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working. I think the largest amount I had seen prior to that was $50,000 and that was on one occasion.
Chairman ST GERMAIN. But you never saw any weapons whatsoever.
Mr. FRIEDBERG. No, sir.
Chairman St Germain. Did you ever feel funny walking out of that warehouse to go launder $100,000?
Mr. FRIEDBERG. Scared to death.
Mr. Friedberg, I read over your prepared statement and I appreciate your coming here to testify, but I find it incredible that before June 1984 you had no suspicion that there was something wrong. Is that what you really want us to believe? Or is June that you realized that you were in trouble and you had
Mr. FRIEDBERG. No, sir; I had no problem. I was never investigated. I never had any
Mr. KANJORSKI. It is not a question of whether you were investigated. You mean up until June, for 5 or 6 months, you were-Chairman ST GERMAIN. If the gentleman would yield.
That was explained previously so what I think you should do is tell him the story Mr. Behar gave you, as to where this money came from.
Mr. KANJORSKI. I have read the statement.
Mr. KANJORSKI. I have listened to the testimony and I have read the statement.
Chairman ST GERMAIN. Were you here when he explained the con job on him?
Mr. KANJORSKI. Yes; I just find that that was not a convincing con job and I am just wondering why you accepted it and I would not.
Mr. FRIEDBERG. I cannot answer the question, sir, other than the fact that Mr. Behar was convincing and I-
Mr. KANJORSKI. Let me ask you, I was a workman's compensation referee before I came to the Congress and I tend to agree with the chairman. I found very few people who were seriously injured who do not contest being laid off workman's compensation. You never made a contest of this?
Mr. FRIEDBERG. I had a back injury which was healed in December and that was it.
Mr. KANJORSKI. How were you paid for the first 5 months, from January 1984 until June 1984, when you went to the FBI?
Mr. FRIEDBERG. Mr. Behar was paying me on a per day basis. He would pay me $100 or $150.
Mr. KANJORSKI. Did he give you a check or cash?
Mr. KANJORSKI. Then obviously, since you were in business of some sort, you must have filed a quarterly return with the IRS in April and in June of that year on your income. Mr. FRIEDBERG. No, sir. I filed my first one in June, not in April. Mr. KANJORSKI. After you went to the FBI and the IRS?
Mr. FRIEDBERG. When I was informed that I had to do it. I was not aware of quarterly returns.
Mr. KANJORSKI. You mean you are 53 years old and you did not know that if you were self-employed business you have to-
Mr. FRIEDBERG. I never was self-employed prior to that.
Mr. KANJORSKI. In your prepared statement, you talk about the fact, on page 4, page 5, that your employer was indicted in February of 1985, is that correct?
Mr. FRIEDBERG. Yes, sir.
Mr. KANJORSKI. And that in mid-May 1985 he returned from Colombia and expanded his business after he was indicted?
Mr. FRIEDBERG. It could be a typographical error. Mr. BANDSTRA. If the statement says that, it would be incorrect. It is mid-May 1984 that he returned from California.
Mr. KANJORSKI. Are there a lot of people in the State of Florida who operate being paid on a daily basis with cash, and they don't realize that they have to file returns and they go around setting up nine bank accounts without any money so they can cash checks, and they don't suspect that there is something wrong with that? Mr. FRIEDBERG. I am sure there are. Mr. KANJORSKI. What would you have the Congress do to cure a problem like this?
Mr. FRIEDBERG. I don't have the expertise to answer it, sir. I truly don't. I know that to make it more difficult for these people, you are also making it more difficult for the innocent people, I realize that.
Mr. KANJORSKI. Mr. Bandstra, what were the sentences of these 26 people that were indicted?
Mr. BANDSTRA. The sentences have been, in my opinion, very light.
Mr. KANJORSKI. Well, I didn't ask you that. I asked what the sentences were.
Mr. BANDSTRA. The sentences? The sentences have been between 3 and 5 years.
Mr. KANJORSKI. And upon whose recommendations were they this way. Were they worked out pleas?
Mr. BANDSTRA. In most cases there were no restrictions on the judge-on the district court judges above a certain limit. I might say that in certain cases there were plea agreements entered into with these defendants, in all cases not less than 10 years, except perhaps one in which the restriction-or in which the agreement was a 5-year cap. Mr. KANJORSKI. They were given 10-year sentences in each
Mr. BANDSTRA. No. Many of these individuals were indicted in multicount indictments.
Mr. KANJORSKI. Yes. Mr. BANDSTRA. Many of these individuals entered into plea agreements with the U.S. Attorney's Office, in which they pled guilty to two counts, or three counts; each of these counts being a
5-year count, so that they were exposed to a maximum penalty of 15 years or 10 years, but
Mr. KANJORSKI. But what was the understanding as to, in fact, what they would receive.
Mr. BANDSTRA. I am sorry, I didn't hear the question.
Mr. KANJORSKI. What was the understanding as to, in fact, what they would receive?
Mr. BANDSTRA. There was no understanding, and it would be improper for there to be any kind of a discussion or an understanding on the part of the defendant.
Mr. KANJORSKI. What did they then receive?
Mr. BANDSTRA. They then received between 3-well, I would say between 2 and 5 years.
Mr. KANJORSKI. And did the Attorney General of the United States raise cain with the Federal bar as to the reason that they were leaving these people out of a third of their sentence?
Mr. BANDSTRA. No; not to my knowledge, sir.
Mr. BANDSTRA. The plea agreements themselves?
Mr. BANDSTRA. No; they were approved as is the case in every case, they were approved within the U.S. Attorney's Office in the southern district of Florida.
Mr. KANJORSKI. Mr. Chairman, I suggest maybe we should talk to some of the Federal attorneys in the State of Florida.
Chairman ST GERMAIN. Mr. McKinney.
Mr. McKINNEY. Thank you, Mr. Chairman. Mr. Bandstra, I would have to be rather complimentary. I have watched you guys try to shovel sand against the tide in southern Florida for most of my life, and the tide gets higher all the time, I think, Mr. Chairman, you have the most beleaguered force of U.S. agents and U.S. attorneys and assistant attorneys in southern Florida.
Unfortunately, my old home town isn't what it used to be. One of the things that really fascinates me, Mr. Friedberg, is why not just cancel cashiers checks? Why not just force a bank to require a personal check, which they can charge the same fee for, and they will. In fact, certify that check as being worthwhile, but that way we get away from the innocuous no-name instrument pretty much, right?
Mr. FRIEDBERG. Yes, sir.
Mr. McKINNEY. Interesting. Of course, that brings horror to the banker's eyes, but it is a beginning. Florida is a strange place. I bought a place in West Palm Beach, way west, and I went down there during the mortgage crunch when none of my constituents, including a Congressman, could get a mortgage any more. They were still building like mad. I asked my real estate broker: Who is taking out all these mortgages?
I got this blank look from this young lady, who just simply said: Mr. McKinney, there are only 16 mortgages in this whole condo minium complex, and you have one of them.
That makes a northeasterner's teeth vibrate a little bit. I said: You mean everything is being paid for in cash?
And she said: Oh, yeah.
And guess what language you hear out at the swimming pool? Mr. FRIEDBERG. Absolutely. Mr. McKINNEY. OK. You are walking on dangerous territory, but Florida is the land of cash, and I don't know how you guys are going to do it but somehow or other, we have to do something about no-name instruments-cashier's checks and cash. It sounds ridiculous to say you are going to be hard put to use the Nation's currency, but that is really what we are talking about, because cars are paid for in cash, condominiums are paid for in cash, and then they turn around and sell those things. It is a go-go market. You can sell for 5 or 10 percent more than you even paid.
Let me ask you a question. This is a very personal question. You are in Los Angeles and a guy hands you $200,000. Now, where I come from that is a heck of a lot of money. Did you ever get the urge to just take a walk?
Mr. FRIEDBERG. If the thought came to my mind, it didn't linger there too long.
Mr. McKINNEY. OK. Now, in other words, you sort of feel something might happen to you if you did take a walk. What did you think would happen to you? Did you think Mr. Bandstra and the Feds, or the locals would come after you, or did you think someone on a dark night might just end it all?
Mr. FRIEDBERG. Well, here again having a family who lived in Miami, and it is someone else's money, whether I considered him a gangster or racketeer, I would have to feel that he would be a little upset if I walked away with $200,000 of his money. So, therefore, the thought never lingered that long.
Mr. McKINNEY. Yeah, but I mean gee, what a temptation. Two hundred thousand cash, and nobody is going to follow you like the Feds would try to follow you to Argentina or any of those places.
I mean, you can just take a walk. I suppose, Mr. Chairman, if you steal the money, you really don't care that much.
Chairman ST GERMAIN. Yeah, but he probably has a wife and children and so forth. Leave them behind?
Mr. McKINNEY. That is what I wanted to really get across was, you know, this is a lot of cash, and people are just sort
Mr. FRIEDBERG. If I didn't like my wife it would have been a great opportunity.
Mr. MCKINNEY. You know, nobody knows better than Mr. Friedberg or Mr. Bandstra, that all one has to do is read the Miami News on a daily basis, and a lot of people bite the dust for a lot of reasons, including, unfortunately, our poor FBI agents recently.
You know, it is a real problem, but it is the heart of the drug business. Without money laundering, the drug business isn't worth the time, the effort, or the danger, but with money laundering it is worth so much that the people don't give a darn any more.
If you lose $1 million Hatteras yacht, so what? You made $6 million on the sale. You launder it. I really appreciate your testimony, and I appreciate your forthcoming responses.
Let me ask you another inner question. When you look in the mirror in the morning, and you looked at that, and you knew how many people were working in your little outfit with no guards at the door, with cash lying all over the place, wasn't there a lot of that going on in your mind?
Mr. FRIEDBERG. I could not believe myself how much was going on. Once you get into the inner workings of it, one of the exercises, you would be going into a bank and you would be waiting in line, and you see familiar faces, and you think it is somebody you know, and then you realize it is the same Smurf that you have seen in the previous bank.
Mr. McKinney. He was laundering $9,000 too?
Mr. FRIEDBERG. You are running a route. That is what it amounts to. I think you might enjoy how it was done. I would take home $100,000, and when I would get home I would put it out on my dining room table and break it down into $9,000 packages.
Mr. McKINNEY. You mean your wife could sit still and watch $100,000.
Mr. FRIEDBERG. No. My wife cried.
Mr. McKINNEY. My wife would go certifiably insane, instantaneously.
Mr. WYLIE. Would the gentleman yield?
Mr. WYLIE. You have a lot of income for a short period of time here, and now don't have it. Where are you employed now?
Mr. FRIEDBERG. I am not, sir.
Mr. McKINNEY. My time has expired, but if you want to keep up. You just took the money home and threw it on the dining room table.
Mr. FRIEDBERG. We broke it down into $9,000 packages, and then I would make a list of the banks I was going to call on the following day, and you had bags—bank bags, these plastic bags, and you put the money in there and put it all in an attache case, and contrary to what they show on television, at attache case does not hold $1 million; it holds about $120,000 in 20's.
Mr. MCKINNEY. Mr. Chairman, you have to be heroic to be a Federal employee in a land like southern Florida, and I congratulate the Fed's informant, and I congratulate the assistant U.S. attorney.
Chairman ST GERMAIN. You said your wife would cry when she saw you counting the money into the packets?
Mr. FRIEDBERG. She just couldn't believe the kind of money that would just come in every day, and she would walk out of the room. She didn't want to even sit there and watch.
Chairman ST GERMAIN. Did she know after June that you
Mr. FRIEDBERG. Oh, absolutely. I told her immediately.
Mr. WORTLEY. Thanks, Mr. Chairman. Mr. Friedberg, the principal bank that you used for laundering operations, how long had you had an account in there when you first started laundering?
Mr. FRIEDBERG. The very first check I made was on my own bank account, and it was in the form of a personal check which Mr. Behar had asked me for, and it was in the amount of $5,000, and I