RED ALERT NAZI HOLOCOUST COVERUP IN PA.

[CHarri3122]

Fire hampers Holocaust probe

• May 5 blaze in West Pittston
destroyed thousands of records that
might have had an effect on investigation HOLOCAUST of securities.

By BONNIE ADAMS
Times Leader Staff Writer

Thousands of boxes of documents destroyed in the Diversified Records fire
could have helped the New York Banking Department investigate Holocaust
victims' missing assets.

Documents examined before Diversified's fire yielded information pertinent
to the investigation, said Irwin Nack, who is leading the department's
probe.

Nack said the West Pittston fire destroyed about 5,000 boxes of Swiss bank
records yet to be examined for their relevance to assets belonging to
World War II-era Jews.

The May 5 fire's effect might never be known on the investigation of
securities and other property that Swiss banks transferred to their New
York branches in the years preceding and during the war.

Credit Suisse said 3,500 files were removed from Diversified before the
fire and were examined, with some being relevant to the Banking
Department's investigation. No one from Credit Suisse was available for
comment Thursday.

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©1997 The Times
Leader____________________________________________________________________
_____________________________________________________________I KNOW THE
STATE POLICE INVOLVED IN THE INVESTAGATION OF THIS FIRE
ARE COVERUP ARTIST . THE WORD ON THE STREET IS IT WAS ARSON. THERE WAS
ALSO AN OLD AGE HOME THAT I WAS TOLD HAD BANK RECORDS STORED IN IT THAT
WAS ALSO BURNEDHarveys Lake fire probe discussed

WYOMING -- Luzerne County District Attorney Peter Paul Olszewski Jr. met
privately with Pennsylvania State Police and members of the Luzerne County
Coroner's Office on Wednesday morning to discuss the fatal Country Manor
fire at Harveys Lake.

Sgt. Richard Krawetz, criminal section supervisor with Troop P in Wyoming,
said officials met with Olszewski to keep him updated with the
investigation.

Krawetz would not discuss the details of the conversation, but said
additional interviews will be conducted during the next few weeks before
any public statements are made regarding the cause of the fire. He would
not say who would be interviewed.

Olszewski confirmed an informational meeting took place, but provided no
further information.

Two days after the May 13 fire, which killed nine people, investigators
said it began near an enclosed porch that wrapped like an L around one
corner of the building on Queen of Peace Road. The porch and an adjacent
room were set aside for smoking.

Capt. Francis Panuccio, state police Troop P commander, had said that
smoking might have caused the fire.

After the fire, eight survivors moved to Mountainside Manor in Dallas
Township. Other survivors either live with family members or in other
homes.

Former Country Manor resident Harold Rice remains in guarded condition in
the burn unit at Lehigh Valley Hospital in Allentown.

It is known personally to me that there are several cover-ups by Troop P
of the Penna. State Police, one of them involves me personally. A
corrections officer for the state of Penna. Was injured while target
practicing. When he entered the hospital , he was soon greeted by a local
police officer first, then by two state troopers, Shubzda and Sackney,
from troop P. These two troopers tried in vain to get the corrections
officer to change his story of how he was wounded so that it would
enhance the passage of the crime bill that was pending at the time. They
wanted him to change the fact that he was SHOT BY HIS TARGET RIFLE, BUT
BY AN ASSAULT RIFLE. The corrections officer refused to do so, then the
intensity increased to a point to where the troopers used ANTI-SEMETIC
REMARKS AND ANTI-BLACK REMARKS TO COERSE THE CORRECTIONS OFFICER TO CHANGE
HIS STORY. The corrections officer was then QUESTIONED UNDER ANESTHISIA,
AND TOLD THE OFFICER THAT HITLER SHOULD HAVE WON THE WAR. (making
anti-semetic comments about his Doctor) This happened at the CMC Hospital
in Scranton, Pa.
The corrections officer then attempted to speak to a corporal at the
troop P barracks, to have the troopers arrested, and was told that if he
persued any of the charges, HE HIMSELF WOULD BE ARRESTED AND HURT OR
KILLED. The officer then contacted Capt. Francis Panuccio, Troop P and
gave the Captain all the pertinent information on the case, the Captain
then issued the following:

DEAR XXXXXXXXX,

THIS IS TO SCKNOWLEDGE RECEIPT OF YOUR COMPLAINT CONCERNING TPR.
SHUBZDA OF THE IDENTIFICATION UNIT GIVING INSTRUCTIONS TO YOUR ATTENDING
PHYSICIAN.
TPR. SHUBZDA DID NOT DICTATE TO YOUR PHYSICIAN ON SUCH SURGICAL
PROCEEDURES. HE MERELY ADVISED THE PHYSICIAN AS TO WHAT PHOTOGRAPHS WERE
TO BE TAKEN. TIME AND SPACE PRECLUDES RELATING THE TECHNICAL ASPECTS OF
THIS UNIT, HOWEVER, LET ME ASSURE YOU THAT TPR. SHUBZDA’S ACTIONS WERE
WELL WITHIN OUR DEPARTMENTS PROCEDURES

CAPTAIN FRANCIS PANUCCIO

COMMANDING OFFICER

TROOP P, WYOMING

HERE IS WHAT THE AIR AMERICIA DID WITH THERE SWISS BANK ACCOUNTS COULD
THESE RECORDS ALSO BURNED IN THE FIRE this area is known for money
laundrying_THIS HAPPENED FROM 1979 TO
1986__________________________________------------------------------------
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Aware of the impending indictment, Rik began preparing for departure.
Having "sold" Air America, he felt that his company was safe from
seizure. He arranged to transfer the mortgage for the Mastwood estate to
Jerry Warsky, which protected that from seizure also. He called his broker
at Wertheim & Co. and told him to liquidate his seven-million-dollar
investment account and convert it to bearer bonds, which are nearly as
liquid as cash. He did the same with the funds in his bank accounts in
Scranton. Most of those bearer bonds ended up at his banks in Grand
Cayman.
In December, Rik flew to Switzerland with his lawyer, Sal Cognetti,
to open an account there. Instead of Zurich or Geneva, the cities most

commonly chosen for such purposes, they went to Basel and paid a call
on a local lawyer recommended (by Rik's lawyer in Grand Cayman) as
a man of experience and discretion in such matters. On Rik's behalf this
gentleman created something called "Gesoma Foundation," and opened
an account under that name at E. Gutzwiller & Co. , a small private bank.
Rik signed a document giving Sal Cognetti power of attorney over the
account. As soon as the account was opened, Rik had $2 million wire-
transferred to it from his Sky High Ltd. account in Grand Cayman. With
that step Rik's financial housecleaning was finished.
Late in December, Rik learned that the indictment would be handed
down just before Christmas but remain sealed until early in January. He
made one last attempt to get Neil to leave the country with him. He
warned Neil that the Colombians would "get Cooper" to prevent him
from testifying, implying that Neil might meet a similar fate unless he
fled the country. Still Neil refused.
On December 23 the grand jury indicted Rik, Neil, and four Colom-
bians. Because their last names were unknown, the Colombians were
listed as Peter LNU, Beatrice LNU, Danny LNU, and Hernando LNU.
For nonjudicial reasons, the indictment remained sealed for two weeks.
"The agents had been working night and day getting the case ready for
the grand jury," says Gordon. "They wanted the Christmas week off
before starting the arrests and arraignments and all the paperwork that
goes with them. Besides, Sal knew Rik was going to be indicted, and
he promised Rik would be available. Looking back now, I guess we
should have arrested him then. It was my decision."
While considerate, that decision turned out to be a strategic error. For
when the indictment was finally announced on January 10, Rik was gone,
having left the country with his girlfriend Kathy. And by the time the
judge issued the necessary restraining order to freeze Rik's assets, most
of them were beyond the government's reach.
Since the Air America indictment was primarily intended to initiate
the case within the five-year statute of limitations, it was purposely
broad
in scope and general in its charges. It was based only on the five drug
flights the government had been able to document at that point in the
investigation. In typical legalese, the indictment charged that the six
defendants "knowingly and intentionally did conspire to violate Title 21.
U.S. Code, Section 841 and Section 960, by importing, distributing, and
possessing with intent to distribute numerous multi-kilogram loads o1
cocaine, a narcotic substance controlled under Schedule II, Title 21, U.S.
Code, Section 812." The indictment also charged Rik and Neil witt

HERE IS HOW THE MONEY LAUNDRY WORKED IN SCRANTON WILKES BARRE AREA OF PA

The Laundry Business

Although Air America's planes were carrying $6-$8 million of the
Ochoas' cash on each southbound flight in 1984, even their efficient ser-
vice was not sufficient. The Ochoas and other Cartel families were earning
such huge profits in the U.S. by then that they would have needed regular
shipments by 747 air cargo transports to get all of it back to Colombia.
Federal drug officials estimate that the Medellin Cartel earns from $4-$8
billion a year in profits from cocaine, most of it in this country.
While legitimate U.S. businessmen may dream about rolling in piles
of cash, they cannot appreciate the enormity of the Colombians' problem.
In fact, few Americans who read about drug busts in the daily papers
have any idea of how big the narcotics industry has grown in this country,
and what a major factor it has become in the U.S. economy. Treasury
Department estimates for U.S. retail sales of all illicit narcotics-in-
cluding cocaine, marijuana, heroin, and various chemical creations-
range from $60 billion to more than $ 100 billion a year, with net profits
of $40-$60 billion.
The broad range of those estimates is due to the fact that while drug
dealers may keep accurate records for their own purposes, they do not
file the kind of financial reports required of legitimate businessmen. Nor
do they release such information to Wall Street analysts or to the news
media. Even using the most conservative estimates, however, revenues
from illegal narcotics are greater than those from both prescription and
over-the-counter drugs.
However successful, wholesale and retail drug dealers in the U.S. face
logistical problems that do not trouble most legitimate businessmen. For
example, they cannot simply walk into a bank and deposit their earnings
without creating problems. Since their cash sales are illegal, they must
first "cleanse" the drug-tainted money to give it legitimacy, a process
commonly known as "money laundering. " For the Colombians, laun-
dering their drug profits in the U.S. has become almost more difficult
than distributing the cocaine.
Under current U.S. law, any bank or other financial institution handling
a cash transaction of $10,000 or more is required to fill out a Currency
Transaction Report. (Department stores and other retail merchants who
regularly deposit that much cash can request an exemption from this
requirement.) The CTR must include the customer's name, address, So-
cial Security number, occupation, and the source and destination of the
funds. All CTRs are sent to a central IRS office where they are recorded
in a computerized data bank available to federal investigators.
Those who try to avoid such records face a similar obstacle if they
take their money out of the country. Anyone leaving the U.S. with
$10,000 or more in cash, traveler's checks, or bank checks must file a
Currency and Monetary Instrument Report with the Customs Service at
the point of departure. (The limit on CMIRs was $5,000 until 1984, but
it was raised to $10,000 because so many businessmen and high-rollers;
now carry that much cash on their trips abroad that the paperwork became;
too burdensome.) ;
It is perfectly legal to deposit more than $10,000 in cash or take such
amounts out of the country. What is illegal is to do so without filing the
proper federal currency forms. Since those forms tend to attract attention
and invite curiosity as to the source of the funds, Colombian drug traf-
fickers and those engaged in other illegal enterprises are naturally
reluctan'
to file them.
Until the early 1980s these currency laws were rarely enforced wi
much rigor, particularly in Miami. Bankers there had grown accustom
to dealing with Hispanic depositors who pulled up in vans and dragg,
in duffel bags stuffed with cash. While many bankers may have suspect
the source of these cash deposits, they could not prove it. Besides, '
would be both unprofitable and unhealthy to inquire. Some bankers n:.
ceived discreet commissions for accepting the funds without question
Most just smiled and watched the numbers grow on their daily summaries'
In some cases the Colombians bought controlling interest in existing b
or even established their own, using Americans as front men.
The extent to which drug money has been flooding Miami's banks '
illustrated by one. case in which the government prosecutor proved th
the cash deposited by the defendant contained traces of cocaine. The
defendant's shrewd lawyer countered by obtaining samples of cash from
a dozen major banks in the city and sending them to a lab for testing.
Sure enough, most were similarly tainted by cocaine.
Since federal agents began cracking down on the banks in Florida, the
Colombians' cash has begun showing up in banks in Texas, California,
and New York. It has also appeared at cashiers' windows at casinos in
L s Vegas and Atlantic City, where bills in small denominations can be
easily exchanged for those of greater value.
lVlost of the cash eventually makes its way back to Miami from the
major U.S. markets. One indication comes from the Federal Reserve
Bank in Miami, which accumulates more currency than any other branch
in the country. Federal authorities attribute much of it to the influx of
"narco-dollars. "
While the flood of Colombian drug money has helped fuel Florida's
economic boom and brought joy to real estate firms, it has also drawn
unwanted attention, typified by the city's image as portrayed in "Miami
Vice." Local wags joke that if the Colombians suddenly withdrew all
their investments most of Miami's high-rise buildings would crumble and
most of its banks would close.
The Colombians in Miami have invested much of their drug money in
real estate, buying up office and apartment buildings and waterfront man-
sions without haggling much about prices. Theoretically, federal currency
laws also apply to such large cash purchases, but the Colombians have
found plenty of real estate brokers willing to ignore or circumvent those
requirements.
While Cadillac and Mercedes dealers and luxury yacht brokers are also
supposed to file CTRs for cash transactions over $10,000, many have
found creative ways to avoid such annoying paperwork. When I asked a
Customs agent if those dealers might feel nervous about accepting pay-
ment from known drug dealers, he laughed at my naivete. "Are you
kidding?" he said. "You think they're going to worry about a guy who
comes in and wants to pay $50,000 in cash with no haggling over the
price? You think they're going to ask him a lot of embarrassing questions
about how he made the money, particularly if he's buying several cars
a year? Hell, they'll pour him champagne while they sign the papers."
Drug kingpins tend to buy luxury cars, yachts, and other ostentatious
toys not only because these are the customary rewards of success in their
trade but also because they have few other ways to spend their huge
profits. Some have tried to purchase legitimacy with contributions to
locaL
museums, symphonies, and other cultural institutions; others have da
bled in the creative arts on their own. The results have not always broug
the respectability they hoped for.
One Colombian drug family in Miami financed a four-million-doll
horror movie called Island Claws, about a giant crab that goes on
rampage in revenge for human pollution. For various reasons the fil
bombed. Soon afterward the producer's and director's cinematic caref
ended abruptly when both men were indicted for cocaine trafficking.
Although the Colombian drug families are fond of Miami for vacatio
and shopping, the newly enforced currency laws have made banking the
increasingly troublesome. Besides, they prefer to keep the bulk of tht
money closer to home: either in Colombia or in neighboring Panam
where government and bank officials have been more hospitable than
the U.S. Attracted mostly by Colombian drug money, the number
banks in Panama grew from twenty in 1979 to more than a hundred I
1984.
Not one to miss such an opportunity, Panama's dictator, General Ma
uel Noriega, reportedly demanded his own share of the Colombian narc
do lars. According to testimony at a U. S. Senate hearing, the Cartel pa
Noriega and his c, ies many millions of dollars in exchange for thc
hospitality and protection. This took such forms as the use of milita
airfields, armored cars, and armed escorts for transporting the cash to d
banks, plus limousines and bodyguards for Cartel executives.
In the U. S. , the rapid growth of the cocaine industry combined wi
the enforcement of federal currency laws has created a booming busine
for money launderers. Much of the drug money ends up in accounts
banks and brokerage houses; a good deal of it is converted into cashiet
y g
checks, traveler s checks, bearer bonds, or other easil ne otiable form
Some rings have converted their money into airline tickets. Much of
is filtered through supposedly legitimate retail businesses that
customari;
deal in cash: pizza parlors, video-rental stores, fast-food restaurants.
Because of the sheer bulk of the cash they must handle, most dru
dealers try to convert the many small bills they receive from their cu
tomers into more convenient denominations, hundreds being the favoriG
(That's why the Colombians in New York always paid Air America
pilots with small bills and sent the bigger ones back to Colombia.) Wha
the Treasury Department began tracking the flow of hundred-dollar bil
over the past few years, it discovered that half the $5 billion in hundre
printed every year are being shipped abroad. Since most legitim
_

overseas financial transactions take the form of wire transfers or bank
checks, this huge movement of bills looks suspiciously like money
laundering.
At rates up to $50,000 for handling $1 million in cash, money laun-
dering attraets many otherwise respectable folks who would never sully
their hands with anything as sordid as drug dealing. In recent years, for
example, federal agents working on money-laundering cases have arrested
numerous bankers and stockbrokers, a state senator from New York, and
three DEA agents in Los Angeles.
While the fees for this crime have risen, so have the penalties and the
number of cases. Under a tough antidrug law enacted in 1986, money
laundering is now punishable by up to twenty years in prison and fines
up to $500,000 or twice the value of the amount handled. The IRS
currently has about 4,500 money-laundering cases under investigation,
and nearly 3,000 more under review. "Money laundering has really come
of age," says Bruce Milburn, head of the IRS's criminal investigation
division. "Four years ago I probably had fifty agents working money
laundering. I now have about 350 to 400. "
In one "sting operation" that actually handled $300 million in cash
in 1987, FBI and DEA agents busted a money-laundering ring with
branches in New York, Miami, Chicago, Detroit, Los Angeles, and San
Francisco. In another money-laundering case in 1988, Customs agents
arrested eighty-five people, including nine officers of the Bank of Credit
and Commerce International in Tampa. The indictment charged the BCCI
with moy ' ng millions of dollars in drug money from its branch banks in
several U.S. cities to its branches in Panama, the Bahamas, Luxembourg,
France, and England. In 1988 federal agents charged 127 people in New
York, Atlanta, Miami, and San Francisco with laundering $1.2 billion
in cocaine profits over two years. Most of the money ended up in the
Banco de Occidente's branches in Colombia and Panama. "For some
international banks," said Customs commissioner William von Raab,
"the sleaze factor is higher than their interest rates."
Along with Panama, another favorite destination for drug profits is
Switzerland, whose bank secrecy laws have provided a traditional refuge
for dictators, terrorists, embezzlers, and others seeking financial
privacy.
Even there, however, things are changing. In December 1988, Swiss
authorities charged two Lebanese with laundering more than $ 1 billion
in drug money, much of it from Colombian cocaine traffickers. According
to Peter Gasser, the Swiss government prosecutor, "The difficulty is that
these people claim they are legitimate money changers. On the surface
this isn't forbidden, and a lot of it is legal. It's hard to determine
[whether]
a suitcase has clean money or dirty money heading for a wash.
In solving his own money-laundering problems, Rik Luytjes went about
it with typical flair. During the summer and fall of 1984, when he was
earning more than $1.5 million a week from his drug flights, he realized
that it was too much money to launder through Air America, as he had
often done in the past.
Instead, Rik came up with the ingenious idea of "selling" Air America
to a mysterious Brazilian named R. J. Ortega, represented by a lawyer
in Grand Cayman. According to the contract dated October 10, 1984,
Senor Ortega agreed to pay Rik $14.2 million for the company. Consid-
ering that Air America was grossing only about $ 1 million a year at that
time and showing little profit, that was an exceedingly generous offer.
Shortly before, in fact, Rik had tried to sell the company for only $2
million to some American businessmen who declined on the grounds that
it wasn't even worth that much.
Those of a cynical bent might recognize that the $ 14.2 million paid
by Senor Ortega was curiously close to the total amount Rik earned from
his drug flights that year. They might also notice that the date of the
sale
coincided with the last of those flights. It was certainly odd that Senor
Ortega was willing to pay so much money-in cash-for a company
without bothering to inspect it in person. On the other hand, he did have
the good sense to retain Rik under a management contract, for a fee equal
to $288,000 a year.
As perceptive readers might have guessed by now, Senor Ortega was
a creation of Rik's imagination, and the sale of Air America was merely
a sham designed to launder the proceeds from his drug flights. Actually
there's some question as to whether Rik conceived of this idea on his
own or if he received some inspiration from friends in Scranton. Deserving
or not, none of them are now eager to claim such credit.
Since Rik was sole owner of Air America, the company's apparently
legal sale enabled him to deal openly with his drug money-or at least
with most of it. He actually declared only $ 10.2 million, paying a
capital
gains tax of $2.3 million. The other $4 million somehow ended up in his
bank accounts in the Cayman Islands. For that step in the laundering
process, Michael Coffey definitely deserves credit.
The son of a laborer in Ireland, Coffey is a cocky little man with a
pasty complexion, a weasel-like face, and closely cropped gray hair. He
came to the States in the late sixties and spent two years in the U.S.
Army, which gained him American citizenship. He spent two years study-
ing business at Pace University in New York, then returned to Dublin
and took a job with a bank there. In 1981 he suddenly resigned from that
bank and moved to the States, taking a relatively low position as a motel
clerk in Stroudsburg, Pennsylvania. One year later, in 1982, he joined
the United Penn Bank in Scranton.
Bright and industrious, Coffey moved up rapidly at the bank. Within
two years; at the age of thirty-six, he was vice president and manager of
its main Scranton branch. On his annual performance review, generally
quite favorable, his supervisor described him as competent, ambitious,
and aggressive. Some of his subordinates, however, found him over-
bearing and cruel.
Coffey and his wife and two children lived in a comfortable home in
the upper-class suburb of Clarks Summit, just around the corner from
Sal Cognetti, Rik's lawyer. Though his salary was only about $40,000,
his position at the bank brought him considerable prestige in local
business
circles, as well as membership at the Scranton Country Club. According
to a business acquaintance, "Mike really enjoyed being seen around town
with the big-money people and palling around with all those country-
club types."
The Scranton branch of United Penn Bank had been accustomed to
receiving large cash deposits for the Air America account since 1981.
(Federal agents later traced 175 of them.) No one there was surprised
therefore when the cartons of cash began arriving in the summer of 1984
at the rate of roughly $ 1 million a week. Most of the money was brought
in by Air America employees, with the total amounts marked in red on
the outside of the cartons. One of the cartons was so bulky that Coffey
helped carry it into the bank.
On several occasions when Rik was tied up during the week at the
Tampa trial, he or an associate dropped the cartons off at Coffey's house
on the weekend. Coffey would lock the cartons in the trunk of his car
and bring them into the bank when he went to work on Monday morning.
While some bankers might resent such an intrusion in their private lives,
_

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