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The Salinas-Citibank Affair

A Series of reports from Money Laundering Alert

January 1996 through January 1997


From the January 1996 issue of Money Laundering Alert:

"U.S. Laundering Law Applies in Salinas, other Corruption Cases"

The sordid scandal swirling around former Mexican President, Carlos Salinas, involving allegations that his brother, Raul, accumulated hundreds of millions of dollars from shaking down multinational corporations who did business there and from Mexican drug traffickers puts in focus the applicability of the U.S. money laundering law to transactions involving the proceeds of foreign official corruption.

The U.S. has served for decades as a refuge for corrupt foreign leaders and their family members who usually serve as their "bag men." Former foreign government ministers, military leaders and heads of state who come to the U.S. to live off the millions they stole and extorted would comprise a very long list. The U.S. usually knows who they are.

If the U.S. is truly frustrated about the foreign corruption that impedes the progress of international money laundering and drug trafficking control efforts and wishes to send a strong message to foreign corrupt officials, and to U.S. institutions that help hide their money, the U.S. money laundering law, with its heavy penalties, could deliver the message very effectively. Several news accounts have reported that Raul Salinas, while his brother was president, opened and maintained accounts at U.S. and Swiss banks in a name, Juan Guillermo Gomez Gutierrez, that the bankers knew was fictitious. It is said he may have amassed more than $150 million in those accounts. One Swiss account had $84 million. Some of the money is believed to have been routed through or deposited in U.S. banks with the assistance of "private bankers" employed by U.S. banks in Mexico and New York. The U.S. money laundering law contemplates a fact pattern into which the Salinas affair could fit.

First, the law has "extra-territorial" jurisdiction if the laundering is by a U.S. citizen or, if by a non-U.S. citizen, it occurred at least in part in the U.S. Sending or transporting money into the U.S. is certainly conduct that occurs in the U.S. (Title 18, USC Sec. 1956(f)). Next, it must be determined if the money "involved in a financial transaction," is the "proceeds of specified unlawful activity." The law requires that the proceeds of at least one of more than 100 crimes listed as "specified unlawful activities" be involved in the financial transaction before there can be a money laundering prosecution (Title 18, USC Sec. 1956(a)(1), (2), (3) and (c)(7)).

The overwhelming majority of the "specified unlawful activities" are U.S. offenses. However, the U.S. Congress, for reasons not totally clear, included a handful of "offenses against a foreign nation" as "specified unlawful activities" in the law. The proceeds of those foreign crimes can serve as a basis for a U.S. money laundering prosecution even if the underlying crime was committed outside the territory of the U.S. The foreign crimes listed as "SUAs" are: extortion, narcotics, fraud against a foreign bank, kidnaping and robbery. (Title 18, USC Sec. 1956(c)(7)(B)(I)-(iii)). If the money Raul Salinas was depositing in accounts in or through U.S. banks came from narcotics traffickers, he could be prosecuted for money laundering assuming his intent was to hide or disguise the nature, source or ownership of the money. By the same token, if employees of U.S. financial institutions where Salinas conducted transactions knew or were "willfully blind" to the fact that his money represented the "proceeds of some form of unlawful activity," they could also be candidates for money laundering prosecution.

Similarly, if multinational corporations paid money to Salinas under extortionate demands by him acting implicitly under the authority of his brother, the President, the U.S. law's requirement that "proceeds of specified unlawful activity" be involved in the financial transaction appears to be met.

The principal U.S. federal extortion law, called the Hobbs Act, is often used against corrupt U.S. public officials. They are accused of the crime of "obtaining... property from another, with his consent, induced by wrongful use of actual or threatened... fear, or under color of official right" (Title 18, USC Sec. 1951(b)(2)). That law provides the model that the U.S. Congress presumably had in mind when it listed "extortion" as one of the few foreign crimes whose proceeds could serve as a basis for money laundering prosecution. U.S. financial institutions with foreign customers whose funds could originate from "offenses against a foreign nation" might want to give special scrutiny. There is no reported case of the use of the U.S. money laundering law to prosecute persons involved in foreign official corruption. The law seems to support and welcome such prosecutions.

Foreign Crimes that are "Specified Unlawful Activities" under the U.S. money laundering law

1. Extortion

2. Fraud against foreign bank

3. Kidnapping

4. Narcotics

5. Robbery

Source: Title 18, USC Sec. 1956(c)(7)(B)


From the February 1996 issue of Money Laundering Alert:

"Drug Lord, Now in U.S. Custody, Has Key to Mexican Corruption"

Juan Garcia Abrego, the first international drug trafficker to appear on the U.S. Federal Bureau of Investigation's 10 Most Wanted List, landed in U.S. custody late last month marking the end of a three-year manhunt which seemed hopelessly hindered by Mexican official corruption. If he wishes to use it, he holds the key to the ongoing puzzle of the extent, nature and depth of the official corruption in Mexico and the reasons for the slow progress by Mexico in instituting money laundering reforms as the U.S. has urged in the past seven years. The possibility that he will reveal the inner workings of the Mexican government corruption, possibly including that of former Mexican President Carlos Salinas, is a tantalizing prospect to U.S. and Mexican authorities. They view it as no accident that Garcia Abrego became one of the world's largest during the Salinas administration. Reports put his drug organization's monthly budget for political pay-offs at $50 million. His friends who were formerly in high places are believed to include Raul Salinas, brother of the former Mexican president, and Mario Ruiz Massieu, Mexico's former deputy attorney general. It is alleged that the millions of dollars seized by the U.S. government in accounts held by Massieu at the Texas Commerce Bank in Houston last July came as bribes from Garcia Abrego (MLA, Jul. 1995).

Garcia faces U.S. charges of money laundering and drug trafficking contained in a 1993 indictment. He has asserted that as a Mexican citizen he was wrongly brought to the U.S. Assistant U.S. Attorney Melissa Annis, who is the lead U.S. prosecutor, argues that Garcia Abrego is a U.S. citizen, citing his U.S. social security number. The Mexican government justified his deportation by saying that "his continued presence in the country was judged to be undesirable."

The indictment says Garcia Abrego's organization moved more than $10 million in U.S. currency obtained from cocaine sales from the U.S. to Mexico. It identifies him as "the principal leader of a criminal enterprise... which imported, warehoused, transported, and distributed ton quantities of cocaine and marijuana" from Mexico to the U.S. Abrego, who pleaded innocent to the charges, says he will not cooperate with U.S. prosecutors

(Case No. H-93-CR-167-SS, So. Dis. Tex.).


From the April 1996 issue of Money Laundering Alert:

"Citibanker for Salinas had been Star U.S. witness"

Senior Citibank officer, Amy Elliot, who moved tens of millions of dollars from 1991 to 1993 for Raul Salinas while his brother was President of Mexico, was instrumental in the 1994 money laundering conviction of a former Citibank subordinate with her testimony of how Citibank's private bankers follow stringent "know your customer" and money laundering controls. According to sources, Elliott violated those same procedures in her earlier handling of the Salinas millions.

Her testimony was given in the Brownsville, Texas, jury trial of two American Express Bank International private bankers for laundering millions of dollars for the notorious Mexican drug cartel of Juan Garcia Abrego, who was deported last year by Mexico and is now in U.S. custody. Antonio Giraldi, one of the convicted bankers, is appealing his conviction. When she testified, nothing was known about the role she had played in the previous three years in helping Raul Salinas move about $100 million that Mexican and U.S. authorities have now linked to him in bank accounts in Switzerland, Mexico and elsewhere. The help involved establishing accounts for Salinas in the names of Cayman Islands corporation and in false names. One of the Swiss banks where she established accounts for Salinas, Confidas, is an affiliate of Citibank. Another, Pictet & Cie., a large Swiss private bank, is believed to be the place in Geneva where Salinas's wife, Paulina Casta on, was arrested last November as she tried to withdraw a portion of $84 million held in an account Elliott is said to have helped open that was held in one of Salinas's false names, Juan Guillermo Gomez Gutierrez. Federal grand juries in Washington, D.C. and New York have begun gathering evidence in the case including records subpoenaed from Citibank. The scandal involving the second largest bank in the United States, has ramifications that go far beyond possible violations of the U.S. money laundering laws and compliance with suspicious activity reporting regulatory norms.

Elliott's testimony in the celebrated case, which led to fines and forfeitures against AEBI of $35 million, the largest on record, reads like a model of good compliance and due diligence in bank money laundering controls. She told the judge and jury that she had never managed funds for "former" Mexican public officials and that Citibank's policies on knowing its "private banking customers extends to the point of "visit(ing) our clients 10 to 12 times a year in their country." "This is why we go to their homes, this is why we visit with their family, this is why we go to their business, this is why we remember birthdays.... It's too risky not to do due diligence, not to know who you're dealing with...," she testified.

Elliott, a Cuban-American, began her Citibank career in the human resources department in 1967 and climbed the ranks becoming head of the "Mexico team" for international private banking in 1983. Her testimony provides a clue to what the top echelons of Citibank knew of the Salinas transactions. Elliott said when a new customer "prospect" comes to the bank, "you will be sure to be asked, Who is this person, what do they do, who introduced them to you,' by at least three or four people higher than you. It's just the way it is."


Citibank Jobs Shuffle Coincides with Key Dvents in Salinas Affair

Is it possible that the chairman and board of directors of a bank could not be aware of these circumstances?:

a) The brother of a country's President is accepted as a customer in that country at the foreign office of a major U.S. bank and conducts transactions approaching $100 million, b) he opens accounts in false or front names through the bank's U.S. headquarters where his true identity is known, c) with the help of the same bank officers, he deposits very large sums in an affiliated Swiss bank, d) on whose board sits an executive-level officer-in-charge of the bank's large Swiss operations, e) who reports to a U.S. executive officer who reports directly to the bank's chairman.

The Citibank-Raul Salinas affair provokes that question and others. No conclusions can presently be drawn about the knowledge or involvement of high-ranking officials at Citibank. This can be pieced together:

  • Some Citibank officials whose duties put them in a position to know about Salinas's relationship with the bank transferred to other jobs or announced retirement shortly after Salinas's wife, Paulina Castanon, was arrested by Swiss authorities in Geneva on November 15, 1995. She was attempting to withdraw money from an $84 million account Salinas had in a false name that had been established, with the help of Citibank officers, at Pictet & Cie., an exclusive private bank.

  • Amy Elliott, head of Citibank's "Mexico Team" in New York, who had direct contact with the Salinas transactions, is said by Citibank spokesman Richard Howe to still be a vice-president in private banking. He declined to comment on whether she still has responsibilities in Mexico.

  • From 1989 to 1993, Elliott, a Cuban-American, was managing Salinas's accounts while Citibank's senior officer in Switzerland, Executive Vice President Hubertus M. Rukavina, served as a board member of Confidas, a Citibank-owned bank in Geneva. Confidas held accounts for Salinas in the names of Cayman Islands companies, as was first reported on March 25, 1996, by Andres Oppenheimer of the Miami Herald.

  • Rukavina was Citibank's Swiss-based Executive Vice President for Worldwide Private Banking, with responsibilities over Elliott's Mexican operations, during the time some of the Salinas transactions occurred. On January 16, 1996, 61 days after Casta on's widely-publicized arrest in Geneva, Rukavina was transferred to head Citibank's Investment Products Group.

  • While head of Worldwide Private Banking, Rukavina, an Argentinean, reported to Pei-Yuan Chia, head of Citibank's Global Consumer Bank. Pie reported directly to Citibank's Chairman, John S. Reed.

  • On January 12, 1996, 57 days after the Casta on arrest, 56-year-old Pie announced he would retire "during the year." On January 13, the New York Times reported: "The departure of the highly regarded executive was not expected and prompted concern by some banking industry analysts." A CS First Boston analyst was quoted: "I'm floored. Pei is the earnings power of Citibank...."

    Howe declined to comment on whether Salinas had any transactions at Citibank. He said the personnel changes "had absolutely nothing to do with any allegation. It had nothing to do with Salinas whatsoever. It had to do with a general reorganization. A number of positions changed at that time." Citibank press releases in January 1996 documented several personnel changes, including Pei's. Senior international bankers, who asked not to be quoted, say that it is "virtually impossible" that the chairman of a bank, even one of Citibank's size, not know about a new customer who met the Salinas characteristics.


    Citibanker's 1994 Testimony: "Too risky not to do the due diligence"

    United States vs. Antonio Giraldi

    May 12, 1994

    (Editor's Note: Amelia Grovas Elliott, a senior Citibank private banking officer in New York,

    from 1991 to 1993 managed the multi-million dollar transactions of Raul Salinas, the brother of

    then Mexican President Carlos Salinas. They involved deposits in a Swiss bank affiliated with

    Citibank and other institutions. The accounts bore false and front names used by Salinas to hide

    his identity. In 1994, Elliott testified as a star witness for the U.S. government in the money

    laundering prosecution of Antonio Giraldi, a private banking officer at American Express Bank

    International who previously worked for her at Citibank.

    The following are extracts of her

    testimony, before judge and jury, which helped convict Giraldi. He is appealing his conviction

    for which he received a 10-year prison sentence).

    History with Citibank

    Q: .. (W)hat (are) your duties are as vice-president at Citibank?

    A: I head the Mexico team for the international private bank of the bank.... Since June of 83, so

    11 years.

    Q: (W)hat your duties... in that position?

    A: I manage a team of 10 people with responsibilities... primarily to manage accounts for Mexican

    high net worth individuals.

    Q: How do you define a high net worth individual?

    A: Usually an individual who has a net worth of at least $5 million and that has liquidity of at least

    a million to invest with us.

    "White gloved" banking

    Q: What is international private banking?

    A: Private banking is the area of the bank... that deals with clients with more money than the

    general public, that does it on a more white gloved kind of environment.... In the private bank of a

    bank, you are a name. The person knows you, knows who you are, knows your family, they

    recognize your voice.... (I)t is basically a more personalized kind of banking relationship....

    Q: ... (T)he laws which govern your conduct as an international private banker are the same laws

    that govern the conduct of bankers in the retail bank, commercial bank, the domestic private bank,

    they're the same laws, is that correct?

    A: They're the laws, the banking laws, correct.

    "High profile" clients

    Q: Is it reasonable to assume that bank officers...such as yourself who have extensive experience

    with international private banking clients in Mexico would be more likely to spot something

    improper or to have a funny feeling about a prospective client than a relatively inexperienced

    relationship manager?

    A: Yes.

    Confidentiality for clients

    Q: Are any of your international private banking clients concerned about the confidentiality of

    their holdings?

    A: Most of them are.

    Q: So that the Mexican government will not know?

    A: Not so much the Mexican government - I don't know. I have never asked the question of a

    client. It's not - the Mexican government can know. A lot of my clients have reported it to - when

    they took the money out and continue to report it now and pay taxes there. A lot of my clients

    have taken money back and then reported their entire holdings outside....

    Q: ...With respect to the issue of confidentiality..., would it be safe to say that... one of the

    concerns of international private banking for legitimate reasons - and I'm not suggesting for a

    moment that you would do anything for an improper purpose - is to conceal the source or

    ownership of a particular client's funds from people who have no reason to know?

    A: Yes.

    Relationship with Mexican officials

    Q: What is your level of trust with Mexican authority, do you trust Mexican officials of any kind?

    A: Some, some not.

    Q: And how do you determine which you trust and which you don't?

    A: If you get to know them and -- I mean, it's fairly obvious, I think. Mexican officials are talked

    about a great deal

    Q: They have a history of becoming fabulously wealthy while in office, would you agree?

    A: Some....

    Q: Does your team manage funds in some assets, regardless of the investment or the fiduciary

    vehicle, for former Mexican political leaders or their family members?

    A: No.

    Mexicans of sudden, large wealth

    Q: ...(F)rom your decade or so of experience dealing with Mexico, are the people... who have the

    bulk of the wealth well-known in Mexico?

    A: Yes, they are.

    Q: Is it unusual for someone to appear in Mexico all of a sudden with a large amount of wealth

    that hasn't been previously known?

    A: It can happen, ... Mexico is a very big country but, but the people who hold the wealth, the

    bulk of the wealth of the country are not a handful, but a number that is -... manageable. And so,

    ... you have to either meet them or know of them or recognize the name. That is not to say there

    can't be others but, generally speaking it is a fairly tight and fairly small upper crust.

    Q: Have you ever accepted a client, heard of a client who said "I have $12 million I want to

    invest, but I have not had prior banking relationships?"

    A: No.

    Q: Have you ever in your experience..., have you ever had a situation where a wealthy person

    gave you control of $2 or $3 million without having met you?

    A: No.

    Due diligence -- "The way we do things"

    Q: ...Are you aware of any specific statute or regulation in the U.S. which specifically requires a

    bank who is in the processes of accepting a prospective client... to do any particular amount of

    due diligence or to follow any specific steps before they can accept the client?

    A: I don't know if it's a statute. I don't know if it's a law. I just know that is the way we do

    things.

    Q: Precisely. Would you agree that the due diligence process developed - was developed by the

    banks to protect the banks?

    A: Probably.

    "It's too risky not to do the due diligence"

    Q: Would you agree that the objective of the due diligence or "know your client" policy is for the

    bank to achieve some level of comfort with a prospective client before accepting the client's funds

    and engaging in a banking relationship?

    A: ... It's too risky not to do the due diligence, not to know who you're dealing with.

    Citibank's "methodology"

    Q: ...(I)n your... international private banking group..., how would a relationship manager learn

    that he or she had either cut a corner or shaved a little too close on the due diligence process after

    that had been brought to your attention?

    A: The relationship manager would be discussing the prospective client with his or her supervisor

    throughout the entire process.... (I)t's a complex kind of sale, so it has a fairly long, especially if

    you're not... in Mexico, it has a fairly long lead time. You would be discussing this with

    somebody else, for no other reason just to check yourself. "So-and-so referred this person to me.

    This person does this and this. I have got to visit that person." ... And then that person will say,

    "Well you do this." So that's... the methodology that we use. So by the time the client is

    accepted, all those things have been basically ironed out....

    Q: ...(D)idn't you describe yourself as being terribly conservative when you were before the grand

    jury?

    A: .... When I was in front of the grand jury, I described myself as a conservative investor.

    Q: Conservative as an investor, inflexible as a --

    A: Inflexible in the way I do things....

    "Know Your Customer" as "part of the culture"

    Q: Now, when you hired Mr. Giraldi and when this "know your customer," "know your client,"

    policy that you described was in effect, did you provide him with this information, train him about

    it and instruct him upon it?

    A: ... The "know your client," at least in our bank, is part of the culture. It's part of the way you

    do things. It's part of the way you conduct yourself. If you come in with a prospect and/or name

    of a prospect, you will be sure to be asked, "Who is this person, what do they do, who introduced

    them to you," by at least three or four people higher than you. It's just the way it is....

    Q: And... your bank caused your international bankers to engage in extensive efforts to know

    your client before you accepted them?

    A: Yes.

    "Know Your Customer" -- Signature, background checks

    Q: ...What's the purpose of having the bank officer verify the signature of the customer?

    A: The signature card is probably the most important document in a banking relationship because

    a relationship manager, such as what I do, knows the client and usually gets to know the client's

    voice, a client's signature, the client's everything....

    Q: ...Now as part of this "know your customer"...policy, procedure..., is there a requirement to

    obtain bank references?

    A: We require two bank references....

    Q: Did you accept oral references or did you require written references?

    A: We required written references.

    "We remember birthdays"

    Q: Is the "know your client" due diligence process, ... something that is ongoing and continuing

    or, once you have made the decision to accept a client, that's it, he's in or she is in and you never

    give your comfort level another thought?

    A: ... We visit our clients 10 to 12 times a year in their country. They come back three or four

    times to New York. We see the clients a lot. It's obviously a growing kind of thing and not just in

    knowing your customer as (to) make sure you know what's going on, but because the relationship

    can grow deeper the more you know this person. This is why we go to their homes, this is why

    we visit with their family, this is why we go to their business, this is why we remember birthdays.

    It just increases the depth....

    Q: ...You said that one of the things that you try to do in getting to know your client and

    exercising due diligence and following up with your client is that you encourage your relationship

    managers to try to visit them at their home.

    A: At their home or their office, yes.

    Q: And another thing... that you said you liked your relationship managers to do is to get to know

    everybody in the family.

    A: Yes.

    Q: Everybody from the wife, daughters or sons, to sisters and brother-in-laws and things like that,

    correct?

    A: Sister and brother-in-laws if it's relevant, but certainly close members of the family, yes.

    Attraction of Swiss bank accounts

    Q: Are you aware that there are people who find some attraction to Swiss bank accounts --

    A: Yes.

    Q: -- or Swiss portfolios?

    A: Yes, yes, for confidential reasons.

    Q: Why do you believe that there is that perception or... feeling about something being special

    about Switzerland?

    A: ... (B)ecause Switzerland is known for having numbered accounts. Switzerland is known for

    having... very strict confidential laws. Switzerland did have some law changes in that - and we

    have seen it - in that they will not maintain confidentiality anymore if there is a criminal reason

    and/or they've been asked to provide information. A Swiss banker can, in fact, be put in jail if

    they divulge the confidentiality of the name of an account....

    ----

    Case No. CR B-93-028-51, So. Dis. Tex.

    Before U.S. District Judge Filemon B. Vela, S. Dis. Tex.

    Assistant U.S. Attorney: David Novak, Brownsville, Tex.

    Attorney for Antonio Giraldi: Christopher L. Milner, Corpus Christi, Tex.

    ----------------------------------------

    Role of Swiss Banker could Provide Salinas Link to Drug Money

    The role that Joseph Oberholzer played in the movement of Raul Salinas's multi-million dollar

    accounts through Swiss banks in suspected collaboration with Citibank senior private banker,

    Amy Elliott, may answer the riddle of whether any of that money originated from Mexican drug

    traffickers.

    Salinas enriched himself while his brother, Carlos, was President of Mexico. He says the bulk of

    an estimated $124 million was given to him for "investment" by Mexican tycoons although he

    provides no documentation.

    Oberholzer , a 67-year-old Swiss banker who spent a long career at Union Bank of Switzerland,

    was the Swiss banker in the drug money laundering operation of Colombians, Julio and Sheila

    Nasser David, who were indicted by the U.S. in 1993. After her arrest in Switzerland, Sheila

    Nasser was extradited to the U.S., pleaded guilty and is serving a prison term. Her husband is a

    fugitive. About $150 million was forfeited by the Swiss in 1993.

    Oberholzer was arrested, held briefly by the Swiss authorities and released after a few weeks. He

    is retired in Switzerland. No money laundering charges were brought against him by the U.S. for

    his role in the operation.

    Swiss authorities are investigating Oberholzer's role in the transfer of Salinas's funds to

    Switzerland. Knowledgeable Mexican sources say he played an important role in the Salinas

    banking operations and was a close financial confidante of Salinas.

    If no drug link is found, the Swiss may have difficulty forfeiting the money unless the U.S. steps

    in with its more ample laundering and forfeiture laws to lay claim under U.S.-Swiss bilateral

    agreements.

    Obscure weapon in U.S. laundering law could confront Citibank

    Allegations that Citibank officials administered multi-million dollar transactions for Raul Salinas

    with money he amassed by shaking down multinational corporations in Mexico and possibly from

    drug traffickers bring into play a little-used provision of the U.S. money laundering law as it

    applies to foreign official corruption.

    While his brother was President of Mexico, Raul Salinas opened a customer relationship at

    Citibank in Mexico managed by Amelia Grovas Elliott, the head of the bank's "Mexico team" in

    New York. Salinas used false and front names to open accounts in Switzerland with Elliott's help.

    One Swiss account at a Swiss private bank, where Citibank is alleged to have routed part of the

    money, had $84 million on deposit. Other funds were held at a Citibank Swiss affiliate, Confidas.

    The U.S. money laundering law has "extra-territorial" reach if the transactions are by a U.S.

    citizen or, if by a non-U.S. citizen, they occurred in part in the U.S. The known facts fit that

    standard for Salinas and Citibank officers (Title 18, USC Sec. 1956(f)).

    The key determination for U.S. prosecutors is whether the money "involved in (the) financial

    transaction" was the "proceeds of specified unlawful activity." Among the many crimes defined as

    "SUAs" are five strictly foreign crimes: extortion, narcotics, fraud against a foreign bank,

    kidnaping and robbery (Title 18, USC Sec. 1956(c)(7)(B)(I)-(iii)). Their proceeds can be the basis

    for a U.S. laundering prosecution even if the crime was committed outside the U.S.

    If the Salinas money that Citibank managed came from drug traffickers or from extortionately-obtained payments in Mexico, and bank officials knew or were "willfully blind" to its unlawful

    origin, a laundering prosecution is possible if there was an intent to hide or disguise the nature,

    source, location or ownership of the money.

    The main U.S. extortion law, the Hobbs Act, is used against corrupt U.S. public officials who are

    accused of the crime of "obtaining... property from another, with his consent, induced by

    wrongful use of actual or threatened... fear, or under color of official right" (Title 18, USC Sec.

    1951(b)(2)). Congress had it in mind when it included foreign extortion as an SUA.

    If these requirements are met, Salinas and Citibank officers could face exposure to prosecution.

    Citibank told Congress in 1989 of tight grip on foreign accounts

    Citibank, under scrutiny by the Swiss, Mexican and U.S. governments for transactions it

    conducted for Raul Salinas, the brother of the former Mexican President, told a U.S.

    Congressional committee in 1989 that its money laundering controls worldwide were a model of

    good compliance.

    "Citicorp is committed to compliance with both the letter and the spirit of the law.... Citicorp

    created a committee, comprised of ...personnel from all affected Citicorp businesses, to monitor

    the compliance network of the institution," Citibank lawyer Carl T. Solberg told a Senate Foreign

    Relations Subcommittee in 1989, the year after Salinas became President.

    He said Citibank's foreign branches had adopted "the same standard of customer and transaction

    review which is placed on United States branches," explaining that "this voluntarily imposed

    compliance program, in place for a number of years, has as its foundation in the fundamental

    banking policy of know your customer.'"

    He said the bank pioneered reporting suspicious transactions: "Citicorp banking entities began

    filing criminal referral reports for suspicious transactions in May 1987.... We know of no other

    major financial institution that implemented written procedures to govern the reporting of

    suspicious transactions at that time...."

    -----------------------------

    From the June 1996 issue of Money Laundering Alert:

    "Mexican Drug Lord with Ties to Salinas Faces New U.S. Indictment"

    Federal prosecutors in Houston last month filed new charges against Mexican drug lord, Juan

    Garcia Abrego, who Mexico deported to the U.S. after his January arrest. Garcia had been

    indicted in absentia in 1993. The new charges supersede that indictment. He is said to hold the

    key to exposing the extensive Mexican government corruption during the presidency of Carlos

    Salinas that ended in December 1994. Raul Salinas, brother of the President, is believed to have

    maintained close ties to Garcia but no links to drug proceeds have been found to date in the many

    accounts around the world where Salinas accumulated as much as $250 million during his

    brother's presidency (MLA, April 1996).

    The new money laundering and drug trafficking charges show he is not above bribing public

    officials. His drug cartel was said to spend $50 million a month in bribes to public officials. One of

    the recipients is believed to be Mario Ruiz Massieu, former Deputy Attorney General of Mexico,

    whose $9 million at the Texas Commerce Bank in Houston has been seized by the U.S. (MLA,

    July 1995).

    The new indictment has no reference to Salinas or Massieu, but it does paint a picture of a far-flung organization that used diverse tactics to move and launder its millions. They included paying

    $200,000 in bribes to an FBI special agent who posed as a corrupt federal agent. The indictment

    says Garcia maintained direct telephone contact with the undercover FBI agent whose court

    testimony in the upcoming trial is surely not anticipated with glee by Garcia.

    The indictment contains the novel allegation that Garcia's organization caused a real estate title

    company, Texas American Title Co., to file a false IRS Form 8300, the cash reporting form that

    trades and businesses must file when they receive more than $10,000 in cash. There are similar

    charges concerning cars that the ring bought from four automobile dealerships. Those companies

    were not charged (Case No. H-93-CR-167-3S, So. Dis. Tex.).

    -----------------------------------

    From the July 1996 issue of Money Laundering Alert:

    "Court Expands Exposure of Private Bankers"

    In a decision that will cause tremors in the private banking industry, the U.S. 5th Circuit Court of

    Appeals on June 19 upheld the money laundering conviction of a former private banker for

    American Express Bank International. The case led to the imposition of the largest monetary

    penalty ever imposed on a bank in a money laundering-related case. The conviction of Antonio

    Giraldi turned in large measure on "know-your-customer" issues.

    In its ruling the court alludes to an inherent money laundering soft spot in the private banking

    field: "the pressure on international bankers to recruit new clients and the concomitant

    professional and monetary success that comes to those who are able to produce."

    Private banking has recently become the focus of unwanted attention as a result of the scandal

    surrounding the movement of hundreds of millions of dollars of purportedly ill-gotten money

    belonging to Raul Salinas, the brother of former Mexican President Carlos Salinas.

    A star witness for the government in the Giraldi prosecution was Amy Elliot, Giraldi's former

    superior at Citibank. Elliot, who was the head of Citibank's private banking "Mexico team," is

    now at the center of a controversy over how the suspect fortune of her customer, Raul Salinas,

    moved through and was handled by Citibank (MLA, Apr. 1996).

    In 1989, while working for Bankers Trust Co. in New York as an international private banker in

    the Mexico market, Antonio Giraldi recruited and serviced accounts of wealthy Mexican

    nationals. He was also responsible for screening potential clients to assure that their wealth was

    legitimate. Intentionally or not, Giraldi proved a failure at his client-screening function.

    That year, Giraldi recruited a new client, Ricardo Aguirre, who made an initial deposit of $2

    million. A few months later, Giraldi left Bankers Trust and went to work for American Express

    Bank International. Aguirre's accounts, which followed Giraldi to AEBI, grew dramatically to

    more than $21 million. Aguirre, whom Giraldi had never met before opening the account, turned

    out to be a money launderer for the Mexican drug cartel of Juan Garcia Abrego.

    The U.S. money laundering law requires that the person "know" that the "property involved in a

    financial transaction represents the proceeds of some form of unlawful activity" (Title 18, USC

    Sec. 1956). Without proof of such knowledge, or of "willful blindness" of such illicit origin, a

    money laundering conviction cannot stand. During his month-long trial, Giraldi tried to convince a

    McAllen, Texas, jury that he didn't know Aguirre's money was dirty. He failed and, together with

    his co-worker Lourdes Reategui, was convicted. He was sentenced to 10 years in prison.

    In recent years, courts have recognized that a money laundering trial often boils down to a single

    inquiry of whether the defendant "knew" the source of the money was illicit. Acknowledging that

    there is rarely direct evidence of such knowledge, courts have uniformly held that circumstantial

    evidence is sufficient to prove knowledge. And, if a defendant consciously avoids knowledge of

    facts that would provide the requisite knowledge, his "willful blindness" won't provide a safe

    harbor. Courts often equate "willful blindness" with actual knowledge in a money laundering

    prosecution.

    Giraldi contended on appeal that the evidence at trial was insufficient to establish that he knew

    Aguirre's funds were drug money. He argued that there was no direct evidence that he knew the

    money was from drugs and that all the government really proved was that he was negligent in not

    discovering the illicit source of the cash. At most, he argued, the government had proved that he

    "should have known" the money was dirty. He said such evidence was not enough to sustain his

    conviction. Calling it a "close case," the appellate court held that Giraldi's contention didn't fly.

    Circuit Judge Parker, writing for the court, reasoned that the evidence was more than enough for

    the jury to find that Giraldi knew, or was willfully blind to, the source of Aguirre's funds.

    (Case No. 94-60602, 5th Cir. Ct App.)

    Giraldi is not the only one paying for his transgressions. American Express Bank International

    was held civilly liable and paid $35.2 million in forfeitures, civil fines and penalties, the largest

    settlement on record in a money laundering case (MLA, Dec. 1994).

    ---David S. Mandel, a member of MLA's Editorial Board of Advisors, is Of Counsel to the

    international law firm of Morgan, Lewis & Bockius LLP. He directs the Miami office's

    Corporate Investigations and Criminal Defense Practice Group.

    -----------------------------------------

    From the August 1996 issue of Money Laundering Alert:

    FinCEN's Morris speaks on merits of Salinas-Citibank case

    In the first public statement by a United States official on the merits of the Raul Salinas-Citibank

    case, Stanley E. Morris, director of the U.S. Treasury Department's Financial Crimes

    Enforcement Network, said to La Jornada, a prominent Mexican newspaper: "We have not

    identified the violation of any specified unlawful activity on the part of Raul Salinas. The fact that

    there was money in an account, in multiple accounts in the United States, is not a crime."

    Interviewed by that newspaper in Washington for articles that appeared on June 25 and 29,

    Morris said the U.S. criminal investigation of that affair could last "up to one year, or maybe

    more."

    He said the fact that Salinas, brother of former Mexican President Carlos Salinas, is in jail in

    Mexico for "inexplicable enrichment" is not a crime in the U.S. If Salinas is "accused" of

    committing a "specified unlawful activity," a U.S. bank involved in the transfer of his funds could

    be accused of money laundering only if it "knowingly assisted and promoted a criminal activity"

    or did not comply with a banking regulation, he said.

    He added that Citibank has operated in Mexico for many years and has firm procedures in place

    to assure that it complies with U.S. regulations.

    Morris said FinCEN has had a team in Mexico "to help the Mexican government improve its

    procedures for detecting money laundering."

    ---------------

    From the November 1996 issue of Money Laundering Alert:

    "Conviction of Drug Lord Aids Salinas Inquiry"

    Juan Garcia Abrego, the drug lord who can answer the question whether his unfettered reign

    over drug trafficking in Mexico during the six-year term of former Mexican President Carlos

    Salinas was achieved with payoffs to the president's brother, Raul, was convicted in a McAllen,

    Texas, federal court last month on 22 money laundering and drug trafficking charges.

    He faces a life prison term - unless he decides to talk. His option of providing "substantial

    cooperation" and thereby reducing his prison term runs for one year from the time he is sentenced

    next January. Raul Salinas maintained close ties to Garcia Abrego.

    Garcia Abrego lived by terror and by payoffs to friends in high office. One of them was the

    deputy attorney general under Salinas, Javier Coello Trejo, who received $1.5 million per month

    from Garcia Abrego.

    The trial was followed with great interest by Justice Department officials in Washington and New

    York who are investigating possible money laundering by Raul Salinas through U.S. financial

    institutions, including Citibank. Salinas maintained close ties to Garcia but no links to drug

    proceeds have yet been found in the many accounts around the world, including several at

    Citibank facilities, where Salinas accumulated as much as $250 million during his brother's

    presidency (MLA, April 1996).

    There are persistent, though still unproved, reports that the U.S. government has witnesses in the

    wings who can establish that some of the massive wealth Salinas accumulated during his brother's

    presidency came from Garcia Abrego. There has been close coordination between officials in

    Washington and Texas, which was also the venue of the 1994 trial of two American Express Bank

    International private bankers who were convicted of laundering drug proceeds for one of Garcia

    Abrego's money launderers.

    If drug proceeds can be shown to have formed part of the money that U.S. financial institutions

    handled for Salinas it would establish a crucial link required for a U.S. money laundering

    prosecution: that his transactions included the proceeds of narcotics trafficking, a "specified

    unlawful activity" under the laundering law (MLA, Jan. 1996).

    Federal prosecutor Melissa Annis, chief of the Houston U.S. Attorney's Drug Task Force, who

    led the month-long trial of Garcia Abrego, said: "The jury got to see a picture of all the cocaine

    coming into the U.S. and heard from the guys who took all the money back south and brought the

    money back, much of it properly declared on the Customs CMIR form.

    The cooperation of the

    Mexican government was extremely important. It is a signal to anyone hiding from us that they're

    not above getting captured, expelled and prosecuted. We have taken the head off the octopus and

    obliterated his organization."

    Garcia Abrego was said to spend $50 million a month in bribes to public officials. A crucial

    witness was an undercover FBI agent, Claude de la O, who gained the confidence of Garcia

    Abrego while posing as a corrupt agent, took $200,000 in purported bribes (Case No. H-93-CR-167-3S, So. Dis. Tex.).

    ------------------------

    From the December 1996 issue of Money Laundering Alert:

    "Banker Seeks New Trial Saying Salinas Banker Lied about KYC"

    The landmark money laundering cases involving Raul Salinas, Juan Garcia Abrego and Antonio

    Giraldi, which are becoming increasingly interrelated, took another strange turn last month.

    Giraldi, a former private banker with American Express Bank International who was convicted in

    June 1994 of laundering drug proceeds for the Mexican drug cartel of Garcia Abrego through his

    bank customer, Ricardo Aguirre, asked for a new trial alleging that Amy Elliott, who testified

    against him as a government witness, lied about the "know your customer" procedures that she

    and her bank followed with their private banking customers.

    Elliott, a 29-year Citibank employee and a senior private banking officer, was Giraldi's superior

    at Citibank in the mid-1980s. She was also the private banker of Raul Salinas, brother of the

    former president of Mexico. With Elliott's help, Salinas established accounts throughout the

    world under circumstances that Giraldi says fatally contradict the strict "know your customer"

    procedures she said she followed "fairly inflexibly" for wealthy foreign private banking customers.

    In his motion, Giraldi says that only recent news stories, including a segment on "60 Minutes,"

    about the apparent lapses by Elliott and Citibank in the handling of Salinas's money brought to

    light the contradictions with the way she described, at his trial, the meticulous care that she and

    Citibank took in learning a customer's background. The "newly discovered evidence clearly

    demonstrates the falsity of Ms. Elliott's testimony" at his trial, says Giraldi.

    "(I)f Ms. Elliott, one of the most senior and experienced international private bankers in the

    industry, with extensive experience in Mexico and personal familiarity with Mexico's wealthy

    upper crust,' could be maneuvered by a clever and attractive prospective international banking

    client like Mr. Salinas, then it would have been much easier for a relative beginner like Giraldi to

    have been maneuvered by Aguirre in a regulatory climate three years less intense," argues

    Giraldi's lawyer, Christopher L. Milner, of Dallas.

    Evidence of Elliott's conduct in connection with the Salinas accounts "if shared with the jury...

    would have easily tipped the scales in... Giraldi's favor," says the former banker's lawyer.

    Federal District Judge Filemon B. Vela will decide whether to grant a new trial or hold an

    evidentiary hearing before so deciding or do nothing. First, he will have to consider the

    government's response to Giraldi's motion.

    On December 6, Charles Dause, one of the prosecutors who tried Giraldi, filed a response which

    says:

  • Elliott's statements after the trial (about her handling of the Salinas accounts) cannot be "newly

    discovered" evidence because "they were not in existence" at the time of trial.

  • Even if it is newly discovered, the evidence would only serve to impeach her testimony about

    the "know your customer" rules that Citibank had in 1986 when Giraldi worked there, and, as

    such, is not sufficient to warrant a new trial.

  • That Elliott relaxed "her standards in regard to her own handling of an account at Citibank is as

    much probative of her violation of the bank's policy as it is that the policy did not exist."

  • Elliott did not lie when she testified she had not managed funds "for former Mexican political

    leaders or their family members," even though Raul Salinas previously served in the Mexican

    government. Dause says since President Salinas served until six months after Elliott's testimony,

    Raul Salinas did not qualify as a "family member of a former Mexican political leader."

    Giraldi's lawyer has suggested that the judge hold an evidentiary hearing to clarify the "factual

    issues" raised. He has asked that among the witnesses to be called should be Elliott and Citibank

    chairman, John Reed, who was reported by the Wall Street Journal to have said that "he would

    have approved Mr. Salinas' account himself."

    Giraldi also asserts that the government unlawfully withheld exculpatory evidence from him. He

    says unnamed sources have told his lawyer that the wife of Aguirre, his customer, told U.S.

    agents in a pre-trial interview that Aguirre had lied to Giraldi about his assets because it was

    "important for the bankers to believe that he was a wealthy, influential person in Mexico." The

    government denies that interview took place. The judge will decide who is right.

    ----------

    The money laundering jigsaw puzzle of the U.S. government

  • U.S. Department of Justice obtained money laundering conviction of former American Express private banker,

    Antonio Giraldi, on strength of testimony of Amy Elliott, senior Citibank private banker.

  • Is standing by Elliott against charges by Giraldi that she lied as U.S. witness in his case.

  • Simultaneously, it is investigating her and her bank for possible laundering involving money of

    Raul Salinas and application of same "know your customer" principles she expounded in Giraldi's

    trial.

  • Must prove in that case that funds in the transactions came from a "specified" crime in

    the laundering law. Two foreign crimes are candidates: extortion and drugs. If their proceeds

    formed part of Salinas's funds and if bank and its officers knew or were "willfully blind" to their

    illicit origin, there is strong likelihood of prosecution. Salinas could also be charged.

  • Although it did not indict American Express Bank International, in 1994 it forced the

    bank to pay $35 million in forfeitures, fines and a civil penalty. The latter was imposed under the

    civil penalty section of the laundering law based on the amount of crime proceeds its two

    employees laundered.

  • Must weigh its decisions in Am Ex Bank case in action it takes in Citibank case. Civil

    penalty using Am Ex case formula would cost Citibank a much larger sum if all money the bank

    administered for Salinas is counted. Federal Reserve Board will likely be consulted in this "high

    impact" case to coordinate "message" to all private bankers whose laundering controls are viewed

    as very weak.

  • Must consider how its decisions in Salinas case play in Mexico to whom the U.S. has

    been preaching about money laundering for years. U.S. Attorneys General, Treasury Secretaries

    and enforcement agencies have visited Mexico to spread U.S. gospel about its evils and the need

    to control it. Can U.S. government afford to send message that will be construed by Mexican

    financial institutions as "do as I say but not as I do"?

  • Having convicted Juan Garcia Abrego, can now negotiate with the Mexican drug lord

    who faces life in prison. If so inclined, Garcia can speak volumes about corruption in the Salinas

    administration that permitted him an untroubled six-year reign over the Mexican drug empire,

    including the role of Raul Salinas.

  • Antonio Giraldi

    In 1980s, worked at Citibank under Amy Elliott, head of the bank's private banking

    "Mexico Team." She testified against him in 1994 after he was indicted for laundering drug

    proceeds for a Garcia Abrego ally.

    Has filed an unresolved motion for a new trial alleging that Elliott lied as a government

    witness against him.

  • Amy Elliott

    A senior Citibank official, testified in 1994 that there were tight controls at the bank in

    the management of transactions of foreign high-net worth clients.

    In 1996, became subject of federal grand jury investigation for possible money

    laundering in her handling of Salinas's money.

    Has said she reported to her superiors all key information about the Salinas operations.

  • Juan Garcia Abrego

    Recently convicted for money laundering and drug trafficking, to be sentenced in

    January 1997.

    Had ties to Raul Salinas and ran his drug trafficking business without much Mexican

    government interference during six-year presidency of Carlos Salinas.

    Has one year from sentencing to provide "substantial cooperation" that could reduce his

    jail term, as set by the trial judge with the government's recommendation.

    Three major cases pose classic prosecutorial options for U.S.

    The U.S. Justice Department faces critically pivotal decisions in each of the three major money

    laundering cases now in various stages of development, involving Raul Salinas, Juan Garcia

    Abrego and Antonio Giraldi. Although on the surface they do not appear to be related, the cases

    are inextricably wound. Decisions in one could have a major impact on the others, and possibly on

    the evolution of the laundering issue, at least with Mexico.

    The cases present a textbook exercise on money laundering case. Here is how the intricate plot is

    woven:

    Giraldi-Elliott element of the plot

    Antonio Giraldi, a former private banker for American Express Bank International, and his

    assistant, Maria Reategui, were convicted in 1994 of laundering drug money for Mexican drug

    lord, Juan Garcia Abrego, through one of their customers. A government witness was senior

    Citibank officer Amy Elliott, who was Giraldi's superior at Citibank in 1986. Elliott's testimony,

    which came before her role as Salinas's private banker was known, was crucial to Giraldi's

    conviction because it focused on his non-compliance with "know your customer" standards,

    including those of a bank that follows meticulous "KYC" procedures for customers as Elliott

    testified she and Citibank did (MLA, April 1996).

    Giraldi lost his appeal and will report to prison this month. Last month, he requested a new trial

    alleging that Elliott's testimony was false in light of what is now known about how she handled

    Salinas's money. The U.S. has responded that even if Giraldi had known that her practices varied

    greatly from the "know your customer" procedures she testified she followed at Citibank, it

    would only "impeach" her testimony and not necessarily lead to a jury acquittal.

    The trial judge must decide whether to grant a new trial. New trial or not, Elliott's testimony is

    now an albatross around her neck because of the total conviction she evinced in describing the

    pristine KYC procedures that she testified she follows.

    The Salinas-Citibank element

    Elliott, a career Citibank private banker, is under the microscope of a New York federal grand

    jury investigating the Salinas affair. As head of Citibank's private banking "Mexico team," she

    was the "relationship manager" for Raul Salinas, brother of former Mexican President Carlos

    Salinas. From 1992 through 1995, Elliott established accounts and supervised transactions for

    Salinas exceeding $100 million at Citibank facilities in Mexico City, New York, Zurich and

    London.

    Elliott has told authorities she informed her superiors of the Salinas relationship. One of them

    was Hubertus Rukavina who, from 1993 until January 1996, was Citibank's executive vice

    president for worldwide private banking. A native of Argentina, he was in charge of all Citibank

    Swiss operations, presided over Citibank in Zurich, where Salinas had a multi-million dollar

    account, and sat on the board of directors of Confidas, a Citibank-owned Zurich trust company

    where some Salinas money was held.

    The most important fact U.S. investigators seek to establish in this landmark case is whether

    Salinas's money included the proceeds of any "specified unlawful activities," the predicate crimes

    in the laundering statute without which there can be no laundering prosecution (Title 18, USC

    Sec. 1956(c)(7)). That is where Garcia Abrego can help.

    Also important: how high up the ladder at the bank did knowledge go of Salinas's banking

    activity and source of funds? Prosecutors will ask:

  • What were the procedures in opening Salinas accounts systemwide?

  • What was known about the source of his money when the banking relationship started and while

    it grew?

  • What did Elliott's written reports say about Salinas and who read them?

  • Were there communications between Elliott and her superiors about Salinas's banking activities

    none of which are believed to have been conducted in his own name but rather in the name of

    offshore entities that Citibank formed?

  • Do Elliott's travel, credit card and telephone toll records show trips to Switzerland? Did she

    speak with superiors about Salinas's money or its source and the reasons for secretiveness?

  • Did Rukavina, as an executive-level officer, report to the board of directors about the Salinas

    accounts? What do the notes of the meetings say? If there were no discussions among the officers

    about the source of funds, were they "deliberately avoiding knowledge of the facts," which

    defines "willful blindness"?

  • Did Elliott and senior bank officials consult with the bank's money laundering compliance

    experts about the Salinas relationship or his source of funds? Did those experts warn them of

    something they chose to ignore?

  • Should Elliott be given immunity in exchange for cooperation against superiors? Is she now

    "damaged goods" as a witness because of allegations that she lied in her testimony against

    Antonio Giraldi in 1994?

    Garcia Abrego-Salinas-Citibank element

    Garcia Abrego, whose drug trafficking went undisturbed in Mexico during the six-year Salinas

    administration that ended in December 1994, was hunted down by Mexican authorities and

    deported to the U.S. in 1995.

    He was tried on money laundering and drug trafficking charges and recently convicted in Texas.

    He faces a lifetime in prison but holds a very powerful weapon that could jeopardize Citibank's

    legal position. He could produce vital evidence showing that some of the Salinas money that

    Citibank and other U.S. institutions handled represented drug proceeds. That would prove a key

    element in a laundering prosecution - the illegal origin of the money.

    The U.S. could show a non-drug criminal source but the alternatives are difficult. Money

    obtained by extortion is a viable possibility but extortion victims must be willing to come forward

    and testify (MLA, Jan. 1996).

    Garcia Abrego has shown no inclination to talk and the U.S. is loathe to make an overly sweet

    offer to a brutal criminal as he is. However, there are many examples of drug traffickers being

    offered some consideration if they disclose the financial angle of their operations.

    The 1991 case of Ellen Campbell, a real estate agent who was convicted of laundering based on

    her "willful blindness" to her customer's drug trafficking, is the most famous example. The

    trafficker was caught up in a U.S. sweep and decided to testify against her in exchange for softer

    prison conditions (MLA, Spec. Ed, Oct. 1996).

    After he is sentenced next month, Garcia, 52, has until January 1998 to ponder whether to

    provide "substantial cooperation" that would interest the U.S. The procedure would normally

    entail a "proffer" in hypothetical terms by his lawyer with details of how the information would be

    corroborated. The U.S. would then respond with its position.

    It is the kind of case that prosecutors dream about and which bolsters careers. Many small

    financial institutions have felt the government's wrath in cases with no strong public policy or

    geopolitical significance. In this case everything is big, and the prosecutors who are working it

    know it.

    -------------------------

    From the January 1997 issue of Money Laundering Alert:

    "Am Ex banker Denied New trial, Starts Prison Term"

    Former private banker Antonio Giraldi's last-minute attempt to stave off the start of his prison

    term by seeking a new trial on the money laundering charges on which he was convicted has

    failed.

    Convicted in June 1994, the former private banker with American Express Bank

    International and Bankers Trust began his ten-year prison sentence on December 27. His

    conviction was previously affirmed by the U.S. Fifth Circuit Court of Appeals (MLA, July 1996).

    On December 12, federal district Judge Filemon B. Vela denied Giraldi's motion for a new trial,

    which was based in part on assertions that a key government witness in his trial, Amy Elliott, was

    not truthful in her testimony about the "know your customer" procedures she followed at

    Citibank, where Giraldi had worked as her subordinate in 1986. Her testimony, which was

    instrumental in Giraldi's conviction, focused on the KYC procedures she said she followed in

    connection with wealthy Mexican customers. Elliott, a 30-year Citibank veteran, is embroiled in a scandal over her handling of the fortune that

    Raul Salinas placed with Citibank while his brother was President of Mexico. The matter is under

    federal grand jury investigation in New York (MLA, April 1996).

    In his motion, Giraldi's attorney, Christopher Milner, of Dallas, said that "if Ms. Elliott, one of

    the most senior and most experienced international private bankers in the industry with extensive

    experience in Mexico and personal familiarity with Mexico's wealthy upper crust,' could be

    maneuvered by a clever and attractive prospective international banking client like Mr. Salinas,

    then it would have been much easier for a relative beginner like Giraldi to have been maneuvered

    by Aguirre in a regulatory climate three years less intense."

    Judge Vela framed the issue this way: "Giraldi now argues that Elliott's recent [out-of-court]

    statements concerning her lack of investigation involving the sources of Raul Salinas's wealth,

    cast doubts as to her testimony concerning Giraldi."

    "The critical issue at Giraldi's trial, however, was whether Bankers Trust, the bank where Giraldi

    was employed at the time he entered into the financial relationship with [his Mexican customer]

    Aguirre, had a "know your client" policy in place at the time such relationship began. In this

    regard, witnesses from Bankers Trust, including Giraldi's supervisor, testified to that effect during

    Giraldi's trial," Judge Vela said.

    In denying the motion, the judge added: "In regard to the falsehood of Elliott's testimony,

    Giraldi's contentions, if taken as true, are merely impeaching at best. Impeaching or cumulative

    evidence... is insufficient to warrant a new trial based on newly discovered evidence.... Further,

    the evidence must be such that it would probably produce an acquittal.... Elliott's testimony

    concerning her international clients at Citibank was raised on cross examination.... (I)mpeachment

    of Elliott's testimony on such a collateral matter is not the type of newly discovered evidence

    which would probably produce an acquittal' at a new trial." Giraldi's attorneys plan to appeal

    the ruling.

    Although the government presented no direct evidence that Giraldi knew his customer's source

    of funds, he was convicted of laundering drug proceeds for a customer who turned out to be a

    money launderer for Mexican drug lord Juan Garcia Abrego.

    Having run out the judicial string, Giraldi surrendered to federal prison authorities in Miami to

    begin one of the longest prison terms ever imposed on a banker for money laundering.

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