Part Two

When a nonprofit organization called Global Witness came to New York 19 months ago, it secretly recorded hidden camera interviews with 16 Manhattan lawyers. Its investigator was posing as the representative of an African official trying to move millions of dollars of suspicious funds. Global Witness, which specializes in exposing international corruption, wanted to see how much help the lawyers would provide in setting up anonymous shell companies and offshore bank accounts to move the suspicious funds into the U.S. and at the same time, protect the identity of the fictitious African official.

Newsmakers

Anonymous, Inc., part II

James Silkenat: Good to see you.

Ralph Kayser: Good to see you.

The undercover investigator, who called himself Ralph Kayser, told the lawyers that the minister had used his official position to collect tens of millions of dollars in special payments from foreign companies to help them obtain valuable mineral rights. He wanted to move the money to the United States to buy a house, a jet, and a yacht.

Kayser To Ross: So therefore, he wants to bring in the money into the U.S. So starting with the brownstone and then, probably, buying a Gulfstream jet-- he wants to commission the building of a yacht, and buy, probably, more property.

The story was intentionally devised to raise red flags and lead the lawyers to believe that the minister's money was dirty. During the meetings, only one of the 16 lawyers, Jeffrey Herrmann, told him no.

Jeffrey Herrmann: This ain't for me. My standards are higher.

The rest expressed varying degrees of interest, with most of them offering advice on how it could be done.

Marc Koplik: We do everything, soup to nuts. So, there's no limitation. We don't say, oh, we don't do windows, or we don't deal with the financial money managers, or whatever. No. We orchestrate and organize the entire thing. We're happy to take that responsibility.

What's important to point out and it cannot be overstated is that none of the lawyers we've shown you broke any laws in part because the African minister didn't really exist... there were no hundreds of millions of dollars...and Global Witness' Charmian Gooch said no money ever changed hands.

Steve Kroft: So this is sort of a morality test?

Charmian Gooch: It wasn't, it was a, it was a test on the system.

Steve Kroft: You know, people could make the argument, "Look, all these guys did, really, was just listen to this person that came into their office. They didn't make a deal, they didn't sign up, they said, 'We need to do some more research.'"

Charmian Gooch: And you know what? They'd be absolutely right to say that, but they'd need to say something else, too, which is that those lawyers laid out, in often considerable detail, a myriad of different ways to bring money into America.

None of the lawyers agreed to take on the African minister as a client, nor were they asked to. It was a preliminary meeting that ended with most of the attorneys expressing interest in continuing the dialogue, and some enthusiastic about landing the business.

James Silkenat: I'm happy to chat whenever it's possible to move the ball forward on this.

Ralph Kayser: Fantastic, great.

James Silkenat: Good.

Ralph Kayser: Thank you so much.

James Silkenat: Thanks for coming in.

Marc Koplik and Albert Grant foresaw no problem as long as the money was clean, and gave no indication that they planned to do any checking themselves. They went so far as to discuss legal fees.

Marc Koplik: Legal fees will be substantial. Albert, correct me I'm wrong, $50,000 to $100,000.

Koplik also suggested conducting a test in which a portion of the suspicious funds would be sent into the United States.

Marc Koplik: -A million dollars.

Ralph Kayser: A million dollars, so, as a test?

Albert Grant: Yeah.

Ralph Kayser: Because I said, probably you would start with around, $50 million, probably, I could imagine?

Marc Koplik: I would say--a million dollars.

Ralph Kayser: A million dollars.

Marc Koplik: If anything goes wrong, it'll be painful, but it won't be life threatening.

Ralph Kayser: Right. Exactly.

John Jankoff and his partner Lawrence Gabe, who is off camera here, also seemed willing to go forward.

John H. Jankoff: We would orchestrate it. One legal fee to cover everything.

However, Gabe did express some concerns about the transactions.

Ralph Kayser: Who can set up this structure? Could you do it?

John H. Jankoff: Yeah, your brother-in-law does it all the time.

Lawrence M. Gabe: Well, OK. But I-- I-- I don't think he does it with money that may be questionable. And that we have to find out about.

At the end of that meeting, they looked forward to the next conversation...on the telephone, not on email.

Lawrence M. Gabe: OK, give me a phone number where we can reach you?

Ralph Kayser: Ah--

Lawrence M. Gabe: I'm certainly not putting this in emails.

Ralph Kayser: Sending an email with just an outline would be fine, as well, so it's-

John H. Jankoff: I don't like emails.

Ralph Kayser: You don't like emails?

Lawrence M. Gabe: That's how you catch people.

The hidden camera tapes raise all sorts of ethical questions not just about the behavior of the lawyers, but about the methods used by Global Witness in making them. We showed the footage to Bill Simon, a law professor at Columbia University, who is one of the country's top legal ethicists.

Bill Simon: I think it draws attention to the fact that lawyers may be playing an important role in money laundering that requires more scrutiny.

Steve Kroft: Have you ever seen anything like this before?

Bill Simon: No.

Steve Kroft: Never?

Bill Simon: Never.

Steve Kroft: What's your overall impression of it?

Bill Simon: Any lawyer's gonna be uncomfortable about the fact that this was a sting in which someone lied his way into a lawyer's office and secretly recorded statements a lawyer was, thought he was making to a client. That's kind of unprecedented and it's kind of inconsistent with the bar's norms about confidentiality. So I'm a little uneasy about that. On the other hand, I think that the tapes expose conduct of great public consequence.

Steve Kroft: You think it's valuable that the public sees it?

Bill Simon: Yeah. I think it's very valuable. Confidentiality is for the benefit of the client, not the lawyer. But the lawyers benefit from it because conduct that goes on under the protection of confidentiality is never scrutinized by the public. And lawyers are never accountable for it. So the sting actually brings some accountability to conduct that oughta be accountable.

In its own report, Global Witness includes an opinion from two legal ethicists, including Bill Simon of Columbia. It says that if attorneys Marc Koplik, John Jankoff and Gerald Ross had been responding to a real request, their conduct would "not comply with the professional responsibilities of lawyers." It said the attorneys displayed "a cynical and evasive attitude toward law." The ethicists also noted that the rules are vague, and "we do not expect that all lawyers will agree with us."

Simon put then-ABA president James Silkenat and his partner, Hugh Finnegan, in a different category, even though they provided advice on how to move questionable funds into the U.S.

Steve Kroft: What makes Silkenat different from the other lawyers?

Bill Simon: Silkenat was quite clear that he would not assist illegal conduct. And he even indicated at one point that he would report the client if he found the client engaged in illegal conduct. And then also, Silkenat was fairly clear that he would need more information before he agreed to represent the client.

Steve Kroft: On the other hand, he clearly seems interested in this.

Bill Simon: He clearly seems interested and even a little enthusiastic about it.

Steve Kroft: Anything wrong with that?

Bill Simon: Well, I-- I find it regrettable, but I-- I'm not sure as a professional responsibility authority, I could say it was inconsistent with his duties under the rules.

Simon says the only lawyer who truly fulfilled the ideals of the legal profession was Jeffrey Herrmann, who listened to the pitch, decided it probably involved illegal activity, and ended the meeting.

Jeffrey Herrmann: This ain't for me. My standards are higher. I'm not interested.

Ralph Kayser: Do you-- do you know anybody who would be able to do so?

Jeffrey Herrmann: I don't think so, and I wouldn't recommend them, either, anyway.

Ralph Kayser: Yeah, yeah.

Jeffrey Herrmann: Because those persons would be insulted.

Charmian Gooch says the point of Global Witness' hidden camera investigation was not to target or entrap lawyers for bad behavior. The problem, she says, are lax laws and toothless regulations that make it ridiculously easy for criminals to launder $300 billion dollars a year in the United States.

Charmian Gooch: This is real public interest information. How are you gonna get that out to them if you can't show them what's happening behind closed doors?

Steve Kroft: You couldn't have done this any other way?

Charmian Gooch: I think unless the public and policy makers can really see for themselves what gets said across the desk, across the table in a meeting like this, it's kind of hard to really believe and take onboard.

Gooch says there's a simple solution, but it's been politically impossible to achieve in the U.S. Just ask Carl Levin, the longtime chairman of the Senate's permanent subcommittee on investigation. Until he retired last year, he spent years trying to pass a law that would require the states to collect one additional piece of information from people forming corporations.

Carl Levin: One line -- who's the real owner. Not, who's the agent forming it. Not who's the lawyer representing the owner. Who is the beneficial owner, the real owner? And it's not at all complicated

But the bill has never made it out of committee...in part because of strong opposition from the American Bar Association.

Steve Kroft: What's the American Bar Association's objection to this?

Carl Levin: The lawyers are helping form corporations, and they're afraid, I guess, that if you put a damper on the formation of corporations, that you're putting some damper on legal business.

The irony is that the White House, the Justice Department and the U.S. Treasury have been among the world's strongest proponents for cracking down on money laundering. Yet the U.S. is one of the easiest places in the world to set up the anonymous companies that facilitate it.

Charmian Gooch: It's a heck of a paradox, isn't it? And, you know, I think that the American Bar Association needs to get behind the need for regulation, in the way that European lawyers have had to do exactly the same. And I think that you know, it-- it's-- I think the American government needs to answer that question.

Global Witness may have inadvertently gotten a sassy answer to that question from attorney Marc Koplik in its hidden camera video. Koplik explained to the representative of the phony African minister why he never worried about government subpoenas.

Marc Koplik: They don't send the lawyers to jail, because we run the country.

Ralph Kayser: Do you run the country?

Marc Koplik: Still do.

Ralph Kayser: I love it.

Marc Koplik: Still do.

Albert Grant: I should say, some lawyers run the country.

Ralph Kayser: So, you are, you are some of them? Two of them?

Marc Koplik: We're still members of a privileged, privilege class in this country.

Ralph Kayser: So, how, what does it mean you run the country? It means you?

Marc Koplik: We make the laws, and when we do so, we make them in a way that is advantageous to the lawyers.