US v. Kramer, 87-879-CR.

• Decision Date: 22 July 1991
• Docket Number: No. 87-879-CR.,87-879-CR.
• Citation: 807 F. Supp. 707
• Parties: UNITED STATES of America, Plaintiff, v. Benjamin Barry KRAMER, Jack Kramer, Melvin Kessler and Michael Gilbert, Defendants.
• Court: U.S. District Court — Southern District of Florida

807 F. Supp. 707

UNITED STATES of America, Plaintiff, v. Benjamin Barry KRAMER, Jack Kramer, Melvin Kessler and Michael Gilbert, Defendants.

No. 87-879-CR.

United States District Court, S.D. Florida.

July 22, 1991.

COPYRIGHT MATERIAL OMITTED

Robert Bondi, Asst. U.S. Atty., for United States.

Lawrence Rosen, Albert J. Krieger, Miami, FL, Mary Catherine Bonner, Ft. Lauderdale, FL, for Benjamin Kramer.

Michael S. Pasano, Miami, FL, for Michael Gilbert.

E. David Rosen, Miami, FL, for Jack Kramer.

Arthur W. Tifford, Miami, FL, for Melvin Kessler.

AMENDED FINAL ORDER WITH FINDINGS OF FACT AND CONCLUSIONS OF LAW

ROETTGER, Chief Judge.

An essence of money laundering is deceit and cover-up. This case abounds with examples of "dragging dead fish across the trail" to throw bloodhounds off the scent or "dragging branches behind a horse to destroy the tracks on the trail."

Anyone who sat through the three month long criminal RICO trial had no doubt it was a clear case of money laundering of drug smuggling profits and it was demonstrated and proved not only to the satisfaction of the jury, but, the court believes, to the satisfaction of anyone at the trial.

The evidence in the two-plus month long ancillary hearing under 18 U.S.C. § 1963, corroborates the illegal money laundering activity even more. The case is "document-intensive" with approximately 1,200 exhibits.

STATUS OF THE CASE

Following the jury verdict of guilty on the RICO counts as to all four defendants, (Sam Gilbert had also been indicted originally but died shortly thereafter) a preliminary hearing was held and an order entered freezing the assets of the Bicycle Club, based on the jury verdict forfeiting the interests of Ben Kramer, Jack Kramer and Michael Gilbert in the Bicycle Club. Only the interests of these three convicted defendants in the Bicycle Club were forfeited. The jury determined that Mel Kessler had no interest in the Bicycle Club and declined, therefore, to enter a verdict of forfeiture as to Defendant Mel Kessler.

Immediately a number of claimants filed their petitions under 18 U.S.C. § 1963(1)(2). This was no surprise: Attorneys for a corps of claimants were present throughout nearly all the criminal proceedings. Basically, those claimants fall into two groups. One group had persons with an interest in Park Place Associates while the second group comprised those persons with a claim by virtue of a California general partnership known as LCP. This order will basically ignore the Park Place Associates group because the government quickly relinquished any opposition to its claim because of its non-involvement in money laundering.

LCP stands for Lyon, Coyne and Pierson. Claimants are as follows: Dale Lyon, Maureen Lyon, his wife, and the Lyon Family Trust; Julieann Coyne, now married and known as Julieann Coyne Wasson, and her husband, Christopher Wasson; David Pierson and Lois Pierson, his estranged or divorced wife; Karen Gilbert, Michael Gilbert's wife, and the Michael Gilbert Family Trust; Robert Gilbert and Margaret Gilbert, siblings of Michael Gilbert, and the Robert Gilbert Family Trust.

Although § 1963 is silent as to depositions, the court permitted the parties to take depositions during the summer before the hearing.

The ancillary hearing began the second Monday in September and throughout the proceedings in September the parties requested recesses and wanted time so they could pursue settlement negotiations. Although different degrees of optimism were expressed from hour-to-hour and from day-to-day, it still seemed like a hopeful possibility. Finally, towards the end of September, the parties requested that the court recess the case to permit lengthy and intensive settlement negotiations; the parties were to advise the court on November 30, 1990 whether they had settled their claims, with all parties understanding that if they had not settled, the ancillary hearing would resume on Monday, December 10, 1990.

All of the claimants settled except Dale Lyon, the Lyon Family Trust, Karen Gilbert, and the Michael Gilbert Family Trust. The other claimants are not involved in these proceedings. The claimants requested at the beginning of the ancillary hearing, on December 10, 1990, that the court not be advised of the details of the settlement negotiations for fear it might cause some influence, even subconsciously, on the court's evaluation of the evidence. Consequently, by stipulation of the parties, the settlement agreements for the claimants who had settled and the government were dictated into the record outside the court's presence; the court is still not aware of the details of the various settlements.

EVIDENCE OF MONEY LAUNDERING OF DRUG SMUGGLING MONEY

It is difficult to compress three months of trial evidence without omitting important details. Ben Kramer, when released from his prison term for smuggling marijuana in the late 1970s, resumed smuggling but began the smuggling operations on a grand scale. Ben had partners: Randy Lanier and Tommy, known as George Brock, and Gene Fisher. Gene Fisher and Tom were paired together in their interests in this operation and the pair's total interest was equal to the individual interests of Ben and Randy. Ben's modus operandi was to think big and not import marijuana in Lockheed Lodestars or shrimp boats or sailboats as had been the general practice in this area.¹ Ben Kramer's modus operandi was to use barges or freighters and even to containerize the marijuana, so that it could be quickly offloaded at the port of entry and warehoused and then distributed. The audacity of this operation was quite successful: He imported a barge full of marijuana into the old Brooklyn Navy Yard, San Francisco, and into New Orleans.

An insight into how successful the operation was can be illustrated simply by looking at the single New Orleans operation. The combine netted $41,000,000. and Ben's one-third share was $13,000,000. The small fry apparently divided up the remaining $2,000,000.

Ben Kramer is colorful with his share of audacity and boldness; he was the National Offshore Powerboat Racing Champion in 1986 and raced in many races, including a $50,000. ante, winner-take-all offshore powerboat race from Miami to New York. He was building a boat for a race from New York City to London.

Ben was injured seriously prior to the criminal trial when he tried to escape via a helicopter from Metropolitan Correctional Center (M.C.C.) near Miami. Like a movie scene, Ben grabbed a rope ladder dangling from the helicopter as it hovered over the prison courtyard. Unfortunately for Ben, the helicopter began moving forward before it gained sufficient altitude for Ben to clear M.C.C.'s perimeter fence.

Another illustration of the type of operation it was came before the jury in the testimony given by Podesta, whose job was to bring the cash gathered by the marijuana distributors to Ben Kramer. Members of the jury had stunned looks on their faces when Podesta testified about showing up somewhat unexpectedly at Ben Kramer's house with $7,000,000 in cash and Ben told him he was not ready to receive that much; Ben asked Podesta to take it back to the house where Podesta was staying and to bring it back in "small amounts." Podesta testified he took it back and kept it in the garage overnight; then he began, in his description, to deliver it to Ben "in small amounts — such as $2,000,000, $3,000,000" and so forth.

The volume of cash generated a problem in the Kramer combine. It was too much money in cash and they needed to find a way to launder it. Along the line Ben's father, Jack Kramer, had met Sam Gilbert in 1978 when Ben had a spare $80,000. and was looking for a good investment. Mr. Zuckerman in Los Angeles, who is not involved in this matter, introduced Jack Kramer to Sam Gilbert. The $80,000. was in cash, or had been deposited as cash.

So Jack Kramer's contact with Sam Gilbert was re-established with an idea of finding a way to launder Ben's money.

Meanwhile, out on the West Coast in the beginning of 1978, there had been a discussion even then between Jack Kramer and Sam about a card club called the Commerce Club. Jack Kramer's description of it was a "red herring."

Card clubs or casino card clubs were in existence in the Los Angeles area, although some had less than phenomenal success and one was in receivership. George Hardie in 1982 got a license for the Bell Gardens Bicycle Club from the City of Bell Gardens. Finding a site was a problem. The site finally selected had 70 houses on it. A development grant was obtained as part of the funding of the City. Relocation of all the occupants of the land took awhile. Meanwhile, in August of 1983, Sam Gilbert and David Pierson's discussions about a casino card club had proceeded to the point where they needed money to build the card club, and they had been talking with George Hardie, as well. Hardie had raised some money (roughly $400,000) in a limited partnership known as Park Place Associates. They had been unable to come up with the money needed to buy the land, build the building and get started.

CONVERSION OF CASH TO CASHIER'S CHECK

The money laundering, that is the conversion of cash into cashiers checks, was accomplished in California by various methods.

The cash was taken to California in several ways by couriers. One colorful example involved carrying cash in the biggest Igloo ice chest sold in a private jet to a private airport, then carrying it to the Beverly Hills Hotel and up to a private suite. If someone asked, the ruse was to claim the ice chest carried the remains of a faithful dog — on ice, to be sure.

The main method seemed to be conversion of cash into gold coins, at that point in time mostly krugerrands, and then sold back to coin dealers (numismatics dealers) for checks to be converted into cashiers checks.

Laundering money is not cheap and the cost of laundering this money through the coin dealers and other operations...