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bank officers received as their share, a commission ranging from one-half to 1 percent.
One of the interesting aspects about this case is that Mr. Botero was a prominent Colombian businessman, the first Colombian national ordered extradited to the United States by the Supreme Court of Colombia. He was convicted last year, in 1985, and is currently under a 30-year sentence in prison.
If I could spend a minute trying to interpret this fairly large poster, the black dot at the very top of the poster reflects that $56 million was directly deposited into the Landmark Bank, into the accounts of false El Salvador individuals. He had five accounts at this bank. Chairman ST GERMAIN. Nonexisting individuals?
Mr. WASSENAAR. Nonexisting individuals. With the cooperation of these three bank officers, of course, Mr. Botero would bring large amounts of currency into the bank on a regular basis, and all of the currency was deposited into one of those five accounts. Most of that money or $38 million, was subsequently transferred to another bank in Florida, to the correspondent accounts at the Pan American Bank. Correspondent accounts for the Banco de Bogota and the other three Colombian banks listed.
Once the money was on deposit in those correspondent accounts, of course it could then be wire transferred to the parent bank in Colombia; $38 million was remitted to Colombian banks in that manner in a period of 8 months.
The $38 million in that particular case, as we were able to discover after we had completed our investigation, was primarily to pay source suppliers of narcotics, just to pay for the wholesale cost of the narcotics being shipped to this country.
If one can accept the fact that the average markup on wholesale narcotics is roughly nine times wholesale value, then we are talking about a very substantial amount of narcotics' dollars that were paid for with 38 million dollars' worth of wholesale of narcotics. We are talking about 10 times the $38 million, whatever that figure comes to. Chairman ST GERMAIN. $380 million. Mr. WASSENAAR. Close to half a billion dollars in street value of narcotics was laundered, and the proceeds were laundered through this Landmark Bank.
Chairman ST GERMAIN. Excuse me. It says Botero, $56,692,000. Are you telling me he deposited all of that into the Landmark Bank? Where did he put the rest of that money?
Mr. WASSENAAR. What he did with his profits or the excess, the retail price, is really unknown. It wasn't until after we had finished this investigation that we were able to tie this into narcotics, which really prevented us, even though we knew there was a substantial money laundering operation here, from seizing and seeking forfeiture on the money that was going through this illicit conduit.
There again, I think Mr. Pickle's bill that he talked about this morning would be of some aid in that respect, and we would not have permitted the full $38 million to go over to Colombia to pay for the narcotics that were being purchased. The next case
Chairman ST GERMAIN. Excuse me. Would you finish the chart for us? We covered Pan American and the $38 million that went to Colombia. Explain the rest of that chart to us, please.
Mr. WASSENAAR. That is where most of the money went. Of course, that is the money that was of greatest concern to us.
Chairman ST GERMAIN. Below there, you have checks.
Mr. WASSENAAR. We had $10 million in other distributions, consisting of 20 wire transfers and 132 cashier's checks. Those were deposited or transferred to accounts over which Botero had no direct control. The exact purpose of each of those transfers is really uncertain to us.
Chairman ST GERMAIN. The "blue."
Mr. WASSENAAR. The amounts on the right, those were domestic transfers, to accounts that were under the control of Mr. Botero himself. He controlled all of the accounts on the right and he also controlled all of the accounts on the left.
It is very possible that the other distributions, going down, the $10 million in distributions, could have been to Smurfs, to other individuals assisting him in his business.
Chairman ST GERMAIN. You said there were people within the institution that cooperated, commission checks to bank officials for nonfiling of CTR's.
Mr. WASSENAAR. Right.
Mr. WASSENAAR. The officers in this particular bank were receiving a fee ranging from one-half to 1 percent of the currency they were taking in. In the course of 8 months, they took in $56 million. The amount they received was therefore very sizeable.
Chairman ST GERMAIN. You initially said it didn't involve Smurfs, but indeed, it did. He was the Smurf, but he had the cooperation of bank officials. Isn't that the case? He brought the cash in and the CTR's were not filed.
Mr. WASSENAAR. Right. Traditionally, we think of the term "Smurf" as the individual who scurries about from bank to bank, converting $9,000.
Chairman ST GERMAIN. We will refer to Botero here as the super-Smurf.
Mr. WASSENAAR. Right; indeed, he was. It is very possible above him, in the organization, there could have been some type of Smurfing activity.
Another case I would like to bring to your attention is a case again where we had the complicity of bank officers. This was a case that took place in California. It involved the Garfield Bank. It also involved an attorney by the name of Nathan Markowitz. Nathan Markowitz had been a fairly prominent attorney within the L.A. area, who for all practical purposes, had given up the practice of law because he could make more money by laundering money.
Nathan Markowitz had made an arrangement with the president of the Garfield Bank to assist him in laundering money. Nathan Markowitz had a lot of contacts with individuals involved in narcotics. He would receive whatever currency they would bring to him. He would bring it into the Garfield Bank, assuring the narcotics trafficker that no CTR was filed with the Internal Revenue Service. Markowitz, being an attorney, would create foreign corporations for these narcotics traffickers. Once the currency was brought into the Garfield Bank without a CTR report being filed, the Garfield Bank could wire transfer that money to the same country where the foreign corporation was created. The money is immediately offshore. That money could then come back to the narcotics trafficker under the guise of a loan from a foreign corporation.
It is, at a minimum very difficult for the Internal Revenue Service to charge an individual with receiving income when he has loan documents from some foreign corporation, and that is his primary means of buying his house or his Mercedes.
Chairman ST GERMAIN. Could you describe the wire transfers from Garfield Bank to foreign bank X. How was that accomplished?
Mr. WASSENAAR. The same thing really happened in the Botero case. Once the money is in the financial institution
Chairman ST GERMAIN. Let's use Garfield Bank. Mr. WASSENAAR. The money was delivered by the narcotics trafficker directly to Mr. Markowitz. He or one of his associates would then physically transport that money to the Garfield Bank. Once it was on deposit at the Garfield Bank, in the accounts of nominee names, whatever, then that money, the balance in that account or any part of that account, could be wire transferred to virtually any financial institution.
Chairman ST GERMAIN. They can't put the money in a wire. When I was a kid at Woolworth's and some of the shoe stores, you could go downstairs and buy your shoes, and then they would put your money in this little cup that was on a wire and it went upstairs to the office and down came the change and the receipt. That money, those $20, $50, $100 bills can't go through the wire to foreign bank X; right? Mr. WASSENAAR. That's correct. Chairman ST GERMAIN. Describe to us how that happens. How does the money get from Garfield Bank to foreign bank X?
Mr. WASSENAAR. It is just a matter of crediting and debiting, by way of electronic transfer of funds.
Chairman ST GERMAIN. Garfield Bank doesn't sound to me like the type of institution that would ordinarily be dealing with foreign banks. It sounds like a smaller bank.
Mr. WASSENAAR. That's true. Chairman ST GERMAIN. They don't have credits and debits back and forth.
Mr. WASSENAAR. Right.
Chairman ST GERMAIN. Tell us how that money arrived at the foreign bank.
Mr. WASSENAAR. I assume that money would then go to the Federal Reserve in that particular district. That Federal Reserve district would give proper credit to the bank that really should be holding that particular amount of currency. Chairman ST GERMAIN. The foreign bank? Mr. WASSENAAR. Right.
Chairman ST GERMAIN. What I am trying to determine is, is it possible to monitor wire transfers in excess of $10,000 or $20,000?
Mr. WASSENAAR. I strongly suspect that most wire transfers are in excess of $10,000 or $20,000. I also believe that the volume involved in wire transfers on any given day is probably bigger than any IRS computer can currently handle.
Chairman ST GERMAIN. Are you saying there is no way to have a handle on wire transfers?
Mr. WASSENAAR. I think there is. I think in terms of the amount of wire transfers on any given day, I heard at one time it was roughly $2 billion. I have to assume that most of that is for very legitimate purposes.
Within the past year, Treasury has issued new regulations which will now enable us to have financial institutions provide to us records relating to their wire transfer activity over a given period, which I think will be very helpful. That way, we will not force all financial institutions to provide wire transfer information to us, but we may be in a position to ask suspicious entities to provide wire transfer information to us.
I think that regulation, which just went into effect in the past few months, will indeed be very helpful to us.
Chairman ST GERMAIN. Do you know how big Pan American Bank is?
Mr. WASSENAAR. No. I'm sorry. I don't know the assets of that bank. I did hear Mr. Friedberg mention this morning that he was using Pan American Bank.
Chairman ST GERMAIN. Yes, that he utilized as his personal bank. If that is the case, how did you catch up with Botero? What brought him to your attention?
Mr. WASSENAAR. I'm not certain how we got started, with several hundred investigations going on at any given point in time.
Chairman ST GERMAIN. Could you submit for the record information as to how you came upon the Botero situation?
Mr. WASSENAAR. Yes. I will also add to that the source in the Markowitz case.
[Information to be furnished follows:
SOURCE OF BOTERO CASE The Botero case was referred to the IRS by the FBI, which was conducting an embezzlement case and found a number of unfiled CTRs. The Markowitz case was initiated on the basis of information received from a confidential source. As a result of this information, we placed an undercover agent in the Markowitz organization.
Mr. WASSENAAR. I will submit that in the Markowitz case, we were able to bring that case to a successful conclusion primarily because one of our agents posed as a narcotics trafficker who had lots of money which he wanted Mr. Markowitz to launder. Indeed, he did launder a substantial amount of our undercover agent's money. With that operation, we were able to gather not only the evidence on Mr. Markowitz himself, but on the three bank officers who were associated with the Garfield Bank, and two of Mr. Markowitz' associates.
In that particular case, we convicted the three bank officers. We convicted the three associates of Mr. Markowitz. Shortly after Mr. Markowitz' indictment, he was assassinated in the parking lot in Los Angeles. Also in that case, the Garfield Bank was fined a total of $309,000, which was equivalent to their entire income for the year 1980.
Chairman ST GERMAIN. Do you know how much money the bank tellers were paid?
Mr. WASSENAAR. Yes, they were extracting a somewhat higher fee than the bankers in the Botero case were provided.
I would now, with your permission, like to show you some slides that were taken during an actual money laundering investigation or investigations. The first five slides involve a case that we call the Sonal case, where roughly $200 million was laundered by the Sonal organization over a period of 15 months in Florida.
Sonal was primarily a currency exchange type of an operation. The proprietors of this business had arrangements with the bank to receive up to $1 million a day that could be deposited in the bank account. And as a result, they had a lot of narcotics traffickers bring in their currency to the Sonal organization. Chairman ST GERMAIN. What type of business was it? Mr. WASSENAAR. Currency exchange.
This is a picture of two individuals removing from their trunk cardboard boxes full of currency, about to be delivered to this Sonal organization.
Chairman ST GERMAIN. Excuse me, delivered to the Sonal? That looked like a financial institution that they were parked in front of.
Mr. WASSENAAR. Well, in this particular case, the Sonal Co. had an office right within a bank.
Chairman ST GERMAIN. What bank was that?
Mr. WASSENAAR. I do not have the name of the bank but I could
Chairman ST GERMAIN. Could we flip back to the first slide? No, the other way;
Isn't that the Chasenhook Federal something? Is that Chasenhook?
Mr. WASSENAAR. No, this was in Florida. Chairman ST GERMAIN. Do you have some worthy assistant here who might help you with that question?
Mr. WASSENAAR. Yes, he said it was the Capital Bank.
Mr. WASSENAAR. They had an office right within the Capital Bank in Florida.
Chairman ST GERMAIN. The Capital Bank is spelled c-h-a-s?
Mr. WASSENAAR. Well, this was in a parking lot. The Capital Bank, or at least the branch, was some doors down from this particular-
Chairman ST GERMAIN. Oh, they have a lot of banks in this parking lot? Mr. WASSENAAR. Yes, it must be similar to Wilshire Boulevard.
Chairman ST GERMAIN. Would you, for the record, submit the exact name of the bank, in case you might be mistaken? Mr. WASSENAAR. I certainly will.
EXACT NAME OF THE BANK IN A SLIDE The name of the bank that received the Sonal, Inc., deposits was the Capital Bank. The picture of a bank in the slide was next door to the Capital Bank building