaket, which was forced in 2022 to shut down in the U.S. for operating as an unlicensed betting site, recently won the Trump administration’s blessing to re-launch in the U.S.

The Trump family is also getting in on the action. The president’s son, Donald Trump Jr., is on the board of Polymarket, and his venture capital firm invests in the company. He is also a “strategic adviser” to Kalshi. Truth Social, the president’s social media site, is planning to launch its own prediction market called Truth Predict.

Donald Trump Jr. speaks during The Bitcoin Conference in Las Vegas on May 27, 2025.

Donald Trump Jr. speaks during The Bitcoin Conference in Las Vegas on May 27, 2025.

Ian Maule/AFP via Getty Images


hide caption

Advertisement

toggle caption

Ian Maule/AFP via Getty Images

The explosive growth and permissive regulatory environment has ignited a debate about the underbelly of an industry that essentially turns many features of modern life into potential monetary wins and losses. Fears persist that when elections, politics and foreign invasions become a gamble that insiders could abuse their access for profit and market odds could influence what actually happens.

Then there’s the most prosaic, but perhaps more immediate worry: That the prediction markets gamify trading with slickly designed apps, one-click checking account deposits and constant push alerts, catering to compulsive online bettors. They’re not unlike other app-based trading platforms, but now almost anything is a potential betting opportunity, which economists and other financial experts say can enable a new generation of gambling addicts.

Advertisement

While individual bets on Kalshi are not public, the app has a leaderboard showcasing top profit winners.

That offers hope to some traders who turn to Discord and Reddit to discuss how losses have set them back.

“I’m down 2000 this week when I was up 1200 last week,” wrote a Kalshi trader who goes by Educational_Pain_407 on Reddit. “Lost it all and keep trying to claw it back. So I don’t know what to tell you but right now I don’t have enough to pay my bills in my bank account so I can’t bet even if I wanted to.”

There are three federal lawsuits against Kalshi seeking class action status alleging the apps have sucked young traders into gambling addiction.

Officials at Kalshi have said if traders “lose their shirt that’s on them,” and even the Reddit user behind on his bills concedes it’s a matter of personal responsibility: “Live and learn and pay for your mistakes. The consequences of being an adult,” he wrote recently.

Advertisement

While online sportsbooks and gambling are nothing new, the rapid speed, volume of cash and ease at which transactions flow across prediction market apps set them apart from other forms of betting, according to legal and financial experts.

“Like sports betting, these platforms can be addictive. It is the adrenaline rush that the target demographic is chasing,” said Melinda Roth, a visiting professor at Washington and Lee University’s School of Law who studies prediction markets. “I do believe this is a looming public health crisis.”

Decoding the lingo: ‘Mogged,’ ‘Fudded,’ ‘PMT’

Evan Semet, 26, is another diehard prediction markets trader who left his salaried position in finance as a quantitative researcher after he started raking in six figures a month on Kalshi.”I don’t feel the need for another job at the moment,” he said.

His first golden ticket came via bets on the number of Transportation Security Agency screenings that happen across a certain period on Polymarket.

Evan Semet quit his job in finance to do prediction market trading full time.

Evan Semet quit his job in finance to do prediction market trading full time.

Meredith Nierman/NPR

Advertisement


hide caption

toggle caption

Meredith Nierman/NPR

Advertisement

Semet said he set up a dedicated server through Amazon Web Services to host statistical models that he runs to help him decide where to place bets.

“It was pretty modelable,” he said, noting that he leans on the finance savvy he gleaned at a trading firm to make money on predictions. “Most day traders draw some shapes on a chart and think it has some statistical significance but it’s really just astrology,” he said. “They’re old-school gamblers going off of intuition. I try to be driven by statistics.”

To stay tapped in, he’s often toggling between multiple live trades on one screen and following a discussion among other traders on the social network Discord.

Keeping up on what’s happening there requires understanding a hyper-specific type of lingo that’s a blend of Generation Alpha and Gen Z slang, repurposed finance terminology and a grab-bag of other cultural influences from gaming to crypto to the gutter humor of fringe sites like 4chan.

If you’ve been out-maneuvered by another trader, you’ve been “mogged.”

Advertisement

If a market has “fudded,” people are selling their positions out of fear, uncertainty and doubt. A “rulescuck” is someone who is a stickler for the rules of a betting market and will try to win on a technicality.

A “bondsharp” is a well-known community member who frequently puts up money on the other side of a bet.

These are just a handful of the terms required to stay apace of the chats on Discord, where PMTs are often discussing their full port (prediction market trader, and full portfolio, of course).

“It is a good amount of terminology. It’s borrowing lingo and terms from stuff I’ve heard at real trading firms mixed with online pop culture,” Semet said.

Advertisement
Evan Semet poses for a photo in Boston on Jan. 12, 2026. Semet quit his job in finance to do prediction market trading full time.

“Sometimes I prefer to not look at all and see how I did later,” Semet said.

Meredith Nierman/NPR


hide caption

toggle caption

Meredith Nierman/NPR

Advertisement

Prediction market trading can be a compulsive sport for many of them, who admit they can be dopamine junkies. Others prefer to avoid the pressure-cooker feeling of watching a bet win or lose live.

“It’s an antsy, gambling-like feeling watching it all happen live,” Semet said. “It’s intense, almost feels like the fog of war, trying to decide what to do,” he said. “Sometimes I prefer to not look at all and see how I did later.”

How predictions markets got into politics

Kalshi’s big day came, as it were, on Election Day in November 2020.

That’s when they got word that Trump’s Commodity Futures Trading Commission, which regulates futures contracts, greenlit it as a “designated contract market,” a blessing that essentially gave the platform a license to operate as a financial exchange.

Advertisement

It was a long time coming.

For years before that, Kalshi’s co-founders Tarek Mansour and Luana Lopes Lara, former Wall Street traders who met at MIT, had been battling a skeptical CFTC, which had long rejected similar applications over concerns that an events contract platform would operate a type of gambling outside the purview of state gambling commissions. Regulators also feared the bets invited insiders to rig the outcomes of events from sports to elections.

Tarek Mansour, (left) and Luana Lopes Lara are co-founders of Kalshi.

Tarek Mansour, (left) and Luana Lopes Lara are co-founders of Kalshi.

Alexey Yurenev/Bloomberg via Getty Images


hide caption

Advertisement

toggle caption

Alexey Yurenev/Bloomberg via Getty Images

As Kalshi hired lawyers and lobbyists leading up to their CFTC approval, another prediction market, where most are betting with cryptocurrencies, Polymarket, was exploding in growth. It, however, had not bothered to even try to receive federal buy-in. The Biden administration shut down the exchange for operating without a license. Now, Polymarket has the CFTC on its side, and is staging a U.S. comeback.

Two developments helped Polymarket’s return: the company acquired a little-known derivatives exchange QCX, which had already obtained CFTC approval. And the Trump administration’s CTFC and Justice Department abandoned investigations into Polymarket.

Advertisement

States, however, are on the attack. Massachusetts has sued to push Kalshi out of the state. Eight other states, including New York, New Jersey and Maryland, have sent the company cease and desist letters alleging that it is operating as an illegal and unlicensed sports gambling site. The motivation is clear: Gambling brings in serious tax revenue for states, while prediction markets bring in none.

For both Kalshi and Polymarket, one of the most controversial areas of prediction market trading is elections, an issue Biden-era regulators took Kalshi to court over.

Under the 1936 Commodity Exchange Act, which was updated in 2008 after the financial crisis, future event contracts cannot involve terrorism, assassinations or “games,” but political betting is not explicitly banned.

The Polymarket prediction market website is seen on a computer screen on Sunday. The screen says "Maduro out by?" with Dec. 31, 2025 at over $34 million and Jan. 31, 2026 over $10 million.

The Polymarket prediction market website is seen on a computer screen.

Wyatte Grantham-Philips/AP


hide caption

Advertisement

toggle caption

Wyatte Grantham-Philips/AP

Biden administration lawyers argued that placing wagers on races amounted to a game, a word that is not defined at all in the law. Election bets, the regulators contended, could turbocharge the spread of political misinformation and create financial incentives for voters to cast a ballot even when it’s contrary to a voter’s political views.

Advertisement

It also puts the CFTC in the awkward position of having to investigate news, whether real or fabricated, that moves a prediction market. Former CFTC officials told NPR that the agency has never been equipped to be “an election cop.”

The federal appeals court in Washington, D.C. rejected that framing and handed Kalshi a major victory. The court also pointed out that the harm these markets would cause the government was not “concrete” enough.

The Trump administration dropped the appeal, unleashing what is expected to be an unprecedented torrent of prediction market cash into this year’s midterm elections, which is raising alarms among those pushing for stricter regulations on this industry.

“AI, deepfakes, and other nefarious activities to attack candidates could easily impact the betting activity and odds, as well as the actual outcome of elections,” said Kelleher of Better Markets. “They don’t really care who wins or loses. They only care about the volume of bets and driving that volume as high as possible.”

Regulators appear unprepared. The CFTC usually has five commissioners but currently only has one. Meanwhile, Kalshi’s board includes former CFTC Commissioner Brian Quintenz, who was among the officials who gave the platform its federal approval in 2020.

Advertisement

Former CFTC Commissioner Kristin Johnson, who left the agency in 2025, said that lack of commissioners comes on top of high levels of turnover among the most senior staff lawyers.

“We’re essentially asking the CFTC to get involved in engaging and policing an element of our democratic process that we really haven’t thought carefully enough about,” Johnson said.

Insider trading scrutiny grows

Before a U.S. operation ousted Venezuelan leader Nicolás Maduro, one trader on Polymarket banked a nearly half-million-dollar profit on a bet Maduro would not remain president for long.

While the trader’s identity remains a mystery, speculation continues to rattle around the internet about whether the person had insider information. The episode has renewed scrutiny on how the companies ensure bets aren’t rigged.

On Discord, when traders see a large bet placed that immediately stands out as an outlier, cries of “the market is insidered” are common. Proving it is another matter.

Advertisement

As is often the case on the platforms, open-shut evidence of insider trading is elusive. Kalshi requires a government-issued ID to sign up in order to trace any possible market manipulation back to a real person. Polymarket does not, but it has yet to publicly re-launch its U.S. app. Internal and third-party surveillance tools, the companies say, are on the lookout for unusual activity.

Congress has begun to take notice. Following the Maduro trade, Rep. Ritchie Torres, D-NY, and 30 other Democrats, sponsored legislation banning federal officials from using prediction markets to trade on policies or political outcomes using non-public information.

Being up against an insider is always a risk, said full-time prediction markets trader Semet.

“There’s always going to be someone who has more information than you, unless you’re the insider,” he said. “There are certain accounts that miraculously have every single Google and OpenAI release date nailed perfectly, and it’s like, all right, just don’t fade those people,” he said using the slang word for voting against another trader.

“Sometimes I prefer to not look at all and see how I did later,” Semet said.

Being up against an insider is always a risk, said full-time prediction markets trader Semet.

Meredith Nierman/NPR

Advertisement


hide caption

toggle caption

Meredith Nierman/NPR

Advertisement

When asked if he thinks Kalshi and Polymarket are doing enough to combat insider trading, he gave a blunt assessment: “F*** no,” Semet said. “I really don’t think they care.”

“Tailing,” or making a bet joining in on a suspiciously large bet is common on the platforms. Bloomberg on Monday reported on a new tool that allows traders to get alerts when anomalous transactions occur so they can potentially cash in on what could be a winning wager.

From the vantage point of these traders, nearly everything has a trading implication.

And that kind of thinking can fuel conspiratorial theories about why something did or did not happen.

Take, for instance, a recent White House press briefing in which press secretary Karoline Leavitt left the room seconds before hitting 65 minutes. To most, that was unremarkable.

Advertisement

Yet on Kalshi, that looked like a secret message, because many thousands of dollars in bets were at stake that she would cross the 65-minute mark.

The chatter about Leavitt was mentioned on CNBC, which got the attention of traders on Discord, who wondered if this or another incident will ever lead to a PMT, prediction market trader, testifying in Washington about rigging the markets.

“PMT getting called before Congress,” wrote a Discord user, whose handle is “permanent resident of hell,” they added: “Let’s get a market on it.”

Continue Reading

News

DOJ investigating Gov. Tim Walz and Mayor Jacob Frey, sources say

Published

on

DOJ investigating Gov. Tim Walz and Mayor Jacob Frey, sources say

The Justice Department is investigating Minnesota officials, including Gov. Tim Walz and Minneapolis Mayor Jacob Frey under the theory they conspired to impede federal immigration agents through public statements they have made, a senior law enforcement official and a person familiar with the matter told NBC News.

Minneapolis has been the backdrop of intensifying protests since an ICE officer fatally shot Renee Nicole Good, a mother of three and a U.S. citizen, last week. Immigration enforcement arrived in Minneapolis weeks ago, but federal officers have flooded the city since Good’s shooting.

Both Walz and Frey have been at odds with federal officials who have argued the officer, Jonathan Ross, was justified in shooting Good. They have criticized the federal response and questioned why the FBI cut out local authorities from the probe into the Good shooting. CBS News first reported on the investigation.

Minnesota Gov. Tim Walz and Minneapolis Mayor Jacob Frey. Star Tribune via Getty; AP

Walz said in a statement Friday the investigation is purely political.

“Two days ago it was Elissa Slotkin. Last week it was Jerome Powell. Before that, Mark Kelly. Weaponizing the justice system and threatening political opponents is a dangerous, authoritarian tactic,” he said. “The only person not being investigated for the shooting of Renee Good is the federal agent who shot her,” he said.

Advertisement

Frey said in a statement in response to reports of the DOJ investigation that he “will not be intimidated.”

“This is an obvious attempt to intimidate me for standing up for Minneapolis, our local law enforcement, and our residents against the chaos and danger this Administration has brought to our streets,” he said.

He added, “Neither our city nor our country will succumb to this fear. We stand rock solid.”

The Justice Department declined to comment. The federal statute used in the investigation into Minnesota officials has been rarely used and has roots in the Civil War-era. But it was on a list of statutes listed in a memo from Attorney General Pam Bondi last month, obtained by NBC News, that offered a roadmap for federal prosecutors on how to boost investigations into individuals she dubbed domestic terrorists.

Bondi posted on X Friday, “A reminder to all those in Minnesota: No one is above the law.”

Advertisement

The prospect of an investigation which would involve political speech by public officials raises First Amendment concerns that normally would involve a consultation with the Justice Department’s Public Integrity Section before federal officials opened a criminal probe into public figures or took any proactive investigative steps, according to a person familiar with the matter.

But the Public Integrity Section has been decimated and sidelined in Trump’s second term.

Aaron Terry, director of public advocacy for the Foundation for Individual Rights in Education, said in a statement Friday that if criticism of the administration’s immigration enforcement operations is the basis for the investigation, “it is blatantly unconstitutional and intolerable in a free society.”

“The right to condemn government action without fear of government punishment is the foundation of the First Amendment,” Terry said.

In Minneapolis, tensions continue to run high; a federal officer shot a man in the leg in Minneapolis on Thursday night after he allegedly fled a traffic stop and attacked an officer.

Advertisement
Continue Reading

News

Video: Will the ICE Agent Who Shot Renee Good Be Prosecuted?

Published

on

Video: Will the ICE Agent Who Shot Renee Good Be Prosecuted?

new video loaded: Will the ICE Agent Who Shot Renee Good Be Prosecuted?

With the Trump administration unlikely to bring a federal case against the ICE agent who killed Renee Good, our criminal justice reporter Jonah Bromwich explains some of the obstacles for any Minnesota prosecutors trying to charge the agent.

By Jonah E. Bromwich, Christina Shaman, Nikolay Nikolov, June Kim and Sutton Raphael

January 16, 2026

Continue Reading
Advertisement

Trending