Woman in drug case
may lose properties

By Susan Kreifels
Star-Bulletin

A woman is accused of laundering drug money by investing in nine Waikiki apartments that federal investigators said were used for prostitution and drug-dealing. If found guilty, she will forfeit that property.

And U.S. Attorney Steven Alm warned other landlords that if they turn a blind eye to illegal dealings on their property, they could also lose it if they don't evict the tenants.

"This helps put property owners on notice," Alm said yesterday. "If your property is being used for illegal purposes, it will get the attention of law enforcers."

Under state law, illegal activity on property is basis for forfeiture. Authorities must notify property owners, who must then take action such as eviction. "Sometimes greed gets in the way," Alm said.

So far two properties have been handed over to federal authorities, Alm said: the Golden Star, later called the Escalator bar in downtown Honolulu, and the Kilauea Hotel in Hilo.

Last week, a federal grand jury indicted two women and a man for drug conspiracy charges and one of the women for money laundering drug money.

Brigitte Riedl, 61, and Gary Brown, 42, appeared before federal magistrate Judge Barry Kurren. Madaline Yvette Hanson, 21, is still at large.

According to the indictment, between Dec. 12, 1997, and Sept. 10, 1998, the three possessed and distributed cocaine and crack cocaine. Riedl and and Hanson onml7 Gary

Brown several occasions allegedly contacted Brown for drugs, then sold them to undercover FBI agents.

Riedl allegedly turned the drug money into cashiers' checks of $55,000, $320,000, and $100,000, which were then used as escrow and down payments on nine Waikiki apartments: one in Hale Brigitte on 439 Nahua St., seven in the Island Colony Condominium on 445 Seaside Ave., and one in Hawaiian Monarch Condominium at 444 Niu St.

The apartments are worth more than $1 million, Alm said. The government wants the properties to be forfeited.

The indictment also charges Riedl with causing First Hawaiian Bank to file a currency transaction report containing false information.

Financial institutions are required to file reports on cash transactions involving more than $10,000.

If convicted the three face a mandatory minimum of 10 years in prison to life on the various charges.

Riedl and Brown are scheduled for a detention hearing tomorrow and trial Dec. 8.

Authorities said the investigation is continuing.

Frederick Wong and Robert Kauffman, FBI agents, said investigators surveilling Riedl's apartments observed prostitution and drug dealings in the properties. More than 70 prostitution arrests have been made since 1995.

Riedl started acquiring real estate in the 1960s.

A prostitute was murdered at Hale Brigitte two ears ago, Alm said.

"Prostitution is a big enough problem in the state," Alm said. "Things that make it easy to happen cause the state to suffer."

Rick Egged, Waikiki Improvement Association president, said Waikiki businesses are becoming increasingly concerned about prostitution and drugs in the area of Riedl's apartments.

"There are growing concerns, especially with the family market" in tourism, Egged said.

Egged hopes tougher laws passed during the last Legislature will help crack down harder on prostitution.

Laundering drug money Federal authorities outlined this money-laundering scheme allegedly by Brigitte R. Riedl and Gary Brown: 1. Drug proceeds of $320,000, $100,000 and $55,000 were taken to a bank. 2. The cash was used to get cashier's checks in the same amounts. 3. The cashier's checks were transferred to an escrow company either to purchase or make down payments on apartments. 4. The apartments were used for drug-dealing or prostitution. PURCHASED APARTMENTS Hale Brigitte, 14-unit apartment building, 439 Nahua St. Island Colony Condominium apartments 1203, 1520, 1801, 2115, 2303, 3005 and 3007, 445 Seaside Ave. Hawaiian Monarch Condominium Apartment 713, 444 Niu St.