Woman indicted in scheme to sell drugs, cheat insurers

Federal authorities say the woman known as "Auntie" didn't just oversee one of the area's major heroin and cocaine networks.

The Takoma Park woman took out insurance policies on the lives of her drug contacts, authorities said - and then cashed in hundreds of thousands of dollars when some met untimely, violent deaths.


Federal authorities announced yesterday that they have shut down both of what they called 57-year-old Paulette Martin's "enterprises" - an international drug-trafficking network, and a years-long life insurance money-laundering scheme.

Martin and 30 other people, including three from Baltimore and one from Columbia, have been indicted in U.S. District Court in their involvement in her alleged conspiracies. Martin was indicted on charges of drug conspiracy and mail-wire fraud.


But the investigation is continuing. Federal agents said they are looking into the deaths of drug dealers on whom Martin had clandestinely taken out life insurance policies - part of a scheme she is accused of using to clean up drug proceeds.

From June 1995 until March this year, federal prosecutors said, Martin conspired with a 52-year-old Burtonsville insurance agent named Richard Gunn to open at least 17 life insurance policies on a number of her drug contacts, without those individuals knowing.

She learned personal information about these people, such as Social Security numbers, and then completed applications in their names, authorities said. She paid the premiums on the policies with proceeds from her drug trafficking, prosecutors said. When the individuals died, she and her alleged co-conspirators - Gunn and two other women - collected and split the insurance money, prosecutors said.

Federal law enforcement agents called the scheme atypical, but not unheard of.

In the 1990s, federal agents in Miami discovered that Colombian drug cartels were laundering millions of dollars through life insurance policies, said Dean Boyd, a spokesman for the Department of Homeland Security, Immigration and Customs Enforcement.

Boyd said the cartels would purchase the policies - many of which were overseas - and would cash out of them early. The drug lords would lose money in penalties, but would receive millions from the insurance companies in the form of checks or money orders - "clean" funds that they could use virtually without question.

Still, federal agents said, this type of scheme is unusual. "It is a novel technique," Boyd said.

Immigrations and Customs Enforcement agents began the investigation into Martin and her alleged networks in 2002, federal prosecutors said.


"ICE is uniquely positioned to combat sophisticated money-laundering systems like the life insurance scheme uncovered today," said Michael J. Garcia, the Department of Homeland Security's assistant secretary for ICE, in a statement.

But multiple agencies, including the Internal Revenue Service, Drug Enforcement Agency and various area police departments, soon became involved.

Last week, a multiagency drug task force, including members from the Baltimore and Baltimore County police departments, executed 30 search warrants throughout Maryland, Washington and New York.

Agents seized eight handguns, body armor, large quantities of cocaine and heroin, and more than $1 million, prosecutors said.

Efforts to reach Martin were unsuccessful yesterday, and it was unclear whether she was incarcerated.

Most of the 29 people they arrested were charged only with drug conspiracy, not money laundering.


"This indictment is another example of our continued commitment to dismantle entire drug organizations that are national and international in scope," Maryland U.S. Attorney Thomas M. DiBiagio said in a statement yesterday.

The three Baltimore men indicted - Reece Coleman Whiting, or "Cups;" Tony Soloman; and Donell "Jack" Elvin Berry - were charged with conspiring to possess and distribute cocaine, crack and heroin.