Lapas attēli
PDF
ePub

The credit goes to you for being such a watchdog of the system. In fact, it has a surplus today, I understand. Everybody is trying to get their hands on it.

I am one of those who have cosponsored a bill to take Social Security out of the budget process, just leave it alone. It is in the black, we want to keep it there. I wanted to publicly acknowledge your great contribution to the people of America.

Mr. PICKLE. You are very kind, Mr. Annunzio. I appreciate it.

Mr. ANNUNZIO. As we all know, Mr. Pickle, money laundering is really big business. We have had hearings in this committee, our chairman has been very diligent on following money laundering operations. We have exposed large institutions throughout the United States; I am talking about bankers.

One of the things that bothered me was the fact that the officers of these large banks or the banks themselves only paid a fine. No one went to jail, that I know of. Maybe the dope peddler went to jail. As far as the banking executives, I don't know of any that went to jail. If any have gone to jail, it has slipped me.

You are absolutely correct. We have to strengthen the law so that people can be punished, whether they be criminals or bankers. If we are going to stop the drug traffic in America we have to stop the money laundering. We have to stop the money at the source so they will not be able to replenish their stock and buy new drugs in order to continue in business. I think if we stop the laundering of money, we have a very good opportunity of stopping drug trafficking in the United States. I am delighted you are taking the leadership role on this money laundering, as well as our committee and our chairman, who is also taking a leadership role.

I think it was back in 1970 when we passed the Bank Secrecy Act. All these years have gone by. We want to strengthen that law. I think your legislation will help strengthen that law. It will curb money laundering and by curbing money laundering, we can curb drug trafficking

I commend you for the great effort you are making.

Mr. PICKLE. Mr. Annunzio, we saw movies and received testimony from a lot of the operators who are trying to put a stop to this. We were shown that a lot of the financial institutions really didn't make much of an effort to know where the money came from. One of the banks in the Northeast actually received money that was hauled in in gunny sacks. The bank had to just count out the cash. I don't know if there were any loose coins in there. It was just that open and brazen.

You do not have to tell any of us that the bank knew they were not filling out the forms. That money came from somewhere and it wasn't legal money.

Some of the institutions have really become that lax. When that happens, we ought to have a law, not only for enforcement, but to do something to the individuals in that institution. They know better. I think this legislation together with the possible penalties against the institution will save the Government the right to put the smurfs in jail and to seize and forfeit the laundered cash. It will also reduce the violations of the bank secrecy laws considerably.

Chairman ST GERMAIN. Mr. Torres.

Mr. TORRES. Thank you, Mr. Chairman, for allowing me to sit on your subcommittee today. As you know, this is an issue in which I am very interested. Drug money has become an official form of American foreign aid to Latin America. We know that Latin America is beset by horrendous inflation and foreign debt, that many Latin American countries need dollars to desperately finance their programs and laundering has become a paradise in Latin America as well.

It is estimated that $2 billion is laundered through some of the offshore banks in Panama, Colombia, and Peru.

I am appalled this morning to learn that the U.S. Government loses about $50 billion a year through money laundering schemes? Is that correct?

Mr. PICKLE. That is approximately correct, Mr. Torres.

Mr. TORRES. I dare say that compounding both these economic crimes and social crimes, that there is another issue that obviously concerns me, and that is that money laundering is being used along with drug sales to perhaps finance gun running in this hemisphere. We have heard that of late, vis-a-vis the situation in Nicaragua and Honduras.

What light can you shed on that, Mr. Pickle? Is there any evidence that money laundering is being used as a vehicle to purchase arms for the Contras in Latin America or Central America?

Mr. PICKLE. I don't think I can comment on that, Mr. Torres. I do not know. I am sure money laundering is so flagrant that it is almost a means of financing any kind of operation. I would not be surprised if that was not the case, but I don't know that.

Mr. TORRES. Thank you very much, and thank you, Mr. Chairman, for your time.

Chairman ST GERMAIN. Thank you, Mr. Torres. Mr. McKinney.

Mr. McKINNEY. Thank you, Mr. Chairman. It is a delight to welcome my neighbor here. He is a busy man so I will be brief.

I would love to hear your opinion as to what the definition of a financial institution is. I understand later on we are going to hear about a case where an individual was named a financial institution. It seems to me that this has become so bad in the stock market, the bond market, the futures market, and the commodity market, that we need to get some turf around here and really stretch out a little bit.

I had a real estate broker tell me that the State of Florida has one of the biggest go-go real estate markets in the country. In fact, in the southern tip of Florida it was possible to buy a house with a foreign check and then turn around and put the house on the market. You are bound to make money, even on the house. Then you have a legitimate 500,000 dollars' worth of cash or whatever you sell the place for.

Something has to be done. These guys are floating checks all over the place. Southern Florida is a bottomless pit of laundered money and drug money. The drug business will stop when they can't get anybody to do anything with the money. That is the only reason people are in it. That is the only reason people are getting or buying million dollar boats to carry the stuff into Florida.

It seems to me we have to stretch our basis of who gets clipped here. I was just wondering what you thought about it over at Ways and Means.

Mr. PICKLE. When we looked at some of their operations, we were shocked that it was so open and so flagrant in almost every form. The operator would hire young college students in a lot of instances and coach them a little bit and send them down to the banks. They would pick out the different banks. They had cased one town pretty accurately. The money launderers are so open about it that it almost got to be a way of doing things. I think the institutions looked the other way.

As far as the definition is concerned, my legislation does not try to provide a new definition of what is a financial institution. I think that is a problem. I am advised that title 31 has a broad definition of financial institutions. I would assume that would be broad enough to reach almost anyone who holds himself out as a financial institution.

It would not necessarily be limited to just a bank or a savings and loan, but anybody holding out to be a financial institution. I think the tightest definition we could get would be helpful.

Mr. McKINNEY. It was interesting, Jake. When I first came to this place 16 years ago, the definition of a financial institution was very clear. It is a mess now. It is socks, shoes, underwear and everything else. It bothers me. Every single one of these aspects from real estate through stocks is being used to launder money. These louses are not only killing our kids but they are laundering money outside the tax system. I think it is time that we get justifiably mad. Who is the enemy? Nicaragua? I believe the enemy is often right in our own country. Enough said.

I appreciate your testimony. I appreciate your bill. I will cosponsor the same.

Mr. PICKLE. Thank you.
Chairman ST GERMAIN. Mr. Wortley.
Mr. WORTLEY. Thank you, Mr. Chairman.

Welcome to the Banking Committee, Mr. Pickle. We certainly appreciate your taking an interest in this very critical issue. After all, you are one of the most distinguished Members of this body and a master crafter of legislation. To find you focusing in on it is very gratifying

Do you in your legislation make money laundering per se a crime or do you not address that aspect of it? Money laundering is a crime, it is wrong, but nobody really says that within itself it is a crime.

Mr. PICKLE. I am advised that is not the case. It would not be specifically a crime in itself.

Mr. WORTLEY. You focus in a lot on the smurfing aspects of it. Do you address anywhere in your bill the collaboration or provide for punishment of employees of banks, who knowingly participate in money laundering conspiracies?

Mr. PICKLE. Mr. Wortley, with respect to an institution, any employee within the bank who assists in that failure to file one of these CTR's is guilty of the violation and would be subject to prosecution.

Mr. WORTLEY. The way things have been happening in the marketplace is that the banks themselves have been punished, usually with a very stiff fine. Thus far, I haven't seen any employees of banks or bank officers hauled into court for their complicity in money laundering.

I was just wondering if we need to strengthen the laws in such a way that we get to individuals. It isn't just an institution that makes it happen, but some individuals within that institution, whether it is bank officers who approve organizations on the exempt list, or a teller who takes a little money under the table, for splitting deposits and so on. We never seem to convict any individuals. It is always the institution that takes the rap but never an individual.

Do you get into addressing that, Jake?

Mr. PICKLE. No, I do not, except to say that any individual who participates or causes for these reports not to be filed is guilty of the violation and ought to be prosecuted. I do not try to detail the extent of the penalty. If we don't make this thing broad enough to include both the institution and the individuals such as the smurf or the man who plans the money laundering scheme, then this operation is going to go on and on and get bigger and bigger.

Today, the percent is staggering and it is beyond belief that we have so much money that is underground. At best, it is difficult to catch the money. These money launderers are outside the law and they are trying to avoid it to begin with.

If we don't give our governmental agencies the vehicle, then I don't think we are going to put a stop to it. If we say drug trafficking is one of the worse problems in America today, and it is, then we know that drug traffickers have to have money laundered or they will not have drug trafficking. They go together, inseparably.

As far as I am concerned, the stiffer the penalty the better and I try to give the agency over which our committee had primary jurisdiction, the Internal Revenue Service, the right of seizure and forfeiture. To further penalize the money launderer, we also give the IRS the right to move in quickly. I think this will help a lot.

There is a broader bill pending before this committee and several other committees. This legislation ought to fit into other legislation in the appropriate place. This legislation goes to the heart of the matter. I am pleased that the administration has taken the initiative and said, we need to do something and we have asked you to introduce this bill, and let's get with it. I am encouraged.

Mr. WORTLEY. There is no doubt about that, that narcotic trafficking is undermining the integrity of society. I want to thank you very much for joining in the battle with the rest of us. Thank you, Mr. Pickle.

Chairman ST GERMAIN. Mr. Bartlett.

Mr. BARTLETT. Thank you, Mr. Chairman. I have no questions other than to commend my colleague from Texas for his diligence in this area. He has displayed good work on some legislation that needs to be adopted. I am pleased that he is before this committee making this presentation. I commend him for his work.

Mr. PICKLE. Thank you, Mr. Bartlett.
Chairman ST GERMAIN. Thank you very much.
Mr. PickLE. Thank you, Mr. Chairman. I thank the committee.

Chairman ST GERMAIN. At this time, the subcommittee would ask Herbert Friedberg to come to the witness table.

He will be accompanied by Mr. Ted Bandstra, Assistant U.S. Attorney, Southern District of Florida, the Department of Justice.

Mr. Friedberg, we welcome your testimony before the subcommittee and we want you to know that we appreciate your willingness to appear. Your experience as a money launderer or smurfer, as that activity is sometimes called and has just been referred to by the previous witness, will be, I am sure, most beneficial to the members of the subcommittee in our efforts to draft legislation to combat this illegal activity.

Mr. Bandstra, let me take this opportunity to thank you and the Department of Justice for your full and complete cooperation in working with committee staff to secure Mr. Friedberg as a witness before this subcommittee.

Now, I will ask my Members to listen to what I have to say at this point-Stu, David. I just welcomed Mr. Bandstra as well, and it is my understanding Mr. Friedberg may be a key witness again in an upcoming trial. We would not want to cause the Department any litigation problems in that case, so we have asked Mr. Bandstra to feel free to let us know if we are leading Mr. Friedberg into any matters that should remain confidential.

In addition, it is also my understanding that you are making yourself available to answer questions of the committee members that may be of assistance to us so that we better understand Mr. Friedberg's operation and other related matters. For that we are also grateful.

Mr. Friedberg, we will put your entire written statement in the record, without objection. We appreciate having received it ahead of time. I am informed by my very efficient staff that, having placed the testimony in the record, that you are prepared to elaborate a bit with some examples, and certainly that would be of assistance to us. So just feel free. We are here to listen.

STATEMENT OF HERB FRIEDBERG, FORMER MONEY LAUN

DERER, ACCOMPANIED BY ASSISTANT U.S. ATTORNEY TED E.
BANDSTRA, SOUTHERN DISTRICT OF FLORIDA, DEPARTMENT
OF JUSTICE
Mr. FRIEDBERG. Thank you, Mr. Chairman.

Rather than read from my statement, I would like to give you the history of how I became involved in money laundering. I was a property manager for a luxury condominium in the Miami area, and in 1983, due to an injury, I had to leave that job. While working in this condominium, I had the opportunity to meet a Colombian national, Mr. Jack Behar, who was a resident of the building and had an import/export business in Miami.

I was out of work for approximately 4 months. Mr. Behar contacted me and asked me how I was earning a living not working, and I told him I wasn't, I was simply on compensation. He asked if I would care to help him out on occasion; since he was so busy with his own business, could I take some cash to banks for him at various times and pick up some cashiers checks or money orders, for which he would pay me.

« iepriekšējāTurpināt »