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During the early 1970s, the political scandal Watergate shook the United States and toppled a presidency.

During the early 1970s, the political scandal Watergate shook the United States and
toppled a presidency. While there were many aspects to the episode (robbery, enemies
lists, abuse of power, cover-ups, etc.), a key component was the ‘‘laun dering’’ of funds
from big money contributors to campaign coffers. This practice consists of channeling a
large ‘‘gift’’ of money through various banks and individ- uals so that its source cannot
be traced. Unfortunately, such activities continue today as evidenced by congressional
investigations beginning in 1997.
Suppose millionaire I. S. Halverson has $5000 (in reality, he would probably have 10 or
100 times this amount) that he would like to donate ‘‘anonymously’’ to the Independent
National Party (INP). He might first split the money up in smaller units and deposit the
money in several bank accounts spread throughout the world. Money from these accounts
could be mixed or further divided and sent to other accounts or individuals, who, in turn,
would do the same, until several checks for $1000 or less eventually arrive at party
headquarters.
To avert suspicion, a limit has been placed on the amount of each transaction between
intermediaries. These limits are given in the following network depicting



I. S. Halverson, the intermediaries, and the INP. Given these limitations, how much of the
$5000 can I. S. Halverson launder to the INP?
(Note: The federal government employs management scientists who also use such
models to help determine transaction limits that should be monitored.)

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