ustxtxb_obs_2000_03_17_50_00012-00000_000.pdf

Salinas’ courtroom. It’s more revealing than Flanigan’ s, in part because Whalen was too forthright. And it returns to the backstory of the Fed’s investigation of LNB: drugs and federal drug enforcement officials. In 1998, in a statement he now regrets, Whalen advised a Florida investor shopping for a bank that LNB’s request to buy Mercantile National bank would not be approved by the Fed. “In terms of your negotiating strategy,” Whalen wrote in a letter to the potential buyer, “you should be mindful of the fact that the Fed, through regulatory inaction, did not permit LNB to purchase Mercantile Bank claims his comment “through my efforts” was hyperbole. “It was overblown and inflated. It was hyperbole on my part.” Laredo National Bank isn’t buying Whalen’s hyperbole argument. The “others” were federal drug enforcement agents, whose names Whalen tried to avoid revealing until Judge Salinas ordered him to provide them. In his deposition, Whalen states that because he knew Mexican finance, he was contacted by D.E.A. agents inquiring about Carlos Hank Rhon. \(The officers named, according to D.E.A. agent Vincent Rice in San Diego, were local police offito the Fed when their investigators called on him. -Throughout his deposition, Whalen repeated that it was the Hank family and not Laredo National Bank that investigators from the D.E.A. and the Fed wanted talk about. “I indicated to him that I had been contacted in the past by a variety of law enforcement organizations, primarily the D.E.A., who had interest in or ongoing investigations of connections between the Hank family and drug trafficking and money laundering,” Whalen said. Whalen also said he once asked former U.S. ambassador to Mexico Jim Jones about the Hanks and was told “I really don’t think there’s anything there.” \(An odd fact revealed in questions about the Fed is that Whalen’s father is a Their bank’s attorney also pressed Whalen for information about Citibank. Does he have any relationship with Citibank? Does he know a Citibank employee named Amy Elliott? “Any relationship with Philip Jordan? Do you know who Phil Jordan is?” Whalen answered no to each question, which suggests that he might not be the best source on current affairs in Mexico. As has been widely reported in the U.S. press, Amy Elliott is the bank officer in New York who handled the personal affairs of Raul Salinas. Philip Jordan is a former D.E.A. agent living in El Paso, who has been openly critical of the agency’s failure to aggressively pursue big players in Mexico and is frequently quoted in drug-related stories. LNB’s lawyers are also looking for information from federal drug agents. Richard Cedillo subpoenaed fourteen separate items from federal drug enforcement agencies. The Assistant U.S. Attorney in Laredo responded by promptly moving the subpoena to federal court in Laredo: “Laredo National Bank had a long laundry list, a long list,” Hector Ramirez said. “And the agencies said we can agree to release documents listed in items one and two. And we released the documents in items one and two, and that’s where we are.” Ramirez said the U.S. attorney’s office provided Laredo National Bank with some information from the National Drug Intelligence Center and implied that further requests for drug agency information will have to be litigated. Whalen was also asked about his contacts with the press: Knute Royce of Newsday, Michael Allen of the Wall Street Journal, and finally Dolia Estevez of Financiero, who has written extensively on the Hanks. Estevez is the only Mexican reporter writing extensive stories about the Hank’s fight with the Federal Reserve. She has even briefly covered the Laredo Bancshares suit against Whalen. Attempts to speak to Gary Jacobs in Laredo, Richard Cedillo in San Antonio, and attorneys representing Hank Rhon and Incus in Washington, D.C., resulted in a response from a public relations firm in New York. Responding to calls and faxed questions sent to Akin Gump and Fulbright & Jaworski’s Washington offices, and to Richard Cedillo’s office in San Antonio, bank spokesperson Robert Siegfried responded for all three lawyers, by telephone and email: Your questions appear to confuse two separate actions Laredo National Bancshares litigation against Christopher Whalen and the Federal Reserve’s inquiry conducted by its staff with respect to Carlos Hank Rhon of which Laredo National Bank is not a party. With respect to the Whalen litigation, Laredo National Bank clearly lays out its charge that Whalen specifically interfered with an executed contract of purchase between Laredo and Mercantile and that, as a result, Laredo has been harmed by this interference. Laredo National Bank has brought these proceedings to prove just that. Beyond this, we have no further comment, other than to say that the facts and information in this case speak for themselves. In terms of the Federal Reserve inquiry with respect to Mr. Hank, Mr. Hank and his representatives have made it quite clear that the inquiry is without merit and will be shown to be just that. In summary, neither litigation is determinative of the other. Siegfried also called the Fed action inconsistent with of the “intent and spirit of NAFTA.” Whalen’s attorneys point to a timeline they claim will establish that he could not have interfered with the case before the Fed, and argue that no one individual can move the Federal Reserve in the way the plaintiffs claim unless that individual is Alan Greenspan. \(Part of LNB’s claim is that information provided by Whalen so slowed the Fed’s consideration of the attempt to acquire room, Whalen’s lawyers said their client was contacted by Fed investigators and asked for information. He put them in touch with the D.E.A. officers who had called him earlier to inquire about the Hanks, the lawyers insist. The Federal Reserve, they add, is responsible for LNB’s problems. The lawsuit in Texas is grinding forward and thus far has amounted to discovery, depositions, and two court hearings. After one hearing that included a loud, angry discussion at the judge’s bench, John Convery stopped at the back of the courtroom and commented on the cattle custody suit heard earlier in the day. “What a great plaintiff,” Convery said. “The kind of guy every lawyer wants on the stand. Honest, sincere, eloquent.” In Laredo, Judge Salinas is expected to rule on jurisdiction for the Whalen suit within a month. In Washington, the Hanks and Incus requested a private hearing, claiming that the ‘airing of pri. vate and personal business affairs’ could act as a disincentive for foreign investors with unidentified repercussions in Mexico.” The Federal Reserve Board rejected the request and ordered a public hearing, scheduled for October. 12 THE TEXAS OBSERVER MARCH 17, 2000