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$50,000 Cash Stuffed in a Paper Bag
e right to due process of law under the Fi h Amendment, U.S. Constitution, proved a viable defense in a major drug money laun- dering case involving two Phoenix attorneys. Having received information that an attorney was laundering drug money, the FBI proceed- ed with a Phoenix sting operation in which a government informant, Reynolds, and an undercover FBI agent, Miller, posed as co- caine dealers. One of the attorneys ew to the Caymans – with, unknown to the attorney, an undercover IRS Special Agent in tow – and visited the o ces of U.S. Tax Planning Servic- es, Ltd. (USTP) which supplied o shore com- panies and bank accounts, with no questions asked as to the origin of deposited funds. e attorney arranged for formation of a Cayman investment company, Anderex, and establish- ment of a Cayman bank account for the com- pany, plus the delivery of the cash drug pro- ceeds from Miller to USTP’s o ce in Irvine, California for facilitation in the transfer of cash from Phoenix to the Caymans. Soon a er and unannounced, Miller appeared in Irvine at my client’s front door with $50,000 in cash, stu ed in a paper bag...
My client was twenty-four year old Jack Bryan who worked for his father Jim Bryan who owned and controlled USTP. Jack and his young assistant and friend Larry Schmidt were told by an Atlanta attorney, later in- dicted in Atlanta, that banks would not le a currency transaction report (CTR) for sums less than $10,000. erefore, using ctitious names, with the $50,000 in cash they pur- chased six cashiers checks payable to An- derex, all in amounts less than $10,000, and mailed the checks to the Caymans for deposit in the Anderex account. Jack told Reynolds that he could “funnel a lot of money” out of the country, and return the funds to Reynold by “loans,” which he ultimately did.
Later Jack and Larry were asked to visit with Reynolds and Miller at a resort in Phoe-
nix. During the meeting Reynolds made clear their business: cocaine dealers. e meeting was surreptitiously videotaped. Caught in a federal sting operation, Jack, Larry, and the two attorneys were indicted with conspiracy to conceal and concealing material facts in a matter within the jurisdiction of the IRS, Counts I and II, plus wire fraud, counts III and IV. e concealed facts were the existence, source, and transfer of cash from Phoenix to the Caymans without the ling of CTRs, and the return of the money to Phoenix as non- traceable loans. I was retained by Jack and Larry and I brought in my long-time friend and colleague “Wild Bill” Cohan of California to represent Larry.
A er attending a release hearing, I was driving Bill to the Phoenix airport when he announced in his matter of fact style: “No crime committed.” I said, “What, are you cra- zy? ese guys knowingly and intentionally laundered drug money to the Caymans, fun- neled it back to Phoenix as ‘loans,’ and you say, ‘No crime committed’!” Bill explained that there was no law which prohibited structur- ing, which was true at the time. It was this and a similar case which later caused Congress to make it a crime to structure for the purpose of avoiding the CTR.
Originally the grand jury alleged that by causing the failure to le CTRs our clients had attempted tax evasion, an object of the con- spiracy and part of the scheme to defraud. But through pre-trial motions Bill and I pointed out that this was impossible because the last overt act of the alleged conspiracy was in January, long before the ling date of Apri1. By superseding indictment, the government reduced the conspiracy from four objects to two, in which there was no mention of tax evasion. Chess game on.
Read the full story at https://attorneyatlaw- magazine.com/defending-federal-tax-prose- cutions.
DONALD W. “MAC” MACPHERSON HAS BEEN IN PRACTICE FOR OVER 40 YEARS. HIS FORMER CLIENTS INCLUDE TWO GOVERNORS, THREE STATE SENATORS, CIA OPERATIVES, A HOLLYWOOD STAR, AND A MA- JOR U.S. AIRLINE. MAC IS CERTIFIED BY THE ARIZONA STATE BAR AS A SPECIALIST IN BOTH TAX LAW AND CRIMINAL LAW. HE HAS WRITTEN THREE TAX BOOKS AND TRIED 55 CRIMINAL TAX CASES IN FEDERAL COURT IN 25 STATES SEE MORE AT WWW.BEAT-IRS.COM.
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