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
Listen to the pugnacious Ecuadorian fellow with the New York accent, whom shady Miami bankers tolerate with a nervous smile. "Miami has a well-deserved reputation for money laundering," says Charles Intriago, a former federal prosecutor who has built a lucrative business on that experience. "There are four major categories of money launderers -- the drug trafficker, the fraudster, the corrupt foreign officials that since the days of Batista and Somoza have found receptive Miami banks to store their stolen money, and the sun-loving mobsters from the North."
Intriago heads the Miami-based Alert Global Media, which publishes the Money Laundering Alert newsletter, a subscriber-based publication that explains in layman's terms changes in money-laundering regulations and tracks enforcement actions. He's become the much-quoted resident expert on this topic and owes at least part of this cachet to what the Washington Post in 1981 termed "the Wall Street of the underground economy."
The early Eighties was the cowboy era in Miami, a place also sometimes called America's last frontier town -- the frontier of surreality, quite often. Cops killed drug dealers and stole their goods. Dealers hung out all day near pay phones at strip malls in Kendall, waiting for their pagers to go off. Miami Beach retirees smuggled drugs in their purses and laundered a few grand a week at their local banks. A modest deli in Homestead kept Dom Perignon in stock for the smugglers who liked a little bubbly with their bologna sandwiches.
This was largely a young man's game -- from the billionaire thirtysomethings running empires from Medellín, Bogotá, and Cali to the hotshot attorneys defending them in courtrooms, Miami's own "White-Powder Bar." The small-timers were mostly young, too, as were the cops and the law-enforcement agents. Even many of the money-movers were relative youngsters, part of the instant international banking community that sprang up along Brickell Avenue. Everything was fast, loose, and obvious. "The only thing to compare would be Chicago in the 1920s," observes Michael McDonald, a former special agent in the IRS's criminal investigations division, who worked in Miami from 1971 to 1998. In 1979 he cofounded Operation Greenback, the first multiagency money-laundering task force ever assembled.
The groundwork had been laid in the Seventies, when the nascent Colombian cartels began seriously pumping drugs and money into the local economy. Up to that point, according to McDonald, the local drug trade consisted mostly of marijuana transported by traditional American mafia types and Cuban fisherman in the Keys who had been shut out of fishing Bahamian waters. "The Keys became the smuggler's paradise," he recalls. "The term square grouper came from that time. Coke was right on the heels of that. The Medellín guys liked Miami. They came here and partied."
Also in the Seventies, the Central Intelligence Agency shut down its vast Miami field station, which had concentrated largely on aiming exiles at Castro's Cuba, as well as other not-so-secret missions in Latin American and Caribbean countries. That left in the lurch hundreds of Cuban-American men with training easily applicable to the drug trade, such as delivering payloads in boats and small airplanes, and methods of disguising the sources of funding.
South Florida immigration patterns partially prepped local banks for a startling lack of curiosity about their customers. The money always arrived first -- flight capital -- although sometimes this was a euphemism for loot liberated from poor countries by their leaders. "I'd like to have a nickel of every dollar in real estate and bank holdings by the Miami paramours of corrupt Latin American officials," Intriago says. "Gimme five percent of the mistresses' money. I'd be a rich man."
At the turn of the Miami Vice decade came the Mariel boatlift, the Liberty City riots, a record-breaking murder rate, a sagging national economy, and the beginning of the end for major white-collar employers such as Eastern Airlines. "We were reeling from one kind of a crisis to the next," recalls Bill Cullom, president of the Greater Miami Chamber of Commerce in 1981.
Interest rates were high, but real estate was booming. Real estate expert Charles Kimball developed an insanely intricate system for tracking money launderers by cross-referencing various property transactions, a talent he loaned to the FBI and other agencies. "Citizen Kimball," as his friend and sometime collaborator Michael Cannon calls him, recorded transactions on index cards and then ordered them largely through an intuitive genius and "a phenomenal photographic memory."
Cannon, now the managing director of Integra Realty Resources South Florida (Kimball succumbed to cancer this past August), describes the game as fascinating. Drug profits were clearly pumping up the price of property. The money was routed in different ways: through law firms, offshore corporations, and banks. "They used to walk into the banks with suitcases full of cash," Cannon remembers. "Then they purchased legitimate real estate with contraband money, which led to the rule that anything over $10,000 had to be reported."
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.
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."
In 1982 Great American Bank of Dade County became the first financial institution to fall to Operation Greenback. Former Great American officials were charged with laundering some $96 million in drug profits. Kattan, already convicted of possession of cocaine with intent to distribute, was indicted in the Great American Bank case for his role in a scheme to wash drug money through cashiers' checks, wire accounts, and phony loans.
Also in 1982 The Economist of London noted that 44 American banks based in Miami received their charters allowing them to engage in international banking, compared to just ten in 1978. During the same period, 36 foreign banks opened branches here. Some banks were even bought with drug money.
Ray Corona was emblematic of the era. In 1985, when a grand jury accused the 37-year-old of helping smuggler José Antonio Fernandez buy a majority share in Sunshine State Bank in South Miami, Corona was chairman of the bank. He wore a Rolex and drove a Rolls-Royce, among several other luxury cars. He placed former Miami City Manager Howard Gary on the payroll as a bank director. Gary returned the favor, according to the Miami Herald, by giving him "a card identifying him as a special assistant to the city manager." He punched out a lawyer and hired thugs to shake down uncooperative clients. His bank allegedly laundered more than $100 million for Willy Falcon and Sal Magluta. When indicted, Corona blamed Scarface for portraying Cubans as criminals. "It became fashionable to think that anyone who is young and Latin and out with a girl at night and is rich and has a Rolls-Royce has got to be a hood," he told the Herald.
Cases like those slowly began to sink in to the consciousness of the banking community. The heat drove the launderers from dumping raw cash to more sophisticated means, such as wire transfers and offshore banks. "Seven years after Kattan was arrested, all the guys like him were based in Colombia," McDonald says. "You had nickel-and-dime financiers here."
The Eighties was the time of high-profile defense attorneys like José Quiñon, Roy Black, and Al Krieger, among many others. "Everybody wants to climb the highest mountain there is," Quiñon said after being hired to represent Medellín cartel honcho Carlos Lehder Rivas at his federal cocaine conspiracy trial in 1987. "This is the type of case that represents to us the highest mountain, and we're going after it. This is our Everest."
In the Nineties, however, the feds began to prosecute defense attorneys such as Michael Abbell, Peter Baraban, William Moran, and Mel Kessler, who had gone too far over the line. This created a secondary market of defense attorneys representing defense attorneys, and has soured Miami criminal-defense lawyers on drug clients. This past August, Quiñon dropped out of a case representing Cali cartel founder Gilberto Rodriguez-Orejuela because he feared the federal government could charge him criminally for accepting legal fees from Orejuela, money the government considers to be drug proceeds. Thus Rodriguez-Orejuela will end up being represented by a lawyer appointed by a federal judge -- and paid for by the public.
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