The fast-talking and well-dressed Texas customs broker has arrived at the Treasury Department twice in recent years with luggage stuffed with crusty, grimy greenbacks. The money was ruined, he said, and worth about $6.4 million.
The broker wanted to exchange the soiled bills, unearthed in Mexico, for a U.S. government check. But the transactions raised questions for authorities. Was the cash drug money? Was it tied to money laundering? Was it an inheritance? Or had it been exhumed from a coffin with the help of a treasure map? There have been many theories over the years.
Only now, after delicately counting the bills and running down leads, are authorities and attorneys for the broker's clients unraveling the mystery of the Mexican moola. Their answers are not particularly satisfying. But that shouldn't be a surprise. They are talking about buried treasure, after all.
"This would make a great book or a movie," says David B. Smith, a lawyer representing the broker's clients. "It's offbeat. It has characters."
The Mexican cash sheds light on what is normally a little-noticed program at the Bureau of Engraving and Printing in downtown Washington. Each year, the bureau handles about 30,000 transactions involving mutilated currency worth $30 million, according to its tersely worded Web site. The ruined money doesn't go back into circulation. A spokeswoman for the bureau, Claudia Dickens, declined to comment, saying that officials were too busy to discuss the program.
Other officials said the redemptions are usually routine matters, involving cash damaged in floods or fires, for example. But some transactions have great stories behind them, such as a request three years ago by a Japanese man who showed up at the bureau with $100,000 in mutilated bills.
He said the money had been buried for years, but a closer inspection by bureau experts revealed that it had been "bleached, worn, ripped, or otherwise damaged deliberately," a federal agent wrote in court papers.
In January, federal prosecutors filed court papers seeking to confiscate $50,900 in damaged bills that a man said had been buried in a toolbox in Mexico by his father decades ago. No bill was older than 1995, casting doubt on the story, prosecutors said. Last week, a federal judge in Washington granted the government's request to confiscate the cash.
Saga of the badly damaged Mexican cash
Intriguing yarns, for sure. But they pale compared with the saga of the badly damaged Mexican cash and the Texas customs broker, Franz Felhaber, whose job is to ensure that goods and cash flow smoothly across the U.S. border.
Felhaber first came onto authorities' radar in August 2005, when he, his uncle and a female relative appeared at the Federal Reserve Bank in El Paso.
They had $120,000 in water-damaged and ruined cash, just a small portion of millions of dollars they said had been found under a building in Mexico. Bank officials exchanged the cash for a check.
Over the next month, federal agents say, Felhaber tried to exchange small amounts of damaged money at El Paso banks. That's when he and his associates began telling different stories about the money's provenance, federal agents wrote in court papers.
Felhaber told bank employees that he had found it while digging up a tree or that a friend had discovered it in a buried suitcase. He tried to get Bank of America to hire an armored truck to retrieve the rest of the money in Mexico. His uncle said the cash was an inheritance.
Felhaber told federal investigators in 2005 that he was exchanging the money for his employer, a rich Mexican business executive, who had found the loot buried in a coffin -- with the help of a treasure map. The coffin contained as much as $10 million, he said.
In 2007, Felhaber and a woman traveled to Washington and went to the visitors' entrance of the Bureau of Engraving and Printing. They handed over a bag containing what they said was $1.2 million in mutilated currency. A year later, they turned in a suitcase stuffed with what they thought was $5.2 million.
In an apparent effort to mask the identity of the business executive, they told officials that the money was being brought into the United States on behalf of Felhaber's uncle.
‘Conflicting and cockamamie stories’
Authorities moved in. They seized the cash, and federal prosecutors quickly filed court papers in the District's federal court seeking its forfeiture. In a 23-page affidavit, federal agents said "conflicting and cockamamie stories" had been offered about the money's origins.
Authorities suspected it was tied to drugs, and an agent wrote that Felhaber and his cohorts might have been shooting for the "gold standard" in money laundering by trying to get a U.S. government check. They also said that Felhaber hadn't followed the rules in importing the money, later determined to be $3.1 million.
Still, it was enough to fight over. Felhaber's uncle, the technical claimant, and the rich businessman contested the government's effort to seek forfeiture.
In interviews, Felhaber denied ever lying and said he had handled the money appropriately. He even alerted the Secret Service and U.S. customs officials about the cash before crossing the border. "I did everything properly and professionally," he said in an interview.
As it turns out, he was right. Authorities have been unable to prove that the money is anything but legal. In recent months, Assistant U.S. Attorney Barry Wiegand disclosed in court documents that the government had reached a monetary settlement to end the litigation. Wiegand declined to comment.
Smith, the Alexandria-based lawyer representing the uncle and business executive, said the payout to his clients will "be substantial" when approved by a federal judge.
Because kidnappings are a problem in Mexico, the lawyer requested that The Washington Post not identify the business executive, the uncle or the female relative.
Money's origin?
Smith has also had trouble getting a handle on the money's origins. In court papers, he wrote that the cash had been found in furniture being thrown into a Mexican dump.
In an interview, Smith said that the money was discovered in 2005 by workers fixing a broken drainage pipe at a warehouse owned by the business executive. When laborers excavated a corner of the warehouse, he said, they found stacks of greenbacks stuffed in huge bags. The money was damaged by water, and bundles of bills had fused into bricks.
"They made a thwack when you hit them on a table," Smith said. The lawyer said U.S. government laboratory tests confirmed that the bills were at least two decades old, lending credence to his clients' assertions that they found the money by chance.
How did it get under the warehouse? Local residents, Smith said, think the cash was intended as a bribe from the local teachers' union to Mexican leaders. A teachers' union official stashed the money in the warehouse, Smith said, but he died of a heart attack before he could deliver the payoff.
The cash remained there for two decades. Smith said he is skeptical of the story. But he doesn't care. How it got there is irrelevant. All that matters is that his clients found it, he said.
And U.S. authorities, who sorted through all the stories and inspected each damaged bill, seem to agree. They are prepared to write a check, a big one, Smith said, worthy of buried treasure.
