Steve Martini - The Enemy Inside

“Mr. Betz is in the federal penitentiary at Florence, Colorado,” said Grimes.

“Supermax!” Proffit almost said, “I know,” but he didn’t. Instead he bit his tongue. Florence was dubbed the “Alcatraz of the Rockies,” where the feds sent the worst of the worst, tight controls, stories of complete isolation. From everything that Proffit had read, it was the one thing that didn’t make any sense.

Betz was a banker. At one time he worked for one of the large Swiss banks with branches in the United States. That was what got him in trouble, the charge that he had conspired with some US deposit holders to conceal overseas profits from the tax man. It was a white-collar crime, but he was doing time in the tightest maximum security prison in the United States.

“What did the man do? This guy Betz? You’ve got to do something bad to get sent to Florence.” He was hoping Grimes might tell him.

“You don’t need to be concerned about that. You can look it up later.” Grimes knew he would. She also knew that Betz wasn’t in Florence because of anything he’d done. The government put him there to prevent any harm from happening to the man, and not because they loved him. It was to avoid the public fallout that they believed would occur should he die in prison. Florence was the only place of incarceration within the federal system where they could adequately protect him and, at the same time, keep him from talking to anyone else. Betz had what a few of her colleagues on the Hill were now calling the Midas key. They were trying to deal with him, to put closure on the entire affair. The fear was that sooner or later some federal judge might cut him loose, or worse, reduce his term and send him to a minimum security institution, where if he got into an argument or crosswise with one of the gangs, another inmate might kill him. Even the fear that he might fall down a flight of stairs had some members of Congress walking the floors at night.

“Mr. Betz requires the assistance of a good criminal lawyer,” said Grimes. “He doesn’t yet know it, but he’s about to become involved in some rather complicated negotiations.”

“What kind of negotiations?”

“As they say in the military, that’s beyond your pay grade,” said Grimes. “All you have to do is carry the message. We want Mr. Madriani to offer his services. Betz has no lawyer at the moment. Tell Madriani he will be well paid for his services, if he cooperates.”

“What makes you think he’ll do it?” said Proffit.

“Trust me. He will.”

“How much is he being paid?” said Proffit. “He may want to know.”

“He won’t. We have it on good authority that he’s been dying to talk to Mr. Betz for some time. This is his chance.”

“And because of this you think he’ll file for the judgeship?”

“Even if he doesn’t, he’ll talk to Betz.” With that, Grimes hung up in his ear.

You asked about the source of this cash.” It is getting late, nearly midnight and Korff is still telling us about the dealings of his old employer, Gruber Bank.

“When you are talking about the PEPs, politically powerful people who are carrying cash to the bank, there are generally two sources that you look for. Either the person has looted his country’s treasury, which happens more often than you would like to think. But usually that is limited to the third world. Or the PEP is being bribed by some foreign entity, a corporation, perhaps a wealthy individual, or some other country.

“It is the reason why the PEPs are so much trouble. They show up with cash. You don’t know the source. Even if they claim it is legitimate, how do you know? There is no way to prove it.”

“But you said Gruber allowed these PEPs to make large deposits in cash?” says Harry.

“Yes. That’s why I complained. As the bank’s anti-money-laundering compliance officer I knew what would happen. The minute they deposited the funds they would start to launder it.”

“How do they do this?” I ask.

“There are a number of ways,” says Korff, “but the most common is to purchase a legitimate business that deals in large amounts of cash, high volumes. A casino, for example. They are notorious as currency laundries. Or what happened in one case involving one of your American PEPs, he bought a chain of coffeehouses.

“The way it works, they use clean money, funds for which taxes have already been paid, to buy the business. They start small. Then if the business makes, say, two hundred thousand dollars the first year, they report income of two million. They take dirty money from the secret bank account to make up the difference.”

“But they’d have to pay income tax on the full two million?” says Harry. “Doesn’t make any sense.”

“On the contrary,” says the banker. “That’s the point. The money in the bank was free money. They didn’t have to do anything to earn it, other than the corrupt act. But they can’t spend it until it is laundered. They report it as legitimate income and pay the tax. What is left is clean. The entire purpose is to legitimize it by paying the tax.

“Then the next year they take the laundered money and expand their business. Now they have five coffeehouses. That year they earn a million dollars in actual income and report five million. You can see how it would grow very quickly. At some point you stop expanding the business and instead use the laundered profits to invest in other things. When you are done, you end up with a business worth a fortune and a pile of clean cash invested elsewhere.”

“Like I said before, we’re in the wrong business,” says Harry.

“Did you know any of these PEPs? Were they people you recognized?” I ask.

“Oh, yes, of course,” he says. “There were a number of prominent politicians. Some from Europe. Some from the United States. Many of them I didn’t know. Some from South America. They would come in speaking Spanish, sometimes Portuguese. And the Russians, of course, they were always there.”

“You mean to say Russian politicians are corrupt?” says Harry.

“Does a Frenchman speak French?” says Korff.

They both laugh.

“The Americans,” I say. “I’d be curious to know who some of them. .”

“I really shouldn’t tell you that.” Korff is weaving in his chair, halfway through the latest pitcher of lager. “It could get me in serious trouble.”

“Just between us,” says Harry. He upends the pitcher of beer over Korff’s stein one more time. “Would you like another?”

“I would not say no.” The banker laughed.

“Come on, a few names,” says Harry. “Between friends.”

“OK. A lady, a woman. One of your senators. Her last name is”-he whispers-“Grimes.”

“Maya Grimes?” I look at him.

“You said it, not me. She made trips over several months. Enough cash to fill a cargo container,” he says. “This was maybe four years ago. And there were others.”

Before I can ask who, Korff gives up eight more names, every one of them recognizable, fixtures with long tenures in the House and the Senate. And he tells us that one retired member of the Senate now sits on the board of directors of Gruber Bank. The names include members of both political parties. If what we are being told is accurate, corruption may be the only thing that is still bipartisan in Washington.

He says there are more, but he can’t remember all the names. I recall the comment by Graves concerning Abscam and the FBI sting, that if the feds hadn’t pulled the plug and brought the undercover investigation to an end they might have had trouble finding a quorum to do business in either house on Capitol Hill.

“How much money are we talking about here?” says Harry. “In broad numbers, I mean. Do you have any idea?”