Tuesday, July 29, 2008

Man Wants to Exchange $5.2 Million Decomposing Bills for Clean Cash

By MATT APUZZO and ALICIA A. CALDWELL Associated Press Writers
WASHINGTON July 28, 2008 (AP)

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.

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.

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.

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 told 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.

If the goal were to avoid unwarranted attention, Felhaber 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.

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.

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 land deal. The money was buried in a coffin, he said.

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.

Following the money, investigators interviewed Carrillo-Valles and his wife. Each denied ever sending or receiving the money, according to a government affidavit.

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 with about $1.2 million.

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.

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.

None of the documents filed in federal court accuses Felhaber 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 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 ask for their money back.

If they do, they’ll have to explain where it came from.

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