BANK FAILED TO QUESTION HUGE DEPOSITS

A small Manhattan bank that prosecutors said accepted duffel bags full of
cash without questioning their origin pleaded guilty yesterday to violating
federal money laundering rules in what the government called the first case
of its kind.

Broadway National Bank pleaded guilty before Judge Thomas P. Griesa of
Federal District Court in Manhattan to three felony charges for failing to
file suspicious-activity reports on $123 million in cash deposits and
failing to establish a program to curb money laundering. It will pay a $4
million fine immediately under a plea agreement. Prosecutors said the case
was the first instance of a bank's being prosecuted for violating those laws.

"This bank had become the bank of choice for criminal organizations because
it didn't ask questions and didn't want to know where the money came from,"
said Dean Boyd, a spokesman for the Customs Service, which investigated the
bank with the Internal Revenue Service.

From 1996 to 1998, the bank failed to report hundreds of bulk cash
deposits totaling more than $46 million and thousands of transfers
structured to avoid federal disclosure laws, prosecutors said. Once the
cash was deposited, sometimes in large duffel bags dropped off in the
teller area, it was quickly wired to bank accounts in Latin America and the
Middle East, including several well-known money laundering havens, they said.

William B. Pollard III, a lawyer for Broadway National, said in the plea
agreement that "at no time did the bank know, believe or suspect" that any
of the suspicious deposits were derived from illegal activity or
consciously avoid learning the source of the money.

About a dozen people have been arrested in the narcotics and money
laundering schemes that generated the cash that flowed through Broadway
National, prosecutors said. There are no indications that any of the money
was linked to terrorism.

No bank employees have been charged, but the investigation is continuing,
prosecutors said. Broadway National - which was founded in 1986 and has two
branches in Manhattan and one in Brooklyn - has been operating under
federal supervision since 1998.

Under federal law, banks must establish programs that help to identify
suspicious transactions and report them to the Treasury Department. They
must report all cash transfers of more than $10,000 and must be vigilant
for attempts to evade that limit by dividing transfers into packages of
$10,000 or less.

At Broadway National, customers set up about $76 million in cash transfers
with the intent of evading federal disclosure rules over a two-year period,
prosecutors said. That included $20 million in accounts maintained by
members or associates of the Fares family, five of whose members have been
convicted of laundering drug money. The bank's officers ignored repeated
warnings about suspicious transfers from federal regulators, according to
sentencing documents.

A man named Alfred Dauber, who told bankers he was in the electronics
business, deposited about $46 million into nine accounts at Broadway,
sometimes in cash installments as large as $660,000, prosecutors said.
Tellers at the bank often complained to their supervisors about how long it
took to count the deposits, which they were sometimes forced to do during
their lunch hour, prosecutors said. Mr. Dauber has pleaded guilty to
laundering money on behalf of a Colombian drug cartel.

Bankers made no effort to visit Mr. Dauber's listed place of business,
which was a few blocks from one branch, according to sentencing documents.
When federal examiners went to the address, they found it vacant.

A Broadway executive who was a member of the bank's board once remarked
that Mr. Dauber should not be invited to the bank's annual Christmas party
because "for all we know, Dauber is a drug dealer," according to sentencing
documents.

After one customer's account at Broadway was frozen in connection with a
money laundering investigation, the bank allowed him to set up a new
account, Mr. Boyd said.