War on drugs

US prosecutors seeking forfeiture of car dealership

in which drug money was accepted for the sale of vehicles.

The fifth count says that Kaufmann attempted to sell undercover officers a Porsche, after the officers told him they intended to pay for the vehicle with the proceeds of an unspecified illegal activity.

The case is believed to be the first of its kind here. As part of the war on drugs, businesses are sup posed to report all cash transac tions of more than $10,000 to the Internal Revenue Service.

It also is illegal to structure cash payments in smaller chunks to avoid the reporting retirements.

dealing in Wisconsin would indicate
there were many more than 300
$10,000-plus cash transactions with-
in the state.

To avoid reporting requirements,
both Harry Kaufmann Motorcars Inc.
and Olympic Auto Sales allegedly
accepted a series of cash payments
and cashier's checks of less than
$10,000 for various luxury cars, Ruf-
fin said.

In 1988, Kaufmann allegedly sold
a $50,000 Mercedes-Benz to a known
drug dealer by accepting "multiple
payments of approximately $8,000
each over a period of one month until
the car was paid for," an IRS search
warrant affidavit said.

Kaufmann used some of the money
to purchase cashier's checks "be-
cause he did not want to have the
cash on the premises," the affidavit
said.

Ruffin said the IRS this week sent
out 2,683 notices to every vehicle
dealer in Wisconsin, informing them
of reporting requirements.

He said similar mailings were
planned for furriers, jewelers, real
estate offices and travel agencies,
which offer big ticket items attrac-
tive to drug dealers.

"We're not here to intimidate busi-
ness people. I don't want to intimate
that every large currency transaction
involves a drug dealer. We're not
saying every auto dealer in the state
of Wisconsin is dirty."

But Ruffin said business owners
have to use common sense and when
offered a large amount of cash, they
should demand a reasonable explana-
tion.

"If it doesn't pass the smell test, give us a call," he said.

Mr. MURPHY. Moving right along, Mr. Shaw, another example of the New Jersey project identified an individual who had purchased more than $1 million worth of real estate. When contacted by agents, the individual claimed to have received the money from a deceased drug kingpin. The story later proved false and the individual is now under investigation.

Last year, an attorney deposited $80,000 in cash in his account. The bank alerted Criminal Investigation of the transaction and complained that the currency had a peculiar odor and appearance. The cash was analyzed by the U.S. Secret Service laboratory here in Washington. Although no narcotics residue was present, it was determined that the notes, all $10s and $20s, had been buried together.

The Detroit Computing Center was notified to perform a special search and to alert the San Diego office if the attorney filed a form 8300 within the 15-day period. The attorney did file the form but declared the amount as "over $10,000." Did not have a specific amount.

He also inscribed "attorney-client" privilege as to the remaining questions on the form. This and other similar situations are under civil litigation and summons enforcement by the Service.

The spouse of an executive under investigation for participation in a savings and loan fraud case is currently under investigation for structuring cash payments and deposits. The target was determined through a CTR filing.

Criminal Investigation has embarked on several compliance education campaigns around the country. In Dallas, a match was conducted of CTR and corresponding form 8300 filings by car dealerships. Letters were generated to specific car dealerships detailing the requirements of 60501 and highlighting discrepancies found in their CTR and 8300 filings.

These efforts generated mass delinquent form 8300 filings by Dallas area car dealers. The incoming forms were then compared with criminal indices and several known narcotics violators were revealed. Criminal Investigations are being pursued. Whether there should be more and whether more has to be done, I think has been pretty much agreed to here this morning.

These and other similar efforts around the country are beginning to impart the full responsibility of the laws on those who should be filing forms 8300. News publications of those prosecuted for violating the requirements, such as the two car dealerships mentioned earlier, the Milwaukee case I mentioned, are also having a positive compliance impact.

Businesses are starting to file suspicious transaction forms 8300. The 1990 version of the form 8300 includes a prominent block at the top to be checked if the business believes the transaction to be suspicious. The Detroit Computing Center has received 305 forms 8300 filed for amounts under $10,000 in the period January to July

1990.

The reality still exists that businesses will gamble and choose to accept a sale rather than refuse cash transactions that insist on anonymity. Even though the penalties were increased from a 1- to a 5-year misdemeanor, many businesses continue to risk the slim chance of criminal prosecution in favor of completing the sale.