WASHINGTON – The businessman arrived at the Treasury Department carrying a suitcase stuffed with about $5.2 million. The bills were decomposing, nearly unrecognizable, and he asked to swap them for a cashier’s check. He said the money came from Mexico.

Money like this normally arrives in an armored truck or an insured shipping container after a bank burns or a vault floods. It doesn’t just show up at the visitor’s entrance on a Tuesday morning. But the banking habits of Franz Felhaber had stopped making sense to the government long ago.

For the past few years, authorities say, he and his family have popped in and out of U.S. banks, looking to change about $20 million in buried treasure for clean cash.

The money is always the same – decaying hundred-dollar bills from the 1970s and 1980s.

It’s the story that keeps changing:

 • It was an inheritance.

 • Somebody dug up a tree and there it was.

 • It was found in a suitcase buried in an alfalfa field.

 • A relative found a treasure map.

No matter where it came from or who found it, that buried treasure stands to make someone rich.

It could also send someone to jail.

THE BROKER

Felhaber is a customs broker, a middleman.

His company, F.C. Felhaber & Co., is just minutes away from the bridge between El Paso, Texas, and Ciudad Juarez, Mexico. Tens of billions of dollars of Mexican goods cross the bridge annually, aided by people such as Felhaber. Customs brokers don’t own the stuff that comes into the U.S. They just make sure it gets here.

So it is with the $20 million. Felhaber says the money is not his. A Mexican relative, Francisco Javier Ramos Saenz-Pardo, merely sought help exchanging money that had been buried for decades, Felhaber says.

“To be very clear on this matter: In the beginning, I was not told what it was,” Felhaber said in an Associated Press interview.

Money petrifies after sitting underground that long and Felhaber said it looked like a brick of adobe. The Treasury will exchange even badly damaged money, but Felhaber said Saenz-Pardo did not want to handle the process himself.

“Imagine a Mexican family bringing money that is damaged and the government calling it a drug deal,” Felhaber said.

If the goal were to avoid unwarranted attention, he went about it all wrong. Rather than making a simple – albeit large – exchange at the Treasury, Felhaber allegedly began trying to exchange smaller amounts at El Paso-area banks, raising suspicion every time.

THE EXCHANGES

The first stop was the Federal Reserve Bank in El Paso, where authorities say Felhaber appeared with an uncle, Jose, and an aunt, Esther. In her purse, Esther carried $120,000. She told bank officials there were millions more, discovered while digging to expand a building in Juarez, according to U.S. court records filed by U.S. Immigration and Customs Enforcement.

Banks normally refer such requests to the Bureau of Engraving and Printing, an arm of the Treasury. But employees worried that with so much cash, the three might be robbed on their way home. So, the bank accepted the money and wired $120,000 to an account in his uncle’s name, Jose Carrillo-Valles, according to a government affidavit.

Felhaber was back at it again weeks later, this time at a Bank of America branch. Customs officials say he unsuccessfully tried to persuade a bank vice president to dispatch an armored truck to the Mexican border to pick up millions of dollars.

Felhaber denies that conversation took place. But he is tough to pin down on details. At times he seems specific on a point (“There is a $20 million inheritance,”) only to contradict himself minutes later, saying the amount is “nowhere near that” and that he has no idea where the money came from.

THE STORY

It’s unclear which transaction caught investigators’ attention. Most of the tens of thousands of exchanges of mutilated money each year are routine. Natural disasters create a lot of inquiries.

But authorities say there are signs that trigger investigations. Making a series of small exchanges is one. Bringing mutilated money from abroad is another.

“That is one of the things we are extra concerned about: This process being used to launder money from illegal activities,” said Leonard Olijar, the chief financial officer of the Bureau of Engraving and Printing.

Immigration and Customs Enforcement agents questioned Felhaber in October 2005. According to a government records, Felhaber said the money was the result of a 1970s Mexican land deal. The money was buried, he said, until Saenz-Pardo found a map leading him to the buried treasure.

Felhaber said he didn’t want to do anything illegal and got a cut of whatever he exchanged.

He now says he was mistaken in those interviews.

“They take you to your word like you’re supposed to remember every single thing every single time,” he said.

THE INVESTIGATION

Maybe it was the visit from investigators or maybe someone realized the bank visits weren’t working, but Felhaber apparently changed strategies.

In January 2006, the Bureau of Engraving and Printing received a package containing about $136,000 from Jose Carrillo-Valles, Felhaber’s uncle. Felhaber’s business was listed as the return address. A letter explained that the money had been stored in a basement for 22 years.

Though customs officials were suspicious by then, there was no clear evidence of a crime, just a lot of unanswered questions. So, two months later, the Treasury mailed a check, which was deposited into Carrillo-Valles’ account.

Following the money, investigators interviewed Carrillo-Valles and his wife. Each denied ever sending or receiving the money, a government affidavit says.

As for the $120,000 wired to Jose’s account from the Federal Reserve a year earlier, they said it was an inheritance.

Authorities don’t believe the inheritance story. Customs investigators believed Carrillo-Valles was acting as an intermediary, taking a cut of the money and sending the rest to Saenz-Pardo.

Twice, reporters called Carrillo-Valles to ask about the arrangement. First, he said he did not speak English. When a Spanish-speaking reporter called back, he hung up.

In April 2007, the case became a criminal investigation. Customs officials called the Justice Department, saying Felhaber had arrived at the Bureau of Engraving and Printing with about $1.2 million.

It’s not illegal to find money.

There are strict rules, however, about bringing money into the United States. Import documents identified the $1.2 million as belonging to Jose Carrillo-Valles. Based on their investigation so far, authorities believe that was a lie – a violation that carries up to five years in prison.

But federal prosecutor William Cowden decided to wait.

It paid off. This April, Felhaber was back at the Treasury, this time with a suitcase containing $5.2 million. Investigators say they have found no import documents filed for this deal, a violation of cash smuggling laws that also carries up to five years in prison.

THE RESULT

Prosecutors moved in. Felhaber’s two Treasury visits gave them probable cause to seize the money from the two visits.

They told a federal magistrate in June that they suspected it was drug money that had been buried or hidden for decades.

Felhaber says he’s still not sure what all the fuss is about. At times he wavers on where the money came from, but he’s always certain it isn’t connected to drugs.

None of the federal court documents accuse Felhaber or his relatives of being involved in drugs.

In the coming weeks, the Justice Department plans to seek forfeiture of the seized $6.4 million. Felhaber and his family will have to come to Washington to ask for their money back.

If they do, they’ll have to sort through some of the inconsistent stories for a federal judge.