Chapter Six

 

THE PROFESSIONALS

 

 

 

 

"There's no such thing as good money or bad money. There's just money."

 

Charlie "Lucky" Luciano

 

 

 

 

 

 

Enhanced compliance with reporting requirements has not solved the problem. Instead, it has made the laundryman’s cost of washing money that much more expensive and, in turn, displaced the problem.

 

Laundrymen have been forced to seek "user-friendly" nations where there are no currency controls, where banking secrecy is assured, where no one cares who deposits what. It's true that there are international agreements which are supposed to enhance collaboration among law enforcement agencies and thwart this kind of cross-border ablution. But, compared with the extent of smuggling that goes on, the amount of cooperation is negligible. It seems that where crime is concerned, especially money laundering, jurisdiction all too often ends at the airport.

 

Most borders are sufficiently porous that even where they are heavily patrolled, the amount of contraband getting stopped represents only a tiny percentage of the contraband coming through. What’s more, many borders are single-sided, in that goods are checked at the point of entry and not at the point of departure. Theoretically, it is easier to get cash out of the US than to get drugs in, and literally billions of dollars are leaving the country every year, according to the Senate Permanent Subcommittee on Investigations. However, $1 million in $20 bills weighs 15 times as much as the cocaine it buys, so the laundryman has a bulk problem that the drug trafficker doesn’t.

 

The US Post Office used to be the preferred choice of courier for sending dirty money out of the country, mainly because it’s so secure. Commercial services such as Fedex and DHL have, unknowingly, taken some of the business away from Uncle Sam. But as inspectors have learned what to watch for, seizures have risen. In response, the laundrymen have diversified, hiding cash inside cars, furniture, tires and television sets which they ship out of the country labeled as gifts or commercially. One group working in LA had a thriving venture in export fridges to Colombia until the Feds got wise to them. Another in New York was in the sealed metal container trade, until US Customs at Kennedy Airport opened some of their sealed metal containers and discovered $6.5 million.

 

Lifting another page out of the drug traffickers book, many laundrymen reverted to basics and continue to smuggle money out of the country with mules. They hire people to stuff cash in their underwear, suitcases, socks and pockets, or to tape it around their bodies. Increasingly, condoms are filled with cash and then ingested. A relatively new phenomenon, the first reported case of "cash swallowing" was in 1991. Working on a tip-off, Customs agents at Kennedy stopped a woman from Ghana boarding a flight to Europe. They asked how much money she was carrying. She told them $9000. A search of her luggage uncovered $24,000 stuffed in clothes and several bottles of shampoo packed with wads of $100 bills. A medical search then revealed that she’d hidden six more vaginally and had swallowed a dozen condoms with money rolled inside. The total haul was $55,000.

 

As the authorities shut one door, the laundrymen open two more.

 

The so-called "South African Method" is a brazen approach concocted by a Johannesburg businessman who beat currency export controls by faking a badly sprained ankle. Booked on a flight to London, he asked the airline to supply a wheelchair to help him get to the gate because he had a cast on his leg. Departure scrutiny in those days was very strict and on the day of his flight, an anonymous call came into South African Customs that a man with a cast on his leg was using it to smuggle a large sum of money out of the country.

 

When he wheeled up to the Customs and Immigration checkpoint, he was stopped. Officers opened his luggage, went through it, found nothing, then announced they wanted to search him. He refused. They insisted. He demanded that he be permitted to ring his solicitor. Senior officials were summoned and the argument continued long past the point where the plane was scheduled to leave. By the time his lawyer arrived, the flight had taken-off without him. Now the man threatened to sue. His lawyer managed to calm him down and explain that the officers were well within their right. Protesting to the very end, the fellow had no choice but to sit there while his cast was sawn off.

 

It was empty.

 

Now he raised hell. He started ringing everyone he knew in government. Red-faced apologies, though plentiful, were inadequate. The man ordered his solicitor to file law suits against the government and the airline for allowing this to happen. He said he not only wanted retribution, he wanted blood. He caused such a rumpus that the following day, with a new cast plastered over his ankle, cash packed firmly inside, Customs and Immigration officials personally helped him onto the plane.

 

A less nerve-racking method is the identical suitcases trick. More difficult to do these days than it used to be --- for security reasons, airlines demand that every suitcase be accountable to a passenger on board --- it is nevertheless, still manageable.

 

 

One suitcase is packed with clothes, the other is packed with money. The trick is getting the second suitcase onto the plane without it being linked in any way to the laundryman. At his destination, the laundryman then retrieves the suitcase with the money and takes that one through Customs. If he's stopped and the suitcase is opened, he says with appropriate shock, this isn’t mine. He returns to the luggage racks to show the officers the identical suitcase, properly registered to him, with his clothes and identification inside. The money is abandoned, written off as the cost of doing business.

 

Professional smugglers who service the laundry trade may be a rare breed but they are hardly an endangered species. Their numbers are growing because the work is so handsomely rewarded.

 

Call this man Pancho.

 

A medium sized man with delicate features and thick glasses which give him an innocuous look, his biggest single coup to date was making $18 million in small bills disappear for a New York drug dealer. Working on a fee of 10 percent plus expenses, Pancho began by getting the cash out of the US and into Canada. That proved no more difficult than driving it to Montreal himself, with a woman and two kids in the car, making the border crossing look like a mundane family outing.

 

Next, he sent runners to airports, railroad stations, post offices and crowded banks where they posed as tourists, converting $10, $20 and $50 American bills into $100 Canadian bills and US dollar travelers’ checks. Because of the sum involved, reducing the bulk of the cash took nearly one month.

 

From Montreal, he dispatched mules to London. Well-dressed men traveling alone and well-dressed couples carried cash in attaché cases and stuffed the overflow into their pockets. Arriving at Heathrow, they walked innocuously through the "Nothing to Declare" channel along with thousands of other ordinary businessmen and tourists.

 

Much of what Customs does relies on "profiling," the officer's ability to spot certain characteristics common to smugglers. Sometimes criticized today as "politically incorrect" because there are racial overtones, it was a method perfected many years ago by US Customs, when someone high up in the bureaucratic maze wondered what would happen if he fed into a computer all sorts of seemingly unrelated facts about people who'd been apprehended bringing illicit goods into the country. The result was a list of several dozen shared traits, the profile of a smuggler, which is these days deeply embedded into the psyche of customs inspectors. Hardly mysterious, it's mostly common sense.

 

For example, an extremely well-dressed elderly woman traveling alone with nothing to declare will almost always get stopped and searched because profiling says she's the sort of person who has probably bought something expensive. An equally well-dressed couple in their mid-30s who hand the inspector a written declaration will almost always be waved through because profiling says they're probably too scared to cheat. A man who is obviously traveling on business, using a Business Class ticket paid for by his company, wearing a rumpled suit with only carry-on luggage and an especially jet-lagged expression will have less trouble strolling through Customs than a neatly dressed, First Class flying, one-eyed, 300lb Pakistani man with an Italian passport on a flight from Colombia, carrying a blond-haired, blue-eyed, two year old baby girl.

 

Pancho understood that unless he made a serious error of judgment in the couriers he used, or unless customs was tipped off, or unless an officer somehow recognized the same courier coming in every third day, the odds were weighted in his favor. As long as he never gave Customs a reason to suspect something, it was unlikely they would ever get their hands on this money.

 

From Britain the cash was sent to the Channel Islands where it was deposited, by pre-arrangement with a friendly banker, into 14 different accounts. No sooner was it bedded down there, than it was wired out. Some of it is known to have headed for Luxembourg. The rest evaporated into thin air.

 

In order to increase their gain, some professionals are willing to increase their risk by combining money laundering with drug smuggling.

 

John is in his late 20s, tall with an athletic build and a very particular philosophy of life. He says, if you’re going to do it, do it once but do it right so that you make enough to absolutely change your life, so that you never have to do it again, then get out and stay out.

 

He decided to change his life in Gibraltar. Because "The Rock" is over-populated with company formation agents who never ask questions, John had no trouble establishing himself there with a £100 import-export company. Using cash he’d collected from tobacco smuggling to the Spanish mainland, his company bought hi-fis, VCRs, CD players, televisions, portable telephones, answering machines, fax machines and camcorders. He obtained the necessary export licenses and shipped the inventory across the Strait of Gibraltar to Tangiers. After declaring everything at Customs and paying Moroccan import duties, he sold it. With that money he bought cannabis which he smuggled by fast boat into Spain. Selling his dope there, he deposited cash back in Gibraltar, authenticating the source of it with his export license and Moroccan import receipts. Then he closed his business, took his money, moved away and, at least so far, has never been back.

 

The trickiest part of the equation is dealing drugs. However, triangular trade in the region has gone on for centuries, making the Strait of Gibraltar one of the most congested smuggling routes on the planet. Little has changed since the days of the Barbary Coast pirates, except the value of the cargoes and the sophistication of the smugglers. In early 1993, for example, two rings working out of the Spanish North African enclave of Cueta were known to have ferried 100 tons of Moroccan hashish across the Strait hidden in trucks carrying fresh flowers. They’d washed their profits, $220 million worth, through seven different banks in Cueta, Morocco, Spain and Gibraltar.

 

So John knew what he was doing when he put his chips on this roll of the dice. After all, Morocco is Europe’s principal exporter of marijuana and hashish; because of its historical, cultural and linguistic ties to Central and South America, Spain is Europe's premier port of entry for the Latin drug trade and has a highly developed trafficking infrastructure; and Gibraltar is the region’s most suitable sink.

 

Despite Spain’s occasional draconian border checks and British threats to impose direct rule if sufficient action is not taken by the Gibraltarians themselves, the Rock remains fertile territory. It’s true that, reacting to London’s caveat in June 1995, Gibraltar's customs police intercepted 42 smuggling crews and confiscated 63 vessels. But Spanish officials say that at least 100 new Gibraltar-registered fast launches have taken up the slack. It’s also true that Gibraltar has had laws against money laundering on its books since 1988. But it wasn’t until late 1995 that anyone was ever prosecuted there for it.

 

Admittedly, Pancho and John are the exceptions. The difference between them and the amateur smuggler-laundryman is that they approached it like professionals, having worked out ways to minimize risk and maximize gain. Amateurs learn on the job and hope to get lucky, which can make for a very expensive education.

 

A fellow with a pilot’s license in Ft. Lauderdale, Florida decided there was no trick to moonlighting as a flying laundryman so he found some people who were looking to get cash out of the country, stuffed his plane with their money and flew it south. Before long, he had more clients than he could handle, so he upgraded to a Learjet.

 

Obviously, there are plenty of people in the States who fly privately, but when you regularly file a flight plan in Ft. Lauderdale that says you're going to the Bahamas and air traffic control regularly tracks you to Panama, it shouldn't come as a surprise when someone starts wondering what you’re up to.

 

The usual ruse is to file point-to-point. You go from Ft. Lauderdale to Nassau. In Nassau you file to Caracas. When you land in Venezuela, you file to Costa Rica. From there, if you want to go to Panama, it's a good bet that the American authorities have long since lost track of you. But the fellow from Ft. Lauderdale hadn’t worked that out and one morning, just before he left on a run, the DEA came to call. Inside his plane they found $5.5 million in cash. At his home, they discovered nearly $20 million worth of drugs and a small cache of weapons, including a submachine gun. They not only arrested him, they confiscated his new toy.

*****

 

 

It's well known that the airlines cooperate with law enforcement agencies. Air crews arriving in Miami on flights from drug-related destinations such as Colombia, Peru, Ecuador and Venezuela, are offered cash rewards by US Customs for pointing out passengers who did not eat or drink anything during the flight. It’s gets back to profiling. Most people eat something on a four hour flight, unless there’s a particular reason not to, such as a stomach laden with drug-filled condoms.

 

Less publicized is that the airlines themselves are encouraged to look out for and report frequent flyers making unusual journeys. Someone departing from Chicago, going to the Bahamas, on to the Caymans, then to Cali, back to the Bahamas and into Miami every week is bound to attract attention.

 

To get around ambitious airline employees, some laundrymen have friendly travel agents who ticket them on circuitous routes. Smarter laundrymen own travel agencies, pay for tickets with cash and write their own tickets to suit their own circumstances. There's never any need to arrive in Miami on a flight from Cali. He can issue himself a ticket in one name from Bogota to Rio, in another name from Rio to Paris, in a third name from Paris to London and in his own name from London to New York. That way, he is not only impossible to track, he also avoids entry into the United States from someplace suspect.

 

Travel agencies come with the added benefit of being an ideal sink. Cash can simply be funneled into the agency. Cash can be substituted for legitimate payments meaning that the client’s check can be deposited off-shore. And cash can pay for blank tickets, which are negotiable outside the country. The Orozco brothers, of Deak-Perera fame, proved the point by purchasing the Calypso Travel in New York. They opened an account at Chase Manhattan after the bank agreed to put the agency on its exemption list for reporting. At least three cash deposits were made before Chase withdrew the exemption, not because the Orozcos were money launderers, but because the bank had changed their own administrative procedures.

*****

 

 

A professional group operating out of Marseilles found they could wash funds through plastic surgery clinics, where wealthy French and Italians paid to have their bodies adjusted. It was no problem for the laundrymen to find physicians happy to up their turnover with cash from drug sales.

 

Another gang, this one working in Paris, laundered money through the European thoroughbred market. They registered race horses with the various Jockey Clubs and hired professionals to help them put their horses up for sale. Other gang members bought the horses back. The nags' names were changed after each transaction and fed through the system again. When suspicious authorities asked to inspect the thoroughbreds, they were told the poor things had tragically died.

 

Actually, the racing industry is a favorite with professional laundrymen. They hang out at small tracks, where it’s easy to make contacts with jockeys, drivers and trainers, and pay cash for tips. It’s known as "The Sydney Method," having been made famous by an Australian drug dealer who legitimized hundreds of thousands of dollars that way. He’d bribe an insider up to $5000, bet his cash on the winning horse and use the betting receipt to corroborate his cash deposits.

 

Over the past ten years, as legislation aimed at stopping the laundrymen has become more sophisticated, a new breed of laundrymen has come into the business. Respectable white collar professionals who are intellectually equipped to manipulate complex laundering schemes have been enticed with commissions ranging from 5-25 percent. Particularly where drugs are involved, the guys moving the narcotics no longer have to worry about moving the money and the guys moving the money never have to touch the drugs.

 

For many, it turns out to be a hugely lucrative sideline. A politician from Georgia found money laundering an easy way to finance an $850,000 mortgage; a California businessman got involved because washing $1.1 million through his company's account required very little effort and the $77,000 he was paid for the use of the account was too much to pass up; while Richard Silberman, a fund-raiser for Jerry Brown's 1980 presidential bid, admitted to an undercover FBI agent that he'd been making fast money as a laundryman for 20 years.

 

In New York, Eddie Antar, owner of the now bankrupt Crazy Eddie discount electronics chain, got into money laundering because it was a expeditious way of boosting his share price. Over a period of several years he siphoned cash from his business, carted it away in shopping bags and deposited it in a secret account in Israel. From there, the money was washed through a Panamanian bank before coming back to the Crazy Eddie stores in the form of checks payable to the company. Increased sales artificially inflated the company's profits. When his share prices peaked, he sold and pocketed $74 million.

 

Fast money was also undoubtedly the motivation for car salesmen in the Washington DC area who were willing to take cash from self-proclaimed drug traffickers. And sending out a message to car salesmen across the country was what the government had in mind when Larry Best and Tyrone Evans, a pair of DC cops, went undercover.

 

Cars are a favorite with laundrymen because they’re easily resold in South America. The streets of Bogota, for example, are flooded with newly imported BMWs, Mercedes and Toyota Land Cruisers which are so popular among traffickers that the Colombian police call them Narcotoys. There is also a gigantic market in Harley-Davidson motorcycles.

 

So in the spring of 1991, Best and Evans walked into Rosenthal Nissan-Mazda in Vienna Virginia and paid cash for a Nissan Maxima. A CTR was filed for $23,560, listing the buyer with the fictitious name Jerry Johnson. A few weeks later, they were back with $46,600 in cash, this time to buy an Infiniti Q45. The CTR listed the buyer under the fictitious name of Raymond Steven Smith. Next came $42,190 for a Nissan 300ZX sold to a fictitious William Thomas Jones, then $53,000 for a Jaguar Sovereign sold again to Jerry Johnson.

 

It went on like that, at several dealerships, for two years. During that time, the undercover cops testified, they regularly explained the source of their cash to be drug money and made it perfectly clear to everyone they were dealing with that they could never be associated with any of these cash payments, that false names had to be used. In all, they bought or contracted to buy 85 cars for cash, which lead to five convictions for money laundering offenses. The government then saw to it that the case was publicized in the trade press, so that auto dealers would now have to consider that any customer coming in with cash might be an undercover cop.

 

A few million dollars might have been enough to tempt some car dealers, but the amount pales by comparison with the sums that actually went through the books of a gold and coin trader in Cranston, Rhode Island. 34-year-old Stephen Anthony Saccoccia, his wife Donna, plus seven of employees of Trend Precious Metals and Saccoccia Coin were arrested on 100 counts of money laundering, with several million dollars contained in each count.

 

Saccoccia had opened a shop after leaving high school in 1973, building his business by fencing gold and coins for his teenaged friends who were stealing it from their parents. In 1985, he pleaded guilty to a federal charge of tax evasion. Following his release from prison in 1988, he began laundering money for a local Mafia family. But it wasn't until a few years later that he opened a sink to service the rival Medellin and Cali cartels, supposedly becoming the first and only laundryman ever to do business with both of them at the same time.

 

Drug money was collected at dummy jewelry shops in New York and Los Angeles, bundled as gold shipments and crated to Saccoccia's offices in Rhode Island, New York and California. He converted the cash to cashier's checks which he deposited in various company accounts. Using falsified invoices and sales receipts to explain the sudden increase in turnover, the funds were then wired out of the country, through phantom companies, to Colombia.

 

Saccoccia worked on a flat 10 percent commission. And whereas one report noted that in under 15 months he and his employees washed $200 million for the cartels, federal authorities claim that the total was closer to $750 million. In May 1993 he was convicted on 54 counts of money laundering and conspiracy, fined $15.8 million, subjected to a confiscation order for $136.3 million and sentenced to serve 660 years in prison.

 

It now turns out that Robert Maxwell also did his share of money laundering. Not that such a claim would necessarily come as a surprise to anyone who knew the flamboyant Czech born, British businessman. But it seems he did his money laundering in the States, which many Brits fund highly amusing.

 

Maxwell bought the New York Daily News in March 1991, nine months before he fell or was pushed off the stern of his yacht. Within a few days of his death, the paper filed for bankruptcy. Accountants trying to figure out his bookkeeping, discovered that he’d siphoned company money and pension funds from Maxwell Group Newspapers PLC in London and sent it to the Daily News, depositing as much as $238 million in accounts controlled by the parent company, Maxwell Newspapers. But the money didn’t stay in New York for very long. It was wired to any of several hundred other Maxwell-controlled companies, most of them designed to be inaccessible to anyone except Maxwell himself.

 

In one case, the money was used to secure a $78 million loan for the Daily News from Bankers Trusts, but only $8.45 million ever showed up on the newspapers books. In another, he borrowed $86 million from Bankers Trust for Maxwell Group Newspaper which made its way through several different accounts before coming out of the Daily News to repay a different loan to Bankers Trust.

 

With the Daily News on the verge of bankruptcy in October 1991, and one his newsprint suppliers refusing to deliver unless he was paid cash, Maxwell spun $113 million through the Maxwell Newspapers account, left it there for four days so that he could borrow enough against it to pay the supplier, then wired the money out, leaving the newspaper with $376,000 less than it had before he brought the laundered money in.

 

Undoubtedly, Maxwell ran an audacious scam. But the prize for irrefutable moxie must go to the money laundering Rabbi.

 

Abraham Low, an ultra-orthodox Los Angeles clergyman, was arrested by the FBI in early 1993 when they uncovered a $2 million laundry operation that was soon dubbed, "the holy network." Taken into custody along with a Hollywood physician named Alan Weston and Bernadette Chandler, a woman known to the FBI simply as Charlie, his synagogue was having financial difficulties. Realizing that his congregation stood to lose $18 million in bad investments overseen by Low, he claimed all he was trying to do was keep the synagogue solvent.

 

The FBI had already stumbled onto Low during an investigation into a stolen check racket. In September 1991, his wife went into a bank and turned a single $500,000 cashier's check into four smaller checks. When the bank discovered that the original check was stolen and forged, they called the police. Agents learned that Low had been combining cashier's checks pilfered from a bank in West Los Angeles with phony loan papers to show a legitimate source for the funds. Using bank accounts held by various charitable organizations, hence the "holy network" tag, he was laundering large cash deposits. Chandler came into the picture when Low purchased a stolen $500,000 check and two diamond rings from her for $30,000. After Chandler set up a $1.5 million money laundering deal with an undercover agent, Low and Weston bragged that they could provide the same service. A special agent, pretending to be a loan-sharking drug dealer named Ronnie, was introduced to them by an FBI informant. Low and Weston offered Ronnie use of their sink, assuring him that they were prepared to handle substantial amounts on a weekly basis. Low even outlined the system, explaining that money delivered to trusted members of his congregation, in this case diamond dealers, could be washed through those charitable accounts and then wired anywhere in the world. Ronnie agreed to a test transaction and provided $10,000 in cash. The moment the deal was done, the FBI moved in.

 

If nothing else, a money laundering Rabbi must be proof positive that laundrymen these days don't fit any of the usual hoodlum stereotypes. They are not machine-gun toting men in black shirts with white ties. Nor are they to be confused with street-level drug dealers, who are predominately black. For the most part, they don't have previous criminal records. In many cases, they are people who might not otherwise consider crime but who are keenly attracted to a quick-buck, clean-hands hustle. Working on their own account, or on behalf of their drug-dealing, fraudster, smuggling, kidnapping, arms-dealing, terrorist, extortionist and tax-evading friends, these people have turned money laundering into the most sophisticated element of organized criminal activity.

 

White, affluent members of the professional classes have turned money laundering into the world's leading financial growth industry.

*****

 

 

 

The Money Laundering Control Act of 1986 upped the stakes for professionals by making money laundering a criminal offense when associated with any crime. The theory is, because nine out of ten crimes are profit-motivated, to do something about crime society must go after the profit. If someone merely wants to move their own money through a whole series of jurisdictions, in and out of shell companies, to see what comes out the other end, that's their business. But if someone is doing it in conjunction with insider trading, fraud, drug trafficking, income tax evasion, theft, whatever, then money laundering now gets tagged onto the charge sheet. It is very much the flavor of the month, the in-vogue catch-all offense, taking over from such old favorites as income tax evasion and conspiracy to defraud.

 

The government used the act to get the founder and former president of the Phar-Mor discount drugstore chain. Indicted for defrauding investors of $1.1 billion and embezzling a further $1.1 million, the charges against him included 118 counts of money laundering.

 

Just as they used it to get William Aramony, the man who’d turned The United Way of America into the nation’s biggest charity. Over much of the 22 years he served as president, he defrauded the charity of more than a million dollars to support a lavish lifestyle. His seven year sentence was based on convictions for fraud, tax evasion and money laundering.

 

Not to be outdone by a laundryman rabbi, there was the Rev. Martin Greenlaw, a Roman Catholic priest in San Francisco. When parishioners noticed that he was buying property, which was hardly in keeping with his vow of poverty, they contacted the archdiocese. The DA was called and the result was an indictment against the priest for embezzlement, grand theft, tax evasion and 10 counts of money laundering.

 

They got "Chuckie the Meat Man" Cugliari for money laundering. A Trenton, New Jersey meat broker, he’d engineered a pyramid scheme that cost his investors as much as $80 million. Selling single shares in his company for $25,000, he’d promised an annual return of 40 percent on contracts for the delivery of meat and seafood. But instead of investing the money, Chuckie ran a Ponzi scheme, using money from new investors to pay dividends to old investors. It’s fraud. And these days, it’s also money laundering.

 

When Marcus Arthur Rodriguez, deputy director of the Los Angeles County Museum of Natural History, was arrested for embezzling more than $2 million, they charged him with five counts of grand theft, two counts of misuse of public money, one count of forgery, two counts of conspiracy and 12 counts of money laundering.

 

And when Richard Hersch, president of the tax preparation service Quick Tax Dollars, was convicted for filing 431 falsified tax returns and claiming more than $1 million in refunds, the jury agreed with the prosecution that he’d laundered the proceeds through several bank accounts and sent him to jail for five years.

 

But most of all, they got Heidi Fleiss for money laundering.

 

A 28 year old highschool dropout, she was arrested in June 1993 after a sting operation in Beverly Hills rounded up some call girls. Because they were working for Fleiss, she was charged with pandering and a drug violation. She pleaded not guilty.

 

It’s likely that none of this would have mattered to anyone if she’d been living in Eufala, Alabama, but the "Hollywood Madame" was a tabloid’s dream come true. As the story of her life unfolded --- told in vivid detail by just about everyone who’d ever met her and lots of people who hadn’t --- it was revealed that she had a reputation for being into anything and everything as far as sex was concerned, gorgeous girls working for her and famous clients. Among them were actor Charlie Sheen, the former owner of the Denver Nuggets and part owner of the Houston Rockets Sidney Shlenker, Mexican businessman Manuel Santos, Australian tycoon Kerry and real estate magnate Bob Crow.

 

Capitalizing on her 15 minutes of fame, she encouraged more headlines by posing for magazines, selling interviews and opening Heidi Wear, a Pasadena lingerie boutique.

 

But the fun was short-lived. In July 1994, a federal grand jury considered her case. They were told that her call girls, some of whom were charging up to $10,000, kicked back 40 percent as a commission to her. The money was put through family accounts to hide its source. She hadn’t filed income tax returns for 1991 or 1993 and in 1992 only declared $33,000. It then came out that her father, Dr. Paul Fleiss, a 60 year old Beverly Hills pediatrician had deceived a bank into thinking that he was the purchaser of a $1.6 million home that had once belonged to actor Michael Douglas, when she was actually buying the house with her laundered money. So a grand jury indicted daughter and father for money laundering.

 

While the state case against her brought convictions for pandering and a three year sentence, federal prosecutors quickly put her in an untenable corner by working out a deal with her father. If convicted of the original charges, he faced a maximum sentence that exceeded 100 years. So on the promise that he would not have to testify against Heidi, Paul Fleiss pleaded guilty to one charge of conspiring with her to launder money and two charges of making false statements to banks. He also agreed to surrender $375,187 which were the proceeds from the sale of the house. In return, he was sentenced to one day in prison, fined $50,000, ordered to serve three years probation and to perform 625 hours of community service.

 

Heidi refused to plea bargain and mounted a defense. Part of it was based on her claim that ex-boyfriend Bernie Cornfeld had regularly been sending her gifts and that she therefore didn’t need money from prostitution. Cornfeld, of IOS fame "discovered" Fleiss when she was still a teenager. Over the course of several years, while living in Beverly Hills, he jet-setted her around the world. But Cornfeld’s attention span with ladies was famously short. And anyway, tax problems with the IRS drove him into European exile. It’s true that he stayed friends with her, and even though he was the object of an IRS probe right up until the time of his death, he did send her some money. But not $1.6 million. He hadn’t seen that much in years. And anyway, what little he sent her was mainly to help pay legal bills after she’d been arrested.

 

The jury convicted her.

*****

 

 

When Alex Daoud, the former three-term mayor of Miami Beach, was accused of taking bribes, a grand jury indicted him for racketeering, extortion and money laundering.

 

When California State Senator Paul Carpenter and lobbyist Clayton Jackson were arrested on political corruption charges, because they’d tried to make bribe money disappear, prosecutors threw in money laundering.

 

But there have been occasions when a scam has been constructed specifically to launder money and the statutes have been shoved conveniently to one aside. By coincidence, most of them involve politicians. This is not to insinuate that any specific politician has taken part or is otherwise indictable. But somewhere along the way, a politician or two may have benefited.

 

During a routine audit of San Francisco’s 1991 mayoral race, election officials uncovered several suspicious contributions. Much to their surprise, the source of the funds appeared to be the San Francisco 49ers. It turned out that the team had, in fact, made 30 contributions which they clearly knew were questionable because they washed the funds through 30 different individuals in order to circumvent the city’s contribution limit of $500 per person. The 30 individuals were later reimbursed by the 49ers. The club and its chief financial officer got off with a $60,000 fine.

 

The company that stages the LA marathon did much the same thing, although they fared less well. After admitting in 1994 to laundering $73,000 in order to make illegal campaign contributions to members of the city council and former Mayor Tom Bradley, Los Angeles Marathon Inc. was fined $436,250.

 

However, money laundering carries a totally different cache if you happen to be a Congressman.

 

US Senator Rick Santorum, a conservative Republican from Pennsylvania decided he could help the party’s cause in the 1996 elections by setting up a "leadership fund." Usually the prerogative of more senior legislators, it is essentially a discretionary account through which contributions are funneled.

 

The law stipulates that no individual can give more than $2000 to a Senate candidate every six years. As Santorum is not up for reelection until the year 2000, contributions to his leadership fund legally evade those federal contribution limits.

 

So that no one should think he was trying to hide anything, it’s only fair to point out that he very publicly announced the creation of the fund, explaining that he was using it to support GOP campaigns and pay for his travel expenses.

 

It is, arguably, money laundering. Although in this form it seems to be perfectly illegal.

 

Apparently, there are 50 leadership funds in alive and well and living on Capital Hill.

 

 

 

*****