Haggai Harmon - The Chameleon Conspiracy

My phone buzzed. It was Bob. “A federal magistrate judge signed a search warrant for McHanna Associates; FBI teams are on the scene as we speak. Meet me to night at Hodson’s office.”

I arrived at the federal building in downtown Manhattan at eight P.M., but Hodson’s office was still empty. Over an hour later, at nine twenty P.M., as my nerves jangled, five FBI agents finally walked in with Hodson and Casey. Bob Holliday arrived a minute later.

“What’s in the crates I saw you carrying?” I asked the agent standing next to me.

“The last of the stuff we seized at McHanna Associates. The bulk of it was brought over a few hours ago.”

Hodson, sensing my impatience, said, “Our analysts are already starting to examine the first few cartons. I’m afraid it will take time until we have a hit.”

“Can I participate in the analysis of these documents? I know a few things about white-collar crime and money laundering.”

Hodson and Holliday exchanged looks and Holliday nodded.

“OK,” said Hodson. “Be here tomorrow at nine a.m.”

“Tomorrow? I’m not waiting until tomorrow. I want to do it right now.”

Hodson smiled and used the intercom to call his assistant. “Tom, let Dan Gordon join our analysts in cracking the material we seized from McHanna Associates.”

“Thanks,” I said, and before leaving I asked, “Was McHanna taken in?”

“No. Give me a probable cause, and he will be. So far we’ve got nothing to support an arrest warrant.”

I went two floors down. In a big room were six young men and women buried under massive stacks of paper. Open cartons were everywhere.

“It’s slow going, but it’s going,” grunted Mel, a clean-shaven young analyst, when I’d introduced myself.

“Why? Because of the volume?”

“No. We only started three hours ago, but from what we see already, the documents reflect years’ worth of international banking activities. Now add the fact that I already counted four or five foreign languages that were used, and you’ve got a complex audit on your plate.”

“Any computer files?” I asked.

“Yes, we seized McHanna’s computers. We’re waiting for the tech people to hook them up so we can quickly search files electronically.”

“Can I take a look at some of the files?” I asked.

“Help yourself,” he said, and quickly explained their Organization system so that I wouldn’t disrupt it.

I went to the mountain of stacked crates and pulled out the top box. I put it on an empty desk. The label was marked 1990. After going through several hundreds of pages I saw nothing that immediately showed any relevance to our case. I took another box, marked 1993. A few hours later, I felt a creeping frustration. There was nothing there that could be important to my investigation. I looked around the room at the other analysts; their faces were patient, but unenthused. I decided to change course. Instead of looking for a smoking gun, I decided to understand the business logic of McHanna. How were they transacting business, what was their profit center, and how were they actually making money? That is, if they were making money. And if they weren’t, who paid for McHanna’s fancy office, and why?

I realized it’d take me more time, but that was a commodity I had. Bob Holliday agreed to ease my caseload, and I immersed myself in my new project: McHanna Associates.

Three days later I began to see a pattern. McHanna Associates was in fact a clearing house for charitable donations. Money in small amounts was collected in certain Islamic centers throughout the United States for various charitable causes and brought or transferred to McHanna Associates. Next, McHanna transferred the funds in batches smaller than $10,000 through a New York bank to banks in several foreign countries, some in Europe and some in the Middle East. One or two days later, the receiving banks would wire similarly sized amounts to McHanna’s bank account in New York.

Why were they doing it? I wondered. Why send the money back here? And if there was a reason, why couldn’t they simply offset the incoming and outgoing amounts? The back-and-forth transfers made no business sense, other than to the transferring banks, which made hefty commissions off the transfers. And while I understood the reason for transferring amounts to the Middle East to support charities, I couldn’t understand why there were incoming money transfers to the United States.

I decided to take it yet another step forward and see what happened to the money received by McHanna from the European banks. It was routed to charities in various states throughout the United States. Several names of the U.S. receiving institutions surfaced repeatedly. There were two in Texas, three in Michigan, five in Brooklyn, and four in Florida. One common denominator of all receiving institutions was that they were Islamic charities. They also had something else in common. The checks made out to them weren’t endorsed.

That was a finding that bewildered me. I checked the entire contents of the box. There were many bank statements, but among the attached checks made out to the charities, I couldn’t find even one that was endorsed.

I turned on my chair and loudly asked the other analysts, “Guys, has anyone been through any bank statements yet?”

“We all have,” said Mel.

“Have you noticed something odd?”

“Like what?”

“All the checks I’ve seen that were made out by McHanna to charities are stamped as paid, but none carried an endorsement signature on its back or any stamp of a financial institution, and none of the checks appeared on the bank statements with the check number on it as having been cleared.”

Three analysts answered at the same time: “I saw that too.”

“Do you have any idea how this could have happened?” asked Mel.

“I’ve seen it before,” I said. “That’s a trick money launderers use to hide the source or destination of dirty money.”

Mel said, “Maybe they just recorded the money as outgoing locally, in cash, but in fact it was sent outside the country.”

“Maybe what we could do is select at random a specified period and check all bank accounts managed by McHanna Associates,” I suggested. “Then we could see if the wired incoming amounts match with the outgoing amounts at the end of the day. I don’t mean literally daily, but over a period of time-say a week.”

Two hours later we had interim results. Every single analyst in the room confirmed that the incoming and outgoing amounts roughly matched. The difference was about 5 to 8 percent.

“That’s for the administrative costs,” I said jokingly, but in fact I was dead serious. I had a hunch that the excessive commissions were in fact a channel to bury even more deeply the fact that the transfer of the money created a profit that could be escrowed by any of the foreign banks and then transferred internally to another account. That other account could accumulate the graft to line someone’s pockets, but it could also be used as a terrorist slush fund. A foreign bank account is, of course, immune from audit by a U.S. regulatory or law-enforcement agency.

“OK, I’m going to try to synthesize this in a report for Hodson. I assume you guys will do the same.” As I began walking out the door, I stopped. I knew what bothered me-not something I’d seen in the boxes, but something I hadn’t.

“Wait a minute,” I said. “Have you seen any records containing the transactions with Al Taqwa and Tempelhof Bank? I saw them in Switzerland, but there weren’t any here.”

They all shook their heads. So McHanna must have cleaned out his office, or he may have had additional records elsewhere.