By Ryan Yousefi
By Chuck Strouse
By Terrence McCoy
By Terrence McCoy
By Terrence McCoy
By Michael E. Miller
By Kyle Munzenrieder
By Michael E. Miller
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.
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.
McDonald is never at a loss for Miami cocaine anecdotes. "It's dramatic when you see people standing in line [at a bank] with boxes of money on dollies and a deposit slip in their teeth. People joke about that, but that's real," he told Frontline for its "Drug Wars" series. "We had people walking in with rope-handled shopping bags and deposit slips going into banks. The drug profits in Miami blew the economy right out the window. I could go into an automobile dealership and if I was looking for a car that was a popular car and I wanted to negotiate the price down.... I had no chance, because the guy behind me with a briefcase full of cash was willing to pay market price for it. There's one story where an individual trafficker called down to the local Rolls-Royce dealer and said, 'Do you have any white ones?' I love this story. It's true. 'Do you have any white ones?' 'Yes.' 'Bring a couple by. Let me take a look at them.' Brought a couple by, his girlfriend liked one. He gave the guy a couple of shoeboxes of cash for the sales price. Now, anybody can negotiate a few bucks off the sticker price, but they knew what they had. They called the guy up, and they said, 'Look, you were $2000 short.' 'Not a problem. Come on by.' The guy came by, gave him $2000 plus a few bucks as a tip for the inconvenience. And that was the way things were done."
Veteran federal prosecutor Dick Gregorie also spoke with Frontline: "We are talking about billions of dollars every year in liquid cash. Well, that was the basis of money laundering in those days. They would take the cash proceeds from all these narcotics sales and they would bring it to the bank. Bank employees would sit in the cellar counting bill after bill after bill and put it into someone's bank account, which then would get wire-transferred to Colombia. They've [become] far more sophisticated than that now.... What's happened is that the money launderers have been able to develop businesses which are cash business, [for example] restaurants. Jewelry has become a great way to launder money. If you go and look at some of these businesses [throughout Miami], nobody goes in them, nobody goes out of them. We had a baby store that literally had no parking in front of it. Yet when we looked at the receipts, they were recording several million dollars a month going into their accounts. Well, we knew it wasn't from the sale of baby clothes. Nobody could even park there to get in."