Money-Laundering Prosecution Worries Lawyers

Rare money-laundering case prompts criticism that Feds trying to cow attorneys.


July 22, 2008— -- A rare federal money-laundering prosecution of a prominent Florida attorney has prompted concerns that other defense lawyers may no longer represent high-profile criminals for fear of being prosecuted themselves.

Benedict Kuehne, one of Al Gore's lawyers during the 2000 Florida recount, has been accused of money laundering for approving $5.2 million in legal fees paid by Fabio Ochoa, formerly one of the leaders of the Medellin drug cartel, to Ochoa's well-known defense attorney, Roy Black. Much of the money was allegedly derived from drug sales, prosecutors contend.

The case in federal court in Miami is being closely watched in legal circles around the country both because of its unusual circumstances -- it is believed to be the first federal prosecution of an attorney for vetting the source of legal fees -- and because of Kuehne's sterling reputation in the Miami legal community.

"It's an extreme case that represents the government's attempt to expand money laundering laws as broadly as possible and at the same time to send a message to lawyers," said Kendall Coffey, the former U.S. Attorney in Miami, who has worked with Kuehne.

"There are those in the Justice Department who believe that serious drug dealers and other serious criminals should not have access to top-flight lawyers," he said.

That belief was echoed by some other former prosecutors around the country. "The government's position is that people who are notorious criminals shouldn't be able to acquire a high-profile lawyer," said Buddy Parker, a former federal prosecutor in Atlanta who specialized in money laundering cases.

A Department of Justice spokeswoman declined to comment on the case, as did Kuehne and his attorneys.

Kuehne was not the initial target of the investigation. The case stems from the prosecution of Ochoa, who was convicted in 2003 of smuggling more than 30 tons of cocaine into the United States.

Black, Ochoa's attorney, hired Kuehne in 2001 to vet $5.2 million in legal fees to make sure they were not drug proceeds. Black, who was never charged and is not under investigation, is a high-profile criminal defense lawyer whose clients have included William Kennedy Smith and Rush Limbaugh.

According to an indictment unsealed earlier this year, Kuehne was paid about $200,000 for his work, at least some of it allegedly from the money he was vetting. In a series of memos, he told Black the money, initially wired to a trust account controlled by Kuehne, was from legitimate sources, and not drug money. He then gave the money to Black and his associates.

According to the indictment, however, nearly $1.8 million of that money came from fake bank accounts set up by undercover law enforcement agents as part of investigations into money brokers that help drug cartels launder money.

The indictment claims that Kuehne, Gloria Flores Velez, Ochoa's personal accountant, and Oscar Saldarriaga Ochoa, one of Fabio Ochoa's Colombian attorneys, knew that the money was tainted drug money and created fake documents to claim that it came from legitimate sources.

In a statement at the time the indictment was unsealed, Black and several other lawyers who were assisting in Ochoa's defense, said, "During the course of Ben's work on this matter, the lawyers involved in the Ochoa defense saw nothing to suggest that Ben was doing anything other than his typically careful, factual research and legal analysis."

Lawyers for Flores and Saldarriaga, who have both moved from Colombia to Miami while the case is pending, said their clients were not guilty. "She acted in good faith throughout this whole thing and never dreamed she would be in this position," said Henry Bell, Flores' lawyer.

Saldarriaga's lawyer, Joaquin Mendez, said Saldarriaga played a minor role in the case and spent most of his time on Ochoa's defense, not on vetting the money. "We're scratching our heads wondering why they decided to bring this prosecution," he said.

Kuehne attributed $2.3 million of the legal fees to a man named Hernando Saravia, according to the indictment. Of that, $1.8 million were drug proceeds, the indictment says, and were sent to Kuehne from undercover investigators.

In letters to Black, Kuehne said the $1.8 million was from Saravia, whom he described as a reputable businessman in the flower and gem businesses. According to the indictment, Kuehne attached what prosecutors say was a forged letter from Saravia verifying the source of the money.

Saravia is allegedly a money broker who, as first reported by the Miami Herald, is expected to be a cooperating witness for the government in Kuehne's case. He was indicted in January 2007 on a federal money laundering charge in New York. He is in jail in Colombia awaiting extradition to the United States, according to Bell and Mendez.

"They need a link from the Colombians to say that the money was drug derived and Kuehne knew or turned a blind eye," said Myles Malman, a former federal prosecutor who prosecuted Panamanian dictator Gen. Manuel Noriega, and a friend of Kuehne's. "Saravia is the most likely person to provide that link."

Those who know Kuehne or know his reputation were shocked by the indictment.

"You have to understand that Ben Kuehne is probably the best known, most upright, outstanding attorney that you can have," said Tom Cash, the former head of the Drug Enforcement Agency's Miami office. "He has a tremendous reputation. He's always been known as being a tower of integrity."

In recently filed motions to dismiss the charges, Kuehne's attorneys argued that Congress exempted criminal defense services from money laundering prosecutions and that the government has gone too far by essentially criminalizing negligence.

"If the lawyer knows he is subject to criminal prosecution and imprisonment when his judgment on whether to take a fee is flawed, even a client who has untainted funds may not be able to find a willing lawyer to take his case," they argue. The government must file its response by next week.

Other attorneys expressed the same concerns. "What makes it such a paralyzing case for other defense lawyers is if they can prosecute someone with the impeccable reputation of Ben Kuehne in these circumstances, then anyone could be arrested if they are doing work for alleged criminals where the government believes you wound up getting dirty money," Coffey said.

Other observers believe the government may have more evidence against Kuehne than they are letting on. "I have to believe the Department of Justice thinks there's something more here," said Robert Litt, the former head of the Department of Justice's criminal division, who was not familiar with the facts of the case.

"Was this a corrupt deal or a guy who got something wrong? If the latter, it's an outrage. If it's the former, it looks very different."

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