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Prosecution Witness in Noriega Trial Kept Millions in Drug Profits

November 7, 1991 GMT

MIAMI (AP) _ Prosecutors allowed a witness testifying against Manuel Noriega to keep some of the millions of dollars he made in drug deals, the trafficker testified during the ousted Panamanian dictator’s trial.

Steven Kalish, 38, also testified Wednesday that he gave Noriega briefcases full of cash to protect drug smuggling and money laundering, and brushed aside defense claims he represented himself to Noriega as a legitimate businessman.

″Mr. Noriega certainly knew it wasn’t from bingo proceeds,″ Kalish said.

When court resumed today, the defense confronted Kalish with FBI interviews from January 1987 in which he apparently wavered on whether he ever discussed drugs with Noriega.

Kalish responded that the confusion was whether or not he used translators, not whether drugs were discussed. He denied that he admitted lying about Noriega in one of the FBI interviews.

The defense had been expected to confront Kalish with letters he wrote after his July 1984 arrest in Tampa seeming to clear Noriega of any wrongdoing, but did not. Prosecutors had explored the letters at length on direct examination.

Kalish had previously said the letters were mostly untrue, and were written only to persuade Noriega to protect Kalish’ business investments in Panama.

The defense on Wednesday hammered away at Kalish’s plea bargain, which let him hold on to some of the $20 million he estimated he made as a drug trafficker.

Kalish began dealing drugs, he has said, by selling marijuana to fellow high school students in Houston.

How much Kalish kept was unclear. He apparently retained more than half of a $1 million bank account and the proceeds from the sale of a $500,000 Panamanian house.

″The government allowed you to keep this drug money, didn’t they?″ defense attorney Frank Rubino asked.

″Yes, pursuant to my plea agreement in Tampa,″ Kalish said.

He also said he was making money while in prison, but did not explain how.

Kalish is serving a 9 1/2 -year sentence. Under the plea agreement, he will be free in 1993 and cannot be prosecuted for previous acts.

He could have faced life in prison without parole plus more than 285 years on a half dozen indictments in four states.

Much of Kalish’s testimony does not bear directly on the 10-count drug and racketeering indictment against Noriega, who surrendered to U.S. invasion troops in January 1990. But U.S. District Judge William Hoeveler allowed the government to introduce it under a rule that permits testimony about similar acts.