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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 ST GERMAIN. I will make this last observation because we have another witness and we want to have him 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.

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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 COMMISSIONER FOR CRIMINAL INVESTIGATION, INTERNAL REVENUE SERVICE (IRA)

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, both domestic and foreign, play a role-a role that is played by the financial institutions in many cases, wittingly or unwittingly.

The key tool that is used by the Internal Revenue Service in attacking money laundering cases, of course, is the Bank Secrecy Act. Since the subcommittee is very familiar with the aspects of the act, I will not attempt to summarize title 31 of the Bank Secrecy Act, other than to comment that the principal part of title 31 of the Bank Secrecy Act that we use is the current requirement that all currency transactions in excess of $10,000 be filed with the Internal Revenue Service.

As the chart on the left reflects, back in 1975, only 11 years ago, the Internal Revenue Service only received approximately 3,400 currency transaction reports [CTR’s). Since that time there has been a gradual increase through 1984. The increase from 1983 to 1984 was approximately 50 percent. But the most substantial increase, of course, has been in the year 1985, a whopping 120 percent increase.

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241,850

121,000

3,418

1975

1979

1980

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