Green Cards for Sale

Scared immigrants, secret tapings in Chinese restaurants, the silent Mr. Yee, endless subpoenas and the caring Rudy Giuliani: just another New York City story. In this excerpt from his recent autobiography, Dr. Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE, writes about a case early in his FBI career that taught him more than investigative techniques. 

Excerpted with permission from the publisher, John Wiley & Sons, from "Fraud Fighter: My Fables and Foibles," by Dr. Joseph T. Wells, CFE, CPA ©2011 

For years, there had been rumors that Herman Simon Klegmeir, district director for the Immigration and Naturalization Service (INS) in Newark, N.J., was on the take. The INS was divided into geographical districts that covered the entire country. Any foreigner coming into the United States was, in essence, under the authority of the local district director. The alien's original port of entry or his final residence determined his or her INS district. New York and Newark were the largest INS districts in the U.S., followed by Miami and Los Angeles.

The district director's office handled all foreigners' requests to enter the U.S. The director had ultimate decision-making power, but as a practical matter, the staff handled such things. Aliens coming into the U.S. could enter on a visa, but the ultimate was a "green card" (by the way, I have no idea where that name came from; the cards were not green), which gave them the right to stay in the U.S. for extended periods without being citizens.

The investigative theory was that Klegmeir was demanding bribes to issue green cards.

Boyd Howell, a colleague of mine, had trained two INS agents who agreed to work in New York's Chinatown to see if they could gather more information. The underground in Chinatown was effectively controlled by five "tongs" — the Chinese equivalent of Mafia families. Over time, the two INS agents had developed a relationship with Benny Ong, a mainland Chinese native who was reputed to be the head of one of the tongs. Each time the INS guys met with Ong, they wore body recorders to capture the entire conversation. These meetings had to be transcribed, and that is where I came in. The steno pool was normally in charge of the transcriptions, but it had fallen months behind, and the head stenographer had complained to Howell that the conversations were almost impossible to decipher. So Howell loaded me up with a pile of tapes, and my job was to transcribe them word for word. It took a long time to do. I thought maybe I was going to pull my hair out; the meetings invariably occurred in a Chinese restaurant with much background noise — clinking glasses and the like. Adding to the difficulty was Ong's heavy accent.

After the agents had developed some rapport with Ong, he confirmed that he had also heard that Klegmeir was on the take. More specifically, rumors on Mott Street (one of the main thoroughfares in Chinatown) had it that Klegmeir was taking bribes from Stanley Yee, a wealthy Chinese restaurateur who owned at least a dozen eating establishments in New York. Yee was allegedly making the payoffs to obtain green cards for his workers, nearly all of whom came from mainland China. The problem for us was that Ong had no proof.

Around this time, Howell received a transfer to his dream location (known officially in FBI circles as his "office of preference"), Springfield, Ill. It proved pointedly that it was easy to get assigned to the FBI's New York office (NYO) and almost impossible to get out. From Howell's point of view, he could not leave New York fast enough; he was thrilled to be returning to his native hunting ground. It was logical for my supervisor, Vinnie Daugherty, to reassign the Klegmeir matter to me as the case agent.

EAT AROUND THE APPLE

Even though Howell taught me a lot, we were not the same kind of agent; he was more thoughtful, deliberate and cautious. I was much younger and admittedly full of impatience. Howell, in my estimation, had fooled around with this case a bit too long, and I was determined to bring it to a head. He worked undercover and in the shadows, but that was not my style.

One of my first moves was to discontinue the INS agents' meetings with Ong. The intelligence had dropped off dramatically, and the meetings were a paperwork nightmare. It was not standard FBI practice to interview the principal subject of the investigation first. Had I approached Klegmeir right away, he would have only denied the allegations, and I would not have had anything to confront him with. The FBI methodology was to start at the outer circle of culpability and work inward toward the main suspect. Or, as an agent told me once, "What we do in the Bureau is eat around the apple until the core drops out."

In lectures I have given on investigative techniques, a common question is, "How do you keep the suspect from finding out he or she is being investigated?" The short answer is that you cannot; at some point your target is going to know. But if you have secured physical evidence so it cannot be tampered with, and interviewed enough witnesses to lock in their testimonies, there is little the subject of the investigation can do to send the inquiry off track.

Because I had a specific lead — that Yee was paying off Klegmeir to get green cards for the former's workers — I presented the matter to Rudolph Giuliani, then an assistant U. S. attorney, and his colleague, Ed Kuriansky, to seek grand jury subpoenas for Yee's workers' records. (Yes, that is the same Rudy Giuliani that would later go on to fame.) Giuliani had developed a reputation as an agent's prosecutor. If you could convince him of a case's merits, he could be very aggressive. And he was this time.

Subpoenas duces tecum (a Latin term that roughly translates to a demand for records only) were served for all of Yee's restaurants. This basically gave Yee two options: Cough up his paperwork or sit in jail until he did. But Yee did not go down without a fight. His attorney argued furiously with Giuliani to no avail.

The records were an absolute nightmare because all of them were in Mandarin. I naturally could not make out a word, so we hired a Chinese interpreter who converted the payroll data to English. Chinese people usually have three names, and the last name normally comes first. For example, "Yun Chin Bang," when converted to English, would be "Chin Bang Yun." The heart of FBI record keeping was its index system. All names of key individuals — suspects, co-conspirators, witnesses — were indexed in the Bureau files. The first step in just about any case was to search the index to see if the person's name was already there. At that time, there were no computers and no FBI-wide index. So if you suspected that someone in New York had been involved in a case in Los Angeles, you would ask L.A. to hand-check its index. At best, it was a time-consuming, haphazard system. (Now, because of computerization, a nationwide search can be conducted almost instantaneously.)

Because I was unsure of the exact method to sequence the Chinese names, the clerks had to conduct a six-way search on each name (i.e., the complete list of variations with a first, middle and last name). It nearly drove me and the clerks batty. But all was for naught; our files reflected nothing. I then turned over the list of several hundred names to my INS counterpart, Sol Solzberg, asking him to search their records. I liked Solzberg very much even though he was an odd sort. Not too long after I was assigned to New York, we agreed to meet for the first time at a convenient breakfast place.

Right away he said to me, "Obviously you're not from New York."

"Why?" I asked.

"I saw you standing on the corner," Solzberg said. "Two things: First, you waited for the traffic light to turn green before you crossed. Second, you didn't look down for dog poop before proceeding. Us natives would have done it differently."

Solzberg was not a criminal investigator. In his early 50s and overweight, he had never married and still lived with his mother. Solzberg was thrilled at the prospect of chasing bad guys and got the search done right away. The results were informative: About a dozen of Yee's workers turned up, all with a common element. They had entered the Port of New York originally on visas, and then at various times had sent in letters stating that they had "moved" to New Jersey. A further search of Newark's records showed they had all been issued green cards by none other than Klegmeir himself.

I asked Solzberg how common it was for a district director to sign off on green card applications personally.

"In the 30 years I've been with INS, I've never heard of it happening," Solzberg replied.

Until now. Once Klegmeir approved the green cards, all of these Chinese, at varying times, sent letters to the Newark and New York districts of the INS stating that they had "moved" back to New York and asked that their files be transferred. Of further interest was the fact that in their applications, all were recommended by Yee.

What had happened was as obvious as the nose on your face. None of these people had moved from New York; it was all a ruse to get their files transferred to Newark so Klegmeir could approve the green cards. With this knowledge, I attempted to interview Yee. It came as no surprise when he declined. I went back to Giuliani's office with my new information.

"You're on to something, Joe," Giuliani said. "Let's put Yee in front of the grand jury."

It was just what I was hoping for. To apply some additional pressure, Solzberg had managed to conjure up a few technical violations of INS regulations on the part of Yee. Yee was long a naturalized U.S. citizen, so these infractions could not be used to deport him. But it was still something that Giuliani or Kuriansky could ask about in the grand jury.

THE GRAND JURY GRILLS

When it was his time to testify, Yee denied everything: making payoffs, having Klegmeir as a silent partner in Stanley's Chinese restaurants, even the technical violations. Again, no surprises there, but we had to follow procedure. He barely admitted that Klegmeir had eaten at Yee's establishments. We also got hold of Yee's banking information, which showed us nothing other than he was quite wealthy.

It was now time for Klegmeir's turn in the barrel. Kuriansky pulled him before the grand jury and grilled him for an hour or so. Klegmeir admitted nothing except for casually knowing Yee. Whatever technical infractions of INS regulations occurred he blamed entirely on Yee. His explanation about why he personally approved green cards for the Chinese immigrants was that he routinely did this. Klegmeir denied any favoritism at all toward Yee. The only useful information was the location of the suspect's bank accounts (or at least the ones he admitted to). We subpoenaed them from his financial institutions.

You would think that no one receiving ill-gotten gains, such as bribes, would stash the loot in his own bank accounts under his true name. Even so, over the years I investigated fraud, it happened repeatedly. But not in the case of Klegmeir; his banking records reflected no suspicious activity at all. His stonewalling us was no great surprise.

I still had about a dozen Chinese immigrants to interview. Thus far, I had been reluctant to do so for two reasons. First, the language barrier presented great problems. FBI agent George Proctor from the Newark office assisted me in the interviews, but he did not speak Chinese either. So we had to use an interpreter, which greatly slowed us down. The second reason for my reluctance had to do with the Chinese culture. The immigrants were scared to death of the police. Most shook like a leaf when we questioned them, and it was difficult — usually impossible — to get candid answers.

The interviews would have been worthless except that we got bank account information from all of them. So back I went to Giuliani's office, requesting even more subpoenas. He was getting impatient, and so was I. So far, thousands of man-hours had been expended with no real results. Kuriansky handled some of the paperwork. When I explained to him what was happening, he gave me the 12 or so subpoenas I needed.

'YOU DON'T HAVE ANYTHING'

The bank records showed a very unusual pattern. Not one of these immigrants had a checking account, but all of them had savings. The deposits coming in were obviously from their meager earnings. It was in the withdrawals that we hit pay dirt. In every case, each immigrant had taken out exactly $10,000 in cash — about a week or so before their green cards were approved by Klegmeir. The implication was clear: The immigrants were paying Klegmeir, doubtless through Yee. Whether Yee was adding more cash to those amounts, I did not know. If he was, that was not reflected in his bank accounts.

I was excited to set up a meeting with Giuliani to tell him the news. When I went into his cramped office, he placed a quick call to Kuriansky and asked him to join us. Giuliani's desk was strewn with papers, and it was obvious from his demeanor that he was hassled with other cases. Nonetheless, he listened carefully to what I had uncovered. As I spoke, Giuliani put his fingers together and brought them under his chin.

When I finished, the prosecutor was silent. He then looked at Kuriansky but did not say anything. Both nodded to each other almost imperceptibly. They brought their eyes back to me and Kuriansky spoke for the both of them. "Joe," he said. "You've worked very hard on this case. You've left no stone unturned. We agree with you that Klegmeir is on the take from Yee. But unless he hands up Klegmeir or until you can put money in Herman's pocket, you don't have anything. And you know that."

I looked at Giuliani. At this time, he still had a full head of hair, but you could tell it was not going to last. And he always looked like he could use a good meal. While I was mulling over what to say, I silently asked myself: Does Giuliani have one blue suit and one white shirt, or does he have a hundred? I'd never seen him in anything else. He broke the silence.

"Joe, I agree with Ed. You've worked your butt off on this case. Maybe you can find a way to apply more pressure to Yee. He's the key. However, if that doesn't work, we're going to have to recommend you close the case," he said in a measured voice.

I knew they were right, but it was still a bitter pill. The disappointment must have been obvious on my face.

As I stood up, Giuliani got out of his chair, patted me gently on the shoulder, and said, "Sorry, Joe."

When I left, which was in the middle of the afternoon, I stepped into the bright, cool sun of downtown Manhattan. I felt as though I had been kicked in the chest, so I started walking slowly uptown at a leisurely pace. It was a good way for me to blow off steam and think about what my next step might entail. The walk was therapeutic.

APPLYING THE PRESSURE

By the time I arrived at the NYO, I was calmed down, and I had a plan: Put pressure on Yee, as Giuliani and Kuriansky had suggested. I was going to do exactly that. Had I called ahead for an appointment with Yee, his lawyer would have told him not to consent.

Instead, a few days later I made several phone calls to find out where the Chinese restaurateur was at that exact moment. Yee was at one of his restaurants in Midtown. So I gathered up several key documents and headed out. Yee was surprised to see me, and from the look on his face, he was not happy I had shown up. I asked to speak to him privately in his tiny office.

"Mr. Yee," I started, "we know that you have perjured yourself before the federal grand jury about Mr. Klegmeir." Yee said nothing. "When we prove that, you could go to prison." Still nothing. "But we are not after you, we are after Klegmeir. If you cooperate, I am going to recommend to the government's attorneys that you not be prosecuted." Again, Yee was silent. "We know that your workers have paid Herman bribes through you to obtain green cards. That is a very serious offense. All of these people could be deported when we prove our case. You don't want that; they will not be welcomed back to mainland China and will probably be jailed or might even be executed. Believe me, we will prove this case — with or without you," I bluffed. "Mr. Yee, you can make it easier for us, and you'll be rewarded for that by possibly avoiding prosecution." An FBI agent doesn't have the authority to convey immunity, I explained; that can be done only by the government's lawyers.

"But they frequently take my recommendations, and I am willing to speak up for you if you tell me the truth."

Yee didn't say anything for a while. I remained quiet too, so what I told him would sink in.

Finally, in broken English, he said, "I no rat on my friend."

"Stanley," I countered, "this could help you avoid a prison term and probably save your restaurants."

Yee shook his head and repeated, "I no rat on my friend."

"Mr. Yee, does this mean you would go to jail for Mr. Klegmeir?" I asked.

"Yes," he said without hesitation, "I no rat on my friend."

I thought for a bit and then pulled out my big gun: a transcript of Klegmeir's testimony before the federal grand jury. Giuliani or Kuriansky would not have wanted to be involved in my tactics; grand jury testimony was technically secret, although it was frequently leaked even by prosecutors.

"Mr. Yee, if Klegmeir is your friend, why would he say these things about you to the grand jury?" In his testimony, the INS district director denied receiving any money from Yee. But when asked about all of the administrative violations, Klegmeir blamed everything on Yee. Yee could read English much better than he could speak it. He took his time looking at the sections I had pre-marked, and he carefully examined the front page, which clearly reflected that the document was a transcript from the federal grand jury. He said nothing but uttered a few audible grunts.

I could not resist. "So this is your ‘friend,' " I said. "With ‘friends' like this, you don't need any enemies."

Yee was silent and handed me back the transcript. You could tell by the look on his face that he was shaken. He said, "I say nothing more now."

I left, but had the feeling I would be hearing from him. A week or so later, I got a call from an attorney who said he represented Yee. He wanted a meeting with the prosecutors and me. I arranged it. The attorney, Kuriansky, Giuliani and I met in a conference room. I had no prior experience being involved in a plea deal so the entire procedure was new to me. It became readily apparent that Yee's attorney had been around the block a few times.

Yee's lawyer said, "Hypothetically, my client can hand Mr. Klegmeir to you on a silver plate. What can you do for Mr. Yee in return?"

Kuriansky said, "Hypothetically, if your client can do that, perhaps the government can grant him immunity to prosecution on bribery charges, plus agree not to pursue his perjury to the grand jury."

I silently wondered about all of this "hypothetically" stuff. Later I learned that it was an intricate dance that attorneys engage in to discover each other's position without actually committing themselves.

Yee's lawyer, thankfully, did not mention the leaked grand jury testimony to Kuriansky or Giuliani. After he left, Giuliani asked, "How did you get Yee to come around?"

"Well," I said, "I didn't beat or threaten him."

"So how did you do it?" Ed asked.

"You don't want to know," I answered.

Giuliani and Kuriansky's eyebrows shot up simultaneously, but they did not press the question.

When Yee finally appeared before the grand jury again, I got a call from the prosecutors, who said that Yee had come clean, fully implicating Klegmeir. Yee even knew where the money was stashed — in a bank in Tel Aviv, under Klegmeir's own name. Since Israel did not fall under U.S. bank secrecy laws, I was able to confirm through our international contacts that Klegmeir did indeed have an account with a balance exceeding $250,000. That is hard to amass on the salary of a public servant. He probably hid the cash under his mattress until he got enough to make the trip in person so he could deposit the money.

The grand jury subsequently indicted Klegmeir. Shortly before his trial, he appeared quietly in federal court and pleaded guilty to one count of bribery. He was required to disgorge all of his ill-gotten money, and he drew a prison sentence of a couple of years. Case closed.

Although I could have been proud that justice was served, I was actually ashamed for what I had done in leaking the grand jury transcript; my own little fraud. It was a valuable lesson that I had vowed to learn before but had fraudulently violated again: If you cannot play by the rules, you do not deserve to win. And I did not deserve to win this one.

Dr. Joseph T. Wells, CFE, CPA, is the founder and Chairman of the ACFE. The author or co-author of 20 books, he has been named to Accounting Today magazine's annual list of the "Top 100 Most Influential People" in accounting nine times. In 2010, he was honored for his contributions to the anti-fraud field as a Doctor of Commercial Science by York College of the City University of New York.

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