51. Zurich International letter of credit in favor of Intercopa SA, Panama, with backup documentation and other letters of credit__ 48. Documents received from the Four Queens Hotel & Casino, Las Vegas, Nev. re Bank of Sark swindle... 49. Documents received from the University State Bank, Denton, Tex. re Bank of Sark swindle... 50. Documents received from First National Bank, Dallas, Tex., re unpaid drafts on Bank of Sark checks made out to Braniff Airways and others__. 52. Copies of bills of exchange from Panama Timber and Intercopa SA, with backup documentation___. 53. Blank Bank of Sark check made out in the amount of $50,000; Bank of Sark check for $15,000 and one blank International Bank of Sark check___ 54. Zurich International letter of credit in favor of Intercopa SA, Panama, with backup documentation___ 150 55. Documents re L. & M. Associates and Diversified Minerals Corp. loan transactions___ 150 56. Receipt of REA Air Express showing shipment going from L.P. Mastriana, Dallas, Tex., to Harold Rothman, New York City-- 57. Loan commitment from Harold Audsley, Ft. Lauderdale Financial Inc., to James Decker, International Holding Corp--. 150 150 150 Roosevelt to Louis 193 58. Zurich International letters of credit in favor of International Mastriana. 60. Copy of a check drawn on the Bank of Nova Scotia to Elliott Roosevelt, signed by M. McLaney and endorsed, "Pay to the order of Louis Mastriana." 61. Letter dated May 21, 1968, from Elliott Roosevelt to Louis Mastriana__. 62. David Slater's handwritten notes of contractual relationship 63. Xerox copy of pertinent information sheet on Agricultural 65. Telex dated October 9, 1970, addressed to Mr. D. Slater for 67. Copy of incorporation of partnership between Heinrich Paul Protzman and Argimino Velarde Alvarez of International Commerce and Investment, S.A., dated August 30, 1967, with translation of same (Spanish to English). *May be found in the files of the subcommittee. 194 194 216 216 216 216 216 (*) (*) (*) (*) (*) (*) (*) (*) T F T F V EXHIBITS-Continued 68. Copy of minutes of meeting between the board of directors 70. Copy of minutes of meeting of board of directors of Intercopa, 75. Copy of Telex from Rogers to Slater dated September 30, 76. Copy of Telex from Banco Exterior to Credit Suisse, dated October 7, 1970, reference transfer of $5.5 million-for Hammac properties and refers to the letters of credit PAA 7 and PAA 8_. 77. Two Telex messages-one dated October 10, 1970, and second dated October 12, 1970-reverse of Telex of October 10, 1970, carried pencil note on transfer data and account number PDOC 823980-mistakenly written by Slater as PEOC. Other Telex refers to Shin well dealings with Credit Suisse. *May be found in the files of the subcommittee. EXHIBITS-Continued Intro 78. Two Telex messages-one sent by Slater to Perez Salamero 80. Four documents pertaining to attempted purchase of the 81. A series of memos, correspondence, business cards between 82. Telephone credit card for use by David Slater....... A. Certificate of deposit of guarantee by Banco Ex- B. Telex copy from J. M. Axelrod certifying that First C. Copy of letter by Banco Exterior to Security Pacific D. Telex from Security Pacific Bank to Banco Exterior 85. Copy of report from National Westminister Bank re: Cornucopia__ E. Four page list of foreign securities allegedly on de- 84. Copies of correspondence between Slater and Samos, De- 86. Report-financial statements-Cornucopia investments and multinational funds__ 87. Original letter from Slater to Senator John L. McClellan dated June 14, 1971, in which he offers to cooperate with the subcommittee.. 88. Court order dated June 12, 1973, conferring immunity and compelling testimony of witness Philip Morell Wilson----89. Financial statement of First Southern Financial Investment Co. of Charlotte, N.C.. 90. Financial statement of Allied Fund for Capital Appreciation, Inc____ 92. Copies of four Bank of Sark checks payable to Banco Exterior, SA... 91. Copies of fraudulent Telex messages confirming letters of credit, etc.___ 123 September 19, 1973. 225 *May be found in the files of the subcommttee. ORGANIZED CRIME SECURITIES: THEFTS AND FRAUDS TUESDAY, SEPTEMBER 18, 1973 U.S. SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met at 10:03 a.m., in room 3302, Dirksen Senate Office Building, pursuant to section 4, Senate Resolution 46, approved February 26, 1973, Senator Henry M. Jackson (chairman of the subcommittee) presiding. Members of the subcommittee present: Senator Henry M. Jackson, Democrat, Washington; Senator Walter D. Huddleston, Democrat, Kentucky; Senator Charles H. Percy, Republican, Illinois; and Senator Edward J. Gurney, Republican, Florida. Members of the professional staff present: Howard J. Feldman, chief counsel; Philip R. Manuel, investigator; Fred Asselin, investigator; William B. Gallinaro, investigator; Stuart Statler, chief counsel to the minority; William F. Gibney, detailed from the Internal Revenue Service; Eugene G. Anguilla, detailed from SEC; and Ruth Young Watt, chief clerk. Chairman JACKSON. The subcommittee will come to order. [Members of the subcommittee present at time of reconvening: Senators Jackson and Huddleston.] Chairman JACKSON. We resume this morning the hearings in connection with the stolen securities investigation by this committee which have been underway now for quite some time. In order to lay the foundation for the testimony that is to follow, we are going to call upon Mr. Philip Manuel, a subcommittee investigator, to outline the situation as of now and the testimony that will be presented in connection with this ongoing investigation. Mr. Manuel, would you be sworn, please? Do you solemnly swear that the testimony you are about to give before this committee shall be the truth, the whole truth and nothing but the truth, so help you God? Mr. MANUEL. I do. TESTIMONY OF PHILIP R. MANUEL, INVESTIGATOR, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS Chairman JACKSON. Mr. Manuel, would you first identify your position with the committee for the record and then proceed in your own way? Mr. MANUEL. Mr. Chairman, my name is Philip R. Manuel. I have been an investigator on the subcommittee staff since March 1, 1968, and in all I have had 13 years of experience in the field of investigations. Since 1970, I have directed the staff field investigations on matters pertaining to organized criminal activity and most particularly, the activities of organized criminals in the field of securities thefts and frauds a subject on which the subcommittee held hearings in the summer of 1971. Chairman JACKSON. Thank you, Mr. Manuel. You may proceed to outline the case. Mr. MANUEL. Since the close of the 1971 hearings, the subcommittee staff has continued the investigation of organized criminals in the theft, counterfeiting, conversion, and manipulation of many millions of dollars in securities with particular attention to the massive proliferation of commercial and securities frauds which are being generated by their use. This investigation has established that there is and has been developing for some time, a burgeoning group of professional confidence men and international swindlers who are, to a great degree, closely knit and interlocking, most of whom are recidivist securities violators. They cooperate rather openly, each promoting the fraudulent schemes of the other for mutual benefit and profit. At least until recently, they have moved with a minimum fear of legal or governmental restraint despite the fact that most of the individuals so engaged have been cited by various government agencies for fraudulent activities. This group has conceived and has applied sophisticated corporate principles to the age old art of swindling. Their forte is that they know "how to use bad paper" and in so doing, are limited only by their own ingenuity. This group of swindlers comprise in themselves an organized criminal group who form a natural alliance with those organized criminals who control the theft and distribution of securities and on whom their supply of this paper depends. In our investigation, the staff has identified several hundred of these professional paper users and to some extent, documented their participation in various frauds. While these frauds touch almost every area of the country, this group has operated for the most part, from the New York City area, the Los Angeles area, the Las Vegas area, the Chicago area, and most especially from the Miami-Fort Lauderdale area. To these individuals, stolen, counterfeit, or basically worthless securities can be safely represented as legitimate assets in corporate financial statements provided the spurious nature of the paper can be effectively hidden. In this regard, there are a number of important factors that work to the criminals' advantage. These factors include: (1) The obvious expansion in the internationalization of banking, commerce, and finance which has brought with it an increasing dependence on the so-called paper credit philosophy. The foundation of this philosophy is a reliable certified financial statement of assets and liabilities. If just a small percentage of the billions of dollars that move in international trade can be siphoned off, the result will be millions in |