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Hank-Owned Bank Violated U.S. Election Laws
Listen to story with El Andar's Jorge Chino on NPR. Watch video interview with Carlos Hank Rhon by PBS's Lowell Bergman, and read more at the Frontline special site, "Drug Wars."
Documents from a Federal Election Commission (FEC) case file recently made public show that the commission found reason to believe that Gary Jacobs, the banks president and CEO, "knowingly and willfully" violated US laws when he donated $15,000 to a Republican fundraiser on April 3, 1995, then ordered Laredo National Bank (LNB) to issue a reimbursement check the day after.
It is illegal for banks to donate to federal elections and political parties.
Jacobs and LNB were fined $30,000 in civil penalties this year as a result of the FECs determination.
The finding raises the possibility that Jacobs may have violated additional election laws which state that foreign nationals may not contribute to US federal elections. The banks owner, Carlos Hank Rhon, is a Mexican citizen.
In addition, Hank Rhon is a member of a powerful, wealthy family that has been the subject of international money laundering and drug-trafficking investigations.
The finding also raises the question as to whether the Hank family may have attempted to influence US politicians and elections. Since the Hanks became owners of LNB, Jacobs and his wife have donated over $40,000 to Democratic committees and candidates, and over $60,000 to Texas Governor George W. Bush.
In June 1999, a leaked Justice Department report accused the Hank family of being narco-kingpins who laundered money through LNB. Articles in the Mexican daily El Financiero and The Washington Post quoted parts of the report, which said the Hank family "poses a significant criminal threat to the United States."
"Its multibillion-dollar criminal and business empire, developed over several decades, reaches throughout Mexico and into the United States," that report said, adding that Gary Jacobs was "a front man" for the Hanks. Laredo National Bank has denied the allegations.
In March, Attorney General Janet Reno wrote a letter to former Republican Senator Warren Rudman, attorney for Carlos Hank Rhon, stating that the report was a draft only. She said that the report "was beyond the substantive expertise and area of responsibility" of the agency that wrote it, but did not confirm or deny any allegations of the Hanks involvement in criminal activity.
Carlos Hank Rhon is also the subject of a Federal Reserve Board inquiry into whether Hank Rhon illegally acquired majority ownership after he began investing in LNB in 1989. The Fed has charged that Hank Rhon and his father, Mexican politician Carlos Hank González, channeled millions of dollars through Caribbean bank accounts in order to disguise their controlling interest in LNB.
The Hanks have been investigated in Costa Rica, Mexico and the US, in cases ranging from corruption to drug trafficking and the murder of a Tijuana journalist. They have never been charged.
El Andar was threatened with a $10 million defamation and libel suit by Gary Jacobs, Carlos Hank Rhon and Laredo National Bank after it published a 1999 article about the family. El Andar refused to retract its story.
Many observers believe that the family enjoys a high level of impunity in both Mexico and the US. This makes the FEC and Fed cases significant, since they may indicate new willingness by US authorities to investigate the Hanks business activities.
Jacobss donation to the Republican National Committee was solicited by Georgette Mosbacher, ex-wife of the Bush administration commerce secretary, Robert Mosbacher.
The FEC found that while
vacationing at Canyon Ranch Spa in Arizona, on April 3, 1995,
Jacobs telephoned the bank and asked his assistant to send a personal
check for $15,000 to the RNC. Then, on April 4, the bank made
out a reimbursement check that was deposited in his account.
Jacobs told the FEC that as late as 1998, he was "not aware" that he had been reimbursed. But bank records indicate that Jacobs gave the instruction to reimburse, and even initialed a request. In a document marked "sensitive," the FECs general counsel also suggested that after the inquiry began, Jacobs may have inserted a fabricated note into the banks files to imply that he had been confused as to whether the bank had repaid him the $15,000. Phone records from Canyon Ranch Spa show numerous calls to the bank on the days the two checks were issued. Jacobs then apparently planned to meet with Carlos Hank Rhon on April 6. A notation in Jacobss agenda for that day is marked "CHR," an apparent reference to Hank Rhon.
FEC spokeswoman Kelly Huff said that the commission rarely refers cases to the Justice Department for criminal prosecution, preferring to reach conciliation at the civil level. The RNCs involvement was not pursued, since the donation arrived in Jacobs name and the committee would not have known about the reimbursement.
FEC officials admit they are unable to fully investigate many probable cases due to lack of resources. And a general councils report in the LNB case noted that the record leaves several "unanswered questions."
Because LNB and Jacobs
agreed to conciliate a penalty, the investigation ended this spring.
An agreement, signed by Jacobs, said that "the Commission
found reason to believe that Gary G. Jacobs knowingly and willfully
violated federal election laws." LNB was also found in violation,
and Jacobs and the bank each paid $15,000, for a total penalty