DEALER: MILAN KNEW HE WAS TAKING DRUG CASH

A convicted drug lord testified that the Camden mayor frequented his inner
sanctum before taking office.

CAMDEN - Convicted drug lord Jose Luis "J.R." Rivera testified yesterday
that Mayor Milton Milan accepted a satchel containing $65,000 in cash from
him in November 1994, and that Milan knew these were proceeds from Rivera's
multimillion-dollar drug syndicate.

Rivera, convicted this year for his role in a massive cocaine-distribution
conspiracy, said that before Milan became mayor in 1997, he frequently
visited the inner sanctum of Rivera's office while drug money was counted
and drug dealers were present.

Rivera also testified that he made no attempt to hide his trade from Milan.
He said he displayed weapons and bundles of cash bound in rubber bands on
the desk at his East Camden office while Milan sat a few feet away on a
leather couch.

"You know, [Milan] was always around me," Rivera told the jury yesterday in
Milan's federal corruption trial in U.S. District Court. "At times, people
thought he was my bodyguard."

Asked about Rivera's testimony yesterday, Milan said that when he borrowed
the $65,000, he believed Rivera to be a legitimate businessman. At the time,
Milan said, Rivera ran a thriving auto-parts store in East Camden that
attracted customers from across the region.

Rivera, 39, was among the last government witnesses in the trial, which is
in its fourth week of testimony. Assistant U.S. Attorneys Renee M. Bumb and
Mary A. Futcher expect to wrap up their case against the mayor today.

Milan's lead attorney, Carlos A. Martir Jr., said yesterday that he would
call at least four witnesses, including the mayor's brother, Johnny Milan,
and two Camden police officers. He said he expected to conclude his defense
today.

Milan, 38, who is accused of an assortment of crimes, including accepting
payoffs from organized crime and laundering drug money, will not take the
stand.

His attorney has advised him not to, Milan said after yesterday's
proceedings, "and in thinking about it . . . I think I'm going to take the
recommendation."

Milan, who was running a construction company called Atlas Contracting Inc.
and had been turned down for bank loans, said he needed the money from
Rivera as collateral to secure a city contract.

"The way businesses do business is by borrowing money, whether in cash or
checks," Milan sid. "As a small business starting up . . . when you have an
opportunity to do major construction, you do it. And in this particular
case, if I had to go to a 7-Eleven or a tire store, or anyone I knew who
could have helped me or my company, I would have certainly [gone] to them."

Federal prosecutors are alleging that once Milan received the loan from
Rivera, he tried to conceal its source through an elaborate money-laundering
scheme that involved breaking the money down into amounts below $10,000 to
elude the IRS.

On the stand yesterday, Rivera said that he met Milan in 1990 when he was
expanding J.R.'s Custom Auto Parts, his East Camden shop, and was looking
for a contractor to complete the work.

Rivera said Milan's uncle introduced him to Milan, who was vice president of
a small construction company called Santiago & Milan. That company was paid
$5,000 in cash to supervise J.R.'s expansion, Rivera said.

"What was your relationship with Milton Milan like at this time?" Bumb
asked.

"Just business," he responded.

But that soon changed, Rivera said. By 1993, he was interested in opening
another business, Hi-Tech Auto Alarm & Car Wash, near his auto-parts store.
He hired Milan, then with Atlas, to manage the construction site and paid
him $5,000 - again in cash.

During that time, Rivera said, he would see Milan almost every day. Milan,
he said, would frequently visit him in his back office at J.R.'s - a
privilege he accorded to few people.

Those few included dealers in his cocaine ring who, he said, would go to his
office seeking to buy cars, boats and other luxuries through him. Rivera
said the dealers would pay him in "ones, fives, tens," which he would then
lock in his safe.

Rivera said he kept the safe in his office and used it only to store drug
proceeds. Money generated from his auto-parts shop was handled by the
cashier and deposited at the end of the day.

"Did you ever try to hide from Milton Milan the fact that you were taking
large amounts of cash from drug dealers?" Bumb asked Rivera.

"Not at all," Rivera said. " . . . It didn't matter. It didn't matter
because, you know, I knew him good."

In November 1994, Rivera said, Milan told him that he needed $65,000 for a
construction project. Rivera said he asked Milan to draw up a promissory
note laying out the terms of the loan. Not included on the document was the
fact that Milan was to pay Rivera $10,000 in interest.

Milan picked up the cash from his office, Rivera said.

"I told [Milan] to sit down on the leather sofa I had in the office," Rivera
said.

"So he sat there, and I went into - I have like a little closet, and I have
my safe in here. And I went into it, cracked it open, took the money in
cash, put it in the bag, and gave it to him."

"It was all in fives, ones, twenties . . . in bundles," Rivera added.

Milan's former partner in Atlas, Joseph "Gholam" Darakhshan, had testified
in Milan's trial that once Milan received the loan, he walked into Atlas
bearing a white satchel of cash and proclaimed, "We're in business."

Darakhshan said Milan hatched the scheme to break down the money because any
bank deposit over $10,000 would trigger IRS notification.

The pair funneled the money through Milan's and Darakhshan's families and
friends. That way, Darakhshan said, it appeared as if family members were
giving Atlas loans.

During his cross-examination of Rivera yesterday, Martir attempted to show
that the loan was legitimate and that Milan viewed Rivera as nothing more
than a businessman.

Martir argued that Rivera was a street dealer between 1982 and 1984, and
that by the time Milan met him in 1990, Rivera was operating a successful
business.