“That depends on the Swiss government’s willingness to cooperate. Just moving money isn’t a crime per se, but under the circumstances, it reeks of money laundering,” said Bob.
We continued analyzing the options for how to proceed, when Hodson got up.
“Well,” he said. “My legal department just told me that the documents Dan has obtained give us probable cause to seek a search warrant at McHanna Associates. That prick McHanna is in New York, so we don’t need to go far. Are we done?”
“Sit down, Bob,” suggested Casey in a soft tone. “There are a few more issues we need to cover.” Hodson sat down, visibly reluctant.
“There’s also a small matter of security leaks,” I added. “I had to leave Vienna in a rush because Casey warned me that the safe apartment used for my Iran briefings was compromised. Then the whole operation was put on hold because a Mossad agent wasn’t paying attention, and Parviz Morad, the Iranian refugee whom Benny was so proud of getting out of an Iraqi prison, managed to make an unauthorized phone call. Then after I returned from Iran, my room at a Bern hotel was searched.”
“You mean you don’t know what caused the security breach?” asked Bauer.
“Know what?” I asked, although I did know the cause for at least one security breach. Casey Bauer must have forgotten bringing me up to speed in Turkey after my escape from Iran, giving me details about how Hasan Lotfi had known who I really was.
Casey explained. “Parviz Morad called his uncle, Morteza Mughnia, whom he claimed he believed to be an Iranian dissident. But in fact the uncle was an Iranian agent posing as a dissident. The uncle was regularly reporting to Iran on the dissidents’ activities in Europe. Some of them were killed. Morteza Mughnia, who knew about Parviz Morad’s escape from the Iraqi prison from letters Parviz sent his family from Israel, asked him where he would be later on that evening, so he could come and see him. Parviz gave his uncle the address of his hotel. Morteza Mughnia suspected that the Israelis would take his nephew out of Israel only if it were an important intelligence matter, and alerted the local operatives of the Iranian security service.
“They staked out the hotel and followed Parviz to the safe house. Our security team in the building opposite the safe apartment took photos of the scouts the uncle had sent. One of the scouts was identified as a member of the Iranian Revolutionary Guards working in the Iranian Embassy as a ‘cultural attache.’ Since he had diplomatic immunity, we notified the Austrians, and he was cordially asked to pack and leave.”
“Just because of that?” I asked.
“No way. There was a whole file on him concerning undiplomatic activities.”
“So this is how I was exposed,” I said, letting the information sink in.
“Probably. They must have taken your photograph as you entered the building. Then you went to the Iranian embassy to obtain a visa and were captured by video when you entered the building, and also attached your photo to your application. The counselor, who is no doubt an intelligence officer, made the connection.”
“That means I entered Iran already exposed.”
Hodson nodded.
“Then why didn’t they arrest me immediately?”
“Either because they wanted to know whom you’d be contacting locally or because the information stopped at Hasan Lotfi’s desk.”
“So, if my identity was known to others in the security services, when Lotfi met me at the hotel and then for lunch, he doomed himself, because he was already under surveillance.”
“Exactly. But he was on the alert for a while. When he suspected that he came under suspicion he took off after contacting us, even before we concluded a deal.”
“That means I contaminated everyone else I met,” I said. “In a way, but only those that couldn’t explain. We believe that the school alumni came clean when they gave a true account of the circumstances leading to their meeting with you. Your Kurdish friends escaped to the Kurdish enclave in the north, where no Iranian policemen dare set a foot, unless they are suicidal.”
“One thing isn’t solved, though,” said Holliday. I knew what he was going to ask, and I had no answer. “Where the hell is the Chameleon? Let me remind you that he’s our prime target, and is expected to lead us to the other Atashbon members.”
“I don’t know yet,” I said candidly, “but I’m getting closer. I hope the search of McHanna’s records will tell us more. I’m not easing up the chase. Positive identification of Nazeri as Atashbon will probably bring us closer to the Chameleon and his comrades.”
I went back to my office and wrote Erikka a personal letter telling her that my publisher had put the book project on hold, and therefore her services were currently no longer needed. I attached a check drawn on a Canadian bank to cover the remainder of the period for which I’d agreed to retain her. I added a $500 bonus.
“It was a plea sure to have worked with you,” I wrote. “I hope I can complete the book project one day.” I put the letter and the check in an envelope and sent it to her through a mail-forwarding service in Toronto. I didn’t include a return address.
My phone buzzed. It was Bob. “A federal magistrate judge signed a search warrant for McHanna Associates; FBI teams are on the scene as we speak. Meet me to night at Hodson’s office.”
CHAPTER TWENTY-NINE
I arrived at the federal building in downtown Manhattan at eight P.M., but Hodson’s office was still empty. Over an hour later, at nine twenty P.M., as my nerves jangled, five FBI agents finally walked in with Hodson and Casey. Bob Holliday arrived a minute later.
“What’s in the crates I saw you carrying?” I asked the agent standing next to me.
“The last of the stuff we seized at McHanna Associates. The bulk of it was brought over a few hours ago.”
Hodson, sensing my impatience, said, “Our analysts are already starting to examine the first few cartons. I’m afraid it will take time until we have a hit.”
“Can I participate in the analysis of these documents? I know a few things about white-collar crime and money laundering.”
Hodson and Holliday exchanged looks and Holliday nodded.
“OK,” said Hodson. “Be here tomorrow at nine a.m.”
“Tomorrow? I’m not waiting until tomorrow. I want to do it right now.”
Hodson smiled and used the intercom to call his assistant. “Tom, let Dan Gordon join our analysts in cracking the material we seized from McHanna Associates.”
“Thanks,” I said, and before leaving I asked, “Was McHanna taken in?”
“No. Give me a probable cause, and he will be. So far we’ve got nothing to support an arrest warrant.”
I went two floors down. In a big room were six young men and women buried under massive stacks of paper. Open cartons were everywhere.
“It’s slow going, but it’s going,” grunted Mel, a clean-shaven young analyst, when I’d introduced myself.
“Why? Because of the volume?”
“No. We only started three hours ago, but from what we see already, the documents reflect years’ worth of international banking activities. Now add the fact that I already counted four or five foreign languages that were used, and you’ve got a complex audit on your plate.”
“Any computer files?” I asked.
“Yes, we seized McHanna’s computers. We’re waiting for the tech people to hook them up so we can quickly search files electronically.”
“Can I take a look at some of the files?” I asked.
“Help yourself,” he said, and quickly explained their Organization system so that I wouldn’t disrupt it.
I went to the mountain of stacked crates and pulled out the top box. I put it on an empty desk. The label was marked 1990. After going through several hundreds of pages I saw nothing that immediately showed any relevance to our case. I took another box, marked 1993. A few hours later, I felt a creeping frustration. There was nothing there that could be important to my investigation. I looked around the room at the other analysts; their
faces were patient, but unenthused. I decided to change course. Instead of looking for a smoking gun, I decided to understand the business logic of McHanna. How were they transacting business, what was their profit center, and how were they actually making money? That is, if they were making money. And if they weren’t, who paid for McHanna’s fancy office, and why?
I realized it’d take me more time, but that was a commodity I had. Bob Holliday agreed to ease my caseload, and I immersed myself in my new project: McHanna Associates.
Three days later I began to see a pattern. McHanna Associates was in fact a clearing house for charitable donations. Money in small amounts was collected in certain Islamic centers throughout the United States for various charitable causes and brought or transferred to McHanna Associates. Next, McHanna transferred the funds in batches smaller than $10,000 through a New York bank to banks in several foreign countries, some in Europe and some in the Middle East. One or two days later, the receiving banks would wire similarly sized amounts to McHanna’s bank account in New York.
Why were they doing it? I wondered. Why send the money back here? And if there was a reason, why couldn’t they simply offset the incoming and outgoing amounts? The back-and-forth transfers made no business sense, other than to the transferring banks, which made hefty commissions off the transfers. And while I understood the reason for transferring amounts to the Middle East to support charities, I couldn’t understand why there were incoming money transfers to the United States.
I decided to take it yet another step forward and see what happened to the money received by McHanna from the European banks. It was routed to charities in various states throughout the United States. Several names of the U.S. receiving institutions surfaced repeatedly. There were two in Texas, three in Michigan, five in Brooklyn, and four in Florida. One common denominator of all receiving institutions was that they were Islamic charities. They also had something else in common. The checks made out to them weren’t endorsed.
That was a finding that bewildered me. I checked the entire contents of the box. There were many bank statements, but among the attached checks made out to the charities, I couldn’t find even one that was endorsed.
I turned on my chair and loudly asked the other analysts, “Guys, has anyone been through any bank statements yet?”
“We all have,” said Mel.
“Have you noticed something odd?”
“Like what?”
“All the checks I’ve seen that were made out by McHanna to charities are stamped as paid, but none carried an endorsement signature on its back or any stamp of a financial institution, and none of the checks appeared on the bank statements with the check number on it as having been cleared.”
Three analysts answered at the same time: “I saw that too.”
“Do you have any idea how this could have happened?” asked Mel.
“I’ve seen it before,” I said. “That’s a trick money launderers use to hide the source or destination of dirty money.”
Mel said, “Maybe they just recorded the money as outgoing locally, in cash, but in fact it was sent outside the country.”
“Maybe what we could do is select at random a specified period and check all bank accounts managed by McHanna Associates,” I suggested. “Then we could see if the wired incoming amounts match with the outgoing amounts at the end of the day. I don’t mean literally daily, but over a period of time-say a week.”
Two hours later we had interim results. Every single analyst in the room confirmed that the incoming and outgoing amounts roughly matched. The difference was about 5 to 8 percent.
“That’s for the administrative costs,” I said jokingly, but in fact I was dead serious. I had a hunch that the excessive commissions were in fact a channel to bury even more deeply the fact that the transfer of the money created a profit that could be escrowed by any of the foreign banks and then transferred internally to another account. That other account could accumulate the graft to line someone’s pockets, but it could also be used as a terrorist slush fund. A foreign bank account is, of course, immune from audit by a U.S. regulatory or law-enforcement agency.
“OK, I’m going to try to synthesize this in a report for Hodson. I assume you guys will do the same.” As I began walking out the door, I stopped. I knew what bothered me-not something I’d seen in the boxes, but something I hadn’t.
“Wait a minute,” I said. “Have you seen any records containing the transactions with Al Taqwa and Tempelhof Bank? I saw them in Switzerland, but there weren’t any here.”
They all shook their heads. So McHanna must have cleaned out his office, or he may have had additional records elsewhere.
“I’ll be back,” I said pensively. I went out to the street, remembering that I was hungry. It was the middle of the night, but I found an all-night deli.
There was no question that we’d hit on a money-laundering operation. But we still had to see how it actually worked, and for what purpose. I sat at the corner table and wrote down on a napkin points to remember. I spilled some mustard on the napkin, painting my comments in yellow. But even without the stained napkin I knew exactly what to do next. I returned to the analysts’ room.
“Mel, may I suggest something else?”
“Sure.”
“Let’s focus for a moment on the route of the money. We’ve got records telling us that there were small deposits coming from people and small businesses into McHanna Associates’ bank accounts. Next, McHanna transfers roughly the same amounts to several banks in Europe. Next, roughly the same amounts-less up to 8 percent return to McHanna Associates-from Europe, not necessarily from the same banks to which McHanna originally sent the money. Now McHanna Associates writes a check, always in an amount smaller than $10,000, to various Islamic charities in America and the Middle East. Let’s talk about American charities first: the check made out to them was never cleared through the banking system or even endorsed. Nonetheless, there’s a ‘paid’ stamp on it. How did the charity get the money?”
“In cash,” we both answered at the same time.
“Did you see any receipts?” I asked.
“Yes,” answered another analyst. “But only a few. In some instances there were receipts signed by individuals with typical Arab names, such as Ahmed or Ibrahim, without a surname or street address. In other instances there were grocery receipts, with a handwritten signature of a purported recipient.”
“Do we have any proof that the charities in fact received the money?” I asked.
Most of the analysts shook their heads.
“And even if they did receive some money, who benefited from the 8 percent difference in the funds sent to Europe and returned here?”
“Probably the guys in between,” came the answer from one of the analysts.
“So we’ve got an intricate bidirectional money-laundering operation orchestrated by McHanna, benefiting anonymous entities or even individuals here, and unknown entities or individuals in Europe and the Middle East, not necessarily with charitable causes on their minds,” I concluded.
Aha, my friend, I thought. I’m on my way to get you.
“And where did the cash come from?” asked one analyst. “I don’t know,” I said. “The money went out of McHanna’s account, there’s no question about it. But did the payments ever make their way to any charity here? Is it possible that McHanna simply churned the accounts by moving money back and forth, each time leaving 8 percent to institutions outside the U.S. and away from our reach? Or that he sent the money out to somebody somewhere for an unknown reason or purpose, but on the books it appeared as if the charities received the money? That’s an ingenious plan, whether McHanna planned it or was just used as a facilitator.”
“But why?” asked Mel. “They didn’t want to leave a paper trail in the U.S.? There couldn’t be a tax reason. All these charities are tax-exempt anyway.”
“As I said, I don’t think these charities ever got the money, or maybe just a fraction of it. But i
f they did receive cash, we must conclude that its source was meant to be hidden from some eyes, maybe the FBI’s counterterrorism unit.”
“Just because the receiving institutions have Islamic and Arabic names doesn’t automatically mean that they’re supporting terrorism,” said Mel.
“True…” I said in a level tone.
“I’m a Muslim,” he went on. “And in my neighborhood in Brooklyn there are several Islamic charities that do holy work for the sick and needy. I don’t think they have anything to do with terrorism.”
There was no point in arguing with him. Who knew?-these charities’ names could have just been used by McHanna without their knowledge. But there were also charities that were raided by the FBI, suspected of being a hub of money laundering for Islamic terrorist groups in the Middle East. So I only added, “What we need to check first is the legitimacy of the institutions listed in McHanna’s records. We can check if they received any money from McHanna and if they’re for real.”
I relayed the same suggestion to Hodson.
Two days later, almost-identical responses came from FBI field offices throughout the country. A typical example read, The charity in question doesn’t maintain a valid office or employ any staff. A principal who was interviewed claimed that they’re saving costs and directing all donors’ contributions to the needy in their community. There were no organized records showing names of recipients of support from the charity. We didn’t identify any records showing they received money through McHanna Associates. We didn’t get an answer to our query why money was sent from their communities to McHanna instead of using it locally. We recommend a thorough inquiry and audit. Since donations made to the charity interviewed are tax-exempt, an IRS audit is necessary to ascertain compliance with the rules.
Well, it was time to meet with my old friend Timothy B. McHanna. Would he be happy to see me? I had no doubt I’d give him heartburn-but then again, who cares?
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