Kim said. “Right. For starters, our main business is supposed to be in Mexico City. The LA office was set up in case they want to quickly check us out. The location in Mexico City is a huge warehouse operation the Feds sometimes use for stings. Everything will check out when they verify who we are.”
I leaned forward, my attention focused on learning more. “Okay, let’s have it. Tell us how this whole thing is going to work.”
“Let’s go into the living room where we can stretch out. Besides I like looking at your view. This might sound a little confusing on the surface. I understand how it works because of my accounting background, so I’ll try to explain it in simple layman’s terms.”
She told us the target was two-fold. The three businesses we were to visit in the Fashion District were known to launder huge amounts of drug money. However, instead of raiding them to simply seize money, we had to set up a phony transaction to catch them in the act.
“Okay,” Kate said. “So is the money kept at these locations? How much could possibly be kept at fashion importers or wholesale outlets, or whatever they are? What do you know so far about how this all works, or at least what the Feds have uncovered?”
Kim’s eyes lit up and I knew we about to hear exactly what she promised—something stunning. And stunning it was.
“Let's say you run a cartel in Mexico and you sell drugs here in the U.S. You make a lot of cash money, but it's hard to get that money—U.S. dollars—back into Mexico. According to the Feds, you hire a middleman to bring the cash to various businesses in the garment district and use that cash to buy a large amount of product. That’s where Las Ropas Exclusivo comes in.”
Kate held up her hand in a stop motion. “Let me get this straight. We bring money to one of these businesses and buy, say a bunch of tee-shirts, a bunch of dresses, or even a bunch of something like leopard-skin leggings. On the books this all is a legitimate transaction paid for with drug money?”
“Absolutely right. But it isn’t something as small as a bunch. The overall transactions add up to hundreds of millions of dollars annually. The LA business owner pockets a nice profit for their part in the transaction, and on the surface everything looks legitimate. The cash that pays for these purchases is kept off premises or in deposits less than ten thousand in various bank accounts so it isn’t that easy to locate the money that bought the merchandise. Here is how it works.
“I’ll put it in the context of Las Ropas Exclusivos. Let’s assume our fake company has contacts with clients in Mexico who want to buy American goods from Los Angeles, and our contacts also include businesses in the Fashion District that supply the product. Both sides are aware of what kind of a transaction each one is. For example, a client wants to buy, um, $100,000 worth of shirts. Theoretically we have a Cartel member pay the bill through us in dollars. We pay the shirt wholesaler or manufacturer, who has a nice markup in it, for their part. The client in Mexico then buys the merchandise from us and pays in pesos. We take a healthy commission for ourselves and pay the rest of the pesos to the Cartel.”
Kate exhaled loudly. “Whew. That is a clean-sounding operation. We pay for it in Cartel drug dollars, sell it in Mexico for pesos and give the Cartel back their drug dollars in pesos less our fee.”
A satisfied look passed over Kim’s face. “You’ve got it. Simple, right? That’s why we will be posing as the heads of a company that has the ability to convert millions of drug dollars into pesos. Our assignment is to contact the three targeted LA wholesalers and offer to bring them a ton of U.S. dollars in exchange for merchandise to be shipped to Mexico. I was assured we will be able to make a deal. We direct them to ship the merchandise to the warehouse that’s been set up in Mexico City. Once they accept the money, we pretty much have them.”
Kim said the Director explained that these three were only a small slice of up to eighty suspected businesses, but our charade was intended to smoke out the one person rumored to own those three and several more of the suspect businesses. Until now, he had managed to remain an enigma, facetiously referred to as The Ghost by the agents involved in the investigation.
I pretty much understood everything, but wanted to know where these businesses got the finances to manufacture all the merchandise to begin with. It would take a lot of money to keep this scam going.
Kim had the answer. “For one thing, it’s cash flow. They keep a portion of the money rotating. But there is even more to it. These innocent-seeming businesses actually purchase dirt cheap stuff from China, change the labels to say it’s made in the United States and make a big profit on the markup. The middlemen like Las Ropas Exclusivo are the whole key to doing this successfully because they control both ends of the deal.”
My head was swimming. Okay. I got it that the money to buy the merchandise was dirty drug money given to the middleman by people within the Cartel. But what came next, and why would they even need our fake company or trust us?
Before I was able to ask my questions, Kate said, “That makes sense, but you didn’t tell us why we can get away with posing as this, um, middleman company and get them to trust us.” She always has such a level head and talent for getting down to the bare facts.
“Well, simple. Two of the main money laundering operations for the Rojas Cartel were busted last week. Gone. Finito. Lots of arrests. The Feds have managed to make us look very legitimate with endorsements from one of the Cartel’s trusted members who entered a deal with them to save his own skin. After arrests are made, he will cease to exist if anyone is gunning for him. With a new identity and tidy sum of money, he’ll be able to start a new life in an undisclosed country, and we will have helped bring down drug money laundering in the Fashion District.”
I let out a big breath. “You weren’t kidding when you said this would be stunning. Won’t we be in danger?”
“They don’t think we will. Otherwise Nathan would never have condoned this. Never okayed having any of us getting involved.”
All of this raised more questions in my mind. What if Marjory’s discovery about the investment group trying to buy the bank and her recognition of the name Kenneth Monnigan had anything to do with all of this?
I had to ask. “Listen, guys, I know I’m not a financial whiz, but is it possible to find out if any of these businesses have accounts at the bank that group is trying to buy? Owning a bank would be one more cog in the wheels that would certainly help to wash this drug money. Maybe the Feds could check into the other bank where Marjory remembered seeing Kenneth Monnigan’s name. I don’t know. While it would be crazy for all of this to be connected, I can’t get over the feeling that it is.”
My friends had to admit they had been thinking along the same lines, and so had the Feds. Who was Kenneth Monnigan, anyway? Had anyone ever met him or seen a photo of him? He had to show up somewhere, didn’t he?
34
IT TURNED OUT TO BE a good thing that Kate decided to extend her trip because of our caper. The following morning her agent called her cell phone and said she had to get back to LA because there was definite interest in developing her story for a movie. When she finished the call, Kate looked like her mind was somewhere else.
Finally she said, “It’s moving ahead. I can’t believe it. It’s really going to happen.”
She proceeded to tell us a major production company was hot to make the FraudBusters movie about her and her escapades. “My agent was really happy when I told him I’m still in town. He is going to set up an appointment with them to take it to the next step. They agreed to my main concern—not to reveal my identity so it doesn’t affect my business or put me at more risk. They want to meet to discuss my being a technical adviser and lay out the details of their offer.”
I was delighted for her, and of course once money came in it meant Kim and I would be cut in for a small percentage. “Um, sounds like you might be needing a manager soon. I happen to know of a great one.”
“You mean the lovely man who invited us to dinner tonight?”
“Yep. That’s the one,” I said smiling broadly while picturing the love of my life.
Like I said, Kate has always been a person who cuts to the chase. “Although I’m really excited about this,” she said, “right now there’s something much more urgent. We have to fine tune our plans for tomorrow morning when we hit the Fashion District. Let’s talk about getting into character so we become the executives behind Las Ropas Exclusivo, money-launderers extraordinaire.”
I inhaled sharply. “Just remember tonight at dinner, not a word of this to Milt.”
We spent the rest of the afternoon morphing into the amateur detectives we were several years before. Each of us knew our role by the time we had to get ready to meet Milt at Dan Tana’s on Santa Monica Boulevard in West Hollywood. Having Milt as my boyfriend meant one thing when we ate out—it would always be a place to see and be seen by celebrities. He said it was part of his business, but I knew he also loved the notoriety.
I’ve never really been able to figure out how Dan Tana’s has lasted so long as one of the favorites. Far slicker restaurants with much better food have come and gone, and Dan Tana’s keeps attracting those in the business. It certainly isn’t the decor, which is definitely old fashioned, or maybe it is. Red dining rooms, red leatherette booths and Chianti bottles hanging from the rafters. Not even real leather. Maybe it’s the lure of old-fashioned, overpriced food which, I have to admit, is pretty good and the servings are generous.
Milt was already seated at an “A-lister’s” table when we arrived. He stood to greet us and looked as happy as a guy having dinner with three beautiful women as one with a winning lottery ticket When he asked what we had been up to, Kate almost slipped and spilled the beans, but she recouped quickly and told him about her upcoming meeting with the producers. That totally diverted the direction of the conversation, and I breathed a sigh of relief.
We wound up the evening with Milt telling Kate he would be happy to help in any way. He wrote his cell number on the back of one of his business cards and handed it to her. On the way back to my house, my two friends took turns naming the movie stars who had come over to our table. I think it was more of a thrill for Kim than Kate, because her main world was political and she couldn’t wait to tell Nathan she met Jim Carrey and Cameron Diaz both on the same night.
Because I was feeling the effects of three glasses of wine, I decided to take Santa Monica Boulevard all the way to Lincoln. Then I could cut down to Washington and home instead of heading to the freeway.
Santa Monica Boulevard is an interesting street that cuts south at an angle from West Hollywood through upscale Beverly Hills, then through Westwood—the home of UCLA. After that, it terminates in Santa Monica. The character of each of those areas is completely different. An LA Times columnist once described Los Angeles as a group of suburbs in desperate search of a downtown. Outside of the Music Center, the courts and City Hall, plus high-rise buildings filled with businesses, downtown still is not the hub of the city. There really isn’t one.
The next morning the three of us dressed in sharp looking business suits and headed downtown armed with our business cards and the introduction from the Cartel member who was working with us. I won’t lie. While it was exciting to be investigating again, I was also scared to death. What if something went wrong?
Driving through the Fashion District was like entering a world so different from my office in Century City or my home in Venice.
Most of the stores and showrooms are wholesale only, and several of the shops display signs to that effect, but other areas are dedicated to discounted retail merchandise.
Kim was in awe as we passed armies of mannequins dressed in women’s clothes, children’s frocks and men’s clothes or suits all posed in front of block after block of shops. As for Kate, she had seen it before.
“So, what’s the story for this place?” Kim asked. “I mean, it looks like there must be hundreds of these businesses.”
“You’d be surprised,” I said. “Would you believe this District includes around two thousand businesses that cover one hundred blocks?”
“That many?”
“Yep. Freestanding stores, factories, and warehouses, and then we have showrooms in some multi-story buildings like the California Market Center, Cooper Design Space, The Gerry Building and The New Mart. Our first stop is the New Mart.”
On our way we drove past an area that caters to retail buyers including a famous area called Santee Alley—an actual alley the size of a small street lined by open storefronts on both sides.
There are always crowds of people cruising Santee Alley looking for bargains and it’s only open to foot traffic. Colorful umbrellas dot the street, merchandise hangs from every possible place and droves of people bustle along the sidewalks stopping now and then to check out the clothing or venture into the shops. Santee Alley is like a place with the air of a joyful festival.
“Okay, Kim, check this out,” I said. “Maybe if we have time after our appointments we’ll stop for a bit and look around.”
Kim and Kate both agreed that sounded like fun, but at that moment we had to be sure to maintain the roles we were about to play.
I felt like a tour guide when we pulled into parking for The New Mart. “Kim, here’s a bit more trivia for you, because I know how you love history. This building is on the historical register, and before you say anything snarky, yes, LA does actually have an historical register. Anyway, in another life the whole place was filled with manufacturing lofts. Now it’s all showrooms for manufacturers, reps with more than one line and a few jobbers.”
Kim listened with interest, then said, “Check the directory. We’re headed for Altalune Fashions. Supposedly they manufacture all sorts of fashionable women’s pants in the United States, but the Director told me they bring in lots of merchandise from China. He said the truth of the matter is a large portion of the actual sewing at their manufacturing facility is limited to sewing elegant Altalune Fashions labels that say “Made in the U.S.A.” into the Chinese merchandise.”
We approached a large showroom featuring curved glass walls with full height plate glass doors. I guess I was surprised to find it looked every inch a legitimate first class operation. Comfortable seating areas furnished with white leather lounge chairs and matching love seats flanked large glass coffee tables atop polished marble floors. Expensive looking samples either hung on rods in separate bays or were displayed on floor racks on silver-toned half mannequins—that is to say they were not full mannequins, but rather ones from the waist down in a variety of poses. If I hadn’t known any better, I definitely would assume this to be a high-end manufacturer.
A stunning brunette greeted us. Her voice dripped honey. “May I help you?”
Kate spoke for us. She held out her business card and said, “We have an appointment with Mr. Vashti.”
She smiled. “Ah, yes, welcome to Altalune Fashions. He is expecting you.” She led us through the showroom to a private office at the back.
“Mr. Vashti, your ten o’clock appointment is here.” She turned to us. “Can I get you something to drink? Coffee? Tea? A cold drink?”
We thanked her, but declined. We weren’t there to socialize. Mr. Vashti came around his desk to greet us and guide us to guest chairs. He was a short man, probably five-foot-six, and slightly rotund. However, his pinstriped suit was impeccably tailored to fit his girth. He wore a white dress shirt open at the neck. I figured him to be fortyish. His smile revealed a rather wide space between his two front teeth, but otherwise they were straight and sparkling white. All in all, he looked like a man who had money and took pride in looking good. And, why not? This was the fashion business.
35
KATE WALTZED AROUND the introduction, carefully selecting words that more or less evaded references to anything that might suggest money laundering.
“Mr. Vashti, thank you for meeting with us. Our company, Las Ropas Exclusivo, serves a select clientele, and our friend Luis Espinos
a felt our capabilities would be useful to you at this time. We act as the United States purchasing entity on behalf of our clients in Mexico, have the merchandise shipped into our own warehouse and then resell it to them. You might call us middlemen—or in this case middlewomen, with vast financial resources.”
Vashti was also evasive. “And exactly what are your capabilities? Mr. Espinosa did contact me and said to expect a proposal from you, but he did not elaborate.”
Now it was time for the cat-and-mouse game. Kate was on top of it. “Let us just say that we are aware you recently lost, um, two major accounts. We assume that will certainly make a dent in your bottom line. Our clients are in the market for merchandise such as yours and have the resources to pay in cash upon shipping rather than requesting terms. So, let us say we can replace that volume for you.”
It was apparent Kate had hit one of his buttons. He leaned forward, elbows on his desk, and tented his fingers. I was encouraged to see he clearly understood the next move in this game was his. I suddenly felt quite warm even though the temperature in the room was pleasant.
After a moment’s hesitation he said what we hoped to hear. “Of course,” he said, “I am interested to know more about what sort of volume your client seeks. Please understand, we mostly deal with large accounts and the size of their orders must meet our minimum requirements.”
That is where Kim stepped in. “Mr. Vashti, are you questioning our capabilities? Please understand while you are interviewing us, we are also interviewing you to determine the best resources for our clients. Frankly you are not the only manufacturer we are meeting with. As Chief Financial Officer of our company, I can assure you other manufacturers are anxious to do, let’s say, our special type of business with our Mexican buyers. As such, our buyers require specific arrangements. Every transaction will be in U.S. Dollars, half with the order and half upon advice of shipping. Shall we proceed to more definitive conversation now?”
Payback Page 13
