Read all the pertinent stories about "Operation White Tiger". It involves U.S.
government agency's cover up of serious investigations in
the Hank-Rhon's [Carlos, Jorge and Hank Gonzalez senior aka El
Professor (now deceased)] case.
There are also two links to a couple of very good articles, one by Jaime
Dettmer of Insight Magazine and one by Dolia
Estevez of El Financiero. The government did
NOT wish to have these documents entered into the file for
public access. The Judge denied the requests to have them
deleted. After a long wait and much red tape, I now have
them available for the first time to the public.
There is a public document and sworn statement by a DOJ official named
Michael T. Horn, head of the National Drug Intelligence
Center (NDIC) which is filed at the Alexandria Virginia
District Court House.(Dated: 1-20-00)
You can get your own copy of the document if you send a check or money order to:
Clerk's Office
U.S. District Court
Alexandria, Virginia
Fax:(703)299-0119
Civil Docket: 02-MC-6
Request documents (c) (d) & (e) from Exhibit R to Docket item #11.( about 32 pages in all)
Certified copies are about 50 cents each page and $7.00 for certification. (About $21.00)
"Operation White Tiger"
is explained fully and you can read the certified documents.
The fact that the government did NOT wish to reveal certain
"sources" illustrates that it would cause a MAJOR
problem with Mexican-U.S. relations. There was definitely
collusion going on to protect people like Jorge Hank-Rhon. I
know first hand. I experienced the protectionist retaliation
for doing my job.
It makes you wonder why Customs Supervisor John "Jack"
Maryon "ordered" me NOT to put Jorge Hank-Rhon's
name into the TECS II computer; status "look out",
or at least on a MOIR/ROI distribution list???
If there is a "National Security" interest, NO ONE
ever said so. On the contrary, I was told by my
Supervisor John "Jack" Maryon, that he
"had lunch" with the suspect Jorge Hank-Rhon
once a week! THAT is no reason to retaliate against someone
who is just doing their job! THAT is not justification for
ruining someone's career. The agency should inform and
discuss this issue very candidly with anyone that discovers
sensitive information and explain that "other"
national interests prevail, before retaliating without
apparent reason. This was NOT done, because there was
no special legitimate interests. Our
government should not damage our own people to protect
foreign interests. Are WE to be considered "collateral
damage"? NO!
It makes you wonder which "internal" sources OUR government
is really protecting? What do you think?
The following articles may help explain some things too.
John Carman
Editor~ www.customscorruption.com
The following articles are actual scans of the magazine to preserve the integrity and
validity of the source. The White Tiger Document is a scan as
well, with certification stamp affixed.
<<RETURN TO CUSTOMSCORRUPTION.COM
The Last Word
Posted Feb. 25, 2002
By Paul M. Rodriguez
Free Press Facing Challenge to Its Rights
What do an international
business consultant, an Ohio
professor and three
journalists have in common?
Nothing more than independent
work to expose squalid and
disturbing allegations of ties
among politicians, banks,
narcotraffickers and money
launderers on both sides of
the U.S.-Mexican border and
tie-ins elsewhere around the
world.
A second common factor is that
all have incurred the wrath of
the Hank family — one of the
most powerful clans in Mexico
— which has launched
high-powered legal exercises
in Texas and Ohio to
intimidate and harass members
of the press and challenge
their rights afforded by the
First Amendment. This includes
Insight and one of its senior
editors, Jamie Dettmer, as
well as Washington Post
reporter Douglas Farah and
Dolia Estevez, the Washington
correspondent of Mexico's El
Financiero newspaper. All
three have received subpoenas
to produce a wide range of
information protected by U.S.
press-shield laws and our
Constitution.
Reading the subpoena is like
reading the summary of a
high-suspense plot from a John
Grisham novel, what with
tantalizing hints of
conspiracies, organized-crime
ties, secret U.S. intelligence
agencies, shady gumshoes,
undercover sources and the
assassination of a Roman
Catholic prelate. Details are
indeed contained in the two
legal cases that now have
enmeshed the magazine and the
two newspapers in a lawsuit
filed in Laredo, Texas,
against writer and business
consultant Christopher Whalen,
and another filed in Cleveland
against Donald Schulz, a
political-science professor.
If the subpoenas served on the
news organizations are allowed
to stand, many in the trade
believe the precedent would
chill reporting by the
American press on efforts by
U.S. authorities to resist
suspected narcotrafficking and
organized crime.
So how did this happen? It
began with an exclusive report
by Dettmer back in March 1999
outlining details in federal
law-enforcement and
intelligence documents
alleging close ties between
the Hank family and Mexico's
suspected top narcotraffickers,
including the Arellano Felix
cartel in Tijuana. The story
included details of how tons
of illegal drugs move freely
across borders and the lax
security that allows these
substances to destroy the
lives of millions.
The article about the Hanks
reported findings of a major
multiagency probe into the
Mexican family involving
political and business support
to help mask or otherwise
support the illegal-drug
trade. One of the documents
referenced in the story
involved Operation White
Tiger. It concluded that the
Hank family, consisting of the
now-dead patriarch Carlos Hank
Gonzalez, a billionaire
businessman and top Mexican
politician, and his two sons,
Carlos Hank Rhon and Jorge
Hank Rhon, represented a
"major criminal
threat" to the United
States because of alleged
political protection they
afforded to drug cartels (see
"Family Affairs,"
March 29, 1999).
A month after Insight broke
that story, U.S. and Mexican
newspapers followed our lead
with yet more information
based on their own sources.
The stories caused quite a
stir within the Clinton
administration and in Mexico,
where at a summit of
law-enforcement chiefs,
Mexicans complained loudly to
their U.S. counterparts, as
did Mexico's then-president
Ernesto Zedillo, whose
campaign-nomination papers
Carlos Hank Gonzalez had
signed.
Since then, the Hanks have
mounted a major counterattack,
including their recent U.S.
lawsuits against Whalen and
Schultz. Whalen is the former
editor of The Mexico Report, a
newsletter on politics and
finance that carried similar
stories about the allegations
against the Hanks and others.
Whalen also was an adviser to
the U.S. Federal Reserve and
reportedly helped to block a
bid by Carlos Hank Rhon to buy
a second bank in Texas to add
to the family's ownership of
the Laredo National Bank.
In addition to suing Whalen
for "tortious
interference" in their
effort to buy a second U.S.
bank, the Hanks sued Schulz
following a Wall Street
Journal report identifying him
as a "probable
source" of leaks from
Operation White Tiger to the
press. Schulz is considered an
expert on Central and South
American issues and author of
an unpublished (but
circulated) study entitled
Narcopolitics in Mexico. The
Hanks' lawsuit charges that
Schulz spread false and
defamatory information about
the family based on insider
knowledge from the White Tiger
report and his ties with U.S.
law-enforcement agencies.
There have been several
stories about the ongoing
cases in local press and one
overview by The Nation
magazine (see www.nation.com).
But this is the first report
on the subpoenas recently
served on the news outlets —
demands that seek astonishing
access to a wide range of
protected information. For
example, in the subpoena
accepted for Insight by the
Washington law firm of Akin
Gump, the Hanks want all
unpublished documents,
materials and e-mails and all
details of conversations
reporters and editors had on a
wealth of matters relating to
the family, federal law
enforcement, other news
outlets and any documents in
our possession. In short, the
whole enchilada, and to hell
with the First Amendment!
Such chilling requests are
rare — and, generally, fail
— but they raise serious
issues about the rights of a
free press to do its job. For
smaller publications with
limited resources it could
deal a deathblow to enterprise
reporting and shut down those
who stand up to the rich and
powerful. We'll keep you
posted.
Paul M. Rodriguez is the
managing editor of Insight.
Drug War On Trial
URL: http://www.mapinc.org/drugnews/v01/n1683/a06.html
Newshawk: Terry Liittschwager
Pubdate: Mon, 17 Sep 2001
Source: Nation, The (US)
Page: 18
Author: Mark Schapiro
Note: Mark Schapiro writes frequently on international affairs. Research
support was provided by the Investigative Fund of the
Nation Institute.
Bookmark: http://www.mapinc.org/people/Al+Giordano
(Giordano, Al)
A new counteroffensive has been launched in the drug war:
Financiers have begun to retaliate against allegations
of money laundering and drug trafficking by suing the
messengers. If successful, the suits could hinder
future investigations into the G spot of the drug trade,
where billions of dollars in illicit profits meet the
highest precincts of international finance.
At the heart of the legal assault are a Mexican
billionaire and majority owner of a Texas bank, Carlos
Hank Rhon, of the powerful Hank family ( frequently
referred to as the "Mexican Rockefellers" ),
and Roberto Hernandez, president of Banamex, Mexico's
second-largest bank. The suits are being fought
out in US courts, pitting scions of the Mexican elite
against an American journalist, a scholar and a
little-known agency of the US government.
Carlos Hank Rhon is the eldest son of Carlos Hank
Gonzalez, who parlayed friendships with former Mexican
President Carlos Salinas and his predecessor into a
multibillion-dollar financial empire. Hank
Gonzalez died in August at the age of 73; his two
surviving sons, Carlos Hank Rhon and Jorge Hank Rhon,
now oversee a multinational conglomerate that includes
holdings in real estate, television, manufacturing,
trucking and banking. In the mid-1990s Incus, a
Caribbean-based holding company controlled by Carlos
Hank, engineered the purchase of the Laredo National
Bank of Texas, in one of the most significant expansions
of Mexican capital into the United States in the NAFTA
era.
Carlos Hank's takeover of Laredo, however, ignited the
interest of the Federal Reserve Board and the suspicions
of the National Drug Intelligence Center ( NDIC ), which
supplies intelligence and analyses to law enforcement
agencies. In a draft summary of an 800-page report
detailing the links between drug traffickers and top
Mexican politicians and financial figures, the NDIC drew
connections suggesting that Hank was involved in the
drug trade and included reports of his involvement in
money laundering for Mexican drug organizations.
The report, compiled at the request of the FBI and the
Drug Enforcement Administration, was dubbed Operation
White Tiger, in reference to an attempt by Carlos Hank
to smuggle an endangered white tiger into Mexico in the
back seat of his Mercedes in 1991.
In the spring of 1999 the contents of the leaked White
Tiger draft summary--including the assertion that Hank
posed "a significant criminal threat to the United
States" and that his enterprises helped facilitate
cocaine and heroin shipments into the United
States--broke in a series of articles in the Washington
Times's weekly magazine Insight, the Washington Post,
the Mexican newspaper El Financiero and a feisty
quarterly journal of Hispanic politics and culture, El
Andar, based in Santa Cruz, California, which has been
dogging the Hanks with investigative reports over the
past two years. The Laredo bank immediately
threatened legal action against El Andar, which has a
circulation of some 10,000 readers, demanding a
retraction, $10 million and the bank's approval of any
future articles. Julia Reynolds, author of the
story and editor of El Andar, refused, and continued to
write about the bank's funding and connections to Texas
political figures--including George W. Bush.
After publicity on the threat against El Andar appeared
in the Los Angeles Times, Laredo backed off its threat
to sue.
The news about the Hanks was explosive, breaking just as
then-Attorney General Janet Reno and then-White House
drug czar Gen. Barry McCaffrey were visiting
Mexico for a series of meetings on US-Mexican
cooperation in the drug war.
The White Tiger findings would generate more attention
to the NDIC than at any time in its short, mostly
obscure history. Based in Johnstown, Pennsylvania,
the center, with a staff of some 200 scholars and
researchers, was created by George Bush senior as an arm
of the Justice Department to signal his commitment to
fighting drugs ( and as a signal of Democratic
Congressman John Murtha's commitment to providing
employment for his constituents ). Until recently,
its investigators have been mostly nameless, the
millions of words issuing from its government-issue
red-brick offices mostly anonymous.
But that changed when the NDIC was hit with a
multimillion-dollar lawsuit by Laredo's American
president, Gary Jacobs. In the suit, filed this
past May 23 in federal court in Laredo, Texas, Jacobs
demands $129 million from the NDIC on the grounds that
the center's leak of the White Tiger summary constituted
a violation of the Privacy Act, which prohibits the leak
of classified government documents. Jacobs terms
the NDIC's allegations "life-shattering lies."
His attorney, Patrick McLaughlin, contends that the
information in White Tiger was little more than
"unproven and uncharged allegations" contained
in an "unvetted" report that was
"illegally disseminated to the news media."
White Tiger, he says, "assassinated my client's
character." On August 20 the Justice Department
filed suit in federal district court in Laredo asking
that the case be dismissed.
Though Jacobs's name is on the lawsuit, it is Carlos
Hank Rhon who is the unseen player behind the legal
machinations. Carlos Hank's company, Incus, has
controlled 70 percent of the shares in Laredo, and it is
Hank's name that surfaces most prominently in the White
Tiger and related stories. Jacobs's suit was filed
a week before the settlement of a longstanding Federal
Reserve Board civil complaint against Hank and Incus
accusing him of using the names of relatives and
associates to cover up his financial interest in Laredo.
The settlement does not require Hank to admit guilt, but
he is required to turn over his controlling shares in
the bank to an independent trust. And he agreed to
pay $40 million in penalties--the second-biggest fine in
the Federal Reserve's history.
That was not Hank's first run-in with the Fed. In
the mid-1990s, as reports similar to those later
contained in White Tiger began surfacing in Mexico and
the United States, the Fed launched an investigation
into Laredo's bid to purchase the Mercantile Bank of
Brownsville, Texas. After a lengthy investigation
Laredo withdrew its bid.
Jacobs's suit against the NDIC followed, by less than a
year, a legal blitzkrieg that transformed the life of a
mild-mannered political scientist named Donald Schulz.
Currently chairman of the political science department
at Cleveland State University, Schulz worked for eight
years as a specialist on Latin America and national
security for the Strategic Studies Institute at the US
Army War College. While researching an academic
book exploring the links between the drug trade and
Mexican politicians, Schulz interviewed several
officials at the National Drug Intelligence Center, one
of whom sent him a copy of the draft executive summary
of White Tiger containing material on the Hanks.
Jacobs filed suit against Schulz in August 2000,
accusing him of violations of the RICO act, alleging
that he was involved in an "enterprise...designed
to...unlawfully acquire, use and disseminate top secret,
predecisional, law enforcement sensitive
information...to the direct detriment of
plaintiffs," that the assertions in White Tiger
constituted defamation and that release of the draft
report was a violation of Justice Department regulations
prohibiting unauthorized release of documents considered
"law enforcement sensitive." In essence,
Jacobs accuses Schulz of "infiltrating" the
NDIC and providing researchers there with
"disinformation" that was later leaked to the
press in White Tiger.
Laredo's lawyer, Ricardo Cedillo, denies the White Tiger
allegations and asserts that they have resulted in deep
damage to Jacobs's professional standing.
"Gary Jacobs is a border banker with an impeccable
reputation," Cedillo said in a telephone interview
from his office in San Antonio. "Suddenly,
he's not being invited to the seminars and programs on
both sides of the border, he's not enjoying the fruits
of his labor. He has been on a first-name basis
with ambassadors from the United States and Mexico, and
now he is [treated like] a pariah after being associated
[in White Tiger] with money launderers."
Schulz denies providing any such information or leaking
the report. Schulz's trial, when it commences in
August 2002, will revolve not necessarily around the
truth of such assertions but whether he leaked the
report and whether he conspired to interject allegedly
defamatory information into the contents of the NDIC
report. Schulz says he didn't receive a copy of
the summary until late March of 1999 ( the court record
indicates it was sent to him on March 25 ), and the
Insight magazine story--the first to publish the White
Tiger allegations, and running at almost 4,000
words--appeared on March 29. The author of the
story, Jamie Dettmer, has declined to name his source,
but he insists that it wasn't Schulz. An internal
investigation by the Justice Department determined that
the source of the leak--and the person who sent the
draft summary to Schulz--was the supervisor of the White
Tiger project, an NDIC agent named Daniel Huffman;
Huffman, a former FBI agent, resigned under pressure
last year.
Whoever was the source, the leaks were not popular in
Washington, which was on the verge of certifying Mexico
as a "partner" in the drug war. In a
letter to former Senator Warren Rudman, who as a Hank
lobbyist on Capitol Hill had disputed the White Tiger
allegations, Attorney General Janet Reno disassociated
herself from the findings in the report. Shortly
afterward, Schulz's work on Mexico at the War College
was terminated, and he was diverted to research on
Colombia as the wheels of Plan Colombia were grinding
their way through Congress. White Tiger itself was
shelved by the NDIC when a new director took over in
June 1999.
For Schulz, the lawsuit has had a devastating impact.
He has spent, thus far, some $25,000 on legal costs and
has received no assistance from either the NDIC or the
US Army War College; his appeal to the government for
legal help has now been sitting with the Justice
Department for more than eight months. If the case
goes to trial, Schulz, 59, says it will eat up all his
retirement savings. Ironically, Schulz and the
NDIC, which tried to distance itself from him after he
was sued last year, have now been thrown together as
parallel defendants in the legal offensive launched by
Jacobs. "It doesn't matter whether I win or
lose; I lose," Schulz says. "My time, my
costs to lawyers--I will have lost even if I'm
vindicated in the end." In June Schulz filed a
countersuit for "harassment" against Laredo,
asking $1 million in damages and demanding that Carlos
Hank Rhon's name be added to Jacobs's complaint as a
plaintiff. As the majority owner and chairman of
Laredo, and as a primary target of Operation White
Tiger, Hank, Schulz argues, dodged behind Jacobs.
Keeping Hank's name off the suit, asserts Schulz,
protects him from being deposed and keeps information
about his business activities in the United States and
Mexico from being entered into the legal record.
Cedillo discounts this charge: "Jacobs is no
surrogate for Carlos Hank Rhon." Rather, he says,
the reason the Mexican mogul has kept his name off the
suit is that he "has a thick skin, and didn't want
to aggravate Mexican press attention at a time when his
father was ill." Indeed, the Mexican press has had
a voracious appetite for stories on the Hank
family--ranging from serious corruption investigations
to salacious tabloid reports, in which they are cast as
a symbol of the PRI oligarchy that dominated Mexico for
seven decades.
Jacobs's legal offensive appears to be the culmination
of a campaign foreshadowed on national television when,
in an interview with PBS's Frontline for its fall 2000
special on the drug war, he announced, "With the
lawsuits I [am] getting ready to file, these cockroaches
in the government are going to run for cover."
Jacobs's choice of "cockroaches" appears to be
based on the potential for sending a warning signal to
any future investigators--from the government or the
press. The Washington Times never heard from
Jacobs's legal team. After being contacted by
Carlos Hank's lawyers, the Washington Post printed a
"clarification" of its earlier story by saying
it had mistakenly identified a trucking company as a
Hank property. ( The Post stands by the rest of
its reporting on the White Tiger findings concerning
Hank family links to the drug trade. )
Schulz says the suit against him "is part of a
larger campaign of intimidation against journalists,
scholars and US government researchers who have
researched or written about the Hanks. It's an
attempt to intimidate and silence everything from El
Andar to the US government, or those who speak with the
US government. If it succeeds, simply threatening
a lawsuit could be used by others to deter government or
journalistic investigations."
Another case wending its way through the courts involves
a Mexican banker's legal attack against a US journalist,
Al Giordano, the editor and publisher of Narco News ( www.narconews.com
), an Internet magazine that for the past year has been
covering the intersection between corruption and the
drug war in Latin America. Giordano is facing a
libel suit filed by Banamex, Mexico's second-largest
bank, for a series he wrote last year asserting that the
bank's president, Roberto Hernandez, was involved with
drug trafficking and money laundering.
Giordano's reports were based on stories in the Mexican
newspaper Por Esto!, based in Yucatan. The author
of the Por Esto! series was the newspaper's founder and
editor, Mario Menendez, a veteran Mexican journalist who
was briefly imprisoned in 1968 after publishing details
about the massacre of students demonstrating in Mexico
City's Tlatelolco Plaza before the 1968 Olympics.
Por Esto!'s most explosive charges--which Giordano went
on to repeat, describing them as "what lawyers call
beyond a reasonable doubt"--concerned the
appearance of several bales of cocaine on land owned by
Hernandez along the Yucatan coast. Hernandez
himself is a leading figure of the Mexican old guard
allied to the PRI, having purchased the government's
shares in Banamex in 1991, turning that investment into
a financial empire. There was no proof of
Hernandez's knowledge of the shipment, but the Por Esto!
series, which ran from 1996 through 1999, included
photographs of the cocaine seized on Hernandez-owned
property and of containers frequently associated with
drug-running along the Yucatan coast that were found on
Hernandez-owned beachfront. The stories proved
particularly embarrassing when President Clinton
traveled to Yucatan in 1999 for an antidrug conference
attended by then-Mexican President Ernesto Zedillo and
hosted by Hernandez at a local resort.
Banamex responded by suing Mario Menendez for libel and
slander. Two years later, a Mexican judge ruled
against the bank; that decision was upheld in May 2000
on appeal ( a subsequent effort to pursue Menendez on
criminal libel charges was thrown out of court in Mexico
City last October ). Having failed to discredit
the charges in Mexico, in August 2000 Banamex shifted
venue, filing suit on the same grounds against Giordano,
Narco News and Menendez in a state court in New York.
The defendants, allege Banamex, defamed the bank and
issued "false statements" that interfered with
the bank's "prospective economic advantage,"
based on the fact that the journalists repeated their
charges during an interview on New York public radio
station WBAI and during a Columbia University conference
on Latin America in March of 2000. According to
the bank's filing, "Neither Banamex nor its
Chairman and General Director are or ever have been
engaged in illegal drug trafficking...nor is it funded
with such money."
The case represents an unprecedented turn of events for
Internet journalism. Narco News, produced and
written in English from a town in Mexico, has broken
some important stories related to the drug
war--including an expose of the CIA's hiring of
mercenaries in Peru, months before an airplane with an
American missionary family aboard was shot down by one
of those private CIA-contractor teams in the Peruvian
jungle. "You've got a Mexican Internet
magazine, published in English, being sued in an
American court," comments veteran civil liberties
lawyer Thomas Lesser, who is defending Narco News.
"If they can get away with this, nobody on the
Internet will be safe from legal harassment." The
suit has been a nerve-rattling experience for Giordano,
a former political correspondent for the Boston Phoenix.
With no legal insurance and operating on a bare-bones
budget, he is conducting a joint defense with Lesser,
representing Narco News, and David Atlas, representing
Menendez.
"What was said here in New York about Banamex is
mild when compared with what was said about Hernandez in
Mexico," comments Atlas, who is with the New York
law firm of Frankfurt, Garbus, Kurnit, Klein & Selz,
noted for its defense of First Amendment cases.
"And Mexican courts decided three times that what
Menendez published was not defamatory to Banamex.
This is purely an attempt to intimidate journalists,
this time in an entirely new venue." In a hearing
at the New York Supreme Court in Manhattan on July 20,
Atlas, Lesser and Giordano argued that Banamex's suit
should be thrown out of court on jurisdictional grounds
and because New York law requires malice, which they
deny. The judge is considering their request.
he accuracy of all these stories will in the end be
determined by a court of law. In the meantime,
there is one revealing element common to all the legal
actions. It is a financial institution that is far
closer to home than any of the Mexican enterprises
operating south of the Rio Grande: Citibank. It
was Citibank that brought Carlos Hank Rhon to the
attention of the Fed during the Mercantile Bank
investigation because of his ties to Raul Salinas,
brother of then-Mexican President Carlos Salinas.
Hank Rhon introduced Raul Salinas to the top banking
agent in Mexico for Citibank, which Treasury Department
investigators claim helped facilitate the laundering of
some $200 million that Raul Salinas skimmed off Mexican
government food programs, corrupt procurements and drug
payoffs during his brother's tenure as president.
( Raul Salinas is currently serving a twenty-year
sentence in a Mexican prison for murder and illicit
enrichment; Carlos Salinas is living in self-imposed
exile in Ireland. )
Most pungently, on May 18 Citibank, now Citigroup,
announced that it was purchasing Banamex for $12.5
billion in cash and stock--making Hernandez, overnight,
one of the richest men in the Americas.
"How can they [Banamex] claim that I've ruined
their reputation when they've just done a massive deal
with Citibank." exclaimed Giordano, interviewed by
telephone from his office in Mexico shortly after the
sale was announced.
The Citibank-Banamex deal now joins the largest US
financial institution--which was criticized by the
Federal Reserve Board during Senate subcommittee
hearings in 1999 as having lacked the proper procedures
to detect Salinas's and other corrupt Mexican
politicians' money-laundering activities--with a bank
that has been excoriated in the Mexican and US press for
its corrupt ties to the PRI. ( Responding to
widespread criticisms of its monitoring of suspect
accounts, this past spring Citigroup hired one of the
Fed's top experts on money laundering, Rick Small, to
oversee its compliance office. ) A further irony:
When Citigroup chairman Robert Rubin was Treasury
Secretary during the Clinton Administration, he
authorized a comprehensive assault on money laundering
that was dubbed Operation Casablanca. Among the
tens of millions of dollars identified as having illicit
origins over the course of Casablanca's multipronged
investigation ( which was partly immortalized in the
film Traffic ) was $3.3 million seized during a sting
against none other than Banamex, which the DEA, in
coordination with Mexican law enforcement, alleged was
drug money from a northern Mexican smuggling operation.
In many ways, all these cases are also united by the
phenomenon of NAFTA's having opened the door to Mexican
capital flowing north, just as US capital and jobs have
been flowing south. Follow the money far enough
across the ever-more-open US-Mexican frontier, these
challenges suggest, and journalists and scholars alike,
not to mention the federal government itself, could face
a new NAFTA-inspired boomerang of unintended
consequences. Giordano now claims that if his case
goes to trial, it will not be just him but "the
entire drug war" that will be going on trial.
The guiding principle of Operation Casablanca was to
"follow the money" that helps fuel the drug
trade. Whatever the courts decide, the three
pending cases offer an ominous warning sign to anyone
who tries to do just that. Congressional
investigators estimate that as much as $500 billion is
laundered through the US financial system each year.
But attempting to draw the links between the legitimate
and illegitimate economies, the great untold secret of
the drug war, remains a dangerous business.
Carlos Hank's NAFTA Bank
by Louis Dubose
it's owned by
Incus?
-- That's correct?
Who holds the majority of the stock?
-- Incus.
Who owns Incus?
-- Carlos Hank Rhon
Laredo
On
the third floor of Laredo's palatial new court house,
in a room appointed with rose-colored faux marble,
extravagant drapery, and dark hardwood bar, bench, and
tables, a plaintiff was telling a cattle rustling
tale. Though it was a tale of modern cattle rustling
-- involving show cattle, high-dollar auctions, the
implantation of fertilized eggs, and a business
partner doing the rustling -- it was a case you would
expect to be tried in one of the old architectural
monuments Laura Bush is trying to preserve in rural
Texas. And if the claim that "with embryo
transfer there is no limit as to how many calves you
can get from one cow" seemed as over the top as
Laredo's four-story monument to justice and county
government, the plaintiff was earnest, eloquent, and
compelling. Judge Elma Salinas Ender ruled on a
substantial default judgment that provided $75,000 and
attorneys' fees for the plaintiff and enjoined the
defendant from selling any more cows owned in
partnership. The quick resolution of the case provided
one of those sweet moments in a courtroom, when equity
is efficiently delivered and justice is served -- even
if the defendant was nowhere to be seen.
It also provided a stark
contrast to the case that would follow: Laredo
National Bank's claim that a New York investment
banker had queered the deal when LNB set out to
acquire Mercantile National Bank of Brownsville.
Neither of the principals was present -- only the
attorneys. The defense counsel told the judge the
plaintiff's counsel had been "childish and
rude." The plaintiff's counsel -- who had walked
out of a deposition in San Antonio after complaining
"this is bullshit" -- told the judge the
defense counsel was an "obstructionist." The
judge was being asked to schedule the deposition in
her courtroom, where she could mediate fights between
lawyers. No attorney had yet mentioned the facts and
the law. And Judge Salinas, no doubt looking forward
to her next case (a sullen defendant in handcuffs and
an orange jumpsuit, waiting to be escorted into the
courtroom by a deputy sheriff), was only being asked
to settle a question of jurisdiction.
This particular episode of Laredo
National Bancshares vs. Richard Christopher Whalen
-- sandwiched between an animal husbandry tort and a
pre-trial hearing of a felony prosecution -- was all
pre-trial posturing. It is also the smaller of two
oddly related lawsuits. Part of LNB's complaint
against Christopher Whalen alleges that he provided
the Federal Reserve Board with information damaging to
the bank. The Fed's legal staff, in a separate legal
procedure, has taken aim at the bank's owners. And
Whalen is being pressed by the bank's attorneys to
tell them who he talked to at the Fed, and when he
talked.
It is evident that the real
action is in Washington, where the Federal Reserve
Board is attempting to take Laredo National Bank from
its owner, Mexican industrialist and investor Carlos
Hank Rhon. Attorneys in the Fed's enforcement division
have built a detailed factual case against Hank Rhon,
alleging that he played an elaborate shell game with
bank shares and lied about who owns Laredo National
Bank. If LNB wins in Laredo, the bank's lawyers might
wring a few million dollars out of Christopher Whalen.
If the Fed wins in Washington, it can collect $41
million from Hank Rhon, order him to divest himself of
his 71 percent ownership in LNB, and bar him from bank
ownership in the U.S. "This is a really big
deal," said one former Fed employee in
Washington.
It is a big deal that
involves the Washington offices of two powerful Texas
law firms: Fulbright & Jaworski, which bears the
name of one-time Watergate Special Prosecutor Leon
Jaworski; and Akin Gump, best known for one of its
senior partners, former Democratic Party Chair Bob
Strauss of Dallas. There is even a New York public
relations firm hired to do the talking for the Hanks,
the bank, and the attorneys.
It's a big deal because it
involves "los Hank," one of Mexico's
richest and politically powerful families. The Federal
Reserve Board is asking, "who owns the
bank?" It is also quietly asking, "who are
the Hanks?" The Fed's case is straightforward and
built on charges of misrepresentation about the
ownership of the Laredo bank. Yet its investigation
involves the D.E.A., the National Drug Intelligence
Center, and local police department drug task forces
-- agencies rarely involved in chartering federal
banks.
Who Owns the Bank?
Through an offshore holding
company, which owns Laredo National Bancshares, which
in turn owns Laredo National Bank, Hank Rhon
"controls" 71 percent of the border bank.
Bank ownership structure can be complex, so there is
nothing out of the ordinary about shares moving
through Switzerland, the U.S., Mexico, and the British
Virgin Islands. It's a global economy, and if you
think a friendly local holding company in North
Carolina owns your hometown bank in Texas, you're
wrong.
But the Bank Holding Company
Act requires banks to provide a full accounting of who
owns controlling interest, and the Fed retains the
right to approve or reject buyers. For decades, Laredo
National Bank had been locally owned. As a large
border bank it appealed to wealthy Mexicans in the
habit of keeping dollar-denominated accounts. It has
branch offices as far away as Houston and is the third
largest independently owned bank Texas. Until 1990 LNB
had been owned by the Alexanders and Mandels of
Laredo. When Gary Jacobs married into the Mandel
family, he went to work at his father-in-law's bank
and ultimately became president -- a position he still
holds today.
In 1990 major shareholders
were bought out by what the Fed describes as
"nominees" for clients from Mexico and
several European countries. In 1991, Hank Rhon advised
the Federal Reserve that he was buying 74,000 shares
of Laredo National Bancshares Holding Company stock
for $7.4 million. What Federal Reserve board
investigators have learned since, they allege in their
"notice of enforcement," is that Rhon paid
an extra $1.2 million for the stock and threw in a
luxury car to sweeten the deal for the seller.
It was the beginning of a
bewildering series of moves that seem to make it
impossible to determine who owns Laredo National Bank.
Hank Rhon, the Fed's lawyers also allege, acquired
another 93,250 shares of LNB stock, which he failed to
disclose at the time of the transactions. He also used
what in Mexico are known as prestanombres
(borrowed names), acquiring LNB shares in the name of
his daughter Graciela Hank González; his accountant,
Agustín López Morales; and Arturo Mart?nez de la
Mora, who managed other Hank Rhon businesses. In what
appears to be a bit of wry humor in their complaint,
Fed attorneys observe: "In arranging to have the
shares purchased in the name of López Morales, Hank
Rhon had forgotten that López Morales was a director
of Kline, and therefore was also barred by the
commitment from acquiring additional shares, even if López
Morales had held them on his own behalf." Kline
was a Hank Rhon holding company expressly prohibited,
the Fed's lawyers observe, from buying additional
stock at the time.
Money and shares, according
to the Fed, moved in circles and those circles moved.
Follow, for example, $10 million, that seems to move
from Laredo to New York to Switzerland and back to
Laredo, all according to allegations in the Fed
complaint, at the direction of Carlos Hank Rhon (who
either was or wasn't bringing Mexico City newspaper
publisher Gabriel Alarcón Velázquez into the LNB
ownership scheme):
Alarcón agreed to
participate in the acquisition of LNB's stock at or
shortly after the time of Hank Rhon's invitation. To
fund his purchase, Alarcón requested that Laredo
National Bank grant him a $10 million loan. Laredo
National Bank's management agreed to make the loan,
and it was funded on November 19, 1993. Hank Rhon told
Alarcón to send the funds to Citibank, N.A., where
upon Hank Rhon's instructions, the funds were placed
in the escrow account established to hold in
consideration for the shares that Incus had contracted
to purchase from the Swiss shareholders. At the same
time, Hank Rhon instructed Citibank to release back to
him $10 million worth of the peso-denominated mutual
fund shares that he had represented to the Board would
be the source of funds for the acquisition.
In 1994, David Peñaloza
Sandovál, C.E.O. of one of the largest construction
companies in Mexico, purchased a $21 million interest
in LNB and failed to report it for two years,
according to court documents filed by Federal Reserve
lawyers. Two years after the fact, Hank Rhon, Peñaloza,
and a New York law firm drafted contracts documenting
the sale. Hank Rhon and Peñaloza even established an
escrow account, "which purported to hold the
$21,161,845 in escrow, with Hank Rhon as the escrow
agent."
"In fact, the escrow
account was a sham," the Federal Reserve
complaint continues, "designed to make it appear
that Peñaloza's acquisition of an equity interest in
Incus was pending the Board's approval, rather than
completed, as it actually had been in 1993 and
1994.... Hank Rhon treated the funds in this 'escrow'
account as his own, transferring balances to and from
his personal accounts at Laredo National Bank and at
Interacciones" [another Hank Rhon company].
Loans made by LNB also tended
to move in circles. The Fed document describes a $3.5
million loan made to Carlos Oilmon Meraz, Hank Rhon's
brother-in-law. "Approximately $3.5 million of
this loan were transferred to Palenque, Ltd., a
company of which Hank Rhon was the beneficial
owner." Two years later, in 1993, Oilmon borrowed
another $1.5 million. In 1994 the loan balance was
transferred to Oilmex, a corporation owned by Oilmon.
"In 1995, that loan went into default, and Laredo
National Bank wrote off at least $2.8
million...," according to the Fed's court
filings.
Listed in the Fed's long and
detailed complaint are numerous incidents in which
millions of dollars moved in mysterious ways, many
alleged to be in violation of federal banking law. It
was all in the family. If the extended Hank family of
business associates, brothers-in-law, and close
friends worried lawyers at the Fed's enforcement
division, the alleged unauthorized participation of
Hank Rhon's father, Carlos Hank González, could
present a problem when Hank Rhon and his legal team
stand before the Federal Reserve Board of Governors --
a.k.a. Alan Greenspan and the Six Dwarves. Carlos Hank
González, according to the Fed complaint, at one time
bought $20 million of LNB stock, without reporting it
to federal regulators.
Who are the Hanks?
Hank patriarch Carlos Hank
González was born into fairly modest circumstances.
He owes his fortune, which Forbes estimates at $1.3
billion, to the Institutional Revolutionary Party that
has ruled Mexico for seven decades. He was a
schoolteacher and party operative who went on to serve
as a federal congressman from the state of Mexico,
mayor of Mexico City, mayor of Toluca, secretary of
tourism, secretary of agriculture, and director of
Mexico's federal commodities distribution program.
(Hank González' c.v. is not unusual in a country with
a constitutional ban on holding any elected office
twice. Because of term limits, politicians move from
one office to another.)
It has been observed that
Hank González was never president of Mexico only
because his father was born in Germany. The Mexican
constitution requires the president to be the child of
Mexican-born citizens of Mexico.
Manuel Buendía, a nationally
syndicated Mexico City columnist who was assassinated
in the eighties, once wrote a wry humorous column
about Hank González' frustration with the
constitutional provision that denied him his six years
in Los Pinos -- Mexico's White House. A Mexican
congressman, Buendía wrote, convened a panel of
scholars and ordered them to look for proof that the
word "Hank" had its origin in the language
of the Mazahua, an indigenous Amerindian group from
the region around the state of Mexico. When the report
was delivered to Toluca (the state Hank González
represented in Congress) the eager congressman opened
the envelope and read that the word Hank was indeed
Mazahua. In that language it meant: "He who came
from Germany."
It has also been observed
that "El Professor" González amassed a
billion-dollar fortune while working as an elected or
appointed government official. According to the
Mexican newsweekly Proceso, Hank González made
much of his fortune investing in companies who did
business with the government. González and his son,
Hank Rhon, were also two of the power brokers behind
disgraced Mexican president Carlos Salinas de Gortari.
None of this would disqualify
los Hank from owning a "beneficial
interest" in a U.S. bank. But if the Hanks were
found to be engaged in illegal activities, there could
be a problem with the "character test" in
the law governing bank ownership. LNB attorneys have
asked Christopher Whalen about conversations he has
had with federal drug enforcement agencies concerning
Laredo National Bank. And the Federal Reserve's legal
staff seems to be pursuing reports that first appeared
in the Mexico City daily El Financiero and
later in the Washington Post. Both papers
reported on U.S. drug-enforcement investigations
linking the Hank Clan to alleged drug dealing and
money laundering.
Dolia Estévez is the
Washington correspondent for El Financiero and
a particular favorite of American sources leaking
information they decide needs to be reported in the
Mexican press. Her stories often travel a circular
route similar to the one the Fed alleges Hank's money
follows -- from the U.S. to Mexico and back to the
U.S. In 1995, she reported on a Senate Foreign
Relations Committee internal memo that accused Hank
Rhon of laundering money for Mexican narcotraficantes.
The document Estévez cites makes the same claim about
Hank González, describing him as "a principal
intermediary between narcotraficantes and the
political system."
Estévez cited the date of
the memo (August 3, 1995) as well as the pages that
referred to the Hanks. And in fairness to the Hanks,
she reminded her readers that the committee is chaired
by Senator Jesse Helms, widely known to have a strong
anti-Mexico disposition. Hank González, she wrote,
was a close associate of President Salinas and leader
of the Dinosaurios -- the retrograde defenders
of position, power, and the old politics of the P.R.I.
Some of the huge fortune amassed by former president
Carlos Salinas de Gortari, now in self-imposed exile
in Ireland, was deposited at Laredo National Bank,
according to the Foreign Relations Committee report
Estévez cited.
Last June Estévez reported
that the Hanks were the target of a drug task force
investigation documented in a report leaked to her
from a source at the National Drug Intelligence
Center. The story was quickly picked up by the Washington
Post, and although no one at the intelligence
center will discuss the report, its existence was
confirmed when the D.E.A. investigation extended to
Costa Rica.
Kathleen Daly at the U.S.
Embassy in San José told the press the report was
"extremely confidential" and could not be
released. "As a final point we were informed that
the investigation of the Hank González organization
in the United States is ongoing and therefore it is
not appropriate to comment on any possible accusations
of criminal activity," she said in an interview
quoted in Proceso.
In November, Proceso
published the full text of a confidential U.S. Customs
Service Report on Operation White Tiger, which
referred to the white Siberian tiger customs officials
confiscated from Jorge Hank Rhon in 1991, when he
tried to smuggle the animal into Mexico through San
Ysidro, California. Carlos Hank González' younger son
is the enfant terrible of the Hank family.
Jorge Hank owns the Agua Caliente horse track in
Tijuana and several off-track betting parlors in
Mexico. "My only vice is animals," he told Proceso,
referring to the horse track, the tiger, and a chimp
and gorilla he was caught illegally shipping into
Mexico -- as well as a separate incident at the Mexico
City airport where customs agents discovered his
suitcase was packed full of skins of rare, protected
animals.
Jorge Hank also owns the
Tijuana daily, El Heraldo. Since 1988, he has
been the indirect subject of a standing ad in the
Tijuana weekly Zeta. Paid for by Zeta
publisher Jesús Blancornelas, the ad has nothing to
do with the fights over circulation and ad revenue
that normally animate fights between rival
publications. It demands that the government prosecute
the "intellectual author" of the
assassination of Héctor "el Gato" Félix,
the Zeta co-editor and columnist murdered by
Antonio Vera Palestina and Victoriano Medina. At the
time of the murder, Vera Palestina, the former
bodyguard of Carlos Hank González, was Jorge Hank
Rhon's bodyguard. Medina worked as a security agent at
Jorge Hank Rhon's Tijuana racetrack. Both men are
serving prison terms for the murder. (Blancornelas
himself was shot and critically wounded in a 1997
assassination attempt in which his bodyguard was
killed while shooting at the assailants.)
The customs report reprinted
in Proceso also focuses on Transportacíon Marítima
Mexicana, a shipping company controlled by Carlos
Hank; the Tijuana race track; and Laredo National
Bank. It also provides details about alleged drug
dealing and money laundering by the Hank enterprises.
None of this has anything to do with federal banking
law, but Federal Reserve lawyers would have to be
blind to miss it. "The enforcement and supe
supervision] people at the Fed don't do criminal
investigations," a former Fed employee said.
"They license and supervise banks, it's all
financial. But they do pay attention to this sort of
stuff."
It appears that they are
paying attention. A Fed legal staff memorandum
subpoenaed in the Washington proceeding cites a
September 11, 1996, news story in which Reuters
reported that "Mexican officials have discovered
additional U.S. bank accounts belonging to former
President Carlos Salinas' brother Raúl Salinas that
may have been used to launder illegal drug money. Reforma,
a Mexico-City daily, reported that one of the accounts
being investigated by Mexican and U.S. officials is at
the LNB], which is located just over the border in
Texas and owned by Mexican financier Carlos Hank Rhon....
The government documents show Salinas may have used
the U.S. accounts to transfer money to and from large
secret bank accounts in Switzerland that were
discovered late last year."
Subpoenas issued by the
Federal Reserve staff also request information dating
from 1991 for eighteen companies, including Incus,
Kline, and Grupo Financiero Interacciones (a Hank
family holding company). The Hanks began acquiring LNB
shares in 1991. Also subpoenaed are records of
transactions believed to be related to money
laundering involving Mr. Hank Rhon, Raúl Salinas, and
Juan Gómez. Juan Gómez is the name on a Mexican
passport Swiss authorities seized from a safety
deposit box in a bank in Zurich. On the passport was a
photo of Raúl Salinas, the brother of former Mexican
President Carlos Salinas. Swiss authorities seized $90
million from Raúl Salinas' accounts. Raúl Salinas is
in prison in Mexico.
"After taking into
account the size of Hank Rhon's financial resources,
his good faith, the gravity of the violations, the
history of previous violations, and such other matters
as justice may require, the Board of Governors hereby
assesses a civil money penalty of $10,000,000 against
Hank Rhon...." reads the complaint. In similar
language, the Fed's legal staff recommends $31,100,000
in fines for Incus, the Hank's holding company in the
British Virgin Islands.
"We intend to have this
matter taken off the table," said Richard Bickler,
the Fulbright & Jaworski attorney representing
Hank Rhon. In an abbreviated telephone interview,
Bickler said the Fed's charges have no merit. (He has
returned no calls since an initial conversation and is
speaking through Robert Siegfried of New York.) Should
they lose the first round, Hank Rhon and Incus can
appeal before the Federal Reserve Board, and then in
the Federal Court of Appeals in Washington, D.C.
In Court in laredo?
What does all this have to do
with Christopher Whalen? LNB alleges that Whalen cost
the bank its opportunity to purchase Mercantile in
Brownsville, which was ultimately acquired by Norwest
Bank. Whalen, who once published a business newsletter
called The Mexico Report, wrote about the
Hanks, and was on one occasion called before a House
Banking subcommittee, where he testified about their
business interests. The bank's lawyers claim he later
provided the Federal Reserve Board with information
that damaged the bank -- and that he did it for his
own personal gain.
Yet one document in
possession of the Federal Reserve's Washington legal
staff and Hank Rhon's Washington lawyers suggests that
Citibank might have pointed the Fed toward Laredo. The
Fed's summary describes a meeting the Fed's staff held
with Citibank -- at the request of Citibank. "At
the meeting, the Citibank representative provided
information concerning possible violations of banking
laws and misrepresentations to the Board that had come
to the attention of Citibank's attorneys."
Citibank -- for years the
only U.S. bank with a branch office in Mexico -- has
had problems of its own. It was through "Citi"
that Raúl Salinas moved much of his money out of
Mexico and on to Switzerland. The New York Times
and the Washington Post have reported on
Salinas' dealings with Amy Elliott, his personal
banker in Citibank's New York office. It has also been
reported in the Mexican and U.S. press that Carlos
Hank Rhon provided Raúl Salinas suggestions on how to
get his money out of Mexico.
LNB's suit against Whalen is
still focused on jurisdiction -- whether the case can
be tried in state district court in Texas. In a court
appearance on February 23, Laredo National Bank's
attorney Richard Cedillo argued the merits of a
long-arm provision of
Texas law, which holds
out-of-state defendants responsible for actions
committed in another state if the effects of the
action are felt in Texas. He also claimed that
Whalen's ownership of a Texas corporation, Legal
Research International, makes him subject to Texas
tort law.
Whalen's local counsel, John
Convery, argued that Whalen never owned a Texas
business. He had once considered a joint business
venture with a Houston resident. When the company was
incorporated, Houston businessman Billy Flanigan
listed Whalen as officer -- admittedly (in Flanigan's
deposition) without Whalen's consent. Flanigan, the
elderly co-defendant from Houston, seemed bewildered
and angry to have been dragged into court to provide
Laredo National Bank with Texas jurisdiction.
His February 7 deposition is
antagonistic, hostile, and filled with monosyllabic
responses. One non-responsive response Flanigan
offered summed up his frustration. "No," he
said to a question about contacts with government
officials. He added, "I believe that I have been
wrongfully named. My company has been wrongfully
named. And I am not a party to this case." He is.
Unless the judge dismisses him. Or Laredo National
Bank drops him, which would eliminate one of their
jurisdictional claims to keep the case in a Texas
court.
Christopher Whalen's
deposition was ultimately held in Judge Salinas'
courtroom. It's more revealing than Flanigan's, in
part because Whalen was too forthright. And it returns
to the backstory of the Fed's investigation of LNB:
drugs and federal drug enforcement officials.
In 1998, in a statement he
now regrets, Whalen advised a Florida investor
shopping for a bank that LNB's request to buy
Mercantile National bank would not be approved by the
Fed. "In terms of your negotiating
strategy," Whalen wrote in a letter to the
potential buyer, "you should be mindful of the
fact that the Fed, through regulatory inaction, did
not permit LNB to purchase Mercantile Bank in
Brownsville (through my efforts and those of
others)..." Whalen claims his comment
"through my efforts" was hyperbole. "It
was overblown and inflated. It was hyperbole on my
part." Laredo National Bank isn't buying Whalen's
hyperbole argument.
The "others" were
federal drug enforcement agents, whose names Whalen
tried to avoid revealing until Judge Salinas ordered
him to provide them. In his deposition, Whalen states
that because he knew Mexican finance, he was contacted
by D.E.A. agents inquiring about Carlos Hank Rhon.
(The officers named, according to D.E.A. agent Vincent
Rice in San Diego, were local police officers assigned
to D.E.A. task forces.) Whalen passed the contacts on
to the Fed when their investigators called on him.
Throughout his deposition, Whalen repeated that it was
the Hank family and not Laredo National Bank that
investigators from the D.E.A. and the Fed wanted talk
about. "I indicated to him that I had been
contacted in the past by a variety of law enforcement
organizations, primarily the D.E.A., who had interest
in or ongoing investigations of connections between
the Hank family and drug trafficking and money
laundering," Whalen said. Whalen also said he
once asked former U.S. ambassador to Mexico Jim Jones
about the Hanks and was told "I really don't
think there's anything there." (An odd fact
revealed in questions about the Fed is that Whalen's
father is a longtime friend of Fed Chairman Alan
Greenspan.)
Their bank's attorney also
pressed Whalen for information about Citibank. Does he
have any relationship with Citibank? Does he know a
Citibank employee named Amy Elliott? "Any
relationship with Philip Jordan? Do you know who Phil
Jordan is?" Whalen answered no to each question,
which suggests that he might not be the best source on
current affairs in Mexico. As has been widely reported
in the U.S. press, Amy Elliott is the bank officer in
New York who handled the personal affairs of Raúl
Salinas. Philip Jordan is a former D.E.A. agent living
in El Paso, who has been openly critical of the
agency's failure to aggressively pursue big players in
Mexico and is frequently quoted in drug-related
stories.
LNB's lawyers are also
looking for information from federal drug agents.
Richard Cedillo subpoenaed fourteen separate items
from federal drug enforcement agencies. The Assistant
U.S. Attorney in Laredo responded by promptly moving
the subpoena to federal court in Laredo: "Laredo
National Bank had a long laundry list, a long
list," Hector Ramírez said. "And the
agencies said we can agree to release documents listed
in items one and two. And we released the documents in
items one and two, and that's where we are." Ramírez
said the U.S. attorney's office provided Laredo
National Bank with some information from the National
Drug Intelligence Center and implied that further
requests for drug agency information will have to be
litigated.
Whalen was also asked about
his contacts with the press: Knute Royce of Newsday,
Michael Allen of the Wall Street Journal, and
finally Dolia Estévez of Financiero, who has
written extensively on the Hanks. Estevéz is the only
Mexican reporter writing extensive stories about the
Hank's fight with the Federal Reserve. She has even
briefly covered the Laredo Bancshares suit against
Whalen.
Attempts to speak to Gary
Jacobs in Laredo, Richard Cedillo in San Antonio, and
attorneys representing Hank Rhon and Incus in
Washington, D.C., resulted in a response from a public
relations firm in New York. Responding to calls and
faxed questions sent to Akin Gump and Fulbright &
Jaworski's Washington offices, and to Richard
Cedillo's office in San Antonio, bank spokesperson
Robert Siegfried responded for all three lawyers, by
telephone and email:
Your questions appear to
confuse two separate actions -- Laredo National
Bancshares litigation against Christopher Whalen and
the Federal Reserve's inquiry conducted by its staff
with respect to Carlos Hank Rhon of which Laredo
National Bank is not a party. With respect to the
Whalen litigation, Laredo National Bank clearly lays
out its charge that Whalen specifically interfered
with an executed contract of purchase between Laredo
and Mercantile and that, as a result, Laredo has been
harmed by this interference. Laredo National Bank has
brought these proceedings to prove just that. Beyond
this, we have no further comment, other than to say
that the facts and information in this case speak for
themselves. In terms of the Federal Reserve inquiry
with respect to Mr. Hank, Mr. Hank and his
representatives have made it quite clear that the
inquiry is without merit and will be shown to be just
that. In summary, neither litigation is determinative
of the other.
Siegfried also called the Fed
action inconsistent with of the "intent and
spirit of NAFTA."
Whalen's attorneys point to a
timeline they claim will establish that he could not
have interfered with the case before the Fed, and
argue that no one individual can move the Federal
Reserve in the way the plaintiffs claim -- unless that
individual is Alan Greenspan. (Part of LNB's claim is
that information provided by Whalen so slowed the
Fed's consideration of the attempt to acquire
Mercantile that the opportunity was lost.) In Judge
Salinas' courtroom, Whalen's lawyers said their client
was contacted by
Fed investigators and asked
for information. He put them in touch with the D.E.A.
officers who had called him earlier to inquire about
the Hanks, the lawyers insist. The Federal Reserve,
they add, is responsible for LNB's problems.
The lawsuit in Texas is
grinding forward and thus far has amounted to
discovery, depositions, and two court hearings. After
one hearing that included a loud, angry discussion at
the judge's bench, John Convery stopped at the back of
the courtroom and commented on the cattle custody suit
heard earlier in the day. "What a great
plaintiff," Convery said. "The kind of guy
every lawyer wants on the stand. Honest, sincere,
eloquent."
In Laredo, Judge Salinas is
expected to rule on jurisdiction for the Whalen suit
within a month. In Washington, the Hanks and Incus
requested a private hearing, claiming that the
"'airing of private and personal business
affairs' could act as a disincentive for foreign
investors with unidentified repercussions in
Mexico." The Federal Reserve Board rejected the
request and ordered a public hearing, scheduled for
October.
Reporters subpoenaed in
suit over leak of ‘corrupted’ drug report
- A Texas bank sued a
college professor, accusing him of infiltrating a
federal drug investigation and providing reporters
with an unofficial government document that
allegedly contained incorrect information linking
the bank and its officers to illegal drug activity.
Two newspaper reporters have
been subpoenaed by a Texas bank that is accusing an Ohio
man of planting lies in an unofficial government
document that links the bank and its Mexican owners to
drug trafficking and then distributing the tainted
report to the press.
The lawsuit, which already
involved two states and a Mexican family, stretched to
Virginia and Washington, D.C., in the last few weeks
when subpoenas were served on Dolia Estevez, a reporter
for El Financiero, a Mexican newspaper; and Jamie
Dettmer, senior editor of Insight, the weekly
magazine of The Washington Times.
Laredo National Bank also has
tried to serve a subpoena on Washington Post
reporter Douglas Farah, who has been out of the country,
an attorney for the Post said.
The subpoenas seek all
documents the reporters used in preparing their stories
about the federal drug investigation, as well as notes
from conversations the reporters had with key players in
the civil lawsuit.
Laredo National Bank also wants
to know whether the reporters provided documents to each
other while they were preparing their stories.
The bank is "trying to
conjure up some idea that we are in some kind of
conspiracy together," Dettmer said. "They
completely misunderstand how the press works in the
United States. We are competitors and rivals."
Laredo National Bank's lawsuit,
filed in August 2000 in U.S. District Court in
Cleveland, accuses Donald Schulz, chairman of the
political science department at Cleveland State
University, and unnamed defendants of infiltrating a
federal investigation called "Operation White
Tiger" and causing "disinformation and
flat-out lies" to become part of a draft government
report in March 1999.
The lawsuit says the report
incorrectly linked the bank, bank president Gary G.
Jacobs and bank chairman and majority shareholder Carlos
Hank Rhon to illegal drug activity and money laundering.
U.S. government officials later said the report
contained names that may not have been targets of the
investigation, the lawsuit claims, and that news reports
linking the bank, Jacobs and Rhon to crime were not
true.
The bank accuses Schulz of
fraudulently obtaining the flawed draft report and
distributing it to reporters, including Estevez. The
lawsuit accuses Schulz and the unnamed defendants of
conspiracy, violation of federal and state racketeering
laws, tortious interference with contract, defamation
and invasion of privacy.
The bank has threatened to add
Estevez as a defendant for "deliberately and
tortiously traffick(ing) in an unauthorized, unvetted,
draft executive summary of a government report
overflowing with rumor, innuendo and outright
falsehoods," according to court documents.
Estevez, who lives in Reston,
Va., and covers Washington, D.C., for the Mexican
business paper, believes the bank is trying to
intimidate reporters.
"I definitely think that
one of the reasons or motivations they have is to
intimidate reporters, not only Mexican reporters but
American reporters, into not covering any news related
to their activities in the United States," Estevez
said.
Her attorney, Richard Goehler,
said Estevez obtained information lawfully and properly
and published it, which is newsgathering activity
protected by the First Amendment.
Estevez is refusing to comply
with the subpoena. A U.S. District Court judge in
Alexandria, Va., will hear arguments on Feb. 22 on
Estevez's motion to quash the subpoena.
Dettmer, who has been
subpoenaed in Washington, D.C., said he will provide
nothing more than his published articles.
(Laredo National Bancshares,
Inc. v. Schulz; Media counsel for Dolia Estevez: Richard
M. Goehler, Frost Brown Todd LLC, Cincinnati, Ohio;
Media counsel for Jamie Dettmer: Allen V. Farber and
James A. Barker, Akin, Gump, Strauss, Hauer & Feld
LLP, Washington, D.C.) -- MD
Bankers Attack Mexican Reporter
The "Hank Bank," Laredo National, Tries to
Force Estévez to Reveal Her Source
Banker Gary Jacobs: Enemy of a Free Press
A Narco News Global Alert
Narco
News Commentary:
The desperation of the narco-banking industry to silence
scrutiny upon its operations is coming to a head in yet
another lawsuit in the United States; the effort by Gary
Jacobs, the Mexican Hank family and the Laredo National
Bank to abuse the court system to harass, now, at least four
journalists and academics who have reported on their
activities.
The bankers and their lawyers began with a vicious campaign
against author and expert on Mexican finance Christopher
Whalen, hauling him into court and then getting caught in an
entrapment scheme
that preceded the suspicious exit of the Washington law
firm Akin,
Gump, Strauss, Hauer & Feld
from the case. Whalen has since counter-sued.
Then, the same bankers had their lawyers send a threatening letter
to journalists at El
Andar magazine
in California, demanding $10 million dollars from the
small magazine that covers Latino-American news and
issues. El Andar and its reporter Julie Reynolds
courageously pressed on with the story.
Then, the
same bankers sued a mild-mannered professor, Donald Schulz,
accusing him -- without solid evidence -- of leaking a
joint report by five U.S. law enforcement agencies on
connections between the Hank family (an infamous Mexican
political empire), drug trafficking and drug money
laundering. The bankers don't deny the existence of the
report. They simply blame Schulz for its publication in El
Financiero of Mexico City and the
Washington Post.
Now, the Mexican news agency Notimex reports that the
bankers are trying to subpoena Mexican journalist Dolia
Estévez of the daily business newspaper El Financiero
of Mexico City -- who first reported on the joint
allegations by the FBI, Customs, the DEA, the CIA and
Interpol linking the Hank family with narco-banking and
trafficking -- to force her to reveal her source for the
document.
Gary Jacobs and the Laredo National Bank of Texas are using
their questionably-earned financial might to attempt to
bully and silence the press by abusing the U.S. court
system. They seem hell-bent on reversing more than two
centuries of free speech law. Jacobs and Laredo wish to
halt the right of the press to print government documents.
They wish to erase established protections for reporters
to protect their sources. They file expensive legal suits
that have, in our opinion, zero chance of succeeding, with
the sole goal of harassing and intimidating journalists
from reporting on their activities.
In other words, Gary Jacobs and the Laredo National Bank are
desperate to prevent you, the public, from knowing about
their questionable behavior in the banking industry.
It is important to note that, like
Banamex-Citigroup in its failed attack on Narco News,
Jacobs and Laredo National Bank haven't sued the real
source of their problems: the Federal Reserve Board; the
agency that, after a long series of legal proceedings,
forced Carlos Hank Rohn to resign as chairman of the
Laredo National Bank after the Fed revealed that he had
bought the bank by laundering massive amounts of
mysterious money through Caribbean islands.
Instead of facing the music on the official enforcement actions
against them, the bankers use their billions to go after
journalists. And even there, they don't attack the large
newspapers like the Washington Post or El
Financiero who have published the stories and who have
pockets deep enough to defend themselves. They instead
target individual journalists and academics who, they
know, don't have the financial resources to mount a full
legal defense.
This is an abuse of the court system. It reveals the unwillingness
of the bankers to live within an open society of press
freedom and free speech. It attempts to purchase impunity
and immunity from public scrutiny.
It also reveals how dirty the narco-banking industry is in our
era: Only those with big secrets to hide fear public
scrutiny. And these
secrets,
if disclosed, could stop the source of illicit billions:
the insincere prohibition on drugs.
Gary Jacobs and the Laredo National Bank have thus revealed
themselves as enemies of the United States Constitution
and of every authentic journalist in our América.
The threats against Whalen, Reynolds, El Andar, Schulz
and, now, Estévez are threats against all of us.
Narco
News
expresses its solidarity with each of these persecuted
journalists and academics, and reiterates our continued
commitment to cover this story about the systematic
attacks on press freedom by Gary Jacobs and the Laredo
National Bank.
We urge
our colleagues throughout the news media to provide
greater coverage of this story. If enemies of freedom like
Gary Jacobs and Laredo National Bank are allowed to
continue this campaign of high-powered abuse of the
Courts, who will they target next? Silence, in this case,
is complicity.
Today we
provide a translation of the Notimex report on the
persecution of Mexican journalist Dolia Estévez, and a
series of background links for other journalists to use in
covering this story.
From somewhere in a country called América,
Al Giordano, Publisher
The Narco News Bulletin
https://www.narconews.com/
narconews@hotmail.com
Journalist
Subpoenaed in Hank Bank Case
She published U.S. intelligence report that connected
Hank's group with the narco
Lee Ud. el Articulo en Español
From the NOTIMEX news agency and La Jornada of Mexico City
February 7, 2001
The United States judicial story of
the Hank family opened a new chapter with the subpoena of a
Mexican journalist who published a report of intelligence
agencies from that country that connects them with narco-trafficking.
Attorneys for Dolia
Estévez, correspondent of the Mexican daily El Financiero,
sought to have the subpoena quashed on First Amendment
grounds according to the United States Constitution, that
protects reporters against having to reveal their
information sources.
The District Court
judge of the State of Virginia must decide on February 22nd
whether to grant or not the motion by Estévez's attorney to
annul the citation.
"This is
unquestionably a case of abuse... of violation of the First
Amendment of the constitution," said Lucy Dalglish,
president of the Reporters Committee for Freedom of the
Press, an organization that backs and brings legal help to
Estévez.
"It's about a
fishing expedition," in which the accusors want to
cause pain to whoever exposes their story in public,
Dalglish emphasized.
Last January 9th, a
District Court in the State of Virginia presented - on the
petition of Laredo National Bank (LNB) - a subpoena to Estévez
to testify in the case of Laredo National Bankshares, LNB
and Gary Jacobs against Donald E. Schulz.
Jacobs is the
president of Laredo National Bank - property of the Mexican
businessman Carlos Hank Rhon - and Shulz is the academic
that LNB accuses of having conspired to have a branch of the
Justice Department of the United States emit a report about
presumed connections of the Hank group with drug
trafficking.
The National Drug
Intelligence Center (NDIC) elaborated the report, and the
case is now known as Operation White Tiger.
Estévez was the
first Mexican journalist to reveal the fact - in May 1999 -
some months after a Washington Times reporter published
aspects of the story and days before the Washington Post
published its version.
The lawsuit against
Schulz, filed in the state of Ohio - where he lives - also
accuses him of having "disseminated" the report to
the press, and among the journalists to whom he leaked the
document was Estévez.
Background Links
The June 7, 1999 Washington Post Story:
http://www.mapinc.org/drugnews/v99/n587/a09.html?1256
Hank Owned Bank Violated Election Laws:
http://elandar.com/hank/
Hank Bank's Entrapment Scheme Foiled:
http://www.elandar.com/back/spring01/stories/story_entrapment.html
Mark Schapiro on Narco Bankers vs. the Press from The Nation:
http://www.thenation.com/doc.mhtml?i=20010917&s=schapiro
History and Archives of the Drug War on Trial Case:
https://www.narconews.com/warroom.html
RETURN TO CUSTOMSCORRUPTION.COM
|