The Decorators

Decorators Frank Pellecchia and Alexander Blarek thought they were on the right side of the law.

They continued to think this, even after discovering that a wealthy South American who gave them millions of dollars of business was also one of Colombia's biggest drug dealers and the subject of a massive American manhunt.

According to the federal government, though, Pellechia and Blarek are criminals. 60 Minutes II Correspondent Bob Simon reports on a strange corner of the drug war, where decorating can be a crime.

Santacruz hired him on the spot to decorate his new mansion. Other projects followed. Over 17 years, Blarek and his partner Pellecchia worked on more than two dozen homes, apartments and offices.

Pellecchia, who is a better decorator than cameraman, videotaped their work: homes with fully equipped bars, bathrooms with sculptures in the tub, and offices with secret compartments.

Of all their Santacruz projects, the decorators were proudest of a 22,000-square-foot ranch house, designed in what they call "postmodern hacienda style."

Among the items they used: leather rugs, made from cows raised without barbed wire fences.

Santacruz gave Blarek and Pellecchia nearly $8 million to spend on his homes. Some payments were made by wire transfer. But much came in cash. They got cash at home; they got cash at hotels; they got cash on the street.

"This is the way South Americans did business," Blarek says. "It didn't raise questions to me, because this is the way the whole industry is doing business." Blarek once received a Gucci bag with a million dollars inside, he says.

Alexander Blarek, sentenced to five years and eight months in prison, says he is innocent.

According to Blarek, this payment method did not set off alarms. Santacruz appeared to them to be a legitimate businessman, they say.

With all this money, Blarek was doing well. He and Pellechia bought a $3 million home in San Francisco, which had a stunning view of the Golden Gate Bridge, a garden that Louis the XIV would have envied, and a salon filled with expensive art and antiques. They also bought a Mercedes, an SUV and three Harley-Davidson.

With all that money rolling in, the decorators wanted to keep their client happy, even when his requests were a bit unusual. So when Santacruz asked them to decorate the dwellings of his three mistresses, they readily agreed.

Mrs. Santacruz got her revenge the old-fashioned way - by spending her husband's money. She ordered a set of gold-trimmed china, silverware and goblets, for $300,000. Then her husband saw the bill.

Blarek remembers their client's response: "He said 'My name is Santacruz. It is not Santa Claus. This is absolutely insane. The two of you have lost your minds to spend this kind of money on tools to eat rice and beans.'"

The decorators may have believed Santacruz was just a businessman with a busy social life. But American authorities saw him differently. They knew Santacruz was a lynchpin of the Cali cartel, the General Motors of the drug business. This group imported tons of cocaine into the United States and exported millions in profits out of the country.

Santacruz was not an ordinary drug baron, say federal prosecutors Mark Lerner and Richard Webber. "He turned the business of manufacturing, importing and distributing cocaine into an extremely efficient and highly organized enterprise," Lerner says. Santacruz made hundreds of millions of dollars in profits, they say.

The Drug Enforcement Agency tracked Santacruz for years, hoping to nab him in the United States and break his cartel. In 1981, DEA agents stumbled on Blarek's ties to Santacruz. They paid him a visit and told him that his client was involved in the drug business.

"I did ask them, 'Am I doing, are we doing something illegal? Is this something wrong?'" Blarek recalls. "They said 'Not as long as you're doing your decorating business.' And off they went."

Nevertheless, Blarek says that at the time, he "didn't know whatÂ…being in the drug business meant." Time magazine provided clarification in 1991, when it put their client on the cover. Blarek and Pellecchia say they were shocked. The latter says he felt "betrayed" by the government.

Since the decorators were buying so much for this dream house, Santacruz asked them to lower their 30 percent commission. The two decorators told him that perhaps it was time to find anothedesigner. Santacruz, Frank says, responded by saying: " I terminate people; they don't terminate me."

In 1996, before he could move into his White House, Santacruz was killed by Colombian police in a shootout in the Cali countryside. Nevertheless, the DEA investigation continued. Blarek and Pellecchia were arrested a year later. In their house, police found diaries listing meetings with Santacruz, copies of the Time with their client on the cover, and the famous Gucci bag.

Police also figured out how, with the help of a cooperative accountant, they managed to hide all that cash. In federal court in Brooklyn, the two decorators faced charges of money laundering and racketeering. Prosecutors Webber and Lerner argued that Pellecchia and Blarek were important members of the Cali drug cartel.

Even though the decorators never smuggled, sold or handled drugs, they laundered money, Webber says: "Without the ability to clean dirty money, without transforming that money into something the drug lord could use, without that ability, then drug traffickers cannot continue to operate."

If the decorators were charged, why not other businesses that provided services to Santacruz and his family?

"You could go to his wife's plastic surgeon in New York, and I don't know how much was spent there. You could then go in, accuse him of being part of the criminal organization, and then confiscate all of his assets," Blarek says.

The goal, says Webber, is to send a message to American businesses: Don't do business with drug lords. "If you're converting millions of dollars of drug cash into something useable, if that's what you're doing, then you have something to worry about," he says.

The jury disagreed. Blarek and Pellechia were convicted and both went off to prison. Pellecchia is serving a four-year sentence, while Blarek is in for a five-year, eight-month term. The government also confiscated their San Francisco home, their bank accounts and their possessions, including all three Harleys.

Does the punishment fit the crime? Webber says yes: "Thousands of lives are affected by drugs in this district. And, when you're a money launderer and you assist that drug trafficker and you clean his money, you're part of his operation and you should be treated accordingly."

"I in no way harmed society," Blarek says. "We never stole from anyone. We never hurt anyone. By doing nterior design for the wrong client, you can end up spending years in jail and losing everything you've worked for."

Produced by David Kohn