The Enemy Inside

by Steve Martini

  “So I hear.” Proffit’s wife, who sat on the District Court in Los Angeles, was in fact a candidate for the appellate slot on the Ninth Circuit. According to information, she was on a short list in the White House, people who had already cleared all the non-binding hurdles at the American Bar Association and the State Bar. Proffit had put his own shoulder to the wheel, if for no other reason than to get his wife out of town. Once nominated and confirmed by the Senate, she would spend at least four days a week in San Francisco. Paradise to Proffit.

  “The fact is, I am getting tremendous pressure from the criminal defense bar back there to the effect that they are underrepresented on the Ninth Circuit,” said Grimes.

  “Is that so? I hadn’t heard.”

  “I have talked to people in the White House and it seems there is some sympathy for this position there.”

  Proffit thought about asking who at the White House, but he knew she wouldn’t tell him. His wife had been a civil practitioner before being appointed to the bench. Proffit could smell a rat. She was about to be passed over. Still, why would Grimes be calling him? Perhaps there was some way he could turn it around.

  “One name keeps popping up,” said Grimes. “A criminal defense lawyer in Southern California by the name of Madriani. I’m told that you know him.”

  Proffit’s heart skipped a beat. Couldn’t be the same one. Not the lawyer representing the driver who killed Serna?

  “Where’s he from? What city?” said Proffit.

  “San Diego area, I believe.”

  “Paul Madriani?”

  “That’s the one.”

  “Somebody must be walking in my shadow,” said Proffit. “I met him one time. Couldn’t have been more than two weeks ago. If you’re looking for an endorsement or a review, I couldn’t recommend him. From what little I know, he doesn’t have the background.” What Proffit meant was the pedigree, hailing from a small firm outside the cloistered club of the organized bar. “Do you mind my asking where you got your information that I knew him?”

  “I’m not at liberty to say. But he does have significant support in certain quarters, and according to these people he appears to be highly qualified,” said Grimes. “Beyond that, my office has already conducted a thorough background check. And I’ve notified the White House of my endorsement.”

  “Then you didn’t call me for a personal review?”

  “No,” said Grimes.

  Proffit wasn’t stupid. Whatever was going on, he could smell Serna all over it. The fact that Madriani represented the man accused of killing her in an accident was no coincidence. He was curious to discover the connection so that the firm could tiptoe around it, avoid any fallout. At the same time he didn’t want to become personally involved.

  “If you don’t mind my asking, can you tell me if Mr. Madriani has formally applied for the Ninth Circuit position?” Proffit was familiar with all the contenders. He didn’t remember seeing his name. If he had, he would have put the word out to his friends on the various reviewing panels to deep-six him. Two or three black balls were usually all it took to finish off somebody who didn’t have the horses in terms of political pull with the appointing power.

  “The people who recommended you told me you had a way of coming directly to the point. That’s exactly what we were hoping you could help us with,” said Grimes.

  “What?”

  “We’d like you to approach Mr. Madriani and tell him that my office is inviting him to apply. We would like him to do so as soon as possible, unless of course he is not interested. But we think there’s a good chance he will be.”

  “Wait, wait, wait! This is all very awkward,” said Proffit. “You do know . . .”

  “That your wife is a candidate for this position as well? Yes, I wanted to talk to you about that,” said Grimes. “I know this must be very disappointing for you, but you are aware of the custom known as senatorial courtesy? Sometimes they call it privilege.”

  “Go on.”

  “The fact is, for that vacancy, because it’s assigned to California, no other candidate can be scheduled for confirmation before the Senate without my consent.” She listened to him breathing on the other end of the line. “Just to let you know, I am already committed to Mr. Madriani’s appointment. I have advised White House staff to that effect. So you see, it would be to your benefit to use your best efforts to persuade Mr. Madriani to apply.”

  “Just how do I do that?” Proffit was beginning to lose his temper. Smoke coming out of his ears.

  “We have something that I am told will help. But before we get to that, you need to understand that there are currently twenty-nine active seats on the Ninth Circuit, and several judges who are nearing retirement. We expect at least two, possibly three vacancies in the next two years. Just so you know, your wife would be in an excellent position for any one of those other appointments. I would give you my assurance in those regards.”

  For a moment Proffit wondered whether Grimes and Madriani might have been meeting together, in the sack. He took a deep breath. Grimes was putting him in a box and nailing the lid on. If he refused or failed, Grimes was in a position to block his wife’s nomination for higher appointment for as long as she was in the Senate. If so, and his wife found out, she would make Proffit’s life miserable, or worse, divorce him and take half the value of his partnership in the firm. She could ruin him.

  “Of course this is assuming he’s inclined to do so. Not everybody wants to be on the bench,” said Proffit. “You say you believe he’s interested, but he hasn’t filed. I don’t get it.”

  “Good. If you’re curious, then I’ll assume you’re on board,” she said. “Now this is all confidential. You do understand that?”

  “I haven’t said I’d do anything.”

  “But I’m sure you will. Right?”

  Proffit thought about his options. “I suppose.”

  “You don’t sound enthusiastic,” she said.

  “I’ll have to work on that later,” said Proffit.

  “Of course. Take your time. But don’t take too long. So that there is no confusion later,” said Grimes. “I will be sending you a check in today’s mail, a retainer. Be kind enough to send me a fully executed retainer agreement, signed by you, to my office here in Washington.”

  There was no response from the other end.

  “Are you there?”

  “You want to treat this as a legal matter?”

  “Absolutely. I’m asking you for your assistance and advice as a lawyer.”

  “On this?”

  “You haven’t heard everything yet.”

  “What else?” said Proffit.

  “On the retainer agreement, if you have to describe any of this, just call it general legal advice. No need for any specifics.” She was being careful to cover her tracks.

  Establishing an attorney-client relationship would seal Proffit’s lips, prevent him from talking to anyone else about their conversation without her prior, expressed written approval.

  “There’s a case, a federal appeal. Well, actually, it’s more of a negotiation at this point, or will be shortly. In any event, the case is United States versus Rubin Betz.”

  The instant the name was mentioned, Proffit sat bolt upright in his chair. He’d heard it before. In fact, he had scoured the Internet search engines at the office looking for anything he could find on Betz. Rubin Betz was the name Madriani had given him the night they met in the restaurant in Georgetown. The name of Serna’s old boyfriend. The synapse in his brain sent a jolt of adrenaline to his heart. Now Grimes was calling with the same name. Whatever it was, Serna was in the middle of it. Shit was about to rain down on the firm. Proffit could smell it.

  “Mr. Betz is in the federal penitentiary at Florence, Colorado,” said Grimes.

  “Supermax!” Proffit almost said, “I know,” but he didn’t. Instead he bit his tongue. Florence was dubbed the “Alcatraz of the Rockies,” where the feds sent the worst of the worst, tight controls,
stories of complete isolation. From everything that Proffit had read, it was the one thing that didn’t make any sense.

  Betz was a banker. At one time he worked for one of the large Swiss banks with branches in the United States. That was what got him in trouble, the charge that he had conspired with some US deposit holders to conceal overseas profits from the tax man. It was a white-collar crime, but he was doing time in the tightest maximum security prison in the United States.

  “What did the man do? This guy Betz? You’ve got to do something bad to get sent to Florence.” He was hoping Grimes might tell him.

  “You don’t need to be concerned about that. You can look it up later.” Grimes knew he would. She also knew that Betz wasn’t in Florence because of anything he’d done. The government put him there to prevent any harm from happening to the man, and not because they loved him. It was to avoid the public fallout that they believed would occur should he die in prison. Florence was the only place of incarceration within the federal system where they could adequately protect him and, at the same time, keep him from talking to anyone else. Betz had what a few of her colleagues on the Hill were now calling the Midas key. They were trying to deal with him, to put closure on the entire affair. The fear was that sooner or later some federal judge might cut him loose, or worse, reduce his term and send him to a minimum security institution, where if he got into an argument or crosswise with one of the gangs, another inmate might kill him. Even the fear that he might fall down a flight of stairs had some members of Congress walking the floors at night.

  “Mr. Betz requires the assistance of a good criminal lawyer,” said Grimes. “He doesn’t yet know it, but he’s about to become involved in some rather complicated negotiations.”

  “What kind of negotiations?”

  “As they say in the military, that’s beyond your pay grade,” said Grimes. “All you have to do is carry the message. We want Mr. Madriani to offer his services. Betz has no lawyer at the moment. Tell Madriani he will be well paid for his services, if he cooperates.”

  “What makes you think he’ll do it?” said Proffit.

  “Trust me. He will.”

  “How much is he being paid?” said Proffit. “He may want to know.”

  “He won’t. We have it on good authority that he’s been dying to talk to Mr. Betz for some time. This is his chance.”

  “And because of this you think he’ll file for the judgeship?”

  “Even if he doesn’t, he’ll talk to Betz.” With that, Grimes hung up in his ear.

  THIRTY-NINE

  You asked about the source of this cash.” It is getting late, nearly midnight and Korff is still telling us about the dealings of his old employer, Gruber Bank.

  “When you are talking about the PEPs, politically powerful people who are carrying cash to the bank, there are generally two sources that you look for. Either the person has looted his country’s treasury, which happens more often than you would like to think. But usually that is limited to the third world. Or the PEP is being bribed by some foreign entity, a corporation, perhaps a wealthy individual, or some other country.

  “It is the reason why the PEPs are so much trouble. They show up with cash. You don’t know the source. Even if they claim it is legitimate, how do you know? There is no way to prove it.”

  “But you said Gruber allowed these PEPs to make large deposits in cash?” says Harry.

  “Yes. That’s why I complained. As the bank’s anti-money-laundering compliance officer I knew what would happen. The minute they deposited the funds they would start to launder it.”

  “How do they do this?” I ask.

  “There are a number of ways,” says Korff, “but the most common is to purchase a legitimate business that deals in large amounts of cash, high volumes. A casino, for example. They are notorious as currency laundries. Or what happened in one case involving one of your American PEPs, he bought a chain of coffeehouses.

  “The way it works, they use clean money, funds for which taxes have already been paid, to buy the business. They start small. Then if the business makes, say, two hundred thousand dollars the first year, they report income of two million. They take dirty money from the secret bank account to make up the difference.”

  “But they’d have to pay income tax on the full two million?” says Harry. “Doesn’t make any sense.”

  “On the contrary,” says the banker. “That’s the point. The money in the bank was free money. They didn’t have to do anything to earn it, other than the corrupt act. But they can’t spend it until it is laundered. They report it as legitimate income and pay the tax. What is left is clean. The entire purpose is to legitimize it by paying the tax.

  “Then the next year they take the laundered money and expand their business. Now they have five coffeehouses. That year they earn a million dollars in actual income and report five million. You can see how it would grow very quickly. At some point you stop expanding the business and instead use the laundered profits to invest in other things. When you are done, you end up with a business worth a fortune and a pile of clean cash invested elsewhere.”

  “Like I said before, we’re in the wrong business,” says Harry.

  “Did you know any of these PEPs? Were they people you recognized?” I ask.

  “Oh, yes, of course,” he says. “There were a number of prominent politicians. Some from Europe. Some from the United States. Many of them I didn’t know. Some from South America. They would come in speaking Spanish, sometimes Portuguese. And the Russians, of course, they were always there.”

  “You mean to say Russian politicians are corrupt?” says Harry.

  “Does a Frenchman speak French?” says Korff.

  They both laugh.

  “The Americans,” I say. “I’d be curious to know who some of them . . .”

  “I really shouldn’t tell you that.” Korff is weaving in his chair, halfway through the latest pitcher of lager. “It could get me in serious trouble.”

  “Just between us,” says Harry. He upends the pitcher of beer over Korff’s stein one more time. “Would you like another?”

  “I would not say no.” The banker laughed.

  “Come on, a few names,” says Harry. “Between friends.”

  “OK. A lady, a woman. One of your senators. Her last name is”—he whispers—“Grimes.”

  “Maya Grimes?” I look at him.

  “You said it, not me. She made trips over several months. Enough cash to fill a cargo container,” he says. “This was maybe four years ago. And there were others.”

  Before I can ask who, Korff gives up eight more names, every one of them recognizable, fixtures with long tenures in the House and the Senate. And he tells us that one retired member of the Senate now sits on the board of directors of Gruber Bank. The names include members of both political parties. If what we are being told is accurate, corruption may be the only thing that is still bipartisan in Washington.

  He says there are more, but he can’t remember all the names. I recall the comment by Graves concerning Abscam and the FBI sting, that if the feds hadn’t pulled the plug and brought the undercover investigation to an end they might have had trouble finding a quorum to do business in either house on Capitol Hill.

  “How much money are we talking about here?” says Harry. “In broad numbers, I mean. Do you have any idea?”

  Korff starts to nod. “That was what worried me, part of the reason I complained so much. Before all of this, Gruber was a small regional bank with local deposit holders, mostly individuals and small businesses. It had assets of a little more than half a billion francs. All of a sudden, in less than two years, we had accounts in excess of one hundred billion.”

  Harry looks at me. I know what he is thinking. It’s time for me to start worrying about what he told me on the plane on the way over.

  “Not all of these deposits were from Americans, you understand. Some came from Europe, Latin America. As I said, we had deposits from almost everywhe
re. Money from the larger Swiss banks was being moved to smaller banks where it wouldn’t be noticed. Banks without branches overseas where your IRS and Treasury would have less leverage. We even had diplomats from the United Nations with PEP accounts at the bank.” Korff looks at both of us. He starts to laugh. “These people were on the news at night complaining about corruption in the third world, telling poor countries they had to clean up their act if they wanted help from the IMF, the International Monetary Fund. And during the day they were making PEP deposits in cash, large amounts into their numbered accounts at Gruber.”

  “Makes you wonder about human nature,” says Harry.

  Not if I know my partner. Harry’s been convinced since shortly after escaping the womb that the angels of our better nature took flight the instant Adam had his ass tossed from Eden.

  “You wouldn’t by any chance have any documents concerning any of this?” he asks.

  “No, of course not. But the bank has them. They would have all of the names and the account numbers.”

  “You said there were exceptions to the bank secrecy laws in cases where there was evidence of criminal wrongdoing, money laundering. If that’s the case,” I say, “what’s to prevent a foreign government or some private party from accessing the banks’ files on these accounts?”

  “Ordinarily I would say you are right,” says Korff. “But not in this instance. You see, there was a kind of informal understanding between the Swiss government and the other countries involved. What you might call a ‘safe harbor.’ ”

  “Go on.”

  “If the money was moved, transferred from the large Swiss banks that had international branches, during the window of time that was agreed upon, the United States agreed not to pursue it. Other countries followed the American lead. They would make no inquiries and the Swiss government would not be asked to relax the rules of secrecy concerning any of the PEP accounts. Once they were transferred, they would be untouchable.”

  “Why would they do such a thing?” I ask.