Awash in a Sea of Money

Jim Angleton, Jr., was in the mortgage business in the early Eighties, and his family owned a fair amount of real estate along the Biscayne Boulevard corridor. "I once had a Colombian walk into my office with four Publix shopping bags filled with twenties, fifties, and hundreds," he remembers. "He said there was $400,000 in them." The Colombian wanted to place the money in a real estate mortgage that, once paid, would allow him to take the freshly laundered cash back onto the street. "I sent him packing," Angleton says. "Later that day, here he is walking down Biscayne and he tells me that Capital Bank on 36th Street took the money and opened an account for him."

A Florida International University economist estimated in 1981 that Greater Miami's underground economic activity was worth $11 billion a year, about one-third of the area's total output. Most of that was probably drug-related, he surmised. In 1989 then-U.S. Attorney Dexter Lehtinen told the New York Times that from 1986 to 1989, $220 million in cash was spent on cars in Miami. That compared to $24 million in Jacksonville and Tampa in the same period. As much as twenty percent of local real estate was being purchased in cash, the paper reported. This slowed down after bank-reporting laws were finally enforced. (In 1970 Congress passed regulations requiring banks to provide the Treasury Department with information about the depositor for cash transactions of $10,000 or more. A court challenge delayed implementation of the law by four years, and when it did take effect, it was rarely followed by banks or enforced by the government.)

Only when Miami's image began to suffer major damage, such as the infamous 1981 Time magazine cover story "Paradise Lost," did civic boosters, led by then-Knight Ridder CEO Alvah Chapman, begin to lobby for more federal law enforcement. Vice President George Bush's South Florida Task Force on drugs arrived in 1982. That same year Operation Greenback netted its first big local bank, though money laundering wasn't declared a federal crime until 1986.

In the meantime, an astounding amount of money flowed through Miami. "In 1980 we had twelve people depositing between $250 and $500 million a year [each] in the Miami banks," McDonald recounts. "In 1979 there was a $7 billion [cash] surplus from the Miami banks. Absolutely unconscionable levels of money were pouring in here." In 1985 the cash surplus at the Miami branch of the Federal Reserve totaled $6 billion, still the largest surplus by far in the nation, but decreasing instead of increasing. By the late Eighties the figure had declined to some $4.8 billion per year as tighter regulations and more aggressive law enforcement caused drug lords to shift some of their laundering operations to Los Angeles.

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The story sounds like a joke. "A guy came into a bank with a million dollars in his car," the IRS's Michael McDonald begins. "He went in to get the guard to help him carry it in, and when he came back out, the car had been stolen.

"'Want me to call the cops?' the guard asked.

"'No,' the guy says. 'Call me a cab.'"

The story has been told with various twists, but one thing remains consistent: The guy with the million in the trunk was Isaac Kattan Kassin, Miami-based money launderer for the Medellín cartel and other drug organizations. He specialized in changing grubby drug dollars into pesos in the black-market exchange for Colombian drug dealers until he was sent to jail for 30 years following cocaine and currency convictions. The million, according to McDonald, was only a fraction of the money -- up to half a billion a year -- Kattan was laundering from a couple of condominiums overlooking Biscayne Bay.