gnukid
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Buried loot a mystery for authorities
http://news.yahoo.com/s/ap/20080728/ap_on_go_ca_st_pe/buried...
By MATT APUZZO and ALICIA A. CALDWELL, Associated Press Writers 26 minutes ago
WASHINGTON - The businessman arrived at the Treasury Department carrying a suitcase stuffed with about $5.2 million. The bills were decomposing,
nearly unrecognizable, and he asked to swap them for a cashier's check. He said the money came from Mexico.
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Money like this normally arrives in an armored truck or insured shipping container after a bank burns or a vault floods. It doesn't just show up at
the visitor's entrance on a Tuesday morning. But the banking habits of Franz Felhaber had stopped making sense to the government long ago.
For the past few years, authorities say, he and his family have popped in and out of U.S. banks, looking to change about $20 million in buried
treasure for clean cash.
The money is always the same — decaying $100 bills from the 1970s and 1980s.
It's the story that keeps changing:
_It was an inheritance.
_Somebody dug up a tree and there it was.
_It was found in a suitcase buried in an alfalfa field.
_A relative found a treasure map.
No matter where it came from or who found it, that buried treasure stands to make someone rich.
It could also send someone to jail.
___
Felhaber is a customs broker, a middleman.
His company, F.C. Felhaber & Co., is just minutes away from the bridge between El Paso, Texas, and Ciudad Juarez, Mexico. Tens of billions of
dollars of Mexican goods cross that bridge each year, aided by people such as Felhaber who navigate the customs bureaucracy.
Customs brokers don't own the stuff that comes into the United States. They just make sure it gets here.
So it is with the $20 million. Felhaber says the money is not his. A Mexican relative, Francisco Javier Ramos Saenz-Pardo, merely sought help
exchanging money that had been buried for decades, Felhaber says.
"To be very clear on this matter: In the beginning, I was not told what it was," Felhaber said in one of several telephone interviews with The
Associated Press.
Money petrifies after sitting underground that long and Felhaber said it looked like a brick of adobe. The Treasury will exchange even badly damaged
money, but Felhaber said Saenz-Pardo did not want to handle the process himself.
"Imagine a Mexican family bringing money that is damaged and the government calling it a drug deal," Felhaber said.
If the goal were to avoid unwarranted attention, he went about it all wrong. Rather than making a simple — albeit large — exchange at the Treasury,
Felhaber allegedly began trying to exchange smaller amounts at El Paso-area banks, raising suspicion every time.
The first stop was the Federal Reserve Bank in El Paso, where authorities say Felhaber appeared with an uncle, Jose, and an aunt, Esther. In her
purse, Esther carried $120,000. She told bank officials there were millions more, discovered while digging to expand a building in Juarez, according
to U.S. court records filed by U.S. Immigration and Customs Enforcement.
Banks normally refer such requests to the Bureau of Engraving and Printing, an arm of the Treasury. But employees worried that with so much cash, the
three might be robbed on their way home. So, the bank accepted the money and wired $120,000 to an account in his uncle's name, Jose Carrillo-Valles,
according to a government affidavit.
Felhaber was back at it again weeks later, this time at a Bank of America branch. Customs officials say he unsuccessfully tried to persuade a bank
vice president to dispatch an armored truck to the Mexican border to pick up millions of dollars.
Felhaber denies that conversation took place. But he is tough to pin down on details. At times he seems specific on a point ("There is a $20 million
inheritance,") only to contradict himself minutes later, saying the amount is "nowhere near that" and he has no idea where the money came from.
Soon after the Bank of America visit, a man bearing a striking resemblance to Felhaber walked into a Bank of the West branch. This time, however,
authorities say the customer identified himself as Ken Motley and said he discovered millions while excavating a tree in Chihuahua, Mexico.
Bank employees refused to exchange any money, despite two follow-up phone calls — once with a Spanish accent, once without — try to set up an
exchange. try to set up an exchange
The mysterious Ken Motley also appeared at the First National Bank, telling employees that a friend had discovered $20 million buried in an alfalfa
field, investigators say.
Felhaber says he is not Ken Motley.
Customs investigators say a Bank of the West employee identified Felhaber's picture as that of Ken Motley.
"That's an absolute lie," Felhaber said. "That would be a horrendous miscarriage of justice."
It's unclear which transaction caught investigators' attention. Most of the tens of thousands of exchanges of mutilated money each year are routine.
Natural disasters create a lot of inquiries. Children of the Depression have kept money out of banks, only to see it eaten by rodents in their attics
or destroyed in fires. A surprising number of people accidentally shred greeting cards with money inside.
But authorities say there are warning signs that trigger investigations. Making a series of small exchanges is one. Bringing mutilated money from
abroad is another.
"That is one of the things we are extra concerned about : This process being used to launder money from illegal activities," said Leonard R. Olijar,
the chief financial officer of the Bureau of Engraving and Printing. "That's one of our factors that we use to make a case suspicious."
Immigration and Customs Enforcement agents questioned Felhaber in October 2005. According to a government summary of that interview, Felhaber said he
believed the money was the result of a 1970s Mexican land deal. The money was buried in a coffin, he said, until Saenz-Pardo — the relative who
brought him the money in the first place — discovered a map leading him to the buried treasure.
Felhaber said he didn't want to do anything illegal and was merely getting a cut of whatever he exchanged.
He now says he was mistaken in his interviews with investigators.
"I told them, 'I suspect this is where it's from but I didn't know,'" he said. "They take you to your word like you're supposed to remember every
single thing every single time."
___
Maybe it was the visit from investigators or maybe someone realized the bank visits weren't working, but Felhaber apparently changed strategies.
In January 2006, the Bureau of Engraving and Printing received a package containing about $136,000 from Jose Carrillo-Valles, Felhaber's uncle.
Felhaber's business was listed as the return address. The letter explained the money had been stored in a basement for 22 years.
Though customs officials were suspicious by then, there was no clear evidence of a crime, just a lot of unanswered questions. So, two months later,
the Treasury mailed a check, which was deposited into Carrillo-Valles' account.
Following the money, investigators interviewed Carrillo-Valles and his wife. Each denied ever sending or receiving the money, according to a
government affidavit.
As for the $120,000 wired to Jose's account from the Federal Reserve a year earlier, they allegedly said it was an inheritance. Esther said Jose's
mother had recently died.
Authorities don't believe the inheritance story. For starters, they say Jose's mother was still alive when the $120,000 was exchanged. They also
traced a wire transfer from Jose's account to someone named Saenz-Pardo shortly after it was deposited.
Customs investigators now believed Carrillo-Valles was acting as an intermediary, taking a cut of the money and sending the rest to Saenz-Pardo or
someone else in Mexico.
Twice, reporters called Carrillo-Valles on his cell phone to ask about the arrangement and confirm his discussions with investigators. First, he said
he did not speak English. When a Spanish-speaking reporter called back, he said he could not hear her, and hung up.
In April 2007, the case moved from being suspicious to becoming a criminal investigation. Immigration and Customs Enforcement officials called the
Justice Department, saying Felhaber had just arrived in person at the Bureau of Engraving and Printing with about $1.2 million.
It's not illegal to find money. Depending on where it's found, there might be a bureaucratic process to follow or taxes to be paid, but the discovery
itself is not a crime.
There are strict rules, however, about bringing money into the United States. Import documents identified the $1.2 million as belonging to Jose
Carrillo-Valles. Based on their investigation so far, authorities believe that was a lie — a violation that carries up to five years in prison.
But Washington federal prosecutor William Cowden decided to wait. Maybe Felhaber would return with even more.
It paid off. This April, Felhaber was back at the Treasury, this time with a suitcase containing $5.2 million. Investigators say they have found no
import documents filed for this deal, a violation of cash smuggling laws that also carries up to five years in prison.
Prosecutors moved in. Felhaber's two Treasury visits gave them probable cause to seize the money — both the $1.2 million and the $5.2 million.
They told a federal magistrate in June that they suspected it was all drug money that had been buried or hidden inside a wall for decades.
"Given that the money is coming north from Mexico, that both conflicting and c-ckamamie stories have been told about its origins, and that all the
stories of how it got to be found are fantastical, I strongly suspect that the Felhaber currency is the proceeds of illegal bulk narcotics sales," ICE
investigator Stephen A. Schneider told the magistrate.
___
Felhaber says he's still not sure what all the fuss is about. At times he says he has no idea where the money came from, but he is always certain it
has nothing to do with drugs.
None of the documents filed in federal court accuses Felhaber or his relatives of being involved in drugs. They leave open the possibility that
somebody merely came across a cache of drug money, forgotten or abandoned in the Mexican desert.
In the coming weeks, the Justice Department plans to seek forfeiture of the seized $6.4 million. That means Felhaber and his family will have the
opportunity to come to Washington to ask for their money back.
If they do, they'll have to explain where it came from. And they'll have to sort through some of the inconsistent stories for a federal judge.
Felhaber bristles at the suggestion there have been inconsistencies.
"The story has never changed," he said. "I don't know how it's changed."
Reached by telephone Monday, he said he was aware of the looming forefeiture action but could not discuss whether his family planned to challenge it.
But he said "the truth will come out" about the money eventually.
Cowden, the federal prosecutor, said he doesn't know what to expect.
"Some of these cases, nobody ever comes forward," he said.
If so, the buried treasure will become government property.
Or at least some of it. Perhaps there is another $14 million out there, muddy and waiting to be exchanged.
Does Felhaber know if there's any money left?
On that, it's hard to get a straight answer.
___
Associated Press writer Alicia Caldwell reported from El Paso, Texas.
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Cypress
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He found the cash. It's his. The govt. wants to take it away from him. 
Taking something that doesn't belong to you is theft.
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thebajarunner
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"Theft" is also spelled IRS
When it all gets sorted out the taxman shall arrive.
Trust me.
When you turn up with cash, the US tax law says the burden is on you to prove it is not income subject to taxation.
If you cannot produce proof, then "poof", so to speak.
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Skeet/Loreto
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And a few years ago the Ex President of Mexico arrived in an American Airport in a Cessna 421 completely filled with Pesos which he exchanged for
Dollars and the money went to Houston Investments.
Skeet/Loreto
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The Sculpin
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Statute of limitations on tax returns is 3 years federal, 4 years most states. Statute on fraud is 7 years. If you assume the income was earned within
several years of when the cash was printed, you're way beyond the statute. Home free.
It does raise some interesting issues on either governments ability to question where the money came from.
DB Cooper?
Whoa there, Cowboy - pull back on those reins!
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thebajarunner
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Check your statutes
Your three and four year citations are as to filed returns.
25% understatement automatically kicks in fraud- don't think your 7 years would cover that, but not positive.
And, of course, you are assuming these folks can claim that they filed the returns, had the $$$ for the years as the statutes tolled, them brought the
cash forward.
(my guess is the statute begins to toll after the cash is brought onto the playing field)
Make that argument stick and we all need to have a copy of your card so you can represent us with Uncle Sugar....
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BajaBruno
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I think the issue here is that the money entered the country from Mexico without being declared on a Customs Form 4790; or, the form (filed under
penalties of perjury) was fraudulently filed.
A little case history for those inclined to know more...
United States v. $39,000 in Canadian Currency, 801 F.2d 1210 (1986) “In an actual forfeiture proceeding, the government bears the burden of going
forward, and must show probable cause that the property subject to forfeiture is involved in criminal activity. Once this is established, the burden
shifts to the claimant to prove by a preponderance of the evidence that the property is not subject to forfeiture. These principles illuminate the
burdens at the pleading stage. It is the government that is attempting to deprive a person of property. It is therefore the government's burden to
satisfy the initial pleading requirements by specifically alleging the circumstances underlying the claim.”
In United States v. Beras, 183 F.3d 22 (1999) a federal appeals court let stand a conviction for fraudulent non-reporting and making false statements
to Customs, but found that the government seizure of the entire $100,000 that was being transported was "a miscarriage of justice" under the 8th
Amendment prohibition of excessive fines.
In UNITED STATES v. [about six million dollars] the courts found that the $6 million forfeiture was proper when the defendants had laundered about
$242 million in eight months through a Florida bank to Columbia, ostensibly from sales of "agricultural products, raw materials, etc.", though the
depositors had no business licenses of any type and the money was delivered in flight bags, cardboard boxes, and suitcases. Drug agents had wiretap
and surveillance evidence that made it quite clear these were illegal drug sale profits.
In an older case dealing with IRS proceeding against cash carried by resident aliens, Garzon v. United States, 605 F. Supp. 738 (1985), Garzon, a
Columbian national, was stopped by police with $91,000 in his trunk and a rather shaky story about what it was for. IRS seized the money for back
taxes, assuming it was from illegal trade. At trial Garzon testified to an elaborate story of Columbian inheritance and numerous flights by an
associate to bring the money incrementally into the US. Form 4790’s were filed by the associate, but unknown to Garzon, and Garzon explained his
false statements to law enforcement on the basis of trying to protect the associate from liability for failing to file the Form 4790. The court held
that the IRS screwed up, Garzon, as a non-resident alien, was only subject to taxes for income from a trade or business, and as such was not liable
for taxes, and the money had to be returned.
There are lots of cases that derive from misstatements on Form 4790, but the more recent cases seem to take a more forgiving attitude, particularly
when the government is deficient in its burden to show that the money was illegally obtained. The courts make clear that the only obligation of the
person crossing the border is to complete the form—for the government to properly seize the money they must show criminal origin, and silence or even
conflicting statements by the entrant cannot establish that. Answers they don’t like may trigger a seizure, but that does not equate to a forfeiture,
though it may involve some court costs.
Christopher Bruno, Elk Grove, CA.
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thebajarunner
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No argument there, that is law I have not researched.
I do know that whatever is left over after seizures and forfeitures will no doubt be tightly scrutinized by the tax man, and if it is determined that
the money was obtained in prior years the penalties and interest could wipe out all the remainder.
The Tax Man is a very vigilant character...
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