GERMAN CRIMINAL FINDS A LUCRATIVE LIFE AS FEDERAL INFORMANT

Helmut Groebe’s History Of Fraud Ignored As He Traps People For Cash

Helmut Groebe destroyed the people he professed to love.

He defrauded one young woman he took as his wife after a whirlwind romance.
At least three other times he convinced women that his love was genuine
before draining their bank accounts. He lured one of them into a
money-laundering sting that sent her to prison for 38 months. The U.S.
government paid him for that service.

Groebe even set up his daughter and her husband in a new business, then
arranged to steal their company’s assets, leaving them at the mercy of
creditors.

When Groebe -- a German citizen -- offered his services to the U.S.
government in 1989, he was wanted in four countries for crimes ranging from
fraud to drug smuggling to arranging a South American jail break. It was
apparent this good-looking former professional bicyclist could talk just
about anyone into doing just about anything.

Groebe told federal agents he’d been an undercover informant in Germany for
years and could help the government catch major drug traffickers and money
launderers. The U.S. Drug Enforcement Administration signed him up.

But it soon became apparent Groebe didn’t care if the people he went after
were major criminals, or even criminals at all. The U.S. agents he worked
for didn’t seem to care, either.

Abusing The System

Federal agents must sometimes use criminals to help trap other criminals.
But consider their offer to Groebe: Despite a criminal history that would
bar his legal immigration, they offered him permanent residency in the
United States, turned him loose with little supervision, promised to pay
him more than $600,000, then ensured that charges against the people he
entrapped would stick by unlawfully withholding from defense attorneys
information about Groebe’s criminal background and government payoffs.

"Do you have to put yourself in league with the devil for some higher
good?" asked Mike Levine, who served as an agent and supervisor with the
DEA for 25 years and now lives in upstate New York. "I think the net
balance is we lose."

Levine knows the pain of drugs. His brother committed suicide after
suffering from heroin addiction for 25 years. His son, a highly decorated
New York City police officer, was killed by crack addicts during a holdup.

But agents who come to believe the end justifies the means -- who believe
they are entitled to do whatever it takes to remove criminals from the
streets -- simply succeed in perverting the system they are sworn to
uphold, he said.

Gary McDaniel, a private investigator in West Palm Beach, Fla., knew he’d
stumbled onto something terribly wrong when an imprisoned client asked him
to see what he could find out about Groebe.

Tracking down Groebe’s tangled criminal past required four years and trips
to several countries. McDaniel offered to share his findings with the
government. He met once with a federal agent, then got no further response
to several letters and sworn statements he provided.

"That is the most frightening thing about all of this," McDaniel said. "Not
only are (federal law enforcement officers) doing nothing with the offers
I’ve made concerning this evidence, but they have yet to disclose specific
information to the defendants" that Groebe helped snare and put in prison.

A Veteran Criminal

According to court records, Groebe’s career as a criminal began in 1968,
when as a 23-year-old he was implicated in his father’s escape from a West
German jail.

Groebe, now 53, was already well known as a professional cyclist in his
native country. Soon his name began turning up in police and court documents.

His first fraud involved an advertising company he’d started that won a
contract to print flyers for the German government. Rather than distribute
them, he sold them for recycling and kept the money.

After that, he talked a wealthy German widow to whom he’d proposed
marriage, and a doctor he’d known for years, into investing hundreds of
thousands of dollars in an athletic center that they later learned he
didn’t own.

Some of his crimes resulted in brief prison stints. But he usually was
released early because, according to court documents, he’d become a paid
informant for the BKA, West Germany’s equivalent of the FBI. Once, he even
escaped from prison.

In 1984, Groebe slipped out of West Germany to Rio De Janeiro, Brazil, but
he would fly between South America and Europe and occasionally the United
States up to six times a year.

It was in Brazil that he set up a scam on his 20-year-old daughter, whom he
hadn’t seen in 18 years. He invited her and her new husband to come to
Brazil for their honeymoon. Groebe had learned his new son-in-law was an
accountant with wealthy clients who had money to invest. Groebe suggested a
business deal to the newlyweds.

They would buy dental supplies from Germany, then export them to a
Brazilian firm in which Groebe was a partner. They liked the idea, borrowed
more than $100,000 from one of the son-in-law’s clients and, in August
1988, had the products shipped to Brazil.

Groebe claimed nothing ever arrived. His daughter eventually filed theft
charges against him in Germany and learned that the investor who had loaned
money for the venture had been contacted by Groebe, who offered to pay off
the loan in illegal drugs. The investor refused.

Groebe’s daughter and son-in-law lost everything and soon were divorced.
The criminal complaint and arrest warrant were allowed to lapse.

Sign Him Up

Despite the outstanding warrants against him, Groebe returned to Germany
frequently in 1989 without ever being arrested. During that period, private
investigator McDaniel learned later, Groebe went to work as an undercover
operative for the U.S. government, first in Hawaii, then with the DEA in
South America. Groebe and Lee Lucas, a then-23-year-old special agent with
the DEA, traveled to Brazil, Peru, Colombia and Bolivia in their attempts
to make cases against drug traffickers.

This new association didn’t deter Groebe’s career in crime. In 1990, he was
accused of swindling the wife of a bank robber.

Hermann Sterr was a fellow German on the run in Brazil who faced charges
back home of hiding more than $400,000 he’d stolen from banks in Germany
and Austria.

Groebe immediately contacted German undercover officers so he’d get credit
for Sterr’s arrest. Then he sold Sterr a false passport and helped him
escape to Peru -- knowing he’d be captured at the border. That’s exactly
what happened.

Groebe then told Sterr’s wife that for $20,000, he could arrange for
Sterr’s escape from a Peruvian jail. She made the payment. Groebe then
bribed a Peruvian police officer, who allowed Sterr to slip away in a
waiting car.

Last year, a woman who had also helped arrange Sterr’s breakout reported to
Peruvian officials that she was abducted, beaten and threatened with death
if she did not keep quiet about the entire episode. Peruvian police
eventually arrested three men outside her home, according to reports
secured by McDaniel. The police reports said the men -- all equipped with
high-powered weapons -- said they were working for Groebe. That case has
yet to be resolved.

After several months on the run, Sterr was finally nabbed by German
officials. He blamed his capture on Groebe.

Later in 1990, Groebe moved to South Florida, purchased a house, and soon
opened a Bavarian-styled beer garden in Miami Beach, while continuing his
undercover work for the DEA. To help, Groebe outfitted one table at the
strip plaza restaurant with electronic surveillance equipment so that
Groebe could record everything anyone said.

Faustino Rico Toro

Helmut Groebe provided information that led to the arrest and conviction of
Bolivian official Faustino Rico Toro, above. He hired a private
investigator to look into Groebe’s background, a probe that revealed a long
criminal history. The information helped Rico Toro win his freedom from
prison. Groebe had promised federal agents early on that he could deliver
Faustino Rico Toro, a Bolivian government official in charge of leading
that country’s anti-drug efforts. In 1991, it looked as though he’d succeeded.

Rico Toro was leaving an afternoon mass at his church when Bolivian police
arrested him on an extradition request from the United States. It accused
him of being involved in a major cocaine trafficking ring.

Rico Toro had long been a controversial figure in the Bolivian military,
accused by opponents of everything from human rights violations to aiding
drug smugglers. When he agreed in 1989 to lead his country’s battle against
drugs, he knew more accusations would fly and that he’d face pressure from
the United States.

The Bolivian government initially refused to extradite him, but seven
months later, Rico Toro voluntarily agreed to travel to the United States
to face charges that he was sure would be dropped when the facts became clear.

At the Federal Detention Center in Miami, Rico Toro’s attorneys told him
that federal prosecutors had linked him to drug deals on more than 500
audio tapes and 14 videotapes.

His chief accuser, Rico Toro learned, was a man he’d never met.

His name was Groebe.

In addition, federal prosecutors claimed four co-conspirators were prepared
to testify about Rico Toro’s role as a protector of drug kingpins.

Rico Toro was baffled as to how he could be implicated on tapes for crimes
he knew he did not commit. And he wondered where the government had come up
with the witnesses.

There was, in fact, no physical evidence of drugs. Rico Toro had never been
caught with drugs, nor were any seized when Bolivian officials conducted
raids on his home. They found no hidden assets that might point to profits
he’d earned as a drug kingpin. The costs of fighting the case, in fact,
would eventually leave him broke.

Rico Toro demanded an investigation in his native Bolivia and wanted a
quick trial in this country. But it would be several years before his trial
was finally scheduled, and by then the case had grown more and more curious.

Rico Toro had hired McDaniel, who learned Groebe had promised each of the
four co-conspirators $20,000 if they would connect Rico Toro to drug couriers.

During the discovery process, McDaniel examined the hundreds of tapes the
government said would implicate Rico Toro and found Rico Toro was in none
of them. Groebe would later say in statements to the DEA that he met with
Rico Toro, but did not wear a recording device because he feared for his
safety if he did.

Then, as the trial drew near, the four co-conspirators signed sworn
affidavits saying they refused to cave into pressure from American agents
to implicate Rico Toro in drug trafficking.

Through McDaniel, Rico Toro learned that Groebe had been paid a total of
more than $400,000 by the U.S. government (that amount would eventually
exceed $600,000, including expenses) to help it make cases.

McDaniel also learned that the federal government had been contacted by one
of Groebe’s jilted lovers, who said Groebe had been committing crimes at
the same time he was working for German and American law enforcement
agencies. U.S. prosecutors never produced any of that information about its
prized informer for defense lawyers, which is required under federal
discovery laws.

But when defense attorneys began revealing their knowledge of Groebe and
his tactics, prosecutors began talking about a plea bargain. Although Rico
Toro faced several life sentences on the charges the government had
brought, prosecutors allowed him to plead guilty to a minor drug charge and
sentenced him to a few additional months of jail time.

Rico Toro said he accepted the deal not because he was guilty, but because
he did not want to risk fighting the charges in a system of justice he
could not trust.

Politicians in his own country, who had often chastised him in the past,
had also cleared him of wrong-doing. A report by the Bolivian Commission
for Constitution, Justice and Judicial Police in October 1991 found "there
is no evidence for the guilt of Faustino Rico Toro."

After nearly five years in prison, Rico Toro flew home on Nov. 26, 1996.

Elena Abuawad

Elena Abuawad, a pharmacist, lived in Brazil with Groebe in 1989 and was
unaware her lover was an informant for the DEA.

Abuawad was a widow who confessed to becoming infatuated with the tall,
sweet-talking German. She loaned him more than $60,000 for what she thought
were business deals. She became worried about her money when she learned
Groebe was seeing another woman, but her concerns eased when Groebe
proposed marriage.

Abuawad had been trying to sell a condominium she owned in Rio and Groebe
told her he’d found an Italian buyer. The commission he’d earn on the sale,
he told her, would be enough to help him pay back the money he owed her.
The deal would close in Miami, and prior to the sale, Groebe cautioned
Abuawad to go along with the buyer’s request that the deal be in cash and
that the details of the transaction be kept secret.

Groebe was an international businessman, so Abuawad was used to his
occasional intrigues. She had suspected some of his deals involved drugs.
But he had never put her at risk, and she said later she could not believe
he ever would.

There was no real buyer, however. The man she met was DEA Special Agent
Lucas, working undercover. Other undercover agents were also present.

Lucas mentioned the cash he was using came from illegal drug deals and
asked Abuawad specific questions about laundering money. Her answers, she
later said, came from the schooling she’d received from Groebe on the way
to the closing.

As they left the meeting with cash in hand, Abuawad complained to Groebe
that he had never told her the buyer was a drug dealer. Moments later, she
was arrested and charged with money laundering.

Because she’d made up a story during the deal about how her son might be
able to help her in the endeavor, DEA agents also threatened to indict him,
Abuawad said, unless she pleaded guilty. So she got 38 months in prison.
She never saw Groebe again.

Abuawad had no criminal record. No drug smugglers or gangsters had tried to
launder the money. The only participants in this sting were federal agents.
And they were prodded into the deal by an informant who’d set up his
fiance. In fact, by then he’d found a new lover.

Wolfgang von Schlieffen

Wolfgang von Schlieffen came to America in 1990 with money to invest. He
did well.

He leveraged his loan from a German bank into real estate, construction,
property management and import/export businesses in the Miami area -- and
enjoyed the fruits of his labor. He owned a yacht and several expensive
cars, including a Rolls Royce.

"Everything I touched turned to gold," he said during an interview at a
federal prison in Seagoville, Texas, last January. "It was a challenge to
me. I wanted to accomplish the American Dream. I was so close."

Von Schlieffen, a divorced father of four, had never had been arrested.
Then, on April 5, 1993, he met Groebe. They hit it off immediately -- both
came from the same hometown in Germany. They knew some of the same people.
They shared an interest in new enterprises. Soon, they were talking about
condominiums and von Schlieffen’s cars -- a couple of which he wanted to sell.

A few days later, Groebe told von Schlieffen he knew someone who might be
interested in buying both the cars and condominiums. They agreed to meet
and show the cars to the prospective buyers.

"He was absolutely convincing, everything he said was precise. He was
definitely a professional liar," von Schlieffen said in a recent interview.

"I totally trusted him."

They set the meeting with the prospective buyers for April 8, 1993, in a
room at a travel agency. Both the buyers were, in fact, federal undercover
agents. One was Lucas, the DEA agent who’d been working with Groebe for
several years.

Von Schlieffen told them the cars were in mint condition and began
explaining the improvements he’d made during the year he’d owned them,
according to a transcript of the conversation, which federal agents taped.

The buyers listened, but kept turning the conversation to drugs -- they
were dealers, they said, and that was where the money was coming from. They
even flashed a little package at von Schlieffen that contained what he
believed to be cocaine.

"I [thought], ‘Why am I here, where did he bring me?’ I figured I’m in a
drug dealer nest," von Schlieffen said.

The transcript of recordings made at the meeting shows he tried to steer
the conversation away from drugs or drug money and to his investment
opportunities and the cars. It also shows von Schlieffen struggling with
his English, a language he had not yet mastered.

"I told them I have no sources for this [cocaine], I can’t get involved in
this, but I have excellent business deals for you," he said. The transcript
confirms his statements.

But they also confirm he told the buyers that if the price were right, he
didn’t care where the money came from. The two buyers threw $10,000 on the
table as a downpayment on the auto purchases. He picked it up and at their
request counted it. Moments later, agents with guns rushed in and arrested
him.

He can be heard on the tape protesting that what they were doing was wrong
- -- this was a car deal.

"I said it was all a misunderstanding," von Schlieffen recalled.

But knowingly accepting money from drug dealers for the car resulted in
money-laundering conspiracy charges against von Schlieffen.

While von Schlieffen was out on bail, his attorneys asked federal
prosecutors for all discovery materials -- any evidence that might show
their client’s innocence or discredit witnesses who testified against him.

The government told defense attorneys Groebe had been convicted of fraud in
Germany in 1977, and that they knew of no other crimes on his record -- the
same thing they told defense attorneys in the cases of Abuawad, Rico Toro
and several other individuals Groebe would implicate in crimes.

They described Groebe as an efficient, high-level government informant.
Groebe testified in the von Schlieffen case that he would be paid for his
work, but he only listed specific payments that never surpassed $150,000.
He didn’t mention that the government had promised him more than $500,000
for his various entrapment efforts.

Groebe was smooth on the stand. He placed von Schlieffen into a calculated
conspiracy to engage in cocaine trafficking. Based mostly on his testimony,
von Schlieffen was convicted in a four-day trial in February 1994 and
sentenced to 8 years in prison.

Gathering Evidence

Rico Toro was the first to hire McDaniel to learn more about Groebe. Then
von Schlieffen and Abuawad heard about his investigation of Groebe,
although Abuawad had almost completed her prison time by the time McDaniel
visited her.

The information gathered by McDaniel, with the help of a London
investigator named Jackie Williams, helped win Rico Toro his freedom and
may soon free von Schlieffen.

McDaniel amassed more than 3,000 pages of documents about Groebe, detailing
his criminal past and government payoffs, facts that were hidden from
defense attorneys.

The judge who sentenced von Schlieffen reviewed the affidavits provided by
McDaniel and reversed von Schlieffen’s conviction, sending it back to the
government to decide whether to schedule a new trial. Von Schlieffen waits
in a Texas prison cell for an answer to his lawyer’s latest petition
requesting that he be released on bond.

Abuawad was released from prison in 1996 and returned to South America.

Before she left the United States, she gave McDaniel permission to release
a tape recorded interview that followed her release.

"I was in love," she said. "I wanted to get married, and I wanted to have a
home again. If he asked me to do something, I was going to do it because I
didn’t want to lose him."

After her first lawyer died of a drug overdose, she hired Julio Ferrer.
After learning the truth about Groebe, he lashed out at the government in
an appeal his client later withdrew when she ran out of money.

"It is difficult to imagine misconduct more egregious, more immoral, more
unfair or more improper than that of the government using and paying an
informant to falsely profess his love to a woman with no prior criminal
record, to violate her person by making love to her ... under the pretense
that he has romantic feelings for her, all for the purpose of inducing her
to become involved in a criminal offense by playing on and with her
emotions and taking advantage of her psychological vulnerability."

The government’s response: Abuawad was guilty and all of her arguments were
self-serving. The government would not comment about its relationship with
Groebe.

Last January, a Post Gazette reporter approached Groebe as he loaded
restaurant supplies into his gold Mercedes 500 convertible on a Friday
evening outside his restaurant in Miami Beach.

Groebe said government officials knew about his past when they hired him as
an informant. Asked about the complaints from people he’d set up, Groebe
said their stories were filled with "lies and half-truths."

Finally, he said he could discuss the issues in more detail later and gave
the reporter a telephone number. He never returned calls. A month later,
Groebe sold his restaurant and disappeared. The new owners have since sued
him for $150,000 on various fraud claims.

Last summer, Groebe was arrested in Austria on an outstanding German
perjury warrant related to his escape from prison.

He has posted bond and German legislators -- who’ve been made aware of his
frauds by his victims -- are demanding a full accounting from the German
government. His story played prominently in the German media.

Groebe was the subject of a German documentary last year. Its title: "King
Rat."

Checked-by: Richard Lake