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The City Check Cashing, Inc., of Jersey City, a confirmed organized crime cash laundering pipeline, figured prominently in the Cardinal Container bust-out, which the Commission has referred to appropriate prosecutorial authorities for criminal investigation. The misconduct involving the check cashing process in this case included the fraudulent diversion of huge amounts of cash, false invoices that were sold to the factor Rutherford Commercial, the attributing of more than $600,000 in cashed corporate checks of more than $10,000 to someone other than the individual who actually cashed them, as well as apparent payments via check cashers of usurious interest on loans negotiated with organized crime loansharks.
Bust-out Claims Another Victim Donald Sanns of Pompton Lakes, who formed the Cardinal Container trucking company in 1979, began looking for a factor to buy his bills at discount at the end of 1985 when his company began to run out of ready cash for its day-to-day operations. He explained the situation under questioning by SCI Deputy Director Robert J. Clark at the Commission's hearing:
Q. What is a factor to your knowledge?
Q. Bills would be the receivables?
Enter Rutherford Commercial As previously noted, Murphy, the secret "partner" in Rutherford Commercial, led Sanns to that factor's fiscal spider web as a key participant in the Cardinal Container-Packed Transport deal. The arrangement would be for Murphy or Kayner to cash Rutherford Commercial's checks for Cardinal Container's receivables at the notorious City Check Cashing entity in Jersey City. Sanns outlined these developments for Counsel Clark:
Q. Now, you eventually turned to a ... factor in early 1986. Is that correct?
Q. And at whose recommendation did you turn to this factor?
Q. What was the name of that factor? Q. Why did you turn to a factoring operation?
Q. This was designed to insure you of cash flow available to meet operating expenses and the like?
Q. Now, it's our understanding that based on the receivables that were owed to Cardinal Container, Rutherford Commercial would make checks payable to Cardinal Container. Is that correct?
Q. And Mr. Murphy or Mr. Kayner would pick up these checks at Rutherford Commercial and cash them at City Check Cashing of Jersey City. Is that correct?
The Bust-Out Takes Shape
Q. Now, going to the joint operation, were you endorsing the checks that Rutherford Commercial had made payable to Cardinal Container
Q.These checks were being taken to City Check Cashing by Mr. Murphy and Mr. Kayner. Is that correct?
Q. Did you at some point learn that as many as 38 Currency Transaction Reports for checks in amounts of $10,000 or more totaling over $672,000 were filed by City Check Cashing between February, 1986, and November, 1986, indicating that you were the person who cashed those checks?
Q. You never learned that?
Q. In other words, you learned it from the State Commission of Investigation?
MR. CLARK: For the record, Mr. Chairman, the staff has calculated that a total of approximately $900,000 in checks were cashed at City Check Cashing, including the amounts for which the CTRs were filed.
Q. Do you recall, Mr. Sanns, signing an undated letter authorizing Mr. Murphy to endorse checks made payable to Cardinal?
Sanns Finally Becomes Wary
Q. And what did you do at that point? Q. You brought the books and records-to the accountant and asked the accountant to establish whether the company was indeed making any money?
Q. And he finally reported to you when? Q. That was toward the end of the joint operation?
Q. What did he report to you? Q. Substantial amount of money? More Misconduct Revealed
The more suspicious Sanns became, the more evidence of wrongdoing he found.
For example, he learned that Cardinal Container's weekly payroll included checks that had been made out to fictitious persons. The payroll incident suddenly became a scandal involving a number of misdeeds in addition to payroll padding:
Q. Did you discover that Cardinal Container checks for driver wages were being cashed for amounts greater than what those drivers should have been paid, based on their time sheets?
Q. And who was running the driver dispatch desk at the time these payments were being made to the drivers?
Q. Was Mr. Murphy's daughter, Jacqueline Murphy, also doing some of that work?
Q. Did you get a different dispatcher? Q. Did this dispatcher, the one that took over from Mr. Murphy, admit to you in October, 1986, that he had at Mr. Murphy's request sent a shipment of products to the wrong destination where the goods were stolen?
Q. Did you find out that Mr. Murphy had borrowed $10,000 from City Check Cashing to be paid to this dispatcher?
Q. And this money was for the dispatcher? "Wise Guy Association" Payments
Q. Do you recall answering that question in private session of testimony to the Commission?
MR. PATTERSON: Do we have the testimony?
MR. CLARK: We have the testimony, Mr. Chairman, in which Mr. Sanns indicates that at a meeting between himself and Mr. Santoro, Mr. Siegel and Mr. Murphy, Mr. Siegel and Mr. Santoro indicated that Mr. Murphy owed $39,000 to them and as part of that meeting they requested that Mr. Sanns make good on some of those loans.
However, even more direct implications of organized crime's involvement in the fleecing of Cardinal Container were the indications on the company's payroll recap sheets of apparent loanshark payments to "WGA," (Wise Guy Association), which the SCI's authority on mob activities, Justin Dintino, said referred to La Cosa Nostra soldiers who were also known as "wise guys." Sanns's testimony on this subject confirmed that loan repayments to organized crime were being misidentified as payroll disbursements:
Q. Did WGA stand for Wise Guy Association? Have you heard that term before?
Q. Did you ask Mr. Murphy about those payments to WGA ?
Q. What was his response to you?
Q. Loans from friends of his?
Q. Did you ask him to identify to whom those loans were payable?
Q. But at that time did you ask him?
Murphy Tied To Phony Invoices
Q. Now, did you hear from Mr. Michael Formisano of Rutherford Commercial, who was calling to say that Cardinal Container owed approximately $300,000 to Rutherford because of receivables that had not been paid?
Q. But for which Rutherford had advanced money?
Q. That was toward the end of this joint operation?
Q. About September, 1986?
Q. Did Mr. Formisano claim that these receivables were allegedly owed to Cardinal by various companies?
Q. Did you find out that these companies were operated by people associated with Mr. Murphy?
Q. Had Cardinal done much if any work for these companies?
Q. But not to the extent of $300,000?
Q. Did you learn who prepared the invoices used to bill these companies for the receivables?
Q. That was Virginia O'Connor [Murphy's secretary]?
Q. And did she say where she got the instructions for preparing those invoices?
Q. Did Mr. Murphy give you any explanation for these phony invoices?
Q. Did he say that he needed them to meet any expenses?
Q. Did Mr. Murphy admit in front of Mr. Formisano and Mr. Lucignano of Rutherford that he had fabricated the invoices?
Q. How much do you figure overall was skimmed from the books in this manner?
Q. In false invoices?
Confirms Mob Payouts
Q. Do you recall weekly payments being made to an entity called WGA?
Q. Do you recall what WGA stands for?
Q And what did it stand for as hinted at? Q. And who hinted that?
Q. Did Mr. Murphy indicate why these payments were being made?
Q. Prior business of Mr. Murphy's? Q. Did Mr. Murphy deliver the cash to repay these loans?
Q. Yes.
Q. These were in weekly amounts of $1,640 and $850?
Q. Did you attempt to learn any of the particulars of these loans from Mr. Murphy?
Q. Did he indicate to you why you might not want to know any of the particulars?
"Vig" Payments to a Loanshark
Q. What was the occasion for those loans?
Q. Was interest charged by City Check Cashing on those loans?
Q. How was that interest determined?
Q. Mr. Murphy told you that? MR. CLARK: Could I have C-205" put up on the easel.
Q. Mr. Kayner, is this a representation of a recap sheet of payments made to City Check Cashing?
Q. The payments to City Check Cashing?
Q. That would be payments as indicated to you b y Mr. Murphy?
Q. Now, several notations there are under the category of "vig" in amounts of $1,000 or $500. Now, what did that represent?
Q. That's short for "vigorish?"
Q. And what is your understanding of what that word means? Is that interest payable to a money lender or a loanshark?
Q. Is that how you understood it? Q. Based on the fact that it was apparently openended so far as you know?
Q. Now, do you recall how much the balances of these loans ran at any given time? Approximately $20,000?
Q. Now, while these bad checks were adding up upon which loans were made and interest paid, did City continue to cash checks of Cardinal Container?
COMMISSIONER EVENCHICK: Did you ever discuss with Mr. Murphy or anyone else with whom you were associated in business the matter of the excessive interest or "vig" that was being charged by City Check Cashing?
COMMISSIONER EVENCHICK: Tell us, please, about those discussions ...
COMMISSIONER EVENCHICK: Were any efforts to your knowledge made at that time to avoid having to use the services of City Check Cashing?
Murphy's longtime secretary also confirmed the usurious interest payments to "WGA". She was Virginia O'Connor of Hoboken, who acted on orders from Murphy when she listed the "vig" payments to Herb Siegel on the weekly loanshark recap sheets. She was questioned by Counsel Clark:
Q. Do you know what the initials WGA stand for? Q. Did you know at the time you were recording those initials
Q. Did you understand that some of the money that you were putting down in these weekly recap sheets were for loans that were payable?
Q. Do you recall setting aside payments and making records of payments of $200 weekly?
Q. Did Mr. Murphy indicate to you why these amounts were being paid?
Q. Did Mr. Murphy tell you that?
BY COMMISSIONER DUMONT: How much were the payments to the WGA? Do you recall?
COMMISSIONER DUMONT: Do you recall how often these payments were made to the WGA?
COMMISSIONER DUMONT: I see. Over what period of time, roughly?
COMMISSIONER DUMONT: And over what period of time were the payments made of 200 a week?
Murphy Won't Talk Murphy elected to remain silent, citing his Fifth Amendment right, to almost every question put to him by Counsel Clark. His assertion of the privilege was so frequent that he was permitted to shorten his response to "same answer." Some of Clark's interrogation will be included here to indicate the Commission's investigative concerns relative to Murphy's role in the trucking partnership's deals with the Rutherford Commercial factor and the mob-connected City Check Cashing service:'
Q. Did you ever participate in fabricating or inflating invoices to Cardinal Container customers so that they could be presented to Rutherford Commercial for factored payments?
Q. During 1986 did you cash Rutherford Commercial checks made payable to Cardinal Container at City Check Cashing in Jersey City?
Q. Were you ever aware that City filed Currency Transaction Reports indicating that Donald Sanns was the person cashing checks at City in amounts totaling $672,000 or more when, in reality, you or someone else besides Mr. Sanns had cashed the checks?
Q. Did you ever deposit any of the proceeds of checks made payable to Cardinal Container into your personal accounts?
Q. Were you ever aware that Cardinal Container checks for driver wages were being cashed for amounts greater than what those drivers should have been paid according to their payroll records?
Q. Did you ever ask a Cardinal Container dispatcher to send a shipment of products to the wrong destination so that the goods could be stolen?
Q. Do you know what the term "WGA"stands for?
Q. Did you ever run up American Express balances on Cardinal or Packed credit cards knowing that you did not have the ability or intention to pay the balances?
Q. Do you recall being indicted and convicted of a check kiting scheme involving Container Pier Corporation bank accounts which had insufficient funds?
MR. CLARK: For the record, Mr. Chairman, we have a record of an indictment of Mr. Murphy for that, and we understand that it's a matter of public record that he was convicted of that indictment.
According to official records, Murphy was convicted of two counts of bank fraud. On February 11, 1988, he was given a two-year suspended sentence, placed on probation for five years and ordered to make restitution of over $62,000.
Formisano Trusted Murphy
Q. Mr. Formisano, when you first began factoring for Cardinal Container is it fair to say-I'm going to use words that you used when you testified in private session-that things were rolling along rather nicely and accounts were pretty clean and Rutherford was getting its money in a reasonable amount of time?
Q. In fact, was Rutherford Commercial making money at that time?
Q. Mr. Formisano, since Vincent Murphy was part of Cardinal Container did you check the Cardinal Container invoices as thoroughly as you might have?
Q. Did there come a time when things weren't working so smoothly with Cardinal Container?
Q. And was the problem becoming apparent in that some of the invoices were not getting paid?
Q. Did you have a meeting or meetings with the principals of Cardinal Container?
Q. When we say the invoices were not getting paid, does that, in effect, mean that the debt to Rutherford Commercial was growing?
Q. And, in effect, Rutherford Commercial had
money out and it wasn't coming back in?
Q. At one of these meetings did Murphy admit that the invoices were false, fraudulent or inflated?
Q. They all admitted it? Q. Did you eventually refuse to factor Cardinal Container?
Q. Mr. Formisano, did there come a time when Cardinal Container, in essence, went out of business?
Q. Do you know why or were you told why?
Q. Can you give us a figure as to how much money is still due and owing on Cardinal Container invoices that you factored?
Q. Mr. Formisano, at some point did you learn that the checks Rutherford Commercial had paid to Cardinal Container on those invoices which were factored were cashed at New Jersey check cashers?
Q. Every check you gave them?
Q. Are you still trying to collect on money due to Rutherford Commercial for Cardinal Container?
Q. Through the civil courts?
The End of the Line for Sanns Counsel Clark questioned Sanns about the windup of the partnership:
Q. You presently have as a result of this joint business operation accumulated a certain amount of debts?
Q. A second mortgage on your home? Q. $33,000 that you still personally owe to Mack Truck after it repossessed and sold all your trucks?
Q. You're being sued by American Express for
$8,500 in company credit card bills that were run up by Mr. Murphy. Is that correct?
Q. You had to sell your vacation home in Pennsylvania to help to pay the debts of this joint operation?
Q. You are presently trying to pay off creditors and you are preparing to file for bankruptcy?
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