February 11, 2025 • 46 mins
Sometimes it takes a money launderer to catch a money launderer.
During the 1980’s, Ken Rijock was starting his career as a lawyer in Miami. But he soon found himself acting as a middleman between Colombian drug cartels and their expanding US network, helping launder illicit funds gathered through flooding cocaine onto America’s streets. By his account, he ended up “cleaning” about $200 million in drug cash. Eventually, Ken was caught, sentenced and served time in prison. However, upon his release, Ken was approached by government agents and made an offer to help their mission becoming an undercover informant.
Designated host Yaya Jata Fanusie recently spoke with Ken about his life’s journey and his experiences during the two distinctly opposite phases of his time as The Laundry Man. Working alongside drug dealers during his high-flying, money laundering days.. and the next phase of his life as the anti-money laundering financial crime fighter. Helping law enforcement detect who was trying to launder money and those who were committing the same crimes that Ken knew so well.
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Episode Transcript
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Speaker 1 (00:03):
Today's podcast is supported by TRM. TRM enables compliance teams
to accelerate business revenue and deliver actionable intelligence to regulatory
and law enforcement stakeholders with leading attribution of severe risk categories.
Request a free trial today at trmlabs dot com. I'm
(00:35):
Yaya Jata Finussi. During the course of Designated I've talked
to many financial crime fighters, people who are on the
front lines of anti money laundry, but I've yet to
speak with someone who has lined up on the other
side of that front. Ken Rejack is known as the Laundryman.
In fact, it's the title of his autobiography. In the
(00:58):
nineteen eighties, Ken was a young, young Miami lawyer who
found himself acting as a middleman between Columbian drug cartels
and their expanding US network, helping to launder illicit funds
gained from flooding cocaine onto America's streets. It was the
days of Miami Vice, but was no TV show for Ken.
By his account, he ended up cleaning about two hundred
(01:21):
million dollars in drug cash, all while jetting to the
Caribbean and back via private jet. Like many who chose
that life, Ken got caught and wound up doing time
in prison, but he turned his life around and decided
to join the fight against the drug networks he used
to support, going under cover for the DEA and testifying
(01:42):
against the criminals he knew so well. Today he uses
his experience to help the government and financial institutions stay
a step ahead of the launderers. Ken Riejock didn't start
out seeking a life of crime. He was a college
educated young man who volunteer to serve in Vietnam. His
(02:03):
journey reflects quite an amazing art and it shows us
that it sometimes takes a money launderer to catch a
money launderer. It's time to get designated with Ken Rejok. Well, Ken,
you are a Vietnam veteran, but I'd like to start
(02:23):
with your origin story. Tell us about where you grew
up and how you made your way eventually to Vietnam.
Speaker 2 (02:31):
I'm the son of Russian immigrants, so that makes me
a first generation American. My family came here one hundred
years ago from what is now the Ukraine, and I
grew up in a suburban New York State, in a
tiny little town with about five thousand people and from
a conservative background. As you can imagine, you know, being
(02:51):
the child of immigrants, and I got my undergraduate degree
in history at a college in New York. But I
was forced to leave graduate school because, as you can guess,
I grew up in the middle of the Vietnam War.
So rather than frankly wait to get drafted, I enlisted
in nineteen sixty eight, and by the middle of nineteen
(03:13):
sixty nine I was already in Vietnam. You know, only
four percent of the people who served in Vietnam were
college graduates, so it was a little bit of a
learning experience for me. As you can imagine, I grew
up in a rather sheltered family, so it was a
reality check. As you can imagine, anybody who goes to
(03:34):
war doesn't come back the same.
Speaker 1 (03:37):
What experiences do you think sort of impacted your later life?
Speaker 2 (03:43):
Well, you know, as you can imagine, most Vietnam veterans
came back with some serious gripes against the United States
because they thought the US, you know, could have won
the war and didn't. But more importantly, they basically came
back as disaffected people, and as you can tell, you know,
(04:04):
they weren't well received by the population. But be that
as it may. You know, I had the benefit of
an education. But on the other hand, like a lot
of other people in Vietnam, I was exposed to what
we call agent orange. Now that's a defoliant that was
sprayed on the jungle in which we all ended up
breathing and frankly absorbing it in our bodies. So quite
(04:28):
a few people who are Vietnam veterans are long gone
with cancer. I'm one of the fortunate ones. But more importantly,
there were other effects of agent orange that weren't discovered
for years, and it probably was one of the reasons
why I changed from being a rather conservative, pro American
(04:48):
person to somebody that became a somebody who had a
lot less than of a you know, moral capability than
I had when I went in. Plus, I became a
risk taker. What I learned about Vietnam was that after
I came home, I found the Vietnam veterans were on
two sides. They all became law enforcement officers or they
(05:10):
ended up as drug smugglers because they didn't never want
to go back to a nine to five job. They
more or less became addicted to risk, and if the
ones that survived, you know, it became something that from years.
As the years went by, they had more and more
issues with you know, how can you get your dose
(05:32):
of risk? Which is all dangerous? But I guess what
I learned for a future is working in Vietnam. You know,
I spent a lot of time in the field. I
spent a lot of time on field operations, and I
got to watch what was then called, you know, guerrilla warfare,
but is actually a type of warfare where you only
(05:55):
seek to engage with your opponents on favorable terms. You know,
I like to think that a lot of the lessons
I learned in Vietnam are frankly, things that I applied
later on as a career money launderer.
Speaker 1 (06:10):
Well what do you mean engaging them on favorable terms?
And then how you explain more?
Speaker 2 (06:15):
Okay, Well, you know the problem with the Vietnam War
was that your enemy would not confront you except on
his terms. He would hide in the tunnels, he would
only come out at night. And I've learned from being
exposed to that that, you know, there's a way in
which people fight wars frontally, and there's a way in
(06:38):
which they do it asymmetrically. You know, we talk about
asymmetric warfare, and we talk about terrorism and rebel groups.
But my application of it was use those asymmetric principles
in the practice of money laundering, and it was frankly
highly effective for a decade.
Speaker 1 (06:57):
Walk us through you your I mean, you've given us
a sense of your mindset wanting to take a risk.
But tell us about the age that you're in when
you come back from Vietnam, and then how you sort
of settle into the next stage of your life, because
I think you moved to Florida, so tell us about that.
Speaker 2 (07:12):
Well, when I was in the service, my parents moved
to Florida, and of course as soon as I got
down here, I realized it was pretty much the tropical
climate that I'd been used to for the last four
hundred days in Vietnam. So I was fortunate enough to
get accepted at law school, the first stay of orientation,
so I really didn't lose any time out of my life.
(07:34):
Fortunately for me, the assistant dean at the local law
school was a veteran of submarine warfare and had been
a Naval Academy graduate, and he kind of took a
shine to me and said, hey, we have a slot open.
How'd you like to be a lawyer? I come from
a family in which I'm only one of five people
(07:56):
in my generation who all became lawyers, including my sister,
who became a lawyer when she was forty two. So
it's something that I fell into. Of course, a huge
number of the people I went to school with had
all just come back from Vietnam too. Fortunately, while I
was in law school, I ended up working at the
only Miami law firm that had a branch in London
(08:18):
and in New York. And when I graduated, I went
to work there and I was frankly dumped into the
banking law division, whether I wanted to be there or not.
So by that accident, you know, I became knowledgeable about
financial crime and also legitimate financial transactions.
Speaker 1 (08:37):
So you're in Miami working at a very you know,
an established law firm dealing with banking. You're learning what
about your social network? So how are you again, because
you're a young man, you know, young adult fresh from Vietnam.
Tell us about the I guess the social network you
developed and how things progressed.
Speaker 2 (08:59):
I'm still maladjusted, so I'm still looking for I don't know,
if you want to call them thrills or high risk activities.
So I go out and learn how to fly. I
also take karate lessons, and I just still find myself
to be somewhat you know, misplaced in society.
Speaker 1 (09:21):
What age are you around this time, mid.
Speaker 2 (09:23):
To late twenties. Remember that the average agent that somebody
went to Vietnam was nineteen. I was twenty one because
I had already had my degree. But I was the
exception rather than the rule. Well, there came a time
in my life when I ended up in a very
high stress situation. My first wife lost her mother at
(09:45):
a young age, and frankly started delving into drugs in
a very big way, which created chaos in my life
and ended up with me, you know, leaving home and
out on the street and being in a major divorce situation.
And that stress pushed me over the edge. I just
shut down my practice of law. By then it was
(10:06):
practicing on my own, and I pretty much dropped out
of society. And I happened to run into two young
ladies who lived in my building and who worked at
a bar, and which moved me into a totally different world.
Because this is Miami in nineteen seventy nine, nineteen eighty.
This is the height of the Miami Vice years. So
(10:30):
I moved from being a normal married individual with a
professional job to not working and all of a sudden
being out there on the party circuit. And you can
only imagine that it was, you know, anything goes.
Speaker 1 (10:44):
Yeah, So, yeah, you mean I remember Miami Vice. I'm
sure some in our audience remember it a pretty wild time.
Miami a very sort of vibrant city with a lot
to get into. So tell us more how things progressed
for you?
Speaker 2 (11:03):
Well, what happened was, you know, the turning point was
one of the young ladies that I was living with
was in a motorcycle accident in Ohio in a race
and had to go stay with a friend who lived
in Miami's Shenandoah District, which is a Latino district near downtown.
And of course I went over to meet her and
visit with her because she's there with a broken leg.
(11:25):
And I meet this guy. It's like looking at myself.
He's the owner of this house. He's from Saint Louis,
but he grew up in Cuba as the son of missionaries,
so he's not only bilingual, he's bicultural and he's a
Spanish teacher, but we're two days apart in age. He
also was in Vietnam. His service was with the Marines,
(11:51):
and we take an instant liking to one another because
remember I'm a new bachelor and he's a single guy
and he has a lot of parties. So a couple
months later, when I'm looking for a place to stay,
he lets me move into his house, of which he's
the only resident, and things are great for about three
days until one night, in the middle of the night,
(12:12):
there's a knock on the door and some people in
suits come in the front door with suitcases what you
and I would call trial briefcases, and they're in from California.
And I still have no idea what they're doing there
or who they are. I go back to bed. Then
a few minutes later there's a knock on the back door,
and that's a bunch of Colombians come in the door
(12:33):
with satchels. So what if I got myself into I
happen to be living in a house with somebody who's
a broker of illicit substances, who's the bridge between Colombian
smuggling drugs into the United States and Americans and Canadians
who are taking it from them and wholesaling and retailing
it around North America. So I lived in that house
(12:56):
for six months, and I got probably the functional equivalent
of an MBA in drug trafficking because I met everybody.
I met everybody in that whole world, the wholesalers, the distributors,
the transporters, the professionals that surround them and advise them.
And by the time I decided to get out of there,
(13:16):
I had picked up a whole new circle of friends.
So I went back to work as a lawyer, and
they all started coming to my law office because remember
I'm a civil practitioner, and they asked me for all
the usual services. I want to form a corporation, I'm
selling my plane, I'm buying a business, I'm involved in
(13:36):
a real estate transaction. And these are all legitimate things
that lawyers do. But remember what all these people do
for a living. They're all in the cocaine or marijuana
trafficking business. So I am now facilitating what they're doing.
I guess you'd say, don't ask, don't tell, But having
grown up in the sixties and always believing that marijuana
(13:59):
was a drug, which really should be decriminalized. Didn't bother me.
But then one day somebody comes in the office and
they ask me a question that I can't answer. They say, listen,
I need to launder six million dollars in marijuana profits.
Can you help me? Well, that was kind of like
a period in which I could have gone either way.
(14:20):
I should have thrown them out of the office, But
like a lot of ambitious lawyers, I agree to take
the matter, even though I don't know how to do it,
and I then go off on a totally different tangent.
Speaker 1 (14:32):
So that that was a crossroads in your life and
your young professional life. So you decided, and these people
knew you. I guess they trusted you by this time.
So now you're on a different road. So you've chosen
I'm going to go down this path. I'm going to
help you out what happens from there.
Speaker 2 (14:55):
Well, you know, I was only experienced on the legitimate
side of financial transactions. So you know, I told you
there are a bunch of lawyers in my family, on
all sides of the family. And you know, you can
always choose your friends, but you can't choose your relatives.
And one of my relatives had kind of grown up
(15:17):
doing a lot of things in which most people go
to jail for, and he was just now getting out
of jail for having stolen nine million dollars from the
Castro government. So of course I went to him and
got information on where to go in the tax havens,
who to talk to, what banks, what lawyers to deal with,
(15:38):
And based upon that knowledge, I hired a lear jed
up in Fort Lauderdale. I got a bunch of my clients,
dressed them all up like bankers, male and female, because
what I learned is that in the drug business it's
an equal opportunity employer. If you're bloodthirsty enough to work
in it, your sex really doesn't matter. You have to
(16:01):
be with the sole purpose, and that is the success
of the mission. Well, I completed my first smuggling trip
of several million dollars down to the taxaans. I had
money put into what are called bearer share accounts, in
other words, the corporation that only accounts Those shares were
(16:22):
only issued to bearer. There was no name on the
stock certificates, so it could not be traced back to
my clients. And that was the start of a ten
year odyssey of frankly moving millions of dollars into the
taxaans only to begin their travel around the world. And
what the complex method of money laundering consists of. And
(16:44):
money laundering consists of three separate and distinct phases. The
first one is placement, So that's us smuggling the six
million dollars into a tax haven bank in the Caribbean.
Then there's layering, that's moving the money through the banking
system around the world so that it can lose its
original criminal taint. Why well, you don't want to get
(17:06):
caught and you don't want law enforcement to know where
the money is. So in this case, here's some of
this money getting transferred to Panama, which is of course
another tax haven, and then to China, but not the
People's Republic Taiwan. Why America doesn't recognize Taiwan. Then some
(17:27):
of the money ends up going to the city, which
is the financial district in London. Why well, maybe you
need to set up some sort of bogus company which
then will allow you to buy an office building in
downtown Miami and borrow the money from your own shell company.
And of course you have now effectuated what's called placement
(17:51):
layering and integration. Integration is where you actually invest the
cleaned money in the peacetime economy, so you can have
a cash flow. That's in a nutshell how money wandering works.
And that's why ninety five percent of it never gets interdicted.
Speaker 1 (18:08):
And that makes me think, because you're doing this in
the eighties, so was there any you know, resistance danger?
I mean, how easy was it to do this?
Speaker 2 (18:22):
Well, it's asymmetric warfare all over again, because what you're
doing is you're taking advantage of the fact that our
custom service collects duty on inbounds and things leaving the
United States have no tax consequences. So if you're prudent
and careful about it, as I was, I was never
interdicted in a decade. Those seem to be businessmen going
(18:46):
to a conference in another country. You know, that's not
to mean there wasn't risk. The risk is not in
the actual voyage itself. The risk is, let's say, somebody
on your tea, somebody who's a client, might get arrested
in another matter and then might advise law enforcement how
(19:07):
you're loandering money.
Speaker 1 (19:09):
If you're able to do this for so long, I mean,
you know, even before we get to how things changed.
Were you having any doubts, Were you having any fears
or was this all you know? Was this all all
systems go, everything's all good?
Speaker 2 (19:24):
No, I was. I was one hundred and one percent
committed to what I was doing. I surrounded myself only
with clients. I had a daytime job where I was
practicing law. Everybody knew me as a real estate lawyer.
But at the end of the week, you know, I
might disappear for a day and everybody said, oh, yeah,
he went down to the Caribbean to gamble. Well that's
(19:45):
not what I was doing. I was every week in
the Caribbean and every month in Europe. So I had
two lives. I was a legitimate lawyer in the daytime,
and then from time to time I would put on
my other hat and move cash, whether it was actual
hard cash or financial instruments.
Speaker 1 (20:04):
While you're doing this and you're seeing the laundering side,
you're not, obviously there's the criminal activity that's happening to
generate this fund these funds. But what was your relationship
like with the folks that were doing the criminals? I mean,
did they just instruct you? Was it one person that
would just give you the instruction. I mean, how close
(20:26):
were you to the actual illicit actors.
Speaker 2 (20:29):
Well, in that line of work, you only trust people
who are also criminals because you can't deal with the
legitimate world socially because you know they might be the
ones that give you up. So you end up becoming
in a very small, tight social circle of people who
are all looking at life in prison if they get caught,
including yourself. So it becomes a very narrow social world.
(20:55):
But to the outside world, you know, I'm a legitimate lawyer.
I have a live in girlfriend who's a police officer
and then later a police detective and still later a
police psychologist, so you know I'm looking legitimate. But if
you scratch under the surface hard enough, you find that
I'm a career criminal.
Speaker 1 (21:15):
Mm hmm. I mean, I don't know if this is sensitive,
but just because you brought it up, did this person
know so this while they were involved in law enforcement,
they were in on it, or they did not know?
Speaker 2 (21:27):
Oh? Absolutely, she had some past relationships with some of
the people who were my clients, and she wasn't engaged
in crime, but she was you know, don't ask, don't tell.
Speaker 1 (21:38):
So this could I imagine only lasts for so long.
So what happened to make things change?
Speaker 2 (21:45):
Well, you know, at the same time that I'm doing
this and I'm living this kind of fast lifestyle, I'm
also you know, a major consumer of the drugs that
my clients are selling. So my life is you know,
done it the speed of light. But as years go by,
you know, you realize that you're not going to live forever,
(22:07):
and the risk levels keep increasing, and eventually one of
my client organizations made about two hundred million dollars and
they basically sold their business to one of their lieutenants
who made some mistakes, and of course people start going
to jail. You know, one group of clients fought the case,
(22:28):
went to prison, and the kingpins got three life sentences.
Speaker 1 (22:32):
What are the mistakes that these lieutenants made or what
types of mistakes the mistakes?
Speaker 2 (22:38):
Are getting caught smuggling drugs, which is a very you know,
zero tolerance occupation. Either you're successful or you're caught. So
one day I'm sitting in my office preparing for a
commercial real estate transaction and two people from IRS Criminal
Investigations come in and drop a subpoena on me to
(23:04):
testify in another part of Florida against my clients, which I,
of course, as you realize, I chose not to do.
Speaker 1 (23:11):
Did that raise an alarm? I mean, so that wasn't
unusual for you to say, no.
Speaker 2 (23:15):
Yeah, I was hiding behind the attorney client privilege, which
is something that unfortunately lawyers do, whether their clients are
clean or not. You know, they're entitled not to give
up confidences of their clients. So one day they came
and picked me up and charged me with racketeering, which
is basically the business of being a career criminal, which
(23:37):
I was. They also charged me with acute tax crime
defrauding the Internal Revenue Service, which of course I was guilty.
So after I was charged, and I was looking at
probably at least twenty years, if not longer, I decided that,
since I was in court because some of my clients
(23:59):
had of course explained what my role was, that I
was going to plead guilty and give up all the
information that I had so that I wouldn't have a
twenty years to life sentence. And after that was all over,
I got a sentence of four years and I went
off to a minimum security prison, and of course there
(24:20):
goes my law license and there goes my reputation in
the community.
Speaker 1 (24:24):
Ken even before you know, we hear about your how
things evolved from there. What was going through your head
when this irsci, who we've talked about on the show before.
So when they came and you realized this was it,
what went through your mind?
Speaker 2 (24:44):
Well, you know, nobody lists forever, and you know, I'm
one of the lucky people to come back from Vietnam
unscathed except for mental issues. So therefore it's just when
it's your time, it's your time. I mean, I just
assumed that it was going to happen sooner or later,
and that I wasn't going to die in my sleep
in my eighties.
Speaker 1 (25:03):
So you basically took it. You almost took it on
the chin, and you were ready to deal with what
was next.
Speaker 2 (25:09):
And they sent me to a prison in the middle
of an air force base. And of course, since I
mex military, you know, it wasn't anything that was a
rude shock or awakening. And remember I had visited a
lot of clients in many different prisons, and you know,
it wasn't anything that I couldn't handle. But after I
was there for about six months, a couple of government
(25:31):
figures came in and told me, hey, you know, we
tried to catch you for ten years, and you can
provide services to us if you want to have your
sins reduced. So I testified against a number of my
clients who were responsible for me being there, and the
United States and Switzerland seized a lot of client money
(25:53):
and after two years I was out the door, serving
less time than I did in the military.
Speaker 1 (25:59):
So ken was that process of cooperating with law enforcement
just simply you know, them visiting you and then you
just telling them what you knew.
Speaker 2 (26:10):
Oh No, it was much more complicated than that. I
had to be transferred to a local county jail and
in somewhat austere conditions and had to make myself available
for a period of months. So you know, it was difficult,
but not something I couldn't handle.
Speaker 1 (26:27):
So was that like a you know almost I mean
we haven't used the word, but right, you became an informant.
Speaker 2 (26:35):
Even more than that, I testified against my former clients.
It wasn't anything hidden about it, but they were responsible
for my being there in the first place. And turn
about is fair play in our system. In our system,
the only way that somebody can get their sentence reduced,
is if they give what's called substantial assistance, which results
(26:57):
in somebody either being convicted or a lot of dirty
money being seized.
Speaker 1 (27:04):
How did former clients respond, even if you did you
get to see any of them? I mean obviously when
you're testifying.
Speaker 2 (27:11):
Oh, I ran into a bunch of them in prison,
and I'd run into clients from before. It was that
was the way that most of them were getting their
sentences reduced to. It wasn't such a It didn't make
me such a pariah, especially since I was. I was
there because the clients had given me up originally, or
some of them had.
Speaker 1 (27:32):
So at this point, you've decided to cooperate reduce your sentence,
and you're you know, working against the people that you
were working with in the past. But at this point,
what are your reflections? I mean, is this all just transactional?
I mean, now you're older, do you have a different
outlook on life? What has changed?
Speaker 2 (27:54):
Well, the point is that you know, somebody came to
me from government and said, hey, you know, look at
how you got off track. You know, you're a professional
served in Vietnam, and then look at how you wandered
off base. So therefore you need to switch sides and
go back to where you started. And they were one
hundred percent right. You know, I'd never belonged in that
(28:14):
with that group. If I had never gone to Vietnam,
I probably never would have been involved. I probably would
have spent my entire life, you know, as a normal, boring,
legitimate lawyer in civil practice. But you know, I picked
up a sort of negative addiction for risk.
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(29:21):
risk taker who's gone through so much right in your
you know, at this point, you know, thirty thirty plus
years of life. So when you get out, what do
you do? Then?
Speaker 2 (29:32):
Well, then you're a pariah. You know, you're outside the community.
The lawyers won't talk to you, the bankers won't talk
to you. But then six months later, somebody comes knocking
on my door and it's somebody else from law enforcement,
and what he's saying is, hey, you know, we tried
to catch you for ten years. How about you teach
us how to catch people like you. So one day
(29:54):
I got on a plane, I flew to Daytona Beach
and I stood in front of five hundred detectives who
so if luks could kill, they would have shot me
on the spot because I was the enemy. But by
the time the day was over, I got a chance
to teach them how do you catch and how do
you catch people who are money launders, and how do
you conduct a successful investigation. So what I was doing
(30:17):
was I was using my knowledge gained on the wrong
side of the tracks for law enforcement's use. So that's
how I spent the nineteen nineties, getting on a plane,
flying somewhere and teaching people how to catch crooks. And
at the same time, of course, I have no legitimate occupation,
(30:37):
so I'm serving as a paralegal doing research, whereas before
I was a lawyer, you know, with a huge income
and all this disposable cash. And now I'm just an
ordinary person drawing a paycheck. But then nine to eleven happens,
and then my whole world changes because now I have
something for not just the law enforcement community, but for
(31:01):
the banks. Remember we had the USA Patriot Act. That law,
which was miraculously put together in sixty days, had its
roots in investigations that took place prior to two thousand
and one. I testified three times before three different committees
(31:22):
of the US Congress and how to put together more
effective money laundering laws, and a lot of that stuff
ended up in the Patriot Act. So here now I'm
all of a sudden, I am interested in the banks,
and they're interested in me. Why because I can teach
them about the new world of compliance. And then one
day I get picked up by a huge database company
(31:46):
operating out of England and spend the next five years
visiting one hundred countries teaching bankers how to be effective
in anti money laundering.
Speaker 1 (31:58):
Well that's a good point to actually double click on,
because you know, you describe how In the beginning, people
were skeptical, those police officers in Daytuna Beach. So obviously
you were able to, you know, show them that you
had value. What were some of the key things that
you were able to explain to them about how money
(32:19):
laundering work that they wouldn't have been able to understand
without you.
Speaker 2 (32:24):
Well, the thing about money laundering is that there are
all these inside tips and techniques what we call tradecraft,
these advanced methods which somebody goes into a legitimate industry
and finds a way to manipulate it so that it
can be used for money laundering or some other version
of financial crime. But that particular technique or method is
(32:45):
totally unknown to the public, even to law enforcement. So
by explaining how people create money laundering scenarios and explaining
a lot of the ones that are in current use,
I then was able to teach law enforcement and how
to be effective.
Speaker 1 (33:04):
And so you had that experience from the eighties and
from the nineties. So now it's post nine to eleven.
The financial system is changing, there's more scrutiny to Patriot Act,
et cetera. So what are your observations about the threats
of money laundering since nine to eleven, since the environment
has changed.
Speaker 2 (33:25):
Well, you know, before, when you wanted to form a
corporation and a tax haven, you'd have to get on
a plane, fly to some obscure little island, go see
a lawyer and form some corporations. Now you can do
it in the privacy of your own office. You can
form corporations using the internet. If you need information about
things in the world that nobody knows about, you can
(33:47):
you let your fingers do the walking. So, if anything,
it's easier to get involved in financial crime than it
ever was because you have access to information and information
is king.
Speaker 1 (33:59):
So it's easy year. But I mean now we have more,
you know, the Bank Secrecy Act. There have been changes.
I mean obviously the Bank Secrecy Act is older, but
the changes that happened, you know post nine to eleven. Uh,
you know, don't they make it riskier for someone? I mean,
if someone was, you know, trying to do what you
(34:19):
were doing back in the eighties, wouldn't it be hard
wouldn't that part of it be harder because of how
banking has changed.
Speaker 2 (34:27):
Well, the penalties are harder, but remember that the people
involved in financial crime, they are lawyers, accountants, financial services
professional even doctors, people who see that there is such
a huge profit to be made, not just for their
clients but for them. And they are sharp and they
(34:49):
have an infinite budget, and they know that, you know,
they can run rings around law enforcement, regulators and bankers
because they stay up nights and weekends just to beat
the banks. Remember, they're always on duty. They're always scheming
and coming up with new methods, and they'll use a
use and lose a particular technique and move on to
(35:11):
something else. And the bankers don't figure it out for
two years, and it's three years before law enforcement comes
and seizes funds. So people can get involved in these
matters fast, efficiently, and in you know, breaking new ground.
Where the bankers are nine to five rs. They're not
(35:33):
scheming day and night to find ways to beat a system,
but the money launderers are.
Speaker 1 (35:39):
So it sounds like you have to think like a
money launder You have to think like a criminal in
order to prevent, you know, becoming a victim to them
or a victim of them. Now we're in twenty twenty five,
what are the new sort of risks? I'm sorry, what
are the new risks? Or tech techniques that you see
(36:01):
on the horizon.
Speaker 2 (36:02):
With money laundering, well we have, you know, unfortunately, we
have a totally unregulated industry called cyber currency. Cryptocurrency issues
with something that actually doesn't have a stated value, is
highly speculative and volatile, and which can be abused and
(36:22):
manipulated to launder money outside of the banking system. Remember
that it's only within the financial system that we have
decent regulation, and money launderers will go into some other
industry and you know, abuse the hell out of it
and move on. So, you know, there are all these
new issues and new problems we have. Now we have
(36:44):
artificial intelligence. Well, while the banks are saying that that
will help them with their investigations, what makes you think
that people in the other side of the coin aren't
doing the same thing. Just an illustration. People in that
line of work are technically light years ahead of the
legitimate business world. Back in the early nineteen eighties, my
(37:08):
clients who were drug traffickers were already using email when
nobody even knew what email was. They were using radio
shack computers to store their data, going paperless when everybody
else was using hard copies. So you can only imagine
how far in advance they are now by acquiring Internet assets,
(37:33):
internet databases, software platforms that they could use to frankly
clean and move money globally in a heartbeat.
Speaker 1 (37:44):
Yeah, So the criminals are always, it seems, the early
adopters of these new technologies. So I can see that,
and we've talked about some of these issues on designated
but I'm also wondering about just the international environment, because
you talked about tax havens, you know, and front companies.
(38:05):
What's happening in the international environment that illicit actors are
taking advantage of.
Speaker 2 (38:11):
Well, you know, the most obvious one is that you
can totally change your identity. You know, there are a
number of countries which, for the reasons that they wish
to increase their income, will sell you their passport, their nationality,
and their citizenship. And along the way, you might end
(38:32):
up with a new name, a new birth date, a
new birthplace, and all the identifiers that most people will
not be able to find you at because you're no
longer somebody from Russia, You're somebody from the Caribbean, and
you can practice whatever financial crime you want to with impunity.
Speaker 1 (38:53):
You know.
Speaker 2 (38:53):
The only way that you can actually identify somebody is
through facial recognition software. Only if you can look at
their face and make them as their real identity will
you ever be in a position to know who you
truly have And of coortunately, facial recognition software is still
in the process of development, as is AI, so the
(39:17):
banks and the financial services community is always behind the
eight ball trying to develop new technology while the money
launderers are using the flip side of it to commit
crimes with impunity. And let's say maybe ninety five ninety
eight percent of money laundering has never been interdicted in
real time.
Speaker 1 (39:37):
With these programs where you can, I guess, get a
new passport just to sort of edify our viewers who
maybe you know, aren't familiar with this. Which countries offer
this well?
Speaker 2 (39:52):
In the Western Hemisphere, five countries in the East Caribbean,
which are Saint KITT's and Dominica, Saint Lucia and Grenada
all offer passport sales. In Europe, there's the Republic of Malta.
There are also some tiny and obscure islands in the
Pacific that also offer these things. And these passports allow
(40:15):
you a visa free entry into Europe and the UK.
So if you're going to commit financial crime, there's your
passport to do so. So that's just one method by
which money launderers succeed at the expense of the commercial banks.
Speaker 1 (40:33):
And you mentioned artificial intelligence, and I know previously we
were talking and you mentioned something about it AI Watchdog.
What can you explain what you mean there?
Speaker 2 (40:45):
Well, the point is that when used properly, you can
use artificial intelligence platforms to not only stop bad actors
at account opening, but also in the most difficult part.
When you talk about what's called transaction monitoring, banks have
to ongoing monitor high risk accounts or accounts where a
(41:08):
lot of money changes hands. If you have a sufficiently
sophisticated AI monitor, you can then use the program to
catch it in real time, whereas otherwise you might not
find it for weeks. So AI does have a future
and a benefit in anti money laundering. But on the
(41:31):
other hand, you should understand that it's all the kinks
aren't out yet. We have a number of very high
profile cases where lawyers use AI to do legal research,
and the AI program, when it couldn't find an answer
in existing case law actually created it from scratch. So
(41:53):
AI does have vulnerabilities. And you may use AI one
day successfully, but the next day it may give you
something that legally does not exist. Then what do you do?
Speaker 1 (42:04):
M hm. So, yeah, there's a lot on the horizon there,
both for and against. You have this perspective of, you know,
living through decades of the money laundering world. You wrote
the book The Laundry Man, and I'm wondering if you
could tell us, you know, either in that book or
just from your experience. I mean, what's the one lesson
(42:28):
that you learned that you think financial crime professionals need
to understand about money laundering?
Speaker 2 (42:35):
Well, the point is that you need to be I
guess what you might call a renaissance individual. You need
to be, you know, not just well educated and well trained,
but you need to have a broad based approach on
your job. It's not a nine to five job, it's
it's it's really a calling. It's a career. And if
(42:55):
you don't have experience in the business world, if you
don't understand a little bit about how regulators work, and
you don't know about how law enforcement operates, then you're
only dealing with the commercial side of these problems. So
anybody who really wants to learn about anti money laundering
and countering the financing of terrorism. They have to number
(43:18):
one and get a liberal arts education. Number two, they
need to learn everything they can about the financial system.
And number three, they need to learn all these techniques
which don't show up anywhere in the media, but which
law enforcement sometimes learns about too late. So there's an
ongoing education responsibility, and frankly, most people aren't doing it.
Speaker 1 (43:44):
Ken, Before I let you go, I want to ask
maybe a fun question. You may not have an answer
for it, but this is an a fun thought. Financial crime.
Money laundering is often portrayed in movies and TV shows.
Is there a movie or a TV show that you
think was spot on that really gets it right that
you would recommend for folks wanting to understand this.
Speaker 2 (44:07):
Unfortunately, Hollywood glamorizes all this. And you know, if I'm
going to draw a parallel, the truth about money wandering
is like the truth about war. You know, war is
periods of absolute boredom interspersed with periods of white knuckle fear.
That's what money wandering is all about. It's a lot
of routine transactions, but there are times in which your
(44:31):
life and your health and your own safety and future
and your freedom are at risk, and the question is
can they catch me? Are they going to catch me?
Or am I going to be able to get away
with it? Am I going to be the one that
got away? Or am I going to be the one
spending the rest of my life in a really nasty
federal prison. So yeah, it's fear and loathing and it's
(44:56):
not glamorous and it's not sophisticated. I mean, you might
have all them money in the world, but no time
to spend it. You may not ever have a day
off because you have extremely demanding clients, and there's always
the fear that if you make a mistake and clients
lose a lot of money, you could lose your life.
So it's not fun and it's not for the faint
(45:17):
of heart.
Speaker 1 (45:18):
Ken's journey exemplifies how the tendency to take risk is
a strength that can be used for crime or conversely
for fighting it. There's an inspirational lesson here. No matter
how far down one may fall making bad choices, you
always have the choice to reverse course. Most of us
won't face such decisions at the crossroads, but we should
(45:41):
realize that perhaps every expert money launderer out there, like
Kenriejock can eventually become Kenrijock. The anti money launderer redemption
sometimes may seem remote, but it's never too late. I'm
Yaya Jata. FINUSSI is designated on the Illicit Edge Network
Today's podcast is supported by TRM. TRM enables compliance teams
to accelerate business revenue and deliver actionable intelligence to regulatory
and law enforcement stakeholders with leading attribution of severe risk categories.
Request a free trial today at trmlabs dot com. I'm
(00:35):
Yaya Jata Finussi. During the course of Designated I've talked
to many financial crime fighters, people who are on the
front lines of anti money laundry, but I've yet to
speak with someone who has lined up on the other
side of that front. Ken Rejack is known as the Laundryman.
In fact, it's the title of his autobiography. In the
(00:58):
nineteen eighties, Ken was a young, young Miami lawyer who
found himself acting as a middleman between Columbian drug cartels
and their expanding US network, helping to launder illicit funds
gained from flooding cocaine onto America's streets. It was the
days of Miami Vice, but was no TV show for Ken.
By his account, he ended up cleaning about two hundred
(01:21):
million dollars in drug cash, all while jetting to the
Caribbean and back via private jet. Like many who chose
that life, Ken got caught and wound up doing time
in prison, but he turned his life around and decided
to join the fight against the drug networks he used
to support, going under cover for the DEA and testifying
(01:42):
against the criminals he knew so well. Today he uses
his experience to help the government and financial institutions stay
a step ahead of the launderers. Ken Riejock didn't start
out seeking a life of crime. He was a college
educated young man who volunteer to serve in Vietnam. His
(02:03):
journey reflects quite an amazing art and it shows us
that it sometimes takes a money launderer to catch a
money launderer. It's time to get designated with Ken Rejok. Well, Ken,
you are a Vietnam veteran, but I'd like to start
(02:23):
with your origin story. Tell us about where you grew
up and how you made your way eventually to Vietnam.
Speaker 2 (02:31):
I'm the son of Russian immigrants, so that makes me
a first generation American. My family came here one hundred
years ago from what is now the Ukraine, and I
grew up in a suburban New York State, in a
tiny little town with about five thousand people and from
a conservative background. As you can imagine, you know, being
(02:51):
the child of immigrants, and I got my undergraduate degree
in history at a college in New York. But I
was forced to leave graduate school because, as you can guess,
I grew up in the middle of the Vietnam War.
So rather than frankly wait to get drafted, I enlisted
in nineteen sixty eight, and by the middle of nineteen
(03:13):
sixty nine I was already in Vietnam. You know, only
four percent of the people who served in Vietnam were
college graduates, so it was a little bit of a
learning experience for me. As you can imagine, I grew
up in a rather sheltered family, so it was a
reality check. As you can imagine, anybody who goes to
(03:34):
war doesn't come back the same.
Speaker 1 (03:37):
What experiences do you think sort of impacted your later life?
Speaker 2 (03:43):
Well, you know, as you can imagine, most Vietnam veterans
came back with some serious gripes against the United States
because they thought the US, you know, could have won
the war and didn't. But more importantly, they basically came
back as disaffected people, and as you can tell, you know,
(04:04):
they weren't well received by the population. But be that
as it may. You know, I had the benefit of
an education. But on the other hand, like a lot
of other people in Vietnam, I was exposed to what
we call agent orange. Now that's a defoliant that was
sprayed on the jungle in which we all ended up
breathing and frankly absorbing it in our bodies. So quite
(04:28):
a few people who are Vietnam veterans are long gone
with cancer. I'm one of the fortunate ones. But more importantly,
there were other effects of agent orange that weren't discovered
for years, and it probably was one of the reasons
why I changed from being a rather conservative, pro American
(04:48):
person to somebody that became a somebody who had a
lot less than of a you know, moral capability than
I had when I went in. Plus, I became a
risk taker. What I learned about Vietnam was that after
I came home, I found the Vietnam veterans were on
two sides. They all became law enforcement officers or they
(05:10):
ended up as drug smugglers because they didn't never want
to go back to a nine to five job. They
more or less became addicted to risk, and if the
ones that survived, you know, it became something that from years.
As the years went by, they had more and more
issues with you know, how can you get your dose
(05:32):
of risk? Which is all dangerous? But I guess what
I learned for a future is working in Vietnam. You know,
I spent a lot of time in the field. I
spent a lot of time on field operations, and I
got to watch what was then called, you know, guerrilla warfare,
but is actually a type of warfare where you only
(05:55):
seek to engage with your opponents on favorable terms. You know,
I like to think that a lot of the lessons
I learned in Vietnam are frankly, things that I applied
later on as a career money launderer.
Speaker 1 (06:10):
Well what do you mean engaging them on favorable terms?
And then how you explain more?
Speaker 2 (06:15):
Okay, Well, you know the problem with the Vietnam War
was that your enemy would not confront you except on
his terms. He would hide in the tunnels, he would
only come out at night. And I've learned from being
exposed to that that, you know, there's a way in
which people fight wars frontally, and there's a way in
(06:38):
which they do it asymmetrically. You know, we talk about
asymmetric warfare, and we talk about terrorism and rebel groups.
But my application of it was use those asymmetric principles
in the practice of money laundering, and it was frankly
highly effective for a decade.
Speaker 1 (06:57):
Walk us through you your I mean, you've given us
a sense of your mindset wanting to take a risk.
But tell us about the age that you're in when
you come back from Vietnam, and then how you sort
of settle into the next stage of your life, because
I think you moved to Florida, so tell us about that.
Speaker 2 (07:12):
Well, when I was in the service, my parents moved
to Florida, and of course as soon as I got
down here, I realized it was pretty much the tropical
climate that I'd been used to for the last four
hundred days in Vietnam. So I was fortunate enough to
get accepted at law school, the first stay of orientation,
so I really didn't lose any time out of my life.
(07:34):
Fortunately for me, the assistant dean at the local law
school was a veteran of submarine warfare and had been
a Naval Academy graduate, and he kind of took a
shine to me and said, hey, we have a slot open.
How'd you like to be a lawyer? I come from
a family in which I'm only one of five people
(07:56):
in my generation who all became lawyers, including my sister,
who became a lawyer when she was forty two. So
it's something that I fell into. Of course, a huge
number of the people I went to school with had
all just come back from Vietnam too. Fortunately, while I
was in law school, I ended up working at the
only Miami law firm that had a branch in London
(08:18):
and in New York. And when I graduated, I went
to work there and I was frankly dumped into the
banking law division, whether I wanted to be there or not.
So by that accident, you know, I became knowledgeable about
financial crime and also legitimate financial transactions.
Speaker 1 (08:37):
So you're in Miami working at a very you know,
an established law firm dealing with banking. You're learning what
about your social network? So how are you again, because
you're a young man, you know, young adult fresh from Vietnam.
Tell us about the I guess the social network you
developed and how things progressed.
Speaker 2 (08:59):
I'm still maladjusted, so I'm still looking for I don't know,
if you want to call them thrills or high risk activities.
So I go out and learn how to fly. I
also take karate lessons, and I just still find myself
to be somewhat you know, misplaced in society.
Speaker 1 (09:21):
What age are you around this time, mid.
Speaker 2 (09:23):
To late twenties. Remember that the average agent that somebody
went to Vietnam was nineteen. I was twenty one because
I had already had my degree. But I was the
exception rather than the rule. Well, there came a time
in my life when I ended up in a very
high stress situation. My first wife lost her mother at
(09:45):
a young age, and frankly started delving into drugs in
a very big way, which created chaos in my life
and ended up with me, you know, leaving home and
out on the street and being in a major divorce situation.
And that stress pushed me over the edge. I just
shut down my practice of law. By then it was
(10:06):
practicing on my own, and I pretty much dropped out
of society. And I happened to run into two young
ladies who lived in my building and who worked at
a bar, and which moved me into a totally different world.
Because this is Miami in nineteen seventy nine, nineteen eighty.
This is the height of the Miami Vice years. So
(10:30):
I moved from being a normal married individual with a
professional job to not working and all of a sudden
being out there on the party circuit. And you can
only imagine that it was, you know, anything goes.
Speaker 1 (10:44):
Yeah, So, yeah, you mean I remember Miami Vice. I'm
sure some in our audience remember it a pretty wild time.
Miami a very sort of vibrant city with a lot
to get into. So tell us more how things progressed
for you?
Speaker 2 (11:03):
Well, what happened was, you know, the turning point was
one of the young ladies that I was living with
was in a motorcycle accident in Ohio in a race
and had to go stay with a friend who lived
in Miami's Shenandoah District, which is a Latino district near downtown.
And of course I went over to meet her and
visit with her because she's there with a broken leg.
(11:25):
And I meet this guy. It's like looking at myself.
He's the owner of this house. He's from Saint Louis,
but he grew up in Cuba as the son of missionaries,
so he's not only bilingual, he's bicultural and he's a
Spanish teacher, but we're two days apart in age. He
also was in Vietnam. His service was with the Marines,
(11:51):
and we take an instant liking to one another because
remember I'm a new bachelor and he's a single guy
and he has a lot of parties. So a couple
months later, when I'm looking for a place to stay,
he lets me move into his house, of which he's
the only resident, and things are great for about three
days until one night, in the middle of the night,
(12:12):
there's a knock on the door and some people in
suits come in the front door with suitcases what you
and I would call trial briefcases, and they're in from California.
And I still have no idea what they're doing there
or who they are. I go back to bed. Then
a few minutes later there's a knock on the back door,
and that's a bunch of Colombians come in the door
(12:33):
with satchels. So what if I got myself into I
happen to be living in a house with somebody who's
a broker of illicit substances, who's the bridge between Colombian
smuggling drugs into the United States and Americans and Canadians
who are taking it from them and wholesaling and retailing
it around North America. So I lived in that house
(12:56):
for six months, and I got probably the functional equivalent
of an MBA in drug trafficking because I met everybody.
I met everybody in that whole world, the wholesalers, the distributors,
the transporters, the professionals that surround them and advise them.
And by the time I decided to get out of there,
(13:16):
I had picked up a whole new circle of friends.
So I went back to work as a lawyer, and
they all started coming to my law office because remember
I'm a civil practitioner, and they asked me for all
the usual services. I want to form a corporation, I'm
selling my plane, I'm buying a business, I'm involved in
(13:36):
a real estate transaction. And these are all legitimate things
that lawyers do. But remember what all these people do
for a living. They're all in the cocaine or marijuana
trafficking business. So I am now facilitating what they're doing.
I guess you'd say, don't ask, don't tell, But having
grown up in the sixties and always believing that marijuana
(13:59):
was a drug, which really should be decriminalized. Didn't bother me.
But then one day somebody comes in the office and
they ask me a question that I can't answer. They say, listen,
I need to launder six million dollars in marijuana profits.
Can you help me? Well, that was kind of like
a period in which I could have gone either way.
(14:20):
I should have thrown them out of the office, But
like a lot of ambitious lawyers, I agree to take
the matter, even though I don't know how to do it,
and I then go off on a totally different tangent.
Speaker 1 (14:32):
So that that was a crossroads in your life and
your young professional life. So you decided, and these people
knew you. I guess they trusted you by this time.
So now you're on a different road. So you've chosen
I'm going to go down this path. I'm going to
help you out what happens from there.
Speaker 2 (14:55):
Well, you know, I was only experienced on the legitimate
side of financial transactions. So you know, I told you
there are a bunch of lawyers in my family, on
all sides of the family. And you know, you can
always choose your friends, but you can't choose your relatives.
And one of my relatives had kind of grown up
(15:17):
doing a lot of things in which most people go
to jail for, and he was just now getting out
of jail for having stolen nine million dollars from the
Castro government. So of course I went to him and
got information on where to go in the tax havens,
who to talk to, what banks, what lawyers to deal with,
(15:38):
And based upon that knowledge, I hired a lear jed
up in Fort Lauderdale. I got a bunch of my clients,
dressed them all up like bankers, male and female, because
what I learned is that in the drug business it's
an equal opportunity employer. If you're bloodthirsty enough to work
in it, your sex really doesn't matter. You have to
(16:01):
be with the sole purpose, and that is the success
of the mission. Well, I completed my first smuggling trip
of several million dollars down to the taxaans. I had
money put into what are called bearer share accounts, in
other words, the corporation that only accounts Those shares were
(16:22):
only issued to bearer. There was no name on the
stock certificates, so it could not be traced back to
my clients. And that was the start of a ten
year odyssey of frankly moving millions of dollars into the
taxaans only to begin their travel around the world. And
what the complex method of money laundering consists of. And
(16:44):
money laundering consists of three separate and distinct phases. The
first one is placement, So that's us smuggling the six
million dollars into a tax haven bank in the Caribbean.
Then there's layering, that's moving the money through the banking
system around the world so that it can lose its
original criminal taint. Why well, you don't want to get
(17:06):
caught and you don't want law enforcement to know where
the money is. So in this case, here's some of
this money getting transferred to Panama, which is of course
another tax haven, and then to China, but not the
People's Republic Taiwan. Why America doesn't recognize Taiwan. Then some
(17:27):
of the money ends up going to the city, which
is the financial district in London. Why well, maybe you
need to set up some sort of bogus company which
then will allow you to buy an office building in
downtown Miami and borrow the money from your own shell company.
And of course you have now effectuated what's called placement
(17:51):
layering and integration. Integration is where you actually invest the
cleaned money in the peacetime economy, so you can have
a cash flow. That's in a nutshell how money wandering works.
And that's why ninety five percent of it never gets interdicted.
Speaker 1 (18:08):
And that makes me think, because you're doing this in
the eighties, so was there any you know, resistance danger?
I mean, how easy was it to do this?
Speaker 2 (18:22):
Well, it's asymmetric warfare all over again, because what you're
doing is you're taking advantage of the fact that our
custom service collects duty on inbounds and things leaving the
United States have no tax consequences. So if you're prudent
and careful about it, as I was, I was never
interdicted in a decade. Those seem to be businessmen going
(18:46):
to a conference in another country. You know, that's not
to mean there wasn't risk. The risk is not in
the actual voyage itself. The risk is, let's say, somebody
on your tea, somebody who's a client, might get arrested
in another matter and then might advise law enforcement how
(19:07):
you're loandering money.
Speaker 1 (19:09):
If you're able to do this for so long, I mean,
you know, even before we get to how things changed.
Were you having any doubts, Were you having any fears
or was this all you know? Was this all all
systems go, everything's all good?
Speaker 2 (19:24):
No, I was. I was one hundred and one percent
committed to what I was doing. I surrounded myself only
with clients. I had a daytime job where I was
practicing law. Everybody knew me as a real estate lawyer.
But at the end of the week, you know, I
might disappear for a day and everybody said, oh, yeah,
he went down to the Caribbean to gamble. Well that's
(19:45):
not what I was doing. I was every week in
the Caribbean and every month in Europe. So I had
two lives. I was a legitimate lawyer in the daytime,
and then from time to time I would put on
my other hat and move cash, whether it was actual
hard cash or financial instruments.
Speaker 1 (20:04):
While you're doing this and you're seeing the laundering side,
you're not, obviously there's the criminal activity that's happening to
generate this fund these funds. But what was your relationship
like with the folks that were doing the criminals? I mean,
did they just instruct you? Was it one person that
would just give you the instruction. I mean, how close
(20:26):
were you to the actual illicit actors.
Speaker 2 (20:29):
Well, in that line of work, you only trust people
who are also criminals because you can't deal with the
legitimate world socially because you know they might be the
ones that give you up. So you end up becoming
in a very small, tight social circle of people who
are all looking at life in prison if they get caught,
including yourself. So it becomes a very narrow social world.
(20:55):
But to the outside world, you know, I'm a legitimate lawyer.
I have a live in girlfriend who's a police officer
and then later a police detective and still later a
police psychologist, so you know I'm looking legitimate. But if
you scratch under the surface hard enough, you find that
I'm a career criminal.
Speaker 1 (21:15):
Mm hmm. I mean, I don't know if this is sensitive,
but just because you brought it up, did this person
know so this while they were involved in law enforcement,
they were in on it, or they did not know?
Speaker 2 (21:27):
Oh? Absolutely, she had some past relationships with some of
the people who were my clients, and she wasn't engaged
in crime, but she was you know, don't ask, don't tell.
Speaker 1 (21:38):
So this could I imagine only lasts for so long.
So what happened to make things change?
Speaker 2 (21:45):
Well, you know, at the same time that I'm doing
this and I'm living this kind of fast lifestyle, I'm
also you know, a major consumer of the drugs that
my clients are selling. So my life is you know,
done it the speed of light. But as years go by,
you know, you realize that you're not going to live forever,
(22:07):
and the risk levels keep increasing, and eventually one of
my client organizations made about two hundred million dollars and
they basically sold their business to one of their lieutenants
who made some mistakes, and of course people start going
to jail. You know, one group of clients fought the case,
(22:28):
went to prison, and the kingpins got three life sentences.
Speaker 1 (22:32):
What are the mistakes that these lieutenants made or what
types of mistakes the mistakes?
Speaker 2 (22:38):
Are getting caught smuggling drugs, which is a very you know,
zero tolerance occupation. Either you're successful or you're caught. So
one day I'm sitting in my office preparing for a
commercial real estate transaction and two people from IRS Criminal
Investigations come in and drop a subpoena on me to
(23:04):
testify in another part of Florida against my clients, which I,
of course, as you realize, I chose not to do.
Speaker 1 (23:11):
Did that raise an alarm? I mean, so that wasn't
unusual for you to say, no.
Speaker 2 (23:15):
Yeah, I was hiding behind the attorney client privilege, which
is something that unfortunately lawyers do, whether their clients are
clean or not. You know, they're entitled not to give
up confidences of their clients. So one day they came
and picked me up and charged me with racketeering, which
is basically the business of being a career criminal, which
(23:37):
I was. They also charged me with acute tax crime
defrauding the Internal Revenue Service, which of course I was guilty.
So after I was charged, and I was looking at
probably at least twenty years, if not longer, I decided that,
since I was in court because some of my clients
(23:59):
had of course explained what my role was, that I
was going to plead guilty and give up all the
information that I had so that I wouldn't have a
twenty years to life sentence. And after that was all over,
I got a sentence of four years and I went
off to a minimum security prison, and of course there
(24:20):
goes my law license and there goes my reputation in
the community.
Speaker 1 (24:24):
Ken even before you know, we hear about your how
things evolved from there. What was going through your head
when this irsci, who we've talked about on the show before.
So when they came and you realized this was it,
what went through your mind?
Speaker 2 (24:44):
Well, you know, nobody lists forever, and you know, I'm
one of the lucky people to come back from Vietnam
unscathed except for mental issues. So therefore it's just when
it's your time, it's your time. I mean, I just
assumed that it was going to happen sooner or later,
and that I wasn't going to die in my sleep
in my eighties.
Speaker 1 (25:03):
So you basically took it. You almost took it on
the chin, and you were ready to deal with what
was next.
Speaker 2 (25:09):
And they sent me to a prison in the middle
of an air force base. And of course, since I
mex military, you know, it wasn't anything that was a
rude shock or awakening. And remember I had visited a
lot of clients in many different prisons, and you know,
it wasn't anything that I couldn't handle. But after I
was there for about six months, a couple of government
(25:31):
figures came in and told me, hey, you know, we
tried to catch you for ten years, and you can
provide services to us if you want to have your
sins reduced. So I testified against a number of my
clients who were responsible for me being there, and the
United States and Switzerland seized a lot of client money
(25:53):
and after two years I was out the door, serving
less time than I did in the military.
Speaker 1 (25:59):
So ken was that process of cooperating with law enforcement
just simply you know, them visiting you and then you
just telling them what you knew.
Speaker 2 (26:10):
Oh No, it was much more complicated than that. I
had to be transferred to a local county jail and
in somewhat austere conditions and had to make myself available
for a period of months. So you know, it was difficult,
but not something I couldn't handle.
Speaker 1 (26:27):
So was that like a you know almost I mean
we haven't used the word, but right, you became an informant.
Speaker 2 (26:35):
Even more than that, I testified against my former clients.
It wasn't anything hidden about it, but they were responsible
for my being there in the first place. And turn
about is fair play in our system. In our system,
the only way that somebody can get their sentence reduced,
is if they give what's called substantial assistance, which results
(26:57):
in somebody either being convicted or a lot of dirty
money being seized.
Speaker 1 (27:04):
How did former clients respond, even if you did you
get to see any of them? I mean obviously when
you're testifying.
Speaker 2 (27:11):
Oh, I ran into a bunch of them in prison,
and I'd run into clients from before. It was that
was the way that most of them were getting their
sentences reduced to. It wasn't such a It didn't make
me such a pariah, especially since I was. I was
there because the clients had given me up originally, or
some of them had.
Speaker 1 (27:32):
So at this point, you've decided to cooperate reduce your sentence,
and you're you know, working against the people that you
were working with in the past. But at this point,
what are your reflections? I mean, is this all just transactional?
I mean, now you're older, do you have a different
outlook on life? What has changed?
Speaker 2 (27:54):
Well, the point is that you know, somebody came to
me from government and said, hey, you know, look at
how you got off track. You know, you're a professional
served in Vietnam, and then look at how you wandered
off base. So therefore you need to switch sides and
go back to where you started. And they were one
hundred percent right. You know, I'd never belonged in that
(28:14):
with that group. If I had never gone to Vietnam,
I probably never would have been involved. I probably would
have spent my entire life, you know, as a normal, boring,
legitimate lawyer in civil practice. But you know, I picked
up a sort of negative addiction for risk.
Speaker 1 (28:37):
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(29:01):
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(29:21):
risk taker who's gone through so much right in your
you know, at this point, you know, thirty thirty plus
years of life. So when you get out, what do
you do? Then?
Speaker 2 (29:32):
Well, then you're a pariah. You know, you're outside the community.
The lawyers won't talk to you, the bankers won't talk
to you. But then six months later, somebody comes knocking
on my door and it's somebody else from law enforcement,
and what he's saying is, hey, you know, we tried
to catch you for ten years. How about you teach
us how to catch people like you. So one day
(29:54):
I got on a plane, I flew to Daytona Beach
and I stood in front of five hundred detectives who
so if luks could kill, they would have shot me
on the spot because I was the enemy. But by
the time the day was over, I got a chance
to teach them how do you catch and how do
you catch people who are money launders, and how do
you conduct a successful investigation. So what I was doing
(30:17):
was I was using my knowledge gained on the wrong
side of the tracks for law enforcement's use. So that's
how I spent the nineteen nineties, getting on a plane,
flying somewhere and teaching people how to catch crooks. And
at the same time, of course, I have no legitimate occupation,
(30:37):
so I'm serving as a paralegal doing research, whereas before
I was a lawyer, you know, with a huge income
and all this disposable cash. And now I'm just an
ordinary person drawing a paycheck. But then nine to eleven happens,
and then my whole world changes because now I have
something for not just the law enforcement community, but for
(31:01):
the banks. Remember we had the USA Patriot Act. That law,
which was miraculously put together in sixty days, had its
roots in investigations that took place prior to two thousand
and one. I testified three times before three different committees
(31:22):
of the US Congress and how to put together more
effective money laundering laws, and a lot of that stuff
ended up in the Patriot Act. So here now I'm
all of a sudden, I am interested in the banks,
and they're interested in me. Why because I can teach
them about the new world of compliance. And then one
day I get picked up by a huge database company
(31:46):
operating out of England and spend the next five years
visiting one hundred countries teaching bankers how to be effective
in anti money laundering.
Speaker 1 (31:58):
Well that's a good point to actually double click on,
because you know, you describe how In the beginning, people
were skeptical, those police officers in Daytuna Beach. So obviously
you were able to, you know, show them that you
had value. What were some of the key things that
you were able to explain to them about how money
(32:19):
laundering work that they wouldn't have been able to understand
without you.
Speaker 2 (32:24):
Well, the thing about money laundering is that there are
all these inside tips and techniques what we call tradecraft,
these advanced methods which somebody goes into a legitimate industry
and finds a way to manipulate it so that it
can be used for money laundering or some other version
of financial crime. But that particular technique or method is
(32:45):
totally unknown to the public, even to law enforcement. So
by explaining how people create money laundering scenarios and explaining
a lot of the ones that are in current use,
I then was able to teach law enforcement and how
to be effective.
Speaker 1 (33:04):
And so you had that experience from the eighties and
from the nineties. So now it's post nine to eleven.
The financial system is changing, there's more scrutiny to Patriot Act,
et cetera. So what are your observations about the threats
of money laundering since nine to eleven, since the environment
has changed.
Speaker 2 (33:25):
Well, you know, before, when you wanted to form a
corporation and a tax haven, you'd have to get on
a plane, fly to some obscure little island, go see
a lawyer and form some corporations. Now you can do
it in the privacy of your own office. You can
form corporations using the internet. If you need information about
things in the world that nobody knows about, you can
(33:47):
you let your fingers do the walking. So, if anything,
it's easier to get involved in financial crime than it
ever was because you have access to information and information
is king.
Speaker 1 (33:59):
So it's easy year. But I mean now we have more,
you know, the Bank Secrecy Act. There have been changes.
I mean obviously the Bank Secrecy Act is older, but
the changes that happened, you know post nine to eleven. Uh,
you know, don't they make it riskier for someone? I mean,
if someone was, you know, trying to do what you
(34:19):
were doing back in the eighties, wouldn't it be hard
wouldn't that part of it be harder because of how
banking has changed.
Speaker 2 (34:27):
Well, the penalties are harder, but remember that the people
involved in financial crime, they are lawyers, accountants, financial services
professional even doctors, people who see that there is such
a huge profit to be made, not just for their
clients but for them. And they are sharp and they
(34:49):
have an infinite budget, and they know that, you know,
they can run rings around law enforcement, regulators and bankers
because they stay up nights and weekends just to beat
the banks. Remember, they're always on duty. They're always scheming
and coming up with new methods, and they'll use a
use and lose a particular technique and move on to
(35:11):
something else. And the bankers don't figure it out for
two years, and it's three years before law enforcement comes
and seizes funds. So people can get involved in these
matters fast, efficiently, and in you know, breaking new ground.
Where the bankers are nine to five rs. They're not
(35:33):
scheming day and night to find ways to beat a system,
but the money launderers are.
Speaker 1 (35:39):
So it sounds like you have to think like a
money launder You have to think like a criminal in
order to prevent, you know, becoming a victim to them
or a victim of them. Now we're in twenty twenty five,
what are the new sort of risks? I'm sorry, what
are the new risks? Or tech techniques that you see
(36:01):
on the horizon.
Speaker 2 (36:02):
With money laundering, well we have, you know, unfortunately, we
have a totally unregulated industry called cyber currency. Cryptocurrency issues
with something that actually doesn't have a stated value, is
highly speculative and volatile, and which can be abused and
(36:22):
manipulated to launder money outside of the banking system. Remember
that it's only within the financial system that we have
decent regulation, and money launderers will go into some other
industry and you know, abuse the hell out of it
and move on. So, you know, there are all these
new issues and new problems we have. Now we have
(36:44):
artificial intelligence. Well, while the banks are saying that that
will help them with their investigations, what makes you think
that people in the other side of the coin aren't
doing the same thing. Just an illustration. People in that
line of work are technically light years ahead of the
legitimate business world. Back in the early nineteen eighties, my
(37:08):
clients who were drug traffickers were already using email when
nobody even knew what email was. They were using radio
shack computers to store their data, going paperless when everybody
else was using hard copies. So you can only imagine
how far in advance they are now by acquiring Internet assets,
(37:33):
internet databases, software platforms that they could use to frankly
clean and move money globally in a heartbeat.
Speaker 1 (37:44):
Yeah, So the criminals are always, it seems, the early
adopters of these new technologies. So I can see that,
and we've talked about some of these issues on designated
but I'm also wondering about just the international environment, because
you talked about tax havens, you know, and front companies.
(38:05):
What's happening in the international environment that illicit actors are
taking advantage of.
Speaker 2 (38:11):
Well, you know, the most obvious one is that you
can totally change your identity. You know, there are a
number of countries which, for the reasons that they wish
to increase their income, will sell you their passport, their nationality,
and their citizenship. And along the way, you might end
(38:32):
up with a new name, a new birth date, a
new birthplace, and all the identifiers that most people will
not be able to find you at because you're no
longer somebody from Russia, You're somebody from the Caribbean, and
you can practice whatever financial crime you want to with impunity.
Speaker 1 (38:53):
You know.
Speaker 2 (38:53):
The only way that you can actually identify somebody is
through facial recognition software. Only if you can look at
their face and make them as their real identity will
you ever be in a position to know who you
truly have And of coortunately, facial recognition software is still
in the process of development, as is AI, so the
(39:17):
banks and the financial services community is always behind the
eight ball trying to develop new technology while the money
launderers are using the flip side of it to commit
crimes with impunity. And let's say maybe ninety five ninety
eight percent of money laundering has never been interdicted in
real time.
Speaker 1 (39:37):
With these programs where you can, I guess, get a
new passport just to sort of edify our viewers who
maybe you know, aren't familiar with this. Which countries offer
this well?
Speaker 2 (39:52):
In the Western Hemisphere, five countries in the East Caribbean,
which are Saint KITT's and Dominica, Saint Lucia and Grenada
all offer passport sales. In Europe, there's the Republic of Malta.
There are also some tiny and obscure islands in the
Pacific that also offer these things. And these passports allow
(40:15):
you a visa free entry into Europe and the UK.
So if you're going to commit financial crime, there's your
passport to do so. So that's just one method by
which money launderers succeed at the expense of the commercial banks.
Speaker 1 (40:33):
And you mentioned artificial intelligence, and I know previously we
were talking and you mentioned something about it AI Watchdog.
What can you explain what you mean there?
Speaker 2 (40:45):
Well, the point is that when used properly, you can
use artificial intelligence platforms to not only stop bad actors
at account opening, but also in the most difficult part.
When you talk about what's called transaction monitoring, banks have
to ongoing monitor high risk accounts or accounts where a
(41:08):
lot of money changes hands. If you have a sufficiently
sophisticated AI monitor, you can then use the program to
catch it in real time, whereas otherwise you might not
find it for weeks. So AI does have a future
and a benefit in anti money laundering. But on the
(41:31):
other hand, you should understand that it's all the kinks
aren't out yet. We have a number of very high
profile cases where lawyers use AI to do legal research,
and the AI program, when it couldn't find an answer
in existing case law actually created it from scratch. So
(41:53):
AI does have vulnerabilities. And you may use AI one
day successfully, but the next day it may give you
something that legally does not exist. Then what do you do?
Speaker 1 (42:04):
M hm. So, yeah, there's a lot on the horizon there,
both for and against. You have this perspective of, you know,
living through decades of the money laundering world. You wrote
the book The Laundry Man, and I'm wondering if you
could tell us, you know, either in that book or
just from your experience. I mean, what's the one lesson
(42:28):
that you learned that you think financial crime professionals need
to understand about money laundering?
Speaker 2 (42:35):
Well, the point is that you need to be I
guess what you might call a renaissance individual. You need
to be, you know, not just well educated and well trained,
but you need to have a broad based approach on
your job. It's not a nine to five job, it's
it's it's really a calling. It's a career. And if
(42:55):
you don't have experience in the business world, if you
don't understand a little bit about how regulators work, and
you don't know about how law enforcement operates, then you're
only dealing with the commercial side of these problems. So
anybody who really wants to learn about anti money laundering
and countering the financing of terrorism. They have to number
(43:18):
one and get a liberal arts education. Number two, they
need to learn everything they can about the financial system.
And number three, they need to learn all these techniques
which don't show up anywhere in the media, but which
law enforcement sometimes learns about too late. So there's an
ongoing education responsibility, and frankly, most people aren't doing it.
Speaker 1 (43:44):
Ken, Before I let you go, I want to ask
maybe a fun question. You may not have an answer
for it, but this is an a fun thought. Financial crime.
Money laundering is often portrayed in movies and TV shows.
Is there a movie or a TV show that you
think was spot on that really gets it right that
you would recommend for folks wanting to understand this.
Speaker 2 (44:07):
Unfortunately, Hollywood glamorizes all this. And you know, if I'm
going to draw a parallel, the truth about money wandering
is like the truth about war. You know, war is
periods of absolute boredom interspersed with periods of white knuckle fear.
That's what money wandering is all about. It's a lot
of routine transactions, but there are times in which your
(44:31):
life and your health and your own safety and future
and your freedom are at risk, and the question is
can they catch me? Are they going to catch me?
Or am I going to be able to get away
with it? Am I going to be the one that
got away? Or am I going to be the one
spending the rest of my life in a really nasty
federal prison. So yeah, it's fear and loathing and it's
(44:56):
not glamorous and it's not sophisticated. I mean, you might
have all them money in the world, but no time
to spend it. You may not ever have a day
off because you have extremely demanding clients, and there's always
the fear that if you make a mistake and clients
lose a lot of money, you could lose your life.
So it's not fun and it's not for the faint
(45:17):
of heart.
Speaker 1 (45:18):
Ken's journey exemplifies how the tendency to take risk is
a strength that can be used for crime or conversely
for fighting it. There's an inspirational lesson here. No matter
how far down one may fall making bad choices, you
always have the choice to reverse course. Most of us
won't face such decisions at the crossroads, but we should
(45:41):
realize that perhaps every expert money launderer out there, like
Kenriejock can eventually become Kenrijock. The anti money launderer redemption
sometimes may seem remote, but it's never too late. I'm
Yaya Jata. FINUSSI is designated on the Illicit Edge Network
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