A 52-year-old Baltimore businessman killed in a drive-by shooting Sept. 4 was under investigation by federal drug agents for his role as part-owner of a ship acquired in a Colombian drug-smuggling and money-laundering scheme, authorities said yesterday.
John R. Shotto of the 1600 block of Rolling Road, Bel Air, had admitted during federal lien proceedings in Norfolk, Va., in 1988 to owing $3.6 million to a firm linked to the Cali drug cartel -- the world's biggest cocaine producer, according to narcotics authorities.
Mr. Shotto was gunned down, along with a bystander, as they left a meeting at the Maritime Center in the 2200 block of Broening Highway. He and Raymond Nicholson, 38, of Glendale were killed by a gunman who fired two or three shots from a passing car as they stood in a parking lot outside the offices of a warehousing company.
Baltimore police said yesterday that they still have no motive or suspects in the slayings. Federal authorities also said they knew of no links between the killings and the ship venture.
Donald G. Turnbaugh, special agent in charge of the U.S. Customs Service in Baltimore, said in a statement read to reporters yesterday that authorities have seized $1.7 million netted from the recent sale of the freighter M/V Liberty, a commercial vessel owned by Maryland Ship Inc.
The Customs Service alleges that the ship had been purchased and renovated by the Cali drug cartel as part of their operation smuggling drugs and money in and out of the United States in late 1987 and 1988.
The 9-year-old, 284-foot-long vessel had a shallow draft that allowed it to go into small, non-commercial ports where narcotics are often loaded, federal officials said yesterday.
Special Agent Turnbaugh said Maryland Ship, which is involved in a federal bankruptcy proceeding, sold the Liberty to satisfy its creditors, among them Liberty Shipment Enterprises Inc.
Liberty Shipment was formed in 1987 by Ernesto Forero-Orjuela, a Colombian national, allegedly to acquire a ship and renovate it for smuggling drugs, according to a federal affidavit.
Authorities identified Mr. Forero-Orjuela as a nephew of Jaime Orjuela-Caballero, one of the 12 major Colombian narcotics traffickers wanted for extradition to the United States.
Mr. Shotto, who had been involved in a number of failed maritime businesses over two decades, was sought out by Mr. Forero-Orjuela in the fall of 1987 to purchase and renovate a ship because foreign nationals cannot own a U.S. flag carrier, federal officials said.
Afterward, Mr. Shotto and a business partner formed Maryland Ship and purchased the M/V Liberty with $3.6 million provided by Mr. Forero-Orjuela, who allegedly funneled the funds into the company by transferring money from secret bank accounts in Panama, according to the federal affidavit.
Between October 1987 and August 1988, federal agents said, they traced nearly $2 million from Panamanian banks through New York banks to Liberty Shipment Enterprises in Baltimore. All but about $100,000 could be traced directly to Maryland Ship, they said.
In addition, they said more than $400,000 in unexplained transfers or other large credits was received by Maryland Ship during that same period.
Federal authorities said that major drug cartels have been known to launder narcotics proceeds into the United States from Panama, where rigid bank secrecy laws prevent identification of the sources.
In 1988, Maryland Ship reported in its corporate returns a liability of $3,567,400 to Liberty Shipment Enterprises, authorities said. They saidthe disclosure came during court proceedings that occurred after Liberty Shipment Enterprises placed a maritime lien on the Liberty.
A judge who presided at the lien hearings in Norfolk said it was apparent that Mr. Forero-Orjuela or Liberty Shipment Enterprises actually owned the Liberty, not Maryland Ship, which subsequently filed for federal bankruptcy protection, according to the affidavit. Court records also show that Mr. Shotto testified he owed Mr. Forero-Orjuela $3.6 million, including $1.62 million used to buy the ship.
In 1989, federal agents said, Mr. Shotto was seen visiting a Cali cartel operative named Carlos Mario Gomez, who was described as a flashy narcotics dealer who would recruit smugglers through contacts in the maritime industry.
The affidavit said Mr. Shotto and his business partner, Craig Firing, became directors and equal shareholders of Maryland Ship, which would hold title to the Liberty.
Although no written contracts were ever drawn, Mr. Shotto said in the Norfolk courtroom that he and his partner agreed to split the profits 50-50 between themselves and Mr. Forero-Orjuela, who agreed to provide $2.62 million for purchase, renovation and relocation of the ship from Guam.
Mr. Shotto said Mr. Forero-Orjuela was to obtain contracts to import coffee into the United States from Colombia.
Federal authorities said yesterday that drug smugglers often hide their merchandise in coffee because the scent throws off drug-sniffing dogs.