Lapas attēli


Chairman ST GERMAIN. This is the aggregation we are talking about.

Mr. BANDSTRA. It is the aggregation. Of course, it is the aggregation on a particular day. There is no requirement or the requirement to file a currency transaction report has to be on a single day, at a single financial institution.

There is a division in the circuits right now. One of the problems relates to whether an individual can cause a financial institution to violate the Bank Secrecy Act by failing to file a currency transaction report. In the southern district of Florida, an individual can still cause a bank to violate that particular statute. In California, in the Federal district, of which California is a part, and also in New York, an individual cannot any longer cause a bank to fail to file.

Chairman ST GERMAIN. Would you explain what you mean by that?

Mr. BANDSTRA. Of course, it is a matter of judicial interpretation, but various cases involving these kinds of Smurfing activities have been filed, of course, throughout the United States, and it is the seventh and the ninth judicial circuits that have now expressed judicial opinions which say that an individual can structure his financial transactions in any way that he wants to and that his intent in structuring his financial transactions is not important; so therefore, an individual in the second and ninth judicial circuits can go now today to banks in New York and banks in California and purchase as many cashiers checks or money orders in whatever amounts he wants to and for whatever purpose he has without violating.

Chairman ST GERMAIN. As long as he doesn't or she doesn't purchase one with cash in the amount of $10,000 or more; is that correct?

Mr. BANDSTRA. No, Mr. Chairman, that is not correct.

Chairman ST GERMAIN. That is what I want you to explain so that everybody understands.

Mr. BANDSTRA. All right. To make it very simple, I could go into a bank in certain areas of the United States and ask to purchase three cashiers checks, and let's say I go in at three different times during the day and ask to purchase a check for $9,000 on each time, so that I am purchasing cashiers checks in the total amount of $27,000 in 1 day at a particular bank. Under those circumstances, of course, if a bank knew that I was doing this, it would be required to aggregate and to file a currency transaction report.

If I were to go in or cause Mr. Friedberg to go into that bank in order to disguise myself or to have three different persons actually conduct this transaction, in those particular areas it is no longer considered a violation of title 31.

Perhaps to state it more simply, and what I said before, an individual cannot cause a bank to fail to file a currency transaction report in various locations in the United States, and of course, the interpretations and the reasons for that get lengthy and perhaps are even a little bit beyond what I can say just off the top of my head here at this time.

Chairman ST GERMAIN. What I think you just said was that in those jurisdictions where they don't buy aggregation, they don't think aggregation is a violation or that it has to be reported. But the example you just gave was that Mr. Friedberg went in with $9,000, and Mr. Parris went in with $9,000, all $27,000 of which belonged to you. Is that your example?

Mr. BANDSTRA. That is right.

Chairman ST GERMAIN. In that instance I would agree with you, I can't fault the bank there. How would the bank know? It is three different individuals coming in. Are you telling me that there is a jurisdiction that has held that if three individuals come in on any a given day with $9,000 and purchase three money orders for $9,000, that-how can they aggregate?

Mr. BANDSTRA. I think I can simplify my example a little bit.
Chairman ST GERMAIN. Yes, please.

Mr. BANDSTRA. Perhaps to use three individuals only confuses things. If I were to use three different branches of a particular bank, I think it would make it a little bit more simple. If I as an individual, just myself, would take $27,000 and go to three branches of the same bank and purchase a $9,000 cashiers check in each of those three branches on a particular day in the southern district of Florida, and my intent is to cause that bank to fail to file a currency transaction report, that is against the law in Miami, FL, and in the southern district of Florida.

Chairman ST GERMAIN. Because of the court decision. Mr. BANDSTRA. Yes; because of the court decision. Chairman ST GERMAIN. But it would not be against the law in New York or California.

Mr. BANDSTRA. Yes; it would not be. And part of the problem there is because the courts have said that an individual cannot cause a bank to fail to file a CTR. From what I understand from what Mr. Pickle addressed to the committee here this morning, that this would be a part of his legislation, that an individual can cause a bank to fail to file a currency transaction report. In my opinion, that would clarify some of the problem. That would assist us as prosecutors and make a more uniform enforcement of title 31.

The second thing is, of course, the forfeiture provision. I am presently dealing with

cases in the southern district of Florida in which there is a great deal of money seized and a great deal of money laundered, but simply by having that money seized as a result of money laundering does not make it forfeitable.

In fact, in one particular case that is now pending, a great deal of money, in order to make that money forfeitable, we have to prove that there is a drug connection with that money.

Chairman ST GERMAIN. Let me ask you this question. Mr. Behar is-that's his name?

Mr. BANDSTRA. Yes, Mr. Behar.
Chairman ST GERMAIN. Did you seize any of his funds?

Mr. BANDSTRA. Some money was seized from Mr. Behar. I don't know the exact amount, and it wasn't a great deal.

Chairman ST GERMAIN. It was not a great deal.
Mr. BANDSTRA. No; it was not.

Chairman ST GERMAIN. So he lived high off the hog for a long period of time, made a lot of money, and yes, he is going to prison, but, when he gets out, he has a pension fund.

Mr. BANDSTRA. He has retained whatever it is other than what was seized on the spot. He retains that money, yes.

Chairman St GERMAIN. Let me ask you this. How much money did you make, Mr. Friedberg, that you had to return?

Mr. FRIEDBERG. Some weeks it was $4,000 or $5,000 a week.

Chairman ST GERMAIN. During that period of time that you worked for Mr. Behar, what was the total amount that you made?

Mr. FRIEDBERG. $30,000, $35,000, $40,000.

Chairman ST GERMAIN. And he had how many other Smurfers working?

Mr. FRIEDBERG. A half-dozen. For every dollar I earned, Mr. Behar earned $3.

Chairman ST GERMAIN. He earned $3. Let's use the $30,000. That's $180,000 times 3. That's $540,000 he made, right?

Mr. FRIEDBERG. Roughly.

Chairman ST GERMAIN. Yes, roughly. And of that, how much was seized, Mr. Bandstra? Let's use that as a ballpark.

Mr. BANDSTRA. Mr. Chairman, I'm sorry, I don't know the amount of money that was seized from Mr. Behar. I believe it was less than $100,000.

Chairman ST GERMAIN. I bet we are being conservative here with this quick figuring, so he probably has over $1 million salted away for when he gets out after probation and all that. He pled guilty to what, three counts?

Mr. BANDSTRA. He pled guilty to two counts in four separate indictments, and he received a sentence of 3 years.

Chairman ST GERMAIN. A total of how many years?
Mr. BANDSTRA. Three years.
Chairman ST GERMAIN. Three years? For all of them?

Mr. BANDSTRA. For all of them. I might say, Mr. Chairman, that he was sentenced at four different times by four separate courts and that the sentences were made to run concurrent in each case.

Chairman ST GERMAIN. And as a result thereof, did he help you get to anybody above him?

Mr. BANDSTRA. As part of his plea agreement with the United States, he has agreed to cooperate, he has cooperated, and he is expected to testify in an upcoming case, yes, sir.

Chairman ST GERMAIN. Mr. Friedberg, you must feel pretty silly. I mean the other fellow, who really put the tag on this operation, your Mr. Behar, is in for 3 years and will probably get time off for good behavior-right, Mr. Bandstra?

Mr. BANDSTRA. If he follows the course of most Federal prisoners, yes.

Chairman ST GERMAIN. So how long will he be in, approximately? Could he get off in 18 months, 2 years?

Mr. BANDSTRA. I am not familiar enough with his guidelines, but I would guess it would be between 1 to 2 years.

Chairman ST GERMAIN. Between 1 and 2 years. So he goes to a hotel where we will pay his room and board for a year and a half, and he has made $1 million. Don't you feel silly, Mr. Friedberg? You had to sell your house, you had to sell your condo, and you are

spending your savings, and you are the fellow who helped us out, the taxpayers and the Justice Department.

Mr. FRIEDBERG. That is my subject for the next subcommittee.
Mr. WYLIE. Mr. Chairman.
Chairman ST GERMAIN. Yes, Mr. Wylie.
Mr. WYLIE. Would you yield, please?

Mr. Behar was charged with four different crimes, you said, in four different courts?

Mr. BANDSTRA. He was charged in four different indictments, basically with the same crimes in each indictment.

Mr. WYLIE. What were those crimes, again?

Mr. BANDSTRA. The first was a conspiracy. It was actually a violation of title 18-371, which is a conspiracy to defraud the United States by the scheme that we are here talking about today. The second count that he was charged with in each of these indictments was the violation of title 18, section 1001, which is the scheme itself. It is a conspiracy to defraud the United States and then a scheme to defraud the United States.

Mr. WYLIE. Should we make it a separate crime to launder money?

Mr. BANDSTRA. Mr. Wylie, that would be my recommendation, but I recognize the difficulty with that. If we could identify what money laundering is, if we could say it is illegal to do whatever it is that money laundering is, that would be, in my opinion, the best thing to do. I recognize, however, that to define it and to identify it and to prove it is very, very difficult.

Mr. WYLIE. Thank you.

Chairman ST GERMAIN. Mr. Bandstra, what was the maximum sentence that Mr. Behar could have received?

Mr. BANDSTRA. In each of the indictments to which he pled guilty to two counts, he was exposed to, with no recommendation by the U.S. Government in any way, he was exposed to a 10-year maximum penalty.

Chairman ST GERMAIN. So it could have been 30 years rather than 3?

Mr. BANDSTRA. It could have been 10 years. Well, it could have been 10 years in each case.

Chairman ST GERMAIN. If they didn't run concurrent.

Mr. BANDSTRA. It could have been 10 years in each case or a total of 40 years, yes.

Chairman ST GERMAIN. A total of 40 years.
Mr. BANDSTRA. Yes, sir.

Chairman Sr GERMAIN. I will make this last observation because we have another witness and we want to have up here, but the President's Commission on Organized Crime and the administration have sent us a very tough bill. Other Members are introducing legislation. But here we look at a situation where a man has probably salted away in excess of $1 million, was exposed to 40 years and he gets 3 years, which will probably go down to a year and a half. What in God's name? We are not even really punishing people for money laundering with the so-called weak laws we have. We are letting them off very, very easily.

Should we really spin our wheels if the courts are going to be this understanding of the Behars of this world? Isn't it frustrating for you, Mr. Bandstra? You work so hard.

Mr. BANDSTRA. Mr. Chairman, I don't mean to speak out of place so I'm not going to comment upon the sentences of the Federal Judiciary in the southern district of Florida.

Chairman ST GERMAIN. I'm not practicing law.

Mr. BANDSTRA. I will add, however, that there were two penalties imposed on Mr. Behar. One, of course, is the IRS assessment that he presently is still facing, and the second that he did have to pay a defense attorney and deal with a defense attorney. Or he had these problems, of course, in court, and so he did have to go through that, but it is the sentence that he had, the 3 years.

Chairman ST GERMAIN. The defense attorney did very well for him.

Mr. BANDSTRA. Yes; I believe he did.

Chairman ST GERMAIN. Sure. He probably did-of course, you wouldn't know what the fee was; would you?

Mr. BANDSTRA. No; I don't.
Chairman ST GERMAIN. He probably did all right, too.

Mr. Friedberg, again many thanks. Mr. Bandstra, many thanks to you. I realize that U.S. attorneys are not too well compensated, so we are grateful to you, for the time and the work and the devotion you put into this.

Mr. BANDSTRA. Thank you, Mr. Chairman. We appreciate the opportunity to be here today, and I will be responding to you, sir, with the questions that you have asked me.

Chairman ST GERMAIN. Thank you.

We will now have our next witness, who has been waiting very patiently. He has some very delightful information for us, and I am going to try to pronounce this right. Mr. Richard Wassenaar.

He is the Assistant Commissioner for Criminal Investigation at IRS, Internal Revenue Service. Would you pronounce your name for me, please?

Mr. WASSENAAR. Pardon me?
Chairman ST GERMAIN. How do you pronounce your name?
Mr. WASSENAAR. Last name?
Chairman ST GERMAIN. Yes.
Mr. WASSENAAR. Wassenaar.

Chairman ST GERMAIN. OK. We will place, naturally, your entire statement in the record. We are putting up the charts, and you may proceed. STATEMENT OF RICHARD C. WASSENAAR, ASSISTANT COMMIS


Mr. WASSENAAR. Thank you, Mr. Chairman, and Members of the subcommittee. We certainly appreciate the opportunity that you have given to us, to relate to you the role that the Criminal Investigation Division of the Internal Revenue Service plays in not only attacking traditional money laundering situations but also in attacking other types of fiscal fraud wherein financial institutions,

« iepriekšējāTurpināt »