BRASILIA - Brazil's federal police said they arrested two people on Wednesday suspected of involvement in a racket smuggling gold illegally mined on Indigenous land to the U.S. and Europe.

Police carried out 16 search and seizure warrants across Brazil as part of the operation, an official police statement said, without giving more details.

A police source told Reuters that federal agents arrested Brubeyk Nascimento in northern Amazonas state, while the other person remains unnamed for now.

Werner Rydl, an Austrian millionaire and naturalized Brazilian, was the target of a search and seizure, the source said, adding that authorities seized gold bars kept by Rydl, worth more than 5.7 billion reais ($1.18 billion).

The operation began with the January 2020 seizure of 35 kilos of gold at Manaus airport, the police source said. Two New Yorkers and business partners, Frank Giannuzzi and Steven Bellino, as well as Nascimento, were trying to board a flight to New York with the gold in a suitcase, the source said.

The U.S. citizens are partners in a New York City-based firm, Doromet Inc, which was going to trade the metal, the source said. The three men claimed that the gold was the result of melted jewelry, and presented false documents to prove its origin, the source said.

However, the police's analysis of the material showed that the true origin of the gold was illegal mining in the Tapajos region of Para, northern Brazil.

"The investigation revealed that the criminal organization acquired gold from Indigenous lands and riverbeds with the use of dredges and fraudulently declared that the gold was extracted through legally granted mining permits," the official police statement said.

Reuters attempted to reach all parties in the police operations but did not receive a response. REUTERS