Pubdate: Fri, 25 May 2001 Source: San Antonio Express-News (TX) Copyright: 2001 San Antonio Express-News Contact: letters@express-news.net Website: http://www.mysanantonio.com/expressnews/ Author: Bonnie Pfister, Express-News Border Bureau

LAREDO BANK OFFICER SUES U.S. OVER DRUG REPORT

LAREDO -- Laredo National Bancshares Chief Executive Officer Gary Jacobs said the federal government violated his privacy two years ago when it circulated a damaging secret report about his bank's Mexican owners.

In a lawsuit filed in U.S. District Court here Wednesday seeking $129 million in damages, Jacobs said the National Drug Intelligence Center damaged his reputation when it leaked a draft report alleging Carlos Hank Rhon, the bank's largest shareholder, was involved in drug trafficking and money laundering.

The Johnstown, Pa.-based NDIC, an agency of the Justice Department, gave a copy of the report to a professor at a think tank at the nearby U.S. Army War College, who in turn gave it to the media, the lawsuit alleges.

News about the leaked report appeared on the front pages of newspapers internationally in June 1999.

In April 2000, then-U.S. Attorney General Janet Reno retracted the report, saying the conclusions were wrong and that the person who leaked the document had been fired.

No one at the NDIC could be reached late Thursday for comment.

But the professor mentioned by Jacobs in this suit, Donald Schulz, whom the bank is suing separately in an Ohio federal court, has told the San Antonio Express-News he did not leak the report to the media.

Jacobs' lawyer Ricardo Cedillo could not be reached Thursday for comment.

The draft of the federal report was based on nearly two years of assessment of the anti-drug efforts by such federal law enforcement agencies as the FBI, CIA, Drug Enforcement Administration, Internal Revenue Service and U.S. Customs, according to Jacobs' claim.

Jacobs' lawsuit says the report contained false information, including linking Hank Rhon and his politically powerful father, Carlos Hank Gonzalez, to a criminal enterprise involved in money laundering and moving cocaine and heroin into the United States.

Robert Siegfried, Hank Rhon's U.S. spokesman, has said his client has "absolutely not" been involved in drug trafficking or money laundering.