Case Against Silberman Is Detailed by U.S. : Businessman Arraigned by Magistrate in S.D.

Richard T. Silberman believed that $300,000 he allegedly laundered for an undercover FBI agent came from Colombian cocaine traffickers and boasted to the agent that he had been involved in money-laundering ventures numerous times before, according to an affidavit unsealed by federal prosecutors Monday.

During a wiretapped telephone conversation, Silberman told the agent “this is not my first go-around” and said he solicited money-laundering business through Chris Petti, an alleged co-conspirator and organized crime figure, because he “wanted a little diversification,” the affidavit says.

Silberman also said he was anxious to move on to “bigger and better things” after allegedly completing two laundering transactions negotiated with the agent during meetings at several San Diego hotels, the document says.

Arrested at Hotel

A wealthy San Diego businessman and powerful player in local and state Democratic politics for 15 years, Silberman was arrested by FBI agents Friday at the Hyatt Islandia hotel while allegedly arranging to launder $1.1 million in funds portrayed to him as proceeds from cocaine sales. The arrest--along with several other transactions conducted during the six months Silberman was under FBI scrutiny--was secretly videotaped.

In a complaint issued by prosecutors Monday, Silberman, 59, is accused of conspiring with Petti and two Los Angeles men still at large to launder $300,000 in cash represented by undercover agents to be proceeds of cocaine trafficking. He is also charged with violating a federal law requiring that all cash financial transactions over $10,000 be reported to the U.S. Treasury Department.

Silberman, who is married to San Diego County Supervisor Susan Golding, faces 20 years in federal prison if convicted of the charges. After spending one night in the federal Metropolitan Correctional Center, he was released on a $500,000 personal surety bond Saturday afternoon.

Formally Charged

On Monday, Silberman and Petti, 62, were formally charged before U.S. Magistrate Roger McKee and a swarm of reporters and onlookers. Dressed in a dark-blue suit and looking somewhat haggard, Silberman was accompanied in court by Golding and noted criminal defense attorney Milton J. Silverman, who was making a special appearance and had not been retained.

Although prosecutors asked that McKee require Silberman to secure the bond with property, the magistrate declined, saying he believed Silberman would honor his promise to return to court. McKee, who confiscated Silberman’s passport and required him to sign a list of standard conditions required of those posting bail, scheduled a preliminary hearing for April 21.

Outside the courthouse, Silberman declined to comment. But Golding, wrapping her arm tightly around her husband, vowed that Silberman’s name would be cleared.

“He’s innocent, that’s all there is to it,” said Golding, her voice tremulous. As for the effect her husband’s legal woes may have on her rising career in Republican politics, Golding said, “I haven’t thought much about that. I’m a county supervisor and will continue to be one.”

At one point during the couple’s brief meeting with reporters, Golding whispered, “I love you” to her husband. Silberman then leaned down and kissed her on the cheek.

As the couple and Silverman walked from the courthouse, another emotional episode unfolded when Charlie W. Dozzell--a 70-year-old shoeshine man at the Town and Country Hotel who said he has polished Silberman’s shoes for 20 years--approached and wished his customer well. As the two men embraced, Silberman broke into tears.

Assistant U.S. Atty. Charles F. Gorder Jr. said the government has “a very strong case” against Silberman and is optimistic that its charges will hold up in court. Perhaps most importantly, he said, Silberman was told frequently that the source of the agent’s money was cocaine trafficking and that such knowledge did not dim his desire to do business.

“On several occasions, to make it clear that the money was coming from cocaine sales, the agent would say it was furnished by Colombian (drug) traffickers,” Gorder said. “Silberman would say something like, ‘Well, I don’t want to hear that,’ or ‘I didn’t hear that.’ (But) clearly he did.”

In addition to Silberman and Petti, agents are seeking Darryl Nakatsuka--also known as Darryl Naka--and Jack Norman Myers. Sources said Myers, 43, of Malibu, has been associated with Silberman since both men raised political funds for former Gov. Edmund G. Brown Jr. Myers is the former son-in-law of MCA Chairman Lew Wasserman but has been divorced from Wasserman’s daughter Lynn for about 10 years, sources said.

Petti is being held without bail pending a hearing Thursday. He was serving probation for a federal gaming conviction when arrested Friday night.

The 76-page affidavit--filed in support of search warrants for Silberman’s offices at Yuba Natural Resources Inc. on B Street in San Diego and two Los Angeles County offices--provides the first glimpse of how solid a case the government may have against Silberman.

Prepared by FBI Special Agent Charles B. Walker, it details the genesis of the laundering deals and the system Silberman allegedly used to dispose of the $300,000. The document suggests that evidence against Silberman ranges from the wiretapping of more than a dozen telephones to videotapes of cash transfers and the negotiating session preceding Silberman’s arrest.

Among the telephones tapped was a line in Silberman’s office provided by the California Medical Assistance Commission--to which Silberman was appointed in May, 1986. At one point, the affidavit says, Silberman told an undercover agent not to call his primary office phone because the secretaries maintain a record of all incoming calls. Many of the negotiations covered by the affidavit were made during calls to the Medical Assistance Commission number.

Prosecutors say FBI agents stumbled upon Silberman’s alleged activities during their 2 1/2-year investigation of Petti. Described in the affidavit as a Southern California associate of La Cosa Nostra, an organized crime group in Chicago, Petti--also known as Chris George Poulos--served nine months for a bookmaking conviction and was placed on probation in 1984.

In April, 1987, FBI agents began trailing Petti and unidentified others in connection with their alleged organized crime ties. The investigation involved the use of wiretaps and other electronic monitoring, the affidavit says. Among other things, the surveillance of Petti disclosed that he was allegedly engaged in a series of extortions against people who owed money to the late Anthony Spilotro of Las Vegas, a member of the Chicago organized crime family who was murdered in 1986, the affidavit says.

Last year, Silberman proposed a laundering scheme to Petti, telling him he could “get money out of the country, launder it, and realize a profit at the same time,” the affidavit says.

Petti then allegedly set up a meeting with Robert Benjamin, a convicted felon from Los Angeles who became a cooperating witness for the FBI in 1986. Benjamin, a longtime acquaintance of Petti, provided a cover story telling Petti he was living free in a La Costa apartment owned by a New Jersey man who laundered money for Colombian cocaine traffickers.

Petti arranged for Silberman to meet Benjamin’s New Jersey contact on Nov. 9, 1988, at the coffee shop at the Stardust Hotel and Country Club, the affidavit says. The New Jersey associate was in fact an undercover FBI agent.

Although Silberman said he was not interested in laundering less than $500,000, the agent insisted on a “test” run of $100,000, and Silberman agreed, the affidavit says.

As details of the deal were hammered out during more meetings and wiretapped telephone conversations, Silberman was told that the undercover agent represented Colombians whose money was “not legitimate.” During one monitored call to Silberman, the agent said of his associates, “all they know is coke and they don’t know nothing else.” And in a meeting with Silberman in February, the agent called his sources “a bunch of . . . Colombian cocaine drug lords.”

Silberman’s responses to such remarks--as quoted in wiretap transcripts included in the affidavit--make it clear he knew the source of the money. In one instance, after the agent referred to “the drug types” he worked for, Silberman said, “Let’s us not even . . . use any of the words anymore, OK?” Later, he said, “You and I never have to use the word.”

In November, the undercover agent and Silberman began mapping plans for the first “test” deal, involving $100,000 in federal money, the affidavit says. During a taped conversation on Nov. 12, Silberman assured the agent that he was a veteran of such laundering operations.

“First of all, just for your background, this is not my first go-around, OK. I’ve been here before,” Silberman is quoted in the affidavit. “I just wanted a little diversification and that’s why I went to Chris.”

Silberman added that he could handle “five very big ones” and that “all the guys I deal with” think that it’s a real good deal if they pay 20% to get the money “from here to there,” the affidavit says.

The exchange of the $100,000 was made Nov. 30 when Nakatsuka picked up the money from the undercover agent at the Airport Hilton Hotel in Los Angeles, a pick-up that was videotaped. Those funds were apparently to be used in a stock swap involving Yuba American Gold, Ltd., a subsidiary of Yuba Natural Resources formed in April, 1987. Prosecutors, however, say details of Silberman’s plans for the money are unclear.

Eager for More

Touting his accomplishments in conversations that were wiretapped after the first transaction, Silberman told the undercover agent he was eager to negotiate more deals involving larger sums. During a monitored conversation on Dec. 2, Silberman told the agent that he hoped the agent realized “you’re dealing with something . . . I’ve done . . . 15, 20 years a lot of different ways,” according to the affidavit.

Silberman also told the agent that he hoped, “by now, you’re satisfied that it’s first class, it’s not normal and there’s a lot more potential if we got active,” the court documents show.

On Feb. 22, the second transaction--involving $200,000 of federal money--occurred. It was also videotaped. Those funds were used to purchase zero coupon bonds with the help of Myers, who used a connection at a Westlake stock brokerage house to obtain a favorable rate. The affidavit said Silberman stood to receive a commission of between 6 and 12 points for his laundering services and intended to pay a fee to Petti as well.

After the second transaction, the undercover agent complained that the bonds turned over to him in a Hyatt Islandia hotel room were $50,000 short. That fact prompted the undercover agent to hesitate in negotiating additional deals with Silberman, the affidavit said.

Angry about the snafu, Silberman told the undercover agent that the employees of the stock brokerage firm he used for the transfer were normally reliable but apparently were “playing games.” If the firm failed to rectify the situation, Silberman promised to bring in some of Petti’s “friends” and have them use “muscle” to express his displeasure “in no uncertain terms.”

In building their case against Silberman, the FBI made wide use of newly authorized “roving wiretaps.” Among the phones that were tapped were pay phones at the Stardust Hotel and the Plaza International Hotel frequently used by Petti.

Silberman, who served as secretary of the Business and Transportation Agency under former Gov. Brown, has been a key player in statewide Democratic politics for 15 years. He was Brown’s chief fund-raiser in his 1976 presidential campaign and had a similar role in Brown’s failed bid in 1980. On the local scene, he joined the movement that ended the reign of C. Arnholt Smith and helped elect Mayor Pete Wilson and Dist. Atty. Edwin Miller in the 1970s.

Active in Business

He has been equally active on the business side. In 1968, he made a fortune when the Jack in the Box restaurant chain--in which he was a general partner--was sold to Ralston Purina Co. He also teamed up with Robert O. Peterson to take over First National Bank, later renamed California First Bank.

More recently, however, Silberman’s financial success has been less impressive. He became an officer in Yuba Natural Resources in the 1980s, and lately the company--which mines for gold in Yuba County north of Sacramento--has not been faring well. It lost a total of $6.5 million during the four fiscal years from 1984 through 1987 and would have lost money in 1988 had it not been for the $5-million sale of land and mineral rights. For the first nine months of the current fiscal year, Yuba is running a $2.6-million deficit.