A lawyer in Miami is fighting accusations that the black market peso exchange was employed to pay legal fees in Florida. Joseph DeMaria, a Florida attorney, states the following to the Daily Business Review:
DeMaria said it's disingenuous for prosecutors to denigrate the parallel money market.If a well-known vehicle for narcotics-related money laundering becomes a standard fixture within the Floridian economy, does one simply shrug, accept its presence and live with the consequences?
"Much of Brickell Avenue [in Miami] was built with drug money. Does that mean you take down all those financial institutions?" he asked. "Sometimes the government has gone too far with the black market peso exchange."
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Black Market Peso Exchange at Issue in Kuehne Money-Laundering Case
John Pacenti/Daily Business Review
March 09, 2009
The defense team for indicted Miami attorney Ben Kuehne isn't resting on its laurels after winning crucial pretrial battles against federal prosecutors.
A money-laundering conspiracy count defended by the Justice Department has been jettisoned, charges were dropped against a co-defendant, and the defense team won a magistrate's recommendation to discard a wire fraud charge.
The government and Kuehne now are squaring off on the five remaining money-laundering counts alleging the attorney used the black market peso exchange to funnel $5.2 million from the family of Colombian drug kingpin Fabio Ochoa to Miami to pay defense attorney Roy Black. He had hired Kuehne to vet the money because defense attorneys may not knowingly accept crime profits as legal fees.
Court papers on the money movements filed last month give the best glimpse yet of how the trial may play out in September before U.S. District Judge Marcia Cooke in Miami.
Kuehne ended up as a government target for clearing the Ochoa family money in exchange for a fee of $197,000 from Black. Kuehne investigated the funds with Colombian attorney Oscar Saldarriaga and accountant Gloria Velez, who were indicted along with him. Prosecutors allege 46 of 57 payments that passed through Kuehne's trust account also moved through the black market exchange.
There is little argument that the exchange has been used for years by drug traffickers to launder money and long before that by Latin American businesses to protect assets, exchanging their country's more volatile currency for dollars and more recently euros. Not surprisingly, Latin American governments want to encourage businesses to keep their money at home to support their developing economies, and there are a number of restrictions on currency exchanges.
But in the 1980s, Colombian drug traffickers started to use this parallel market to wash their ill-gotten gains, exchanging dollars made in the United States on cocaine and marijuana sales into pesos.
The latest Kuehne fight is now centered on what a jury will hear about the storied history of the exchange.
"This so-called black market peso exchange, which is known as the parallel market, is a term drawn up by law enforcement," said Velez attorney Henry Bell of South Miami. Bell's client, an accountant, was dismissed from the case last month by Cooke for a speedy trial violation.
"In and of itself it is not illegal, and there have been some attempts to paint with a broad brush that even the mere use of the black market peso exchange means the defendants are up to no good," Bell said.
Joseph DeMaria, a Miami attorney with the Tew Cardenas law firm and a former federal prosecutor, said he has defended legitimate businesses whose assets were seized by the government for using the black market exchange. He said it's wrong for the Justice Department to simply equate using the exchange with helping drug dealers.
"What they [prosecutors] usually do is grab the money, and then you have to negotiate with them. But in the Kuehne case they took it a step forward," DeMaria said.
Prosecutors unsealed the indictment in February 2008, alleging Kuehne washed tainted drug money through the exchange. Kuehne went through a wholesale flower exporter, Hernando Saravia, who was an informant working with the Drug Enforcement Administration. Saravia exchanged $1.8 million worth of Ochoa family pesos for dollars used in U.S. drug stings.
"With the exception of the dollars that the U.S. government placed into its own undercover accounts and wired to Mr. Kuehne, the government has no fact evidence that the dollars acquired in parallel market transactions in the case were drug proceeds," attorneys for the defendants argued in a Feb. 6 motion.
Kuehne is represented by Miami attorney Jane Moscowitz of Moscowitz & Moscowitz and John Nields of Howrey in Washingto n. Kuehne has become a cause celebre among peers who see his prosecution as an attempt to chill legal representation for drug traffickers and other high-profile defendants. Kuehne's clients included Vice President Al Gore in the 2000 presidential recount litigation.
Now his own attorneys are challenging the use of a key government expert, retired DEA agent Donald Semesky, who they say will testify that most of the dollars that Colombians get from the exchange are from narcotics trafficking. "Agent Semesky's proffered testimony is woefully insufficient" and is intended to fill a gap in evidence, the Feb. 6 defense motion states.
Kuehne argues a federal bankruptcy court in New York recently rejected the government's characterization of the exchange as utterly corrupt.
DeMaria said it's disingenuous for prosecutors to denigrate the parallel money market.
"Much of Brickell Avenue [in Miami] was built with drug money. Does that mean you take down all those financial institutions?" he asked. "Sometimes the government has gone too far with the black market peso exchange."
Justice Department attorney Robert Feitel responded Feb. 23 that Kuehne used Mexican currency exchange companies as well as Saravia. He said it's not up to Cooke in pretrial proceedings to resolve differences among expert witnesses.
And the New York bankruptcy case invoked by the defense is vastly different from the case at hand, Feitel argues.
"Evidence will show that in order to raise money to pay Roy Black's legal fees, the Ochoas sold a farm for $10 million to [Luis] Hernando Bustamante Gomez, one of the leaders of Colombia's North Valley Cartel." He was extradited in 2007 and made a deal with Washington prosecutors last October.
The government also alleges Kuehne was well-versed in knowledge that criminal proceeds were sent through the exchange.
Besides attacking the expert, Kuehne's lawyers are trying to strike a paragraph from the indictment that states Colombians are required to use banks, not the exchange, to purchase U.S. currency except for "personal use, travel and personal investments."
In a Jan. 28 motion, Kuehne argues the statement is prejudicial and patently false: "If true, it would mean that Colombian law makes it illegal to purchase United States dollars on the parallel market to pay for legal fees. In fact, however, it is lawful to purchase dollars on the parallel market to pay for legal fees."
At this point, the Justice Department needs some kind of a win in the case.
Cooke already dismissed a money-laundering conspiracy charge, finding Kuehne was protected as an attorney under an exception in federal law.
U.S. Magistrate Judge Ted Bandstra also has recommended dropping a wire fraud charge because the Colombian government never made a legal claim to any Ochoa assets.
Velez was removed from the case when Cooke found her constitutional right to a speedy trial had been violated. Prosecutors indicted her, but kept the charges secret for two years while building their case against Kuehne. Feitel wants to appeal Cooke's adverse rulings but has had trouble obtaining final approval from Washington.
He still hasn't backed off Velez. In the battle over the expert, the government's response said Velez was key, falsifying documents to make it look like money coming from the sale of an Ochoa farm stemmed for livestock sales.
Bell said his client always maintained she believed that parallel market transactions are legitimate. Just saying the exchange is used by drug dealers does not relieve prosecutors of their burden to prove defendants knew that specific transactions were illegal, he said.
"The government hopes to beat the drums of 'black market peso exchange' and 'Ochoa' in an attempt to get around its burden," he said.
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