B.C. Securities Commission (C-*BCSC) - Street Wire
BCSC-known Purdy's lawyer cross-examines Jolliffe
B.C. Securities Commission *BCSC
Thursday February 20 2003 Street Wire
by Stockwatch Miami correspondent
Harold Jolliffe had no hard confirmation that stacks of cash he handled in Miami were cocaine dollars, he just somehow arrived at that conclusion because the money was stuffed in a duffle bag. That revelation, which might help or hurt alleged money launderer John (Jack) Purdy, came in cross-examination of Mr. Jolliffe, a close associate who pled guilty Tuesday and agreed to testify against the veteran Howe Street stock promoter.
The testimony came in the first Bermuda Short money laundering trial in United States District Court for the Southern District of Miami in Florida.
Mr. Purdy, 52, was arrested Aug. 14 in New York in Operation Bermuda Short, a money laundering sting featuring RCMP and FBI undercover agents posing as Colombian Cali cocaine cartel figures. The top targets in the money laundering sting were Mr. Purdy, associate Martin Chambers, a controversial former Vancouver lawyer reputed to be closely connected to the Hells Angels and other organized crime groups, and offshore banker-accountant Michael Hepburn of the Bahamas, both of whom face trial later.
Defence lawyer Neal Sonnett jumped into damage-control mode, to counter Mr. Jolliffe's direct testimony, led by Assistant U.S. Attorney Richard Hong. Mr. Purdy has picked one of Miami's most formidable criminal defence lawyers. Mr. Sonnett, a former prosecutor himself, once represented, albeit unsuccessfully, the pockmarked former Panamanian president and cocaine conspirator Manuel Noriega, known as Pineapple Face behind his back by locals.
Mr. Sonnett sought to clarify the context of Mr. Jolliffe's proclaimed knowledge that the money he handled was drug money. "At the meeting with Jack Purdy, I told him it was drug money, $130,000 worth of drug money," Mr. Jolliffe told the court in direct testimony. (All figures are in U.S. dollars.) "Jack did not seem concerned at the time."
In direct examination, Mr. Jolliffe told the court he knew it was drug money, but he did not explain how he knew -- only that its presentation in some sort of duffle or hockey-gear bag made him suspicious.
In cross-examination, Mr. Sonnett asked Mr. Jolliffe again about Mr. Purdy's non-reaction to the news about drug money.
"It didn't disturb him when I gave him the answer," replied Mr. Jolliffe.
Mr. Sonnett pressed Mr. Jolliffe about his belief that the money offered by Bill McDonald, the RCMP undercover agent's codename, came from cocaine proceeds.
"He never told you the money he was giving you came from cocaine sales?," asked Mr. Sonnett. "No," replied Mr. Jolliffe.
"Did he ever say, 'this is cocaine money'?" asked the defence lawyer. "No, he did not," replied the witness. This may leave the jury with the impression that Mr. Jolliffe had figured it out for himself by guesswork.
Mr. Sonnett then asked Mr. Jolliffe about the $55,000 he was shown the first time he met with Mr. McDonald and a man called Ricardo, an undercover FBI agent, on July 19, 2001. Mr. Jolliffe had testified earlier that he felt uneasy about it and phoned Mr. Purdy, who told him not to accept the cash.
"The fact of the matter is, when you saw this cash when you first met with them in July, and they showed you this bag of cash, that's when you first began to suspect there was something wrong?" asked Mr. Sonnett.
"I would say yes," replied Mr. Jolliffe.
"So, at the time you first had contact (with Mr. McDonald in Miami), Jack Purdy had said that Bill McDonald is a man who represents potential investors and you should see him?," asked the defence lawyer. "Yes," replied the witness.
"So it was a surprise to you when he brought out his bag of cash?" asked Mr. Sonnett. "Yes," replied Mr. Jolliffe.
"What you ultimately found at that meeting was not what you expected, based on your conversation with Jack Purdy? You expected legitimate investment?" asked Mr. Sonnett.
"That's correct," replied Mr. Jolliffe.
"And it was your suspicion. They (the undercover agents) never said they were in the cocaine business, did they?" asked the defence lawyer. "No," replied the witness.
Later on, Mr. Jolliffe testified, his Bolivian Harwoods lumber salesman Ron Horvat told him he should have taken the $55,000 in cash. Mr. Jolliffe said Mr. Horvat eventually arranged to take the money, and deposited it in a Miami bank account.
Apparently unworried about the potential for being investigated, Mr. Horvat filled in the paperwork required by U.S. law for banking transactions involving $10,000 or more. (Mr. Horvat, who maintains his innocence, is set to stand trial with Mr. Purdy in another Bermuda Short money laundering trial later.)
On Sept. 5, 2001, Mr. Jolliffe accepted $130,000 in cash from the undercover men. Preferring not to call attention to it, he drove from one Citibank branch to another in greater Miami, depositing separate portions of less than $10,000 to avoid the paperwork and the attention he feared one large deposit might attract. (Such running around is called smurfing in money laundering circles, while such below-threshold deposits are called structuring transactions.)
In several later transactions, Mr. Jolliffe testified, he returned most of the money to Mr. McDonald -- the largest amount was $74,997 -- by making wire transfers to companies the undercover man designated. One of the companies named in documents and testimony was South China Seas Trading Inc., in the Bahamas, and the Southern Star Shipping Co. Mr. Purdy did not know about those transactions at the time, Mr. Jolliffe testified.
Mr. Jolliffe, a professional forester licensed in British Columbia, said Bolivian Hardwood was his idea, a company that would import South American lumber in shipping freight containers to Canadian markets, and he brought Mr. Purdy in as the financial partner.
"Jack had a number of companies, like a company in a shell. Basically that's a company that's already a legal entity, a company that's legal and able to do business but not necessarily doing business. He changed the name of one of those companies to Bolivian Hardwood."
Mr. Sonnett got Mr. Jolliffe to describe the apparently innocent beginning of his business relationship with Mr. Purdy. The forester was running a sawmill company, in Duncan, B.C., that Mr. Purdy bought. They became partners sometime between 1995 and 1997. Mr. Jolliffe could not recall exactly when.
"So Bolivian Hardwood was not some scheme formed to launder money, but an ongoing firm that had great potential?" asked Mr. Sonnett. "That's correct," replied Mr. Jolliffe.
"You were looking for legitimate investors?" asked Mr. Sonnett. "Yes," replied Mr. Jolliffe.
Mr. Jolliffe went on to testify that they had access to a lumber called Santa Maria, which he said is sold as a substitute for hard-to-get mahogany. They needed financing to gain control of large hectarage.
The defence introduced a printed E-mail that Mr. Jolliffe had sent to Mr. McDonald, the undercover Mountie, on Christmas Day, saying that Mr. Jolliffe and the company's salaried salesman, Mr. Horvat, were unhappy that Mr. Purdy was not giving enough attention to the wood business.
"He is having extremely difficult times financially now, and seems to have me and Ron on the back burner," Mr. Jolliffe wrote. "Somehow Ron and I are keeping Bolivian Hardwood barely going. I think we might have to start a new company and carry on without Jack."
Mr. Jolliffe testified that this was just an idea at that point. "I didn't get the resources to move on."
The E-mail went on to describe eight loads of lumber, about $400,000 worth, that were ready for shipment to Canada, but which could not be sent because Bolivian Hardwood lacked the funds to pay for shipping.
(It is part of Mr. Purdy's defense that at the time all this was going on, he was being audited intensively by Revenue Canada, now known as the Canada Customs and Revenue Agency, and therefore being super-careful to avoid doing any business that might attract unwelcome government attention.)
Whatever the reason, Mr. Jolliffe was beginning to look for ways to save his hardwood business without Mr. Purdy. One method was to move his lumber by means of Wolf Tree Enterprises, a company he had incorporated in B.C. and headquartered at Cochrane, Alta. "There were several shipments I put under Wolf Tree Enterprises," he testified, "to get control of the receipt of the money."
Defence lawyer Mr. Sonnett asked why he avoided routing the money to Bolivian Hardwood. "Because it would go into the black hole of Jack's office ... I would never see a penny," Jolliffe replied.
Mr. Sonnett got him to say he kept a Miami bank account for the hardwood company in his own name in order to keep control of the money himself. "Jack didn't know about this?" the defence lawyer asked.
"We didn't talk until Oct. 18," the witness answered. That was the day Mr. Jolliffe said he told Mr. Purdy that the McDonald-Ricardo money was the proceeds of narcotic deals.
"So you had your own business dealings going on with McDonald and Ricardo and Ron Horvat, and he didn't know what was going on?," asked Mr. Sonnett.
"I don't think so. I could be wrong on that," replied Mr. Jolliffe.
Mr. Jolliffe also told the court that, "it's my understanding" that Mr. Purdy already knew the money was supposedly from cocaine trafficking before he (Mr. Jolliffe) told him so.
The trial continues. |
