The World’s Greatest Con (Chapter 4): Yank Barry’s $533 Million Art Fraud

The World’s Greatest Con (Chapter 4): Yank Barry’s $533 Million Art Fraud

Click here to read Chapter 1 of this story

Click here to read Chapter 2 of this story

Click here to read Chapter 3 of this story

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As if all that we have covered in earlier chapters of this long story were not enough, Yank Barry also perpetrated what is regarded by some art scholars as one of the biggest—if not the biggest—art fraud in all of history, a fraud that saw Yank Barry acquiring ten sets of 74 sculptures (or a total of 740 sculptures), all of which purported to be genuine bronze casts of sculptures by the famous artist Edgar Degas, and then immediately claiming that one set of 74 sculptures was alone worth $37.33 million, while some later reports suggested that all 740 sculptures could be worth as much as $533 million, when the truth was that Yank had paid only $1,369 for each of those sculptures (or around $1 million for all 740 sculpture), and none of the sculptures were, in fact, authentic works of Degas.

Yank purchased the sculptures from an outfit called the Degas Sculpture Project, which claimed to have discovered previously unknown and genuine plasters of Degas sculptures at a foundry in Paris, and then contracted the foundry to mold from the plasters the ten sets of bronze sculptures, with 74 sculptures per set (for a total of 740 sculptures). The owner of the Degas Sculpture Project was a man named Walter Maibaum, and unsurprisingly, Maibaum was a close associate of Yank Barry.

The foundry that made the sculptures from the alleged Degas plasters was a controversial foundry called the Valsuani Foundry. Maibaum told me that Yank Barry had nothing to do with having the alleged Degas sculptures made at the foundry, but Yank Barry at least claimed that he dealt directly with the foundry, and that he acquired additional sets of alleged Degas sculptures from this same foundry.

Either way, Yank and Maibaum are in agreement that the first set of 74 sculptures alone is worth at least $37.33 million, while there have been reports, likely planted by Yank, that all ten sets of sculpures (i.e. all 740 sculptures acquired by Yank) could be worth as much as $533 million (i.e. more than a half billion dollars).

It is unclear whether the Valsuani Foundry made more than ten sets of the sculptures, though Yank has claimed that he acquired directly from the Vulsuani Foundry some number of additional sets beyond the tens sets that he purchased from the Degas Sculpture Project. Maibaum of the Degas Sculpture Project has stated that he was directly involved with the operations of the Valsuani Foundry, and, of course, it was the Degas Sculpture Project that contracted with the Valsuani Foundry for the manufacture of at least the ten sets of sculptures that the Degas Sculpture Project ultimately sold to Yank Barry.

The man described as the Valsuani Foundry’s “driving force,” however, is Leonardo Benatov, who claims to be a descendent of Armenian-Russian royalty and who recently adopted the name Prince Leonardo Argoutinsky-Dolgorouky.

When some people in the art world questioned whether Benatov was really a prince, Benatov’s legal advisor, a man named Jean Francois Marchi, said that he had hired a scholar to document Benatov’s ancestry and that this scholar had determined that Benatov’s right to the title of “Prince” came from his father’s mother’s side of the family. Titles of nobility are usually passed from the father’s side of the family, but Marchi told a prominent art publication called ARTnews, among others, that Czar Paul I (r. 1796-1801) granted Benatov’s forebears (as ARTnews put it) “a special dispensation for their titles to pass through either side of the family.”

In addition to adopting the persona of a Russian-Armenian prince, Benatov often states that he is related by marriage to a family of cannibals in Brazil.

As ARTnews reported after interviewing Benatov, “In 1959, the 16-year-old Benatov set off for Brazil to make his fortune. It was there that one of the more bizarre episodes of his colorful life occurred. He says he was prospecting to set up a rubber plantation, and one day when he was in the jungle traveling alone by boat he was abducted by Indians from a remote tribe, who kept him captive for two years. He has photos of a young woman he says he married and fathered a son with, and a father-in-law he says was a cannibal. He escaped when he told his father-in-law, the tribal chief, that he had to go off hunting and fishing for two months and then simply didn’t return to the tribe. He says he went back two years later to document the story.”

I have been unable to confirm Benatov’s claims, as there is, in fact, no documentation supporting any of it (or, at least, no documentation that has been made public), but since I have also been unable to prove that Benatov’s claims are false, we shall start by simply accepting at face value the story thus far: that Leonardo Benatov is a Russian-Armenian prince (Prince Leonardo Argoutinsky-Dolgorouky) who was, for two years, held captive by a tribe of cannibals in Brazil, and who, while in captivity, married the daughter of the tribal chief, himself a cannibal, before escaping, and later in life, at the behest of Walter Maibaum, if not also Yank Barry, manufactured at least ten sets of putatively genuine Degas sculptures, with reports that those ten sets of sculptures are worth as much as $533 million.

The alternative, as the reader should know by now, is that we might not believe any story associated with Yank Barry, who is, as I have already established, the world’s greatest con. In any event, after acquiring his first set of 74 alleged Degas sculptures, Yank Barry produced an appraisal from a New York art dealer named Stewart Waltzer, who reported that the first set of 74 sculptures was, in fact, worth no less than $37.33 million. The appraisal reported further that just one of those sculptures, which purported to be a genuine bronze cast of a sculpture called Little Dancer at Aged Fourteen, the most prized Degas sculpture of all, was alone worth no less than $15.33 million.

When other art dealers began questioning the authenticity of the sculptures, it emerged that Waltzer had been paid by Yank Barry himself to produce his appraisal, but that emerged later, long after Yank had perpetrated his fraud. Meanwhile, Yank told people that his Global Village Champions Foundation had paid up to $20.33 million for the first set of 74 sculptures (valued at $37.33 million, according to Waltzer’s appraisal), and Yank began selling the sculptures for “charity.” It was flatly untrue that Yank paid anywhere close to $20.33 million: He paid only $400,330 for the first set of 74 sculptures, as we will discuss in a moment.

The Global Village Champions Foundation also began selling raffle tickets over the internet with promises that all of the income from this raffle would go to child victims of a devastating earthquake in Haiti, and that winners of the raffle would take home various Degas sculptures, while one lucky winner would take home the most celebrated Degas sculpture of all, the Little Dancer.

Yank said he expected that so many people would buy the raffle tickets that the raffle would earn around $100 million for the Global Village Champions Foundation (which would, according to Yank, use the money to feed Haitian earthquake victims, most of them children). But Haitian earthquake victims never saw a dime from Yank, and the background to this raffle was partly revealed in a 2013 lawsuit that the Degas Sculpture Project filed against Yank Barry and the Global Village Champions Foundation.

The Degas Sculpture Project, as we know, had sold the first set of supposed Degas sculptures to Yank Barry (or, more specifically, to Yank’s ‘charity,” the Global Village Champions Foundation), and in its lawsuit, the Degas Sculpture Project claimed that it had signed a contract with Yank on November 15, 2008 whereby the Global Village Champions Foundation would purchase at least two sets of 73 Degas bronze sculptures with an option to buy eight additional sets. From that contract, another two contracts followed: a February 2009 confidentiality agreement and a November 2009 purchase of 10 sets of 74 “Valsuani Edition” Degas bronzes, including one cast of the celebrated Little Dancer in each of the ten sets.

In its lawsuit, the Degas Sculpture Project revealed that Yank, through the Global Village Champions Foundation, had paid only $1,o13,330 for all of the sculptures in his possession. Elsewhere, Maibaum, owner of the Degas Sculpture Project, clarified that Yank had paid only $400,330 for the first set of 74 Degas sculptures, including the Little Dancer, and subsequently paid a bit more for the additional sets of Degas sculptures, with his total payment being $1,013,330.

In other words, while Yank had told people he paid up to $20.33 million for the first set of 74 sculptures, including the Little Dancer, and while the Waltzer appraisal reported that those 74 sculptures were worth no less than $37.33 million, the truth was that Yank had paid only $400,330 for those 74 sculptures. And while there were reports that the ten sets of 74 sculptures per set (740 sculptures) were, all together, worth as much as $533 million, the truth was that Yank had paid only $1,013,300 for all ten sets of  sculptures. That, of course, works out to an average of ($1,013,330/740) around $1,369 per sculpture, though Yank, with help from the Waltzer appraisal, was able to claim that one cast of the Little Dancer was alone worth $15.33 million

When Yank placed some of these sculptures on consignment with prominent art galleries, he consistently told owners of the galleries that his sculptures were worth millions of dollars, so, for example, when he placed 12 of his supposed Degas sculptures on consignment with a gallery in Sarasota called R&R Bond Galleries, he told the owner of that gallery that he had paid $17.33 million for the 12 sculptures (when he had, in fact, paid about $18,000 for them).

In one of several phone conversations I had with Yank Barry, he admitted to me that he had paid only “around $1 million” for all ten sets of the sculptures (despite the fact that he had publicly stated that he paid up to $2o.33 million for just the first set of 74 sculptures alone), but he stated that his payment of “around $1 million” was just a down payment, and that he had returned all of the sculptures to Maibaum of the Degas Sculpture Project after he learned that the sculptures might not be authentic.

At the same time, however, Yank insisted that the sculptures are, in fact, authentic, and we will see that, to this day, he is still offering many of those sculpture for sale, telling people that they are master works of art, worth many millions of dollars. In other worlds, not only do the facts show that Yank Barry was lying to people, but also, given the facts that he has acknowledged to me on the phone, he himself knows and unwittingly admits that he was lying to people.

The lawsuit that the Degas Sculpture Project filed against Yank Barry and the Global Village Champions Foundation alleged that after Yank contracted to buy the ten sets of the supposed Degas sculptures, “defendant Barry continuously and systematically represented to plaintiff that he would (i) fund the sales of the sets he had committed to purchase; (ii) deliver notable and qualified third-party purchasers; (iii) provide placement opportunities for the works that would enhance their accessibility to the public, reputation and marketability (i.e. with prominent collectors or celebrities).”

Instead, according to the Degas Sculpture Project complaint, Yank “proposed raffling off the first set of [74 sculptures, including the ‘celebrated’ Little Dancer] to those who offered a minimum contribution to his charity, Global Village Champions Foundation.”

The complaint continued by stating that the Degas Sculpture Project “declined the invitation to sell the set and Little Dancer to [the Global Village Champions Foundation] under these circumstances because the proposed scheme [i.e. the raffle] seemed to be unlikely to succeed and because [Degas Sculpture Project] would lack control over any resulting publicity and the sensitive secondary market. [Degas Sculpture Project] was also concerned that the raffle idea, despite the underlying charitable cause, could serve to diminish the reputation of the works.”

Yank responded, according to the complaint, by “falsely stating that he had acquired the complete set of bronzes from nonparty Leonardo Benatov of the Valsuani Foundry.”

According to the Degas Sculpture Project complaint, Yank also issued a threat, stating that he: “would use his ‘own’ set [of Degas bronzes] for the Global Village Champions Foundation raffle, which could ‘ruin’ [the Degas Sculpture Project’s] vested interest in the secondary market unless [the Degas Sculpture Project] reconsidered.”

The complaint stated that the Degas Sculpture Project “relented and agreed” in exchange for editorial control over the promotion of the raffle and a promise that the money would go to Haitian earthquake relief. But according to the Degas Sculpture Project complaint, Yank and his associates at the Global Village Champions Foundation:

“simply always intended to acquire these works for their personal benefit, under the guise and protection of the charitable shell and with as few dollars exchanged as possible. Defendant Barry in particular has simply absconded with the works, abandoned the raffle or any other purpose related to GVCF’s stated charitable purposes and has even resold or offered these items…for his personal financial gain.”

The Degas Sculpture Project’s complaint described the Global Village Champions Foundation (GVCF) as:

“ostensibly, a nonprofit charitable foundation with the stated admirable purpose of eradicating world hunger. In the circumstances described herein, however, GVCF is in actuality an instrumentality of fraud utilized for the personal benefit of its founder, directors and officers.”

The Degas Sculpture Project was, of course, stating the obvious—the Global Village Champions Foundation was “an instrumentality of fraud” (see Chapter 2 of this article)–but the Degas Sculpture Project subsequently “settled” the lawsuit and retracted its earlier statements about the Global Village Champions Foundation.

In a press release, the Degas Sculpture Project stated: “To set the record straight, Global Village Champions Foundation, Inc. is not an instrumentality of fraud, but rather a very worthy charitable organization that works to eradicate hunger around the world. The Degas Sculpture Project Ltd. has the utmost respect for Mr. Barry, a two-time Nobel Peace Prize nominee, and…we fully commend Global Village Champions Foundation Inc. for its international humanitarian efforts.”

Why the about face?

Well, the Degas Sculpture Project was in cahoots with Yank from the beginning. The owner of the Degas Sculpture Project, Walter Maibaum, was a close associate of Yank Barry, and Maibaum had been involved with the Global Village Champions Foundation. Maibaum and Yank apparently had a falling out, which caused Maibaum to file a lawsuit in which he came clean (at least partially), but then events transpired that made him flip back to supporting Yank Barry’s con.

Maibaum had been working closely with Yank to perpetrate the fraud described above, which fraud at its core amounted to Maibaum (and Yank Barry, if we believe Yank) working with a foundry to manufacture hundreds of alleged Degas sculptures, including sculptures that purported to be casts of the most celebrated Degas sculpture of all, the Little Dancer, and then selling many of these fake sculptures, including the Little Dancer, through a Global Village Champions Foundation raffle purportedly for the benefit of children victimized by a terrible earthquake in Haiti, though no earthquake victims would see a penny.

In addition, by controlling the secondary market in Degas sculptures, and by placing some of his Degas sculptures in prominent galleries, including R&R Bond Galleries, Yank Barry intended to convince the world that he was the world’s leading dealer in Degas sculptures, that his sculptures were genuine works of Degas, and that his sculptures were worth millions of dollars.

Maibaum helped Yank Barry secure the fraudulent appraisal stating that the first set of 74 sculptures, including the Little Dancer, was worth no less than $37.33 million, and Yank, of course, stated that he expected to raise no less than $100 million by raffling off that first set of 74 sculptures. This despite the fact that Yank had paid no more than $400,330 for those sculptures, as was noted by Maibaum, though Maibaum, like Yank, claimed that this was just a down payment, while Yank maintained the fiction that he had paid up to $20.33 million for the first set of 74 sculptures.

Not only was Maibaum (founder of the Degas Sculpture Project) involved with the Global Village Champions Foundation, but Maibaum was also a 2010 winner of the Gusi Peace Prize, while another winner of the Gusi Peace Prize in 2010 was Yank Barry. Both Yank and Maibaum received their awards at a ceremony in the Philippines, right at the time when they launched the raffle of the supposed Degas sculptures, and this ceremony was held with much pomp and circumstance.

If you do a quick Google search, you will find that there are numerous websites referring to the Gusi Peace Prize as being the Asian equivalent of the Nobel Peace Prize, but most of those websites were created by either Yank Barry or his associates. You will also find that Yank, at every opportunity, promotes himself as being a winner of the Gusi Peace Prize, saying that this is the Asian equivalent of the Nobel Peace Prize, but the Gusi Peace Prize most certainly is not the Asian equivalent of the Nobel Peace Prize.

The Gusi Peace Prize was established by one of Yank’s cronies, a guy named Barry Gusi, whose greatest claim to fame is that he was once a runway fashion model for the Armani clothing company. To be an Armani fashion model in the Philippines is about as prestigious as being a model for Fruit of the Loom underpants in the United States. Which is to say that Barry Gusi is not quite Alfred Nobel.

To be fair, while his greatest claim to fame is having been a fashion model, Gusi also claims to have once been the Philippine ambassador to Micronesia (a micro country), but it is clear that the Gusi Peace Prize, far from being the Asian equivalent of the Nobel Peace Prize, was set up to for the specific purpose of promoting Barry Gusi’s cronies.

In 2010, seventeen people won the Gusi Peace Prize. One of those people, of course, was Yank Barry. Another was Walter Maibaum of the Degas Sculpture Project, who was awarded the Gusi Peace Prize for “Art Restoration” (i.e., for arranging the manufacture of the alleged Degas sculptures). Yet another winner of the 2010 Gusi Peace Prize was Buck Revell, chairman of the Global Village Champions Foundation’s illustrious advisory board. Revell was awarded his Gusi Peace Prize for “law enforcement.”

Rounding out the winners of the Gusi Peace Prize in 2010 was the famous Michael Nobel, who, of course, was another member of the Global Village Champions Foundation advisory board. Nobel was awarded the Gusi Peace Prize for “Education and Humanitarianism.” As we know from Chapter 3, Michael Nobel was no humanitarian, but he did “educate” the public by promoting Yank Barry’s ProPectin miracle cure, falsely claiming that ProPectin could rid the human body of radioactive contamination, meanwhile describing himself (falsely) as the “patriarch of the Nobel Peace Prize”.

When the Degas Sculpture Project filed its lawsuit against Yank Barry and the Global Village Champions Foundation, The National Post newspaper in Canada had recently published its story (“The World According to Yank”) casting doubt on Yank’s “alleged good deeds,” and Yank had filed a libel lawsuit against The National Post, while threatening to sue anyone else who suggested that the Global Village Champions Foundation was a fraudulent organization.

The Degas Sculpture Project’s retraction (confirming that the Global Village Champions Foundation was a “very worthy charitable organization that works to eradicate hunger around the world”) served not only to reinforce the notion that the Global Village Champions Foundation was a legitimate charity, but also communicated the message that Yank Barry would emerge victorious from any lawsuit related to the legitimacy of his charity. Furthermore, the retraction of the Degas Sculpture Project’s lawsuit reinforced the notion that the Degas sculptures purchased by Yank were authentic—which they were not.

In its lawsuit against Yank and the Global Village Champions Foundation, the Degas Sculpture Project had reported that “As a result of [Degas Sculpture Project’s] multi-year research of an apparently ‘new’ bronze edition of Edgar Degas’ famed sculpture, La Petite Danseuse de Quatorze Ans (‘The Little Dancer, Aged Fourteen’), plaintiff, through its principals, discovered and purchased certain rights to a set of seventy-five [sic] previously unknown plaster casts made from Degas’ original wax sculptures.”

The lawsuit stated further that:

“In conjunction with the Valsuani Foundry in Chevreuse, France, plaintiff [the Degas Sculpture Project] then arranged to have sets of bronze sculptures cast from these plasters for purposes of exhibition and carefully limited sale. These bronzes, master works of art, are commonly referred to as the ‘Valsuani Edition.’ The historic and cultural significance of bringing the Degas plasters to light and the commercial value of arranging for the bronze editions to be cast from the plasters cannot be overestimated.”

This was precisely the same message that Yank was delivering at the time. It must be stressed, however, that the Degas sculptures were not authentic. (In the art world, bronze sculptures are said to be “authentic’ when the artist himself had authorized the production of bronze sculptures from his plasters, which Degas had not).

The first person to publicly cast doubt on the authenticity of the Degas sculptures was a prominent journalist named William D. Cohen, most famous for his book “House of Cards,” which is about the fall of Bear Stearns, the big investment bank that collapsed in 2008. In a 2011 article for ARTnews (a leading art publication), Cohen wrote that:

“The most respected Degas experts in the United States have questioned the origin of the [Degas] plasters [i.e. the plasters used to make the bronze Degas sculptures that Yank Barry was offering for sale], but last year the New York art dealer Stewart Waltzer appraised the set of 74 bronzes at $37.33 million….The experts who question the legitimacy and the quality of the plasters range from Gary Tinterow, chair of the department of 19th century, modern and contemporary art at the Metropolitan Museum of Art, to Daphne S. Barbour and Shelley G. Sturman, National Gallery of Art conservators…”

Yank Barry was quoted in this ARTnews article as telling author Cohen that he paid “between $7 million and $20 million” for the first set of 74 sculptures, and previously, of course, Yank had advertised that he had paid up to $20.33 million. Meanwhile, Yank was still insisting the first set of 74 sculptures was worth $37.33 million, the figure cited in the Stewart Waltzer appraisal.

Noting that Yank Barry commissioned (i.e. paid for) the $37.33 million appraisal from Stewart Waltzer, Cohen quoted the appraisal as stating that “these works have been appraised as authentic works by Edgar Degas. This appraiser and this appraisal [do] not warrant the authenticity of the 74 Edgar Degas bronze sculptures from the 1998 Valsuani Edition…”

In other words, Waltzer refused to confirm the authenticity of the sculptures, but nonetheless appraised them as if they were authentic—and worth an astounding $37.33 million. Cohen wrote that “one expert who didn’t want to be identified wrote in an e-mail to ARTnews that the Waltzer appraisal provides ‘a very distressing backstage view of the confusion and delusion that has been perpetrated’” against the world of art by people [i.e. Yank] dealing in these supposed Degas sculptures.

Cohen’s story in ARTnews continued:

“The 2010 appraisal, which was done for Barry’s private use, is available on the internet, much to Waltzer’s consternation….Reached by phone, Waltzer expressed surprise that the 120-page appraisal he had done for Barry was available publicly. He did not want to talk about it or say how much Barry had paid him for his work….He said the document should not be publicly available on the internet.”

Indeed, it should not have been on the internet, because it was a fraud.

It might not have been a fraud in the legal sense since Waltzer carefully parsed his words (“these works have been appraised as authentic works by Edgar Degas. This appraiser and this appraisal [do] not warrant the authenticity of the 74 Edgar Degas sculpures…), but it was a fraud in every other sense of the word, in that it nonetheless suggested that the sculptures were worth $37.33 million, which they most certainly were not. And whether or not Waltzer himself can be held legally liable for this fraud (he can always claim that he was acting under the assumption that the sculptures might be authentic), Yank Barry was certainly perpetrating a fraud in the legal sense of the word, since he knew full well the origins of the sculptures, and the fact that he had paid only around $400,000 for that first set of 74 sculptures.

Cohen’s story in ARTnews continued: “Barry offered 50 of the sculptures as prizes in a raffle that he set up in 2010 to raise money—he said he hoped to raise $100 million—for his foundation, which Barry claims ‘strives to become the undisputed world leader in private, humanitarian delivery of nutrition to needy persons everywhere, sustaining human life and helping to eradicate hunger from the face of the Earth.’”

Cohen wrote that Yank claimed he had returned the money that he had raised from the raffle after he learned that that there were questions about the authenticity of his supposed Degas sculptures, but at the same time, Yank told Cohen that he was still convinced that the sculptures were, in fact, legitimate. And after Cohen published this article, Yank began threatening lawsuits against anyone, including ARTnews, who dared continue to assert that the sculptures were not authentic.

Meanwhile, of course, Yank continued to point to the Waltzer appraisal as evidence that the one set of 74 sculptures, including the Little Dancer, was, in fact, worth no less than $37.33 million (while the full ten sets of supposed Degas sculptures were, according to reports likely sourced from Yank, worth as much as $533 million).

Then came the Degas Sculpture Project lawsuit, and recall that while the Degas Sculpture Project lawsuit correctly described the Global Village Champions Foundation as an “instrumentality of fraud,” the lawsuit went to lengths to describe the alleged Degas sculptures that Maibaum sold to the Global Village Champions Foundation as authentic “master works of art.” When this lawsuit was filed, Yank began threatening lawsuits against other journalists who had picked up on the ARTnews story to report that the sculptures were not authentic. Yank also began to threaten lawsuits against even some of the nation’s most prominent art experts who questioned the authenticity of the sculptures and, to their dishonor, they began folding.

In addition, Yank began telling people that he had filed a libel lawsuit against The National Post for its story (“The World According to Yank”) casting doubt on Yank’s “alleged good deeds,” and, of course, the Degas Sculpture Project quickly “settled” its lawsuit, demonstrating that Yank would emerge victorious in any legal case having to do with the legitimacy of the Global Village Champions Foundation.

Soon after the Degas Sculpture Project filed its lawsuit against Yank (i.e. the lawsuit that confirmed that the Degas sculptures were “master works of art,” that being also the lawsuit that the Degas Sculpture Project would soon “settle” while issuing a press release stating that Yank’s charity was entirely legitimate), the Courthouse News reported:

Yank Barry “said he gave the ARTnews story a pass (i.e. he didn’t sue), but that he sued the National Post for an article that stated, among other things, that he sang for a Kingsmen ‘cover band’ and cast doubt upon what the paper called his ‘alleged good deeds.’ Barry told Courthouse News: ‘I’m at a point in my life where, on the record, don’t fuck with me.’”

Recall that Yank also filed a $10 million lawsuit against Wikipedia and the Wikipedia editors who had recently tried to report that Yank’s charity was dubious, that Yank wasn’t a member of the Kingsmen, and that Yank had been implicated in various crimes. Not incidentally, those Wikipedia editors had also reported on the scandal surrounding Yank’s alleged Degas sculptures.

When the Degas Sculpture Project subsequently “settled” its lawsuit and issued its retraction, Yank Barry, of course, portrayed this as a victory, one that demonstrated conclusively that the Global Village Champions Foundation was a legitimate charity, contrary to the revelations in The National Post and the revelations on Wikipedia (before Yank Barry trolls seized control of the editing of his Wikipedia page) and that the Degas sculptures he was selling were entirely authentic “master works of art.” And to repeat: because he “won” the lawsuit that the Degas Sculpture Project had filed against him, Yank was able to convince people that he would emerge victorious in any lawsuit concerning his charity and business, including his art business.

It might well be that the Degas Sculpture Project filed its lawsuit precisely so that Yank could say that he “won” the lawsuit. Alternatively, the Degas Sculpture Project genuinely had a dispute with Yank, but quickly realized that there was nothing to gain from the dispute. Either way, the result of this lawsuit was to benefit Yank, and after the Degas Sculpture Project filed and then quickly settled the lawsuit, the Degas Sculpture Project continued to help Yank perpetrate his massive fraud on the world of art.

Yank, meanwhile, continued to flaunt the appraisal valuing his first set of 74 alleged Degas sculptures, including the alleged Little Dancer, at $37.33 million, and he continued to report that he had paid up to $20.33 million for those 74 sculptures, despite the fact that he had paid $400,330, and despite the fact that most art experts questioned the authenticity of the sculptures, though now the art experts had caved to Yank’s threats and were no longer willing to speak out against the fraud for fear that Yank would hit them with a bogus libel lawsuit.

Yank Barry, wearing a Global Village Champions Foundation shirt, offering for sale what purported to be genuine cast of "The Little Dancer, Age Fourteen" by Degas. Yank said this sculpture was worth no less than $15.33 million, but he paid around $1,500 for the sculpture

Yank Barry, wearing a Global Village Champions Foundation shirt, offering for sale what purported to be a genuine cast of “The Little Dancer, Age Fourteen” by Degas. Yank said this sculpture was worth no less than $15.33 million, but he paid around $1,500 for the sculpture

One person who did not entirely cower before Yank’s threats was William Cohen, the journalist who had exposed the fraud in ARTnews, and when others did cower before Yank’s threats, Cohen published another story about Yank’s supposed Degas sculptures in Bloomberg View, a publication of the Bloomberg News organization. This story (unlike Cohen’s previous story in ARTnews) did not identify Yank Barry by name (perhaps a bit of cowardice on the part of Cohen or Bloomberg), but the story began: “Americans rightly take great pride in the freedoms afforded to us by the First Amendment. Which is what makes ongoing self-censorship among a group of highly regarded art scholars, who work at some of our most prestigious and respected museums and universities, so deeply and profoundly disturbing.”

Cohen, in his article for Bloomberg, continued:

“Instead of speaking out publicly and forcefully against what they believe to be wrong—specifically, a questionable multimillion-dollar trade in sculptures supposedly by Edgar Degas—they instead meet in secret, communicate cryptically and repeatedly decline requests to be interviewed on the record. These experts are keeping mum not because they have doubts about the accuracy of their opinions or their facts, but because they are afraid of being sued at a time when museum and university budgets are increasingly constrained and fighting potential libel or defamation lawsuits is a decidedly low priority.”

Cohen continued:

“Degas must be turning in his grave. Before his death in 1917, he [Degas] repeatedly expressed concern that charlatans might hijack his legacy by casting sculptures in bronze and selling them to collectors, and is said to have told his fellow painter George Rouault, ‘What I fear most is not dust but the hand of man.’”

Cohen continued by reporting that Maibaum (of the Degas Sculpture Project) and another man had published an elegant catalogue describing the first set of 74 supposed Degas sculptures, including the Little Dancer (the set that had been obtained by Yank Barry for a mere $400,330), as not only authentic, but also “master works of art” that had been displayed in museums around the world. “Not surprisingly,” wrote Cohen, “the catalogue—and its hyperbole—caught the attention of Degas experts worldwide. They were appalled by the claims of Maibaum…that museums around the world—including in Israel and Bulgaria—had agreed to exhibit the bronze sets, and that they were being sold to collectors for millions of dollars.”

When I contacted Maibaum to get his side of the story, he agreed only to answer questions by email. When I sent him a list of questions by email asking about the authenticity of the Degas sculptures and his relationship with Yank Barry, he answered by writing that:

“Due to confidentiality agreements between the parties, I am not at liberty to disclose information, specific or otherwise, about the purchase of the bronzes by Yank Barry and his charity, Global Village Champions Foundation (“GVCF”), or about the sale, payments made, the litigation or the settlement.”

Maibaum did say that his Degas Sculpture Project had “made no such plans” with the Global Village Champions Foundation to raffle off many of the Degas sculptures, knowing that the Degas sculptures were not worth the amount cited by the Waltzer appraisal. This, of course, contradicts the statement in the Degas Sculpture Project lawsuit that the Degas Sculpture Project had “relented” and agreed to participate in the Global Villlage Champions Foundation raffle after Yank agreed to give the Degas Sculpture Project full ‘editorial control” over the raffle.

In answer to my questions about the authenticity of the sculptures, Maibaum wrote, “There is nothing wrong with the bronzes. They are authentic, and to the best of my knowledge no one has actually reported that the Degas sculptures are not authentic…”

Maibaum continued:

“The Degas sculptures (plasters and bronzes) have been certified by both the legal heirs of Edgar Degas (the Succession Degas) and the Comité Degas which holds the right to authenticate. Furthermore, ten museums, including the Hermitage, have held exhibitions of the bronzes. Surely no museum, especially the Hermitage, which is among the world’s greatest, would exhibit the bronzes if they felt there was any question about the authenticity. This should put the matter to rest.”

Actually, it doesn’t put the matter to rest because most of the ten museums that exhibited the alleged Degas sculptures were obscure museums, while prominent museums refused to exhibit the sculptures. For example, not only did the National Gallery of Art in Washington, DC refuse to exhibit the sculptures, but a National Gallery of Art catalogue entitled “Edgar Degas Sculpture,” which was described as a catalogue of all known Degas sculptures, contained a footnote stating that the sculptures made by the Valsuani Foundry (i.e. the sculptures obtained by Yank Barry and marketed with the help of Maibaum) were “intentionally not included.”

The only prominent museum to even consider exhibiting the Degas sculptures was, as Maibaum mentioned, the Hermitage museum in Russia. But far from confirming that the Degas sculptures commissioned by Maibaum were authentic, the Hermitage simply invited art scholars to a “colloquium” to discuss what were described as Maibaum’s “controversial” Degas sculptures. The colloquium was entitled “Posthumous Bronzes in Law and Art History,” and the plan was for art scholars to debate what, if anything, should be done about the “controversy” surrounding Maibaum’s sculptures (740 of which had been purchased by Yank Barry for around $1 million, or less than $1.500 apiece).

Furthermore, as “The Art Newspaper” reported, “Degas experts boycotted [the] Hermitage colloquium arranged in part to discuss a group of controversial Degas bronzes, cast from a set of plasters recently discovered at the Valsuani foundry outside Paris….The Degas experts who were invited to the seminar, but declined, include Sara Campbell, who recently retired from the Norton Simon Museum in Pasadena, Catherine Chevillot from the Museum Rodin, the consultant and art historian Joseph Czestochowski, the leading independent curator Richard Kendall and Anne Pingeot, formerly of the Musée d’Orsay.”

Some prominent art experts, including Veronique Wiesinger, director of the Alberto and Annette Giacometti Foundation in Paris, urged other scholars to boycott the colloquium because there was no longer any “debate” about the authenticity of the sculpures. Art experts were nearly unanimous that the sculptures were not authentic, and Wiesinger, among others, did not want scholars to give any credibility to the claims of Maibaum and friends, including Yank Barry, by continuing to discuss the matter.

Not just Maibaum, but also Yank Barry made a point of telling me that the sculptures had been authenticated by the heirs of Edgar Degas himself and by the Comité Degas, but that is not as impressive a stamp of approval as Maibaum and Yank would have us believe. As reported by ArtNews, the “authentication” by the heirs of Degas involved somebody (who, exactly, remains unknown) hiring a “genealogical firm…to track down Degas’s heirs.” The genealogical firm allegedly “discovered that the artist’s niece, Pauline Fevre, a nun, had left her share of the rights to another nun, Berthe Vial, who in turn left them to her brother and his children. A Comité Edgar Degas was set up to represent descendants of Vial’s brother. David Steiner, a Los Angeles art lawyer who represents the heirs, refused a request to interview them.”

In other words, the Comité Degas was not a committee of experts, but rather a legal entity set up to represent the descendants of the brother of a nun who had received a share of the rights to the Degas estate from one of Degas’ nieces. These descendants of the nun’s brother are also what Maibaum and Yank mean by the “heirs of Edgar Degas.”

Maibaum has claimed that ten other “heirs” have authenticated the alleged Degas sculptures. The names of those ten other “heirs” are unknown, and, in any event, it is not up to heirs to decide whether an alleged Degas sculpture is authentic or not. It is up to experts, who determine whether Degas himself would regard the sculptures as authentic, and clearly the experts are nearly unanimous that Degas would be appalled by Yank Barry’s commerce in the alleged Degas sculptures.

Finding heirs to put their stamp of approval on the alleged Degas sculptures does, however, give Maibaum and Yank Barry some legal cover, and perhaps the heirs were enticed to cooperate with claims that the sculptures commissioned by Maibaum and Yank could be sold for as much as $533 million.

Recall that Maibaum wrote to me that the Degas sculptures were “authentic,” and Maibaum wrote, “to the best of my knowledge no one has actually reported that the Degas sculptures are not authentic…” Yank Barry also told me that the Degas sculptures were authentic and that nobody had reported that the Degas sculptures were not authentic.

It is, in fact, true that few prominent art scholars have gone on the record to say that the sculptures are not authentic, but it is also clear that Degas experts throughout the world are nearly unanimous that the sculptures are not authentic, and their reasons for not going public with their opinions were made clear in numerous reports.

Cohen, for one, reported in Bloomberg View that “a group of Degas experts agreed to meet discreetly in January 2010 at New York’s Metropolitan Museum of Art to discuss what, if anything, they should say or do about…[Maibaum’s] seemingly outlandish claims [i.e. his claims that the alleged Degas sculptures were master works of art worth millions of dollars].”

Cohen’s story reported further that:

“Attendees at the meeting have told me that among those present were Gary Tinterow, chairman of the 19th-century, modern, and contemporary art at the Metropolitan Museum; Richard Kendall, consultative curator at the Sterling and Francine Clark Institute in Williamstown, Massachusetts; Theodore Reff, professor emeritus of European painting and sculpture at Columbia University; Patricia Failing, professor of art history at the University of Washington; Sheila Sturman and Daphne Barbour, conservators and Degas specialists at the National Gallery of Art; and Arthur Beale, retired chairman of the department of conservation and collections management at the Museum of Fine Arts in Boston, and co-author (with Kendall) of ‘Degas and the Little Dancer.’”

The experts at this meeting (i.e. the most prominent Degas experts in the United States) were unanimous that Yank Barry’s Degas sculptures (purchased from Maibaum, and promoted with Maibaum’s help) were not authentic, but Cohen noted that beginning in 2011 (when Yank Barry started issuing threats of legal action), “none of the participants in the meeting would speak with me on the record, nor would they confirm that it [the meeting] had in fact occurred, what transpired there or what they intended to do, if anything” about the bogus Degas sculptures.

Cohen reported:

“Still, on the ground that I would not attribute the comment to any individual participant, I was told that there was universal agreement among the experts that these things [the Degas sculptures that Yank Barry was selling, and the sculptures Yank had already sold, with support from the Degas Sculpture Project] were not what they were being advertised as. In declining to speak on-the-record to me, each attendee cited a fear of the potential legal consequences any criticism…might engender.”

This should be stressed: the most prominent Degas experts in the United States were in unanimous agreement that the Degas sculptures obtained by Yank Barry were not authentic “master works of art,” but not one of those experts would go on the record as stating that the sculptures were fakes. Indeed, Degas experts around the world knew the sculptures were not authentic, but few went on the record to state the truth.

In sum, the most prominent experts in the world of art had been cowed by…Yank.

As a result, there were only a few stories in the media, including the two stories by Cohen, casting doubt on the authenticity of the sculptures, and just as the few stories exposing Yank’s other frauds were ignored by the world at large, so too did the world at large ignore the few stories exposing the massive fraud that Yank perpetrated against the world of art. Naturally, Yank got away with the fraud and continues to sell fake Degas sculptures as though they are authentic.

As one extremely prominent art expert told me, “It’s a shame. It’s a fraud, and nothing less. They [Yank Barry and associates] have perpetrated one of the great art frauds of the century.”

But this prominent expert, of course, spoke only on the condition of anonymity. He and nearly every other prominent expert in the art world had been frightened into submission by…Yank. And they continue to be cowed to this day, while Yank continues to sell off the remaining Degas sculptures, advertising them as being worth millions of dollars.

While Degas experts were nearly unanimous that Yank Barry’s sculptures were not authentic, only one art scholar, a man named Gary Arseneau, went on the record to explicitly state the obvious, namely that Yank’s Degas sculptures were, in fact, “counterfeits.” Arseneau wrote that “All so-called sculptures in bronze, attributed to Edgar Degas, are 2nd to 3rd generation removed forgeries with counterfeit ‘Degas’ inscriptions applied.”

Arseneau reported further that “in 1921 Francois Thiebualt-Sisson recalled that Degas once said: ‘I modeled animals and people in wax for my own satisfaction, not to take to rest from my painting or drawing, but to give more expression, more spirit, and more life to my painting and drawings. They are exercises to get me started. My sculptures will never give that impression of completion that is the ultimate goal of the statue-maker’s trade and since, after all, no one will ever see these efforts, no one should think of speaking about them, not even you.”

“Additionally,” wrote Arsenau, “under Association of Art Museum Directors’ endorsed…ethical guidelines: ‘any transfer into new material unless specifically condoned by the artist is to be considered inauthentic or counterfeit.’ The dead don’t condone.” Degas, who, of course, is dead, never condoned the creation of bronze sculptures in his name, and so Yank’s sculptures were, of course, 100 percent counterfeits.

Without mentioning Yank Barry or Maibaum by name, Arseneau also described the Degas sculptures that Yank Barry was selling as not only “forgeries,” but also “one of the largest art frauds of the 20th/21st century.”

Nonetheless, and perhaps not surprisingly, many journalists have helped Yank pull off his Degas sculpture fraud, just as they have helped Yank pull of his other frauds. Do a quick Google search, and you will find stories in the media describing Yank as a prominent art collector, and a leading collector of sculptures by Degas.

In one recent news broadcast, a journalist visited Yank Barry’s home in the Bahamas, where Yank was holding a show for prospective buyers of his remaining supposed Degas sculptures, and the journalist reported Yank’s claim that his remaining Degas sculptures were master works of art. The journalist also repeated Yank’s claim that the sculptures were each worth millions of dollars (though Yank bought those sculptures for less than $1,500 apiece).

The journalist in this news broadcast not only failed to question Yank’s claims, but himself repeated the claims and confirmed them to be true. Naturally, Yank ensured that this news broadcast could be found all over the internet. The newscast, by a television station in the Bahamas, can be viewed here:

At the time of that newscast, Yank had, of course, already offered at least 50 of the sculptures for sale through the Global Village Champions Foundation’s raffle, with the profits of this raffle ostensibly used to feed children who were victims of a terrible earthquake in Haiti. Yank told me that he had returned the money that he raised from that raffle when people began questioning the authenticity of his supposed Degas sculptures, but Yank, of course, continued to maintain that his Degas sculptures were authentic, and he continued to maintain that his profits from the sales of his Degas sculptures would go to charity, just like the profits from his other lines of business supposedly went to charity.

So to summarize: The Degas Sculpture Project (and also Yank Barry himself, if we are to believe Yank) commissioned a foundry in Paris to mass-produce a 740 counterfeit Degas sculptures, for which Yank’s Global Village Champions Foundation ultimately paid roughly $1 million. Notably, the foundry in Paris (i.e. the Valsuani Foundry) was, at least, honest enough to label these sculptures as “reproductions,” but Yank, with the help of the fraudulent Walzer appraisal and the Degas Sculpture Project’s Walter Maibaum (winner, along with Yank, of the bogus Gusi Peace Prize), advertised these sculptures as “master works of art” worth many millions of dollars.

With such help, Yank was able to convince a lot of people that just one of the sculptures, the Little Dancer, was worth $15.33 million, and that his first set of 74 sculptures, including the Little Dancer, was worth a total of no less than $37.33 million. This was a clear-cut case of art fraud, and this alone, it should be stressed, was a felony offense—a jailable offense.

Meanwhile, Yank told people that he paid up to $20.33 million for the first set of Degas sculptures, and he had purchased an additional nine sets of Degas sculptures, with all ten sets reported to be worth as much as $533 million, though the truth was that Yank had paid no more than $400,330 for the first set of 74 sculptures, and a total of around $1 million for all ten sets of sculptures. While Yank advertised one of the Little Dancer sculptures alone as being worth $15.33 million, he paid no more than $1,500 any of these sculptures.

Keep in mind also that Yank Barry had his counterfeit sculptures shipped from France to the United States, and he shipped some of the sculptures from the United States to the Bahamas, if not also to other countries. Did the shipping documents describe those sculptures as authentic Degas sculptures? If so, that is another crime. Did Yank declare in the shipping documents the accurate purchase and likely sale price of the sculptures?

If he claimed the inflated value, that is another offense (lying on records one submits to any government is generally a felony). If he truthfully declared in the documents that he paid only $400,330 for the first set of 74 sculptures, including the Little Dancer, the documents are not only more proof of his fraud (since he told potential buyers and the wider public that he paid up to $20.33 million for the sculptures), but also evidence of tax evasion (since he didn’t pay duties commensurate with his expected resale price of the sculptures). If he declared in the shipping documents that he paid $20.33 million for sculptures worth $37.33 million, he was, of course, making a false declaration (since he paid only $400,330), which was also a violation of the law.

Shipping counterfeit art around the world is no joke. People without friends in the justice system have spent years in prison for that crime. And make no mistake: Yank Barry was (and, until this day, still is) trafficking in counterfeit art under the guise of charity, and it might well be that Yank Barry operates theGlobal Village Champions Foundation for precisely that purpose, among other similar reasons.

We already know that the Global Village Champions Foundation was used to promote the fraudulent company Biochem Solutions, and we know that the Global Village Champions Foundation has been used to promote Yank’s other dubious businesses, including his ProPectin miracle cure. So it is plausible that one of the Global Village Champions Foundation’s current purposes is to promote and serve as cover for Yank’s fraudulent art business as well.

Yank also stated that he expected to take in $100 million for child victims of the earthquake in Haiti by raffling off at least 50 of his supposed Degas sculptures, including the Little Dancer, and though he said he returned the money that he raised in that raffle, he continued to maintain that the Global Village Champions Foundation had paid up to $20.33 million for the first set of 74 sculptures.

In addition, and perhaps worst of all, Yank Barry continued to exploit the plight of hungry children, suggesting that his commerce in the Degas sculptures (all of which had been purchased by the Global Village Champions Foundation) was for the purpose of raising money for his charity, which was “striving to become the undisputed world leader in private, humanitarian delivery of nutrition” to needy children everywhere. Yank certainly made money selling his fake Degas sculptures, but there is no evidence that any of that money was used to feed needy children. That, too, was a jailable offense.

My only question: How many years in jail for ripping off starving children?

* * * * * * * * *

To be continued…

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The World’s Greatest Con (Chapter 2): Yank Barry’s Global Village — Mobsters, Boxers, Frauds and the FBI’s Most Celebrated Hero

The World’s Greatest Con (Chapter 2): Yank Barry’s Global Village — Mobsters, Boxers, Frauds and the FBI’s Most Celebrated Hero

Click here to read Chapter 1 of this story.

* * * * * * * * *

The story of Yank Barry’s charity, the Global Village Champions Foundation, begins in the 1990s, when Yank Barry established a company called Global Village Market.

In one of several phone conversations with me, Yank went to lengths to say that the Global Village Champions Foundation and Global Village Market are “two very separate things,” but the Global Village Champions Foundation certainly grew out of Global Village Market, which Yank advertised as being not only a profit-seeking company, but also a charity whose goal was to deliver one billion meals to needy people everywhere.

Currently, when the Global Village Champions Foundation claims to have delivered nearly one billion meals to needy people, most of them children, included in that tally are meals that were allegedly delivered back in the 1990s by Global Village Market. In a moment, we will closely examine the claim that Global Village Champions Foundation has delivered nearly one billion meals to needy children, and we will see that the claim is a massive fraud, but first let us learn more about Global Village Market, which was also a massive fraud, later to be known as the Global Village Champions Foundation.

While Global Village Market advertised itself as a company that was also a charity (its motto was “Doing Good by Doing Well”) with a goal to feed one billion people, Yank Barry listed Global Village Market’s shares on the World Investors Stock Exchange. Also listed on the World Investors Stock exchange was a firm called the Global Prosperity Group, and Yank Barry was involved with that outfit as well.

According to Offshore Alert, a prominent publication that covers the world of offshore crime, Yank Barry was also involved with the World Investors Stock Exchange itself. In one of several phone conversations that I had with Yank, he denied having any involvement with the World Investors Stock Exchange, other than to have listed his company (Global Village Market) on the exchange, and he said Global Village Market sold only “around $79” worth of stock on the exchange.

It seems doubtful that Global Village Market sold less than $100 worth of stock (indeed, we will see that Yank is not being honest on that score), and multiple of Yank’s associates have told me that he was more closely involved with the World Stock Investors Stock Exchange than he is letting on. But even assuming that Yank was not a principal with the World Investors Stock Exchange, it tells us something that Yank chose to list Global Village Market on this particular exchange, and it is worth discussing the exchange briefly to understand why.

The World Investors Stock Exchange was, of course, different than, say, The New York Stock Exchange or the NASDAQ stock exchange. In fact, the World Investors Stock Exchange, based in the offshore money laundering haven of Grenada, was a sham stock exchange that specialized in listing sham companies. Most of the ordinary people who were induced to invest in these sham companies, including Global Village Market, lost all or most of their money. Some people lost everything they had.

The World Investors Stock Exchange was a unit of the First International Bank of Grenada, which was later indicted because it was a Ponzi scheme that stole $175,330,911 from hapless investors, at which point Gilbert Allen Ziegler, the founder of First International Bank of Grenada, changed his name to Van Brink and moved to Uganda. After moving to Uganda, Van Brink and the First International Bank for Grenada (which remained in business for a time despite the indictment) held a conference for 60 Congolese rebel leaders, and promised the rebel leaders millions of dollar in aid, according to a report from the U.S. State Department.

The First International Bank of Grenada and its subsidiaries (including the World Investors Stock Exchange) also had extensive dealings with organized crime. For example, another of the First International Bank of Grenada’s principals was a man named Gerald Burns, who was also a principal with the World Investors Stock Exchange and with an outfit called Cambridge International Bank and Trust, which was an offshoot of the First International Bank of Grenada, complicit in the Ponzi scheme. At the time, Burns controlled several brokerages, including an outfit called Centex Securities, in partnership with a man named Eugene Slusker. While Burns was a key figure behind First International Bank of Grenada and its subsidiaries, Slusker was involved with First International Bank of Grenada, using the bank to launder money, while trading in stock of companies listed on the World Investors Stock Exchange.

Slusker was sometimes known as Semyan Altman. At other times, he went by the names Evgeny Slusker, Eugene Kozin, Evgeny Lozin, Evgeny Kozin, and Eugene Shuster and Slushke and Sousker and Schuster and Shuskar and etc. Which is a lot of names.

His real name, however, was Evgeny Dvoskin, and he was a major Russian organized crime figure. He was, in fact, the chief lieutenant of Vyacheslav Ivankov, also known as Yaponchik (which translates as “the Little Jap”). Ivankov was, during the 1990s, the top boss of the Russian mafia in the United States.

Both Dvoskin and Ivankov were arrested in 1995 (they shared a prison cell together), but they were both quickly released. It has since been widely reported that when Ivankov was arrested, Ivankov told the FBI that there was, in fact, no such thing as the Russian mafia. Instead, according to Ivankov, there was only “one uninterrupted criminal swamp” controlled by the Russian intelligence services.

The Ivankov syndicate had gotten its start in the United States perpetrating fuel scams in partnership with a DeCavalcante Mafia family capo named Phil Abramo, who was known in some circles as “The King of Wall Street” because he operated numerous brokerages, and leaders of the Genovese Mafia family, including a Genovese Mafia capo named Alan “Baldy” Longo, who was Abramo’s brother-in-law. When Ivankov was briefly jailed in 1995, it was on charges of having perpetrated a fuel scam in league with his top lieutenant, Dvoskin (who was, in fact, a relative of Ivankov) and members of the Genovese Mafia family (including Longo).

As I mentioned, when Ivankov was jailed, he shared a prison cell with his lieutenant, Dvoskin, but as I also mentioned, both of these mobsters were quickly released. After they were released, Ivankov returned to Moscow, but Dvoskin remained in the United States and became involved with multiple U.S.-based brokerages.

Because the documentation to which I am linking describes Dvoskin by various different names, and I wish to avoid confusion, I will repeat that Dvoskin is the same person as Eugene Slusker. He has, at various times, also gone by at least 33 other aliases. By reading through the documents to which I have linked, you will see that in addition to controlling (partially) Centex Securities, Dvoskin (or the various aliases listed above) secretly controlled (with Burns) more than a dozen U.S. brokerages. The most famous of the brokerages secretly controlled by Dvoskin was an outfit called Barron Chase.

Barron Chase was later indicted for not only the usual crimes (i.e., market manipulation, securities fraud, and extortion), but also for conspiracy to commit kidnapping. Dvoskin, meanwhile, was implicated in multiple murders, and the boss of his crime syndicate, Ivankov, was widely known as one of the most ruthless killers in organized crime. It was even reported that Ivankov boiled his victims in vats of hot oil, and while those reports might have been apocryphal, it tells us something about these mobsters that Ivankov himself boasted that the reports were true.

However, with the exception of Robert Kirk (who served as president of Barron Chase, and who went to prison) none of Barron Chase’s principals suffered any fate worse than having to pay small fines, and most of them remained in business during the years that followed. Among Barron Chase’s other principals (aside from Dvoskin and Burns) were (as noted in the indictment) the following: Arthur Gunning, an associate of the Colombo Mafia family; Craig Marino, a soldier in the Genovese Mafia family; and Ronald Giallanzo, a soldier in the Bonanno Mafia family.

Those mobsters were also involved with Centex Securities and other brokerages secretly controlled by Dvoskin and Burns, while other organized crime figures involved with those brokerages included Abramo and his brother-in-law, Alan “Baldy” Longo.

Still others involved with those brokerages (including Centex and Barron Chase) were key figures in the Persico faction of the Colombo crime family, including a Colombo Mafia capo named Danny Persico and a Colombo Mafia capo named Joseph Baudanza. Danny Persico was the son of Alphonse “Allie Boy” Persico, the top boss of the Colombo crime family.

Yank Barry was not, to my knowledge, associated with all of those mobsters, but he did have ties to organized crime (see Chapter 1 of this article), and by way of introduction to our further discussion of Yank Barry’s ties to not only organized crime, but also people who have worked for the Federal Bureau of Investigation (FBI), it is worth nothing at this point that the chief of the FBI’s organized crime unit during the 1990s was a fellow named Lindley DeVecchio, a close associate of Yank Barry.

DeVecchio led the FBI’s investigation of First International Bank of Grenada and the World Investors Stock Exchange. DeVecchio also led the FBI’s investigation of numerous brokerages (including all those named above) that were linked to the First International Bank of Grenada. In addition, DeVecchio led all FBI investigations of the organized crime figures involved with those brokerages.

However, most of those organized crime figures were never jailed while DeVecchio was still with the FBI, and the few who were jailed (e.g. Dvoskin and Ivankov, the top two Russian mafia bosses in the United States, both implicated in multiple murders, in addition to securities fraud, conspiracy, extortion, and kidnapping, etc.) were quickly released from prison and allowed to remain in business.

This is perhaps unsurprising given that DeVecchio was later indicted on charges of having corrupt relationships with members of the Persico faction of the Colombo crime family (principals with the above-mentioned brokerages). DeVecchio was even charged with helping a Colombo Mafia capo named Greg Scarpa perpetrate (on orders from the above-mentioned Danny Persico) multiple murders during the so-called “Colombo Wars” that elevated Danny Persico’s father, Alphonse “Allie Boy” Persico, to the leaderships of the Colombo crime family.

However, the FBI brass and the DOJ rallied to DeVecchio’s support, and he was acquitted on all charges. In a subsequent interview on the 60 Minutes program, DeVecchio stated that he considered some Colombo crime family bosses to be his friends and that he was proud of those relationships, though he said the relationships were not corrupt. Therefore, we may assume that he was innocent, though it appears he let mobsters literally get away with murder.

And when DeVecchio was acquitted on all charges of corruption, one person who congratulated him for his victory was Buck Revell, who, during the 1990s, was the FBI’s associate deputy director (i.e. he was second in charge at the FBI). We will return to Revell in our discussion of Yank Barry’s charity.

It needs to be stressed that all of the organized crime figures involved with Barron Chase were also involved with Centex Securities and other brokerages principally controlled by Dvoskin and his partner Gerald Burns. It also needs to be stressed that those brokerages were linked (as were Dvoskin and Burns themselves) to the First International Bank of Grenada scandal. One component of that scandal was the World Investors Stock Exchange, a sham stock exchange that specialized in listing sham companies, including Yank Barry’s Global Village Market, a company that purported to be a charity (later known as Global Village Champions Foundation).

By way of further introduction to our discussion of Yank Barry’s ties to organized crime (and also Yank Barry’s ties to multiple intelligence officials), it is important to note that in 2009, Ivankov was gunned down on a Moscow street just days after he publicly announced that members of his crime syndicate had long been employed by elements of the Russian intelligence apparatus. A few months later, in June 2010, the FBI arrested ten Russian spies who had long been operating in the United States, at which point Novoya Gazeta, a prominent newspaper in Russia (actually one of the best newspapers in the world, far better than any U.S. newspaper) was the first to report that former Russian intelligence officials alleged that the ring leader of those ten Russian spies had been none other than Dvoskin.

In other words, Dvoskin was not just a major organized crime figure, but also a Russian intelligence agent, and as the Russian media has since reported, one of Dvoskin’s jobs was to perpetrate financial crimes in the United States on behalf of the Russian intelligence apparatus. That was also one of the jobs of the ten Russian spies who were arrested in 2010, and while there is not unanimous agreement that Dvoskin was, in fact, the ring-leader of the ten Russian spies, at least two of those spies, Mikhail Semenko and Christopher Metsos, were involved with Dvoskin’s brokerages.

The fact that the two Russian spies were involved with Dvoskin’s brokerages (including Centex Securities) was first reported to DeepCapture by one of Dvoskin’s business associates (also a business associate of Yank Barry), and later confirmed to me by an FBI agent who investigated Dvoskin (and who also investigated Yank Barry, though that investigation did not result in any charges being leveled against Yank).

Dvoskin had close ties to elements of the U.S. government, and many people, including that FBI agent, believe that Dvoskin was protected by FBI management. It is, at any rate, certain that Dvoskin never did more than a few months in prison, and operated in the United States with impunity for many years.

Much of this will prove pertinent when we discuss some of Yank Barry’s more recent business ventures, but first we need to continue reviewing the history of Yank Barry’s charity, the Global Village Champions Foundation, which, of course, grew out Global Village Market, described by Yank as having been both a charity and a business.

As we know, Global Village Market listed its shares on the World Investors Stock Exchange, as did another firm called the Global Prosperity Group. The World Investors Stock Exchange listed only a small number of companies, and Yank Barry was involved with at least two of those companies, namely Global Village Market and the Global Prosperity Group, the latter of which was a company that specialized in holding conferences at which “motivational” speakers instructed attendees in various get rich-quick-schemes.

Prior to publishing this story, I spoke with Yank Barry by phone on multiple occasions over the course of one week, and in one of our phone conversations Yank stated that he was never involved with the Global Prosperity Group, but this was another case where Yank was not being entirely forthcoming. Offshore Alert reported that Yank was involved with the Global Prosperity Group, and one of Yank’s associates described to me in some detail Yank’s involvement with the Global Prosperity Group.

Offshore Alert also reported that Yank had been directly involved with the First International Bank of Grenada (and its subsidiary, the World Investors Stock Exchange), but in a phone conversation with me, Yank denied that he was directly involved with First International Bank of Grenada, just as he denied that he had been directly involved with the World Investors Stock Exchange. Yank did, however, admit that he listed his company, Global Village Market, on the World Investors Stock Exchange, and in a later phone conversation with me he conceded that he did have some involvement with the Global Prosperity Group’s motivational speakers.

The Global Prosperity Group was, as I just mentioned, in the business of holding conferences where “motivational” speakers gave attendees investment advice. The attendees of these conferences were, more specifically, convinced that they could get rich quick by investing in various companies, including Global Village Market, that were listed on the World Investors Stock Exchange. And those companies, like the World Investors Stock Exchange itself, were scams.

Global Village Market (in addition to being a charity) was a multi-level network marketing scheme ostensibly set up to sell Yank’s dehydrated meat substitute, known as Vitapro. The dehydrated meat substitute was actually manufactured by other companies, none of them owned by Yank (Yank says they were “subcontractors”), but the dehydrated meat substitute was branded Vitapro, and Yank controlled a company called Vitapro International, also known as Vitapro Foods.

The operations of Vitapro International/Vitapro Foods were, of course, closely intertwined with the operations of Global Village Market (which was set up ostensibly to sell Vitapro’s dehydrated meat substitute).

A multi-level network marketing scheme is a scheme whereby a product is sold through distributors, rather than through retailers, and the distributors are encouraged to recruit other distributors, while each distributor in the chain earns commissions on the product he or she has sold, and additional commissions on the product sold by the distributors whom he or she has recruited. Global Village Market’s supposed product, of course, was the Vitapro dehydrated meat substitute.

Although neither Global Village Market nor Vitapro actually produced or sold much dehydrated meat substitute, Yank Barry told both his distributors and his investors that the more money that Global Village Market made, the more meals (in the form of Vitapro dehydrated meat substitute) Global Village Market would deliver as charity to needy children in underdeveloped nations all around the world.

It must be stressed that neither Global Village Market nor Vitapro produced much  dehydrated meat substitute. It also did not donate much in the way of dehydrated meat substitute or anything else to the needy. It is, in fact, apparent that Global Village Market was not established principally to distribute dehydrated meat substitute or to donate meat substitute to charity. Global Village Market was pure scam, set up principally to lure in hapless investors, whose money was simply pocketed by Yank.

Meanwhile, Yank Barry paid the famous boxer Muhammad Ali to promote Global Village Market and Vitapro. Other celebrities, including the famous singer Celine Dion, were convinced to endorse Global Village Market believing that Global Village Market was not a business, but a charity that had been co-founded by Muhammad Ali, and whose goal was to deliver 1 billion meals to needy people around the world.

As of 1998, Yank was reporting that Global Village Market had already delivered 133 million meals to hungry children in poverty-stricken nations around the word, but that claim was false and Global Village Market was, to repeat, a massive scam.

In 1998, journalist Rod Macdonell of the Montreal Gazette (a rare journalist who actually practiced journalism) published (in the Montreal Gazette) a 3,300 word front-page story about Yank Barry, and this story reported that Global Market Village was a scam. Numerous investors in Global Village Market had been unable to get their money back, and many of those investors had invested thousands of dollars.

That is, many of these investors had purchased thousands of dollars of stock that Global Village Market sold on the World Investors Stock Exchange, and though it is not known precisely how much Global Village Market took in, it was certainly more than $79 (the maximum amount  Yank Barry told me that Global Village Market had sold on the World Investors Stock Exchange).

The story in the Montreal Gazette (the same story that was briefly discussed in the first chapter of the story you are now reading) has since been wiped from the internet, but it can now be read in full here at DeepCapture.com, and it reports that while Yank Barry pocketed the money that unwitting investors invested in Global Village Market, that company (contrary to its advertising) did not deliver many meals to charity.

Macdonell, the author of the story in the Montreal Gazette, wrote: “Barry is nowhere near the 100 million meals he says he is delivering to those children this year—the philanthropic side of his company that he uses to attract the celebrity endorsements, which he uses in turn to promote the investment side. There is very little documentation of donated food.”

In fact, even the documentation that Yank Barry provides as supposed evidence that he had delivered large quantities of food to needy children shows that Yank and Global Village Market had delivered almost nothing to charity as of 1998, when Macdonell published his story.

Yank told me during one of our phone calls that he had filed a complaint against Macdonell before the Quebec Press Council, and Yank suggested to me that Macdonell had been fired from his job for having published his story in the Montreal Gazette, but Macdonell had not been fired from his job, and while it is true that Yank filed a complaint before the Quebec Press Council, the Quebec Press Council ruled in Macdonell’s favor because Macdonell’s story was true and MacDonnell had done what journalists are supposed to do by exposing Yank as a fraud.

By contrast, as we saw in Chapter 1 of this story, most journalists have done nothing other than take dictation from Yank and his public relations operatives. Nearly all of the major news organizations have, on multiple occasions, described Yank Barry as a billionaire and noted “humanitarian” who has donated most of his money to charity, who has fed nearly one billion needy children, and who is most deserving of the nominations that he has received for the Nobel Peace Prize.

In his story for the Montreal Gazette, Macdonell reported further that “Celine Dion’s lawyer has put Barry on notice to cease and desist in his claims that the singer endorses his investment scheme or anything beyond his campaign to feed children. Muhammad Ali’s lawyer also warns that if people have been led to believe that Ali is endorsing Barry’s investment plan, they are mistaken.”

Nonetheless, the website of Yank’s charity, the Global Village Champions Foundation (which grew from the earlier Global Village Market), continues to this day to show a picture of Celine Dion, along with the claim that the singer endorses the Global Village Champions Foundation. Yank told me that Celine Dion is a friend of his, and that her photograph would not be on the Global Village Champions Foundation website if she did not endorse the Global Village Champions Foundation and its work.

Meanwhile, of course, Muhammad Ali continues to endorse the Global Village Champions Foundation, and the warning of the champ’s lawyer notwithstanding, it is likely that Muhammad Ali knew all along that he was “endorsing Barry’s investment plan” because, after all, the former boxer had been paid to do just that.

Muhammad Ali’s photograph appeared on all of Vitapro’s marketing materials and packaging (while Global Village Market was ostensibly in the business of distributing Vitapro, also ostensibly delivering a portion of its profits and product to charity).

In recent times, the only journalist to recall that earlier story in the Montreal Gazette was John O’Conner, author of the story (title: “The World According to Yank”) that raised doubts about the seriousness of Yank’s first nomination for the Nobel Peace Prize by a lawyer in Bulgaria. As discussed in the last chapter of this story, Yank has filed a libel lawsuit against The National Post, but every word of that story was true.

In that story, O’Conner also cast doubt on Yank’s “alleged good deeds,” and reported some of what had appeared in the earlier Montreal Gazette story. When O’Conner asked Yank about the earlier Montreal Gazette story, Yank suggested that Macdonell, the author of the story, had been fired, and Yank was quoted by O’Conner as saying that Macdonell “had his license pulled.”

Yank, of course, told me almost the same thing, but the truth was that Macdonell’s former editor at the Gazette had nothing but good things to say about Macdonell, and, again, after Yank complained about Macdonell’s story to the Quebec Press Council, the council returned a verdict in Macdonell’s favor because Macdonell’s story was true, and the public had a right to know about Yank’s obviously fraudulent schemes.

Macdonell never had his “license pulled” (journalists do not have licenses), and he was not fired. After receiving multiple awards for his work with the Montreal Gazette, Macdonell moved on to other jobs, and was recently employed by the United Nations Development Program to create a guide for journalists covering corruption and criminality in underdeveloped nations.

However, Macdonell’s 1998 story about Yank Barry’s “charity” has, of course, been flushed down the memory hole and it could be found nowhere on the internet until now. Readers are encouraged to read the story in full (it is posted here at DeepCapture.com).

* * * * * * * * *

As of this writing in November 2014, we know, Yank Barry is operating the Global Village Champions Foundation, which evolved from his earlier company Global Village Market. Actually, Yank has removed himself as a director of Global Village Champions Foundation, and he has also removed himself from the incorporation documents of his various companies, perhaps because Yank was recently named in a lawsuit alleging that Yank was part of a racketeering enterprise that sold millions of dollars’ worth of stolen and counterfeit art—a lawsuit to which we will return later in this story.

But Yank is still the man who operates the Global Village Champions Foundation.

Unlike Global Village Market, which was a for-profit corporation (listed on the World Investors Stock Exchange), the Global Village Champions Foundation is registered as a not-for-profit, tax-exempt charity, but just as Global Village Market was a multi-level network marketing scheme ostensibly set up to sell Vitapro (the dehydrated meat substitute), so too are the operations of Global Village Champions Foundation closely intertwined with the operations of Vitapro International.

Vitapro International was, at least until recently, based in Canada and controlled by Yank, but presently Vitapro’s website lists only two addresses for Vitapro, one in Bulgaria and one in Belize. The website provides no telephone number for Vitapro, and as I mentioned in Chapter 1 of this story, the photograph on the website purporting to be a picture of Vitapro’s corporate headquarters is a fake photograph, apparently made with Photoshop or some similar software.

When the Montreal Gazette published its front page story about Yank in 1998, that story reported that many of the supposed customers named on Vitapro’s website were not, in fact, customers, and a former employee of Vitapro says that at that time in 1998, Vitapro had sold no more than $133,000 worth of dehydrated meat substitute, though it had recently obtained the $33 million deal to supply Vitapro dehydrated meat substitute to the Texas state prisons (a deal that was voided when Yank was indicted for paying bribes to the director of the Texas state prisons).

The supposed “clients” presently listed on Vitapro’s website are mostly the same clients that were listed on Vitapro’s website back in 1998. Some of those clients were never actually clients of Vitapro, and it has proven impossible to verify whether the others (most of them identified only vaguely as, for example, “the government of Libya” and various other governments) are actually clients of Vitapro.

Yank also failed, despite my requests, to provide me with any documentation showing that Vitapro has actually sold large amounts of dehydrated meat substitute, much less the billions of dollars’ worth of product that Yank claims to have sold, and Yank did not reply to requests for documentation showing that Vitapro had any meaningful revenues or profits.

Nonetheless, the media often describe Yank as a “soy products tycoon” (a reference to the dehydrated meat substitute, which is made from soy). Meanwhile, as evidence that Yank is a philanthropist of the first order, the media and Yank report that Vitapro International donates 60 percent of its profits (or all of its profits, according to some of Yank’s statements to the media) to the Global Village Champions Foundation, which, according to Yank, uses the money to feed needy children, much as Yank previously reported that a significant percentage of Global Village Market’s profits from sales of Vitapro were delivered to charity.

Yank, of course, does not provide evidence that Vitapro has significant profits, so the question remains, 60 percent of what? As of this writing, the Global Village Champions Foundation’s website , meanwhile, reports that the Global Village Champions Foundation has donated 988,911,330 (nearly a billion) meals to needy people around the world, most of them children.

When I asked Yank if he had evidence that he had delivered large sums of money to charity, and that the Global Village Champions Foundation had delivered nearly a billion meals to needy people, he said all of the evidence could be found on the Global Village Champions Foundation’s website. When I told Yank that the evidence on the Global Village Champions Foundation website does not prove that Yank has donated much to charity, he promised to send me additional evidence, but he never did so, and in a subsequent conversation he said again that all of the evidence is on his website.

This is important because most “humanitarian” organizations willingly and quickly respond to any request to show proof of their charity, and again, neither Yank nor the Global Village Champions foundation was forthcoming with any proof other than the documents on the Global Village Champions Foundation website. Those documents, as will see momentarily, are nothing more than proof that the Global Village Champions Foundation and Yank have made only small donations to charity, while fraudulently describing the Global Village Champions Foundation as an organization that is striving to become “the undisputed world leader in private humanitarian delivery of nutrition to needy persons everywhere, sustaining life, and helping to eradicate world hunger…”

Yank operates another company, ProPectin, which, like Vitapro, claims to donate 60 percent of its profits to charity. ProPectin is based in Bulgaria, and ProPectin manufactures an apple pectin product under the brand name ProPectin.

It is, in fact, clear that one reason why Yank Barry operates Global Village Champions Foundation (a reason that has nothing to do with charity) is to convince distributors to sell more of his ProPectin product, much as he operated Global Village Market to convince distributors to sell his Vitapro product. Yank has sold much of his ProPectin product in partnership with a company called Jeunesse Global, which is a multi-level network marketing scheme similar to Global Village Market.

In November of this year (2014), Yank told me that he had cut off all relations with Jeunesse Global because the company is, according to Yank, crooked and it rips off its customers and distributors. He said, “I wouldn’t touch them [Jeunesse Global] with a ten foot pole.”

When I called the phone number that Jeunesse Global’s website lists as the number of its corporate headquarters, I got a recorded message that said “Thank you for your patience, we should be with you soon,” but no real person ever picked up the phone, and so I was unable to ask anyone about Yank’s comments, or confirm whether Yank was telling me the truth when he said he had cut off all relations with Jeunesse Global.

In any event, it is certain that Yank was working closely with Jeunesse Global as of early this year (2014), if not also later, and Jeunesse was closely involved with the Global Village Champions Foundation’s supposed charity. To this day, videos on the Global Village Champions Foundation website purporting to show Global Village Champions Foundation delivering food to needy people state that these missions of charity were conducted in partnership with “Jeunesse Kids,” an initiative of Jeunesse Global.

As of early 2014, if not also later, Jeunesse distributors sold just a few products, namely a few skin care products that allegedly could make your face look younger, and Yank’s ProPectin, which is also advertised as an anti-aging product.

Yank and his hired spokesmen say that ProPectin has various miracle properties. Not only is it an anti-aging product, Yank says, but ProPectin is able to cure diabetes, it is able to protect the body from cancer, and it is able to eliminate radioactive contamination from human bodies that have been exposed to radioactive fallout (and everyone, according to Yank, is a potential customer for such a product because everyone has been exposed to radioactive fallout from the Fukushima disaster in Japan, as well as other sources).We will see, though, that no credible medical professional has provided evidence that ProPectin has any of those miracle properties.

Jeunesse Global regularly holds conventions for its distributors, and Yank has appeared at those conventions. At all of these conventions, Yank has repeated the fraudulent claim that he was once the lead singer of the Kingsmen (see Chapter 1 of this article for more on Yank’s false claim to have been a member of the Kingsmen), and at some of the conferences, Yank has sung the famous Kingsmen song “Louie Louie,” backed up by famous musicians, including Gary U.S. Bonds (who endorses the Global Village Champions Foundation). See the following video of Yank singing “Louie Louie” at Jeunesse’s 2012 annual convention.

Yank has also given speeches at these conventions, telling Jeunesse distributors that the more ProPectin they sell, the more meals the Global Village Champions Foundation will deliver to needy people around the world. Have a look at this video of Yank speaking at another recent Jeunesse convention, held in early 2014:

As you can see in that video, Yank announced that the Global Village Champions Foundation had joined forces with Jeunesse (which, of course, was selling ProPectin via its multi-level network marketing scheme), and Yank stated: “Global Village started by mistake. I spent 33 years in the music business. Most of you are too young to remember ‘Louie Louie.’ I sang that when I was nine years-old.”

That was, perhaps, a veiled confession because far from having anything to do with “Louie Louie,” that song was written (by Richard Berry) way back in 1959, when Yank was indeed nine years old. The band known as the Kingsmen, which recorded the song “Louie Louie,” was formed in 1963, when Yank was 13, and the Kingsmen bought the song “Louie Louie” from Richard Berry, who, unlike Yank, was an elderly black man.

At the Jeunesse convention, Yank continued: “For some reason I ended up in the food business, and wanted a spokesperson, and at that time Muhammad Ali had become a recluse…I said, ‘Ali we’ve got this great food product, and if we take a portion of our profits, we can feed kids’….Ali opened up the world for us. We started feeding children really from the heart…All of a sudden we got a call from Celine. We got a call from Michael Jordan. And Bill Clinton. Buzz Aldrin…all of these people wanted to be part of this organization.”

When Yank said he got a call from Celine, he, of course, referred to her only by her first name, but everyone in the audience knew he meant Celine Dion. It was true that Celine Dion endorsed Yank’s “charity” back in the 1990s, when she thought it was purely a charity, but recall that in 1998, her lawyers issued a warning to Yank, telling him to stop using her name to promote his business (which was the same thing as his charity, a multi-level marketing scheme similar to the one Yank was promoting at the Jeunesse convention).

It was also true that astronaut Buzz Aldrin, the second man to walk on the moon, was involved with Yank’s charity, but more on him later in this story.

As for Michael Jordan, I have found no evidence that he was involved with Yank’s charity, but Yank does know Michael Jordon personally, and Yank has convinced other sports celebrities, including Muhammad Ali, to become involved with his charity.

And how about Bill Clinton? Did Yank “get a call” from the president of the United States back in the 1990s, when Yank founded Global Village Market (now known as Global Village Champions Foundation), and did the president subsequently become involved with Yank’s charity?

I have found no evidence that Bill Clinton has been involved with Yank’s charity in any way, but Yank’s scams are of such magnitude, and such is the depravity of our government, that I would not rule out the possibly that even multiple U.S. presidents, past and present, are involved in some way with Yank Barry. After all, multiple members of the U.S. Congress nominated Yank for the Nobel Peace Prize. And I can’t help but repeat that there was, for a time (and this tells us all we need to know about our Congress), an officially designated “Yank Barry American Flag” flying on top of the U.S. Capitol building in Washington, DC.

At the Jeunesse convention, Yank continued: “The unique thing about Global Village is that we have never accepted a donation.” Which was not true; Yank has held all manner of raffles and charity fundraising events where he has sold stuff for his “charity,” though it might be true that the people who bought stuff from Yank were not so much donating to charity as donating to Yank Barry. Yank also told me that his charity had numerous “corporate sponsors,” the suggestion being that corporations were donating money to the Global Village Champions Foundation.

Later in his speech at the convention, Yank said, “Now, I said we don’t accept donations. But I’m going to tell you about this contest were having.” The contest being a contest to see who could sell the most ProPectin for “charity,” along with a raffle of various items Yank was selling for “charity.”

Yank continued: “We are the only 501-c [non-profit charity] that has zero administration. A dollar comes in, a dollar goes to the children…We’ve been approached by many, many, network marketing companies in the past….We’ve never accepted a network marketing company [with the exception of Jeunesse].”

Neither of those statements were true. If “a dollar comes in, and a dollar goes to the children” (he was referring to dollars coming in from sales of ProPectin), that means Yank is donating 100 percent of his revenues (i.e. every dollar) to “the children.” And, again, we will see that Yank hasn’t donated large amounts of anything to charity.

Yank says “we’ve never accepted a network marketing company” with the exception of Jeunesse, but, of course, the Global Village Champions Foundation was formerly known as Global Village Market, which was itself a “network marketing company.”

At the convention, Yank went on to say, “Some of our partners around the world are Rotary International, International Red Cross, Salvation Army, church groups around the world…”

That also wasn’t true. I called those organizations, and their spokesmen confirmed that none of those organizations are “partners” of Global Village Champions Foundation. We will, in addition, see that Yank has not been involved with those organizations in any way that would suggest that he is striving to be “the undisputed world leader” in providing nutrition to needy people.

At the Jeunesse convention, Yank continued, “We document it all. We don’t document it all because of the publicity. We document it all because no good deed goes unpunished. There’s always an investigative reporter that’s gonna go ‘Well, how do we know you fed this many people?’ So please go to our website: we have manifests, shipping documents, field reports, pictures, it’s all there. We have fed more than that [i.e. more than the nearly one billion people claimed on the Global Village Champions Foundation website]. We don’t keep count of all that we have done.”

I went to the Global Village Foundation Champions website and did not find shipping documents and manifests showing that the Global Village Champions Foundation had donated close to one billion meals to needy children. Instead, I found a number of shipping documents and receipts, along with letters from various charities and others, all of which, taken together, proved the scope of Yank Barry’s fraud.

It is evident from the documents on the Global Village Champions Foundation website that the Global Village Champions Foundation has delivered some food and other items to needy people, and I do not mean to disparage any act of charity, no matter how small, but it is also evident that the Global Village Champions Foundation has donated only just enough to keep up appearances–that is, to enable Yank Barry to portray himself as a leading humanitarian and to enrich himself by exploiting the plight of hungry children.

I will now provide a description of everything that I found on the Global Village Champions Foundation website, and as I do so, keep in mind that the Global Village Champions Foundation and the media have repeatedly reported that the Global Village Champions Foundation has delivered nearly one billion meals to needy people, most of them children, and that the Global Village Champions Foundation is (to quote the Global Village Champions Foundation website) striving to become “the undisputed world leader in private humanitarian delivery of nutrition to needy persons everywhere, sustaining life, and helping to eradicate world hunger…”

As we go through the evidence that I found on the Global Village Champions Foundation website, also keep in mind that the work of the Global Village Champions Foundation was the ostensible reason why Yank Barry has received multiple nominations for the Nobel Peace Prize, along with other honors, such as the “Yank Barry American flag” flying on top of the U.S. Capitol building.

As we saw in Chapter 1 of this article, the first person who nominated Yank for the Nobel Peace Prize was Kiril Gorianov, a Bulgarian lawyer who was the Global Village Champions Foundation’s representative in Bulgaria, so that nomination did not quite count as a real nomination, but this year (2014) Yank received nominations for the Nobel Peace Prize from no less than three members of the U.S. Congress, including   Congresswoman Sheila Jackson Lee, who, in a speech on the floor of Congress honoring Yank Barry, repeated the claim that the Global Village Champions Foundation was (to quote the congresswoman precisely) “striving to become the undisputed world leader in private humanitarian delivery of nutrition to needy persons everywhere, sustaining life, and helping to eradicate world hunger…”

As we go through the evidence that I found on the Global Village Champions Foundation website, keep in mind also that Yank Barry told me that this was all the evidence that he had, and that this was all the evidence I needed. When I asked Yank if he could provide additional evidence, he said that he would, and when he failed to do so, he repeated, in a subsequent phone conversation, that all the evidence that I needed could be found on the Global Village Champions Foundation website.

What I found on that website was supposed evidence sorted by year. I have downloaded all of the evidence that I found on that website, and am providing here links to documents that I found on that website. I encourage readers to view my links, and then view the Global Village Champions website, as there is a chance that Yank Barry will alter the website after I publish this article.

The evidence on the Global Village Champions Foundation was located in two sections, one entitled “Making a Difference” (which you can view by clicking this link), and one entitled “Letters of Appreciation” (which you can view by clicking this link).

The “Making a Difference” section of the website has a “Relief Timeline” link that takes you to a large number of documents sorted by year, so I will begin by discussing what was found under each of those years.

By far the most extensive documentation was provided for the year 2014, and most of the documentation was in the form of numerous receipts for items that the Global Village Champions Foundation allegedly purchased for charity. I have created a document (posted here at DeepCapture.com) that lists purchase prices found on each of the receipts, and provides links to the receipts themselves.

Most of the receipts are in Bulgarian currency and for relatively small purchases, ranging from less than a dollar to around $1,000 (converted from Bulgarian currency). The only exceptions are two receipts, one for around 24,000 Bulgarian Leva (around $15,000 U.S.), and one for around 22,000 Bulgarian Leva (around $14,000). The remaining receipts (more than 100 of them) add up to a total expenditure in 2014 of around $48,000 (converted from Bulgarian currency).

Most of those receipts were not for purchases of food (many of the receipts are for items like fuel and printer cartridges), but even if all the receipts were all for purchases of food, and even if all that food had been delivered to needy people, the total expenditures evidenced by those receipts suggest that the Global Village Champions Foundation, in 2014, spent around what one would pay for a high-end automobile. To put this in further perspective, consider that just one Rotary club, on average, can be expected to raise far more than $1 million for charity in any given year, and there are thousands of Rotary clubs around the world, while Rotary International, unlike the Global Village Champions Foundation, does not advertise itself as an “undisputed leader in private humanitarian delivery of nutrition…”

In addition, there is no evidence that the items purchased by the Global Village Champions Foundation in 2014 were actually delivered to needy people. Even if they were delivered, it must be stressed that the receipts provided by the Global Village Champions Foundation add up to what one would pay for a single high-end automobile, and most of the receipts were not for food. Again, though I do not mean to disparage any act of charity, I do mean to suggest that the Global Village Champions Foundation has taken in a lot more than $50,000 with its fraudulent claim to have fed nearly one billion needy people, and most of the money that the Global Village Champions Foundation took in was not delivered to charity.

Remember that Yank tells his distributors, among others, that he uses at least 60 percent of his profits from his sales of ProPectin alone to buy food for needy children. Yank also told me that he is selling ProPectin in 52 nations around the world, and he has suggested that he earns huge profits from his sales of ProPectin. But he is lying to his distributors when he says that at least 60 percent of those profits are used to buy food for needy children and that the evidence of this can be found on the Global Village Champions Foundation website.

Aside from the receipts shown for 2014, the Global Village Champions Foundation’s website contained a few shipping documents purporting to be evidence of items shipped for charity in 2014. One of these documents (posted here at DeepCapture.com) was a shipping document showing that Yank’s company, Vitapro, had shipped 500 kilograms of ProPectin product to ProPectin’s office in China.

The Global Village Champions Foundation website reports that this ProPectin was “donated to China for Radiation/Pollution victims,” but there is no evidence that it was, in fact, “donated” (rather than sold), and it is hard to imagine that any legitimate charity in China would accept a donation of ProPectin, which, contrary to Yank’s claims, has not been proven by any credible medical scientist to rid the body of radioactive fallout and pollution. ProPectin also is not food.

Aside from that, the Global Village Champions Foundation website shows, as evidence of its charity work in 2014, one shipping document (posted here at DeepCapture.com) indicating that around 20,000 kilograms of Vitapro was shipped from Aliments Ed Foods, a subcontractor that manufactures the Vitapro dehydrated meat substitute, to the Global Village Champions Foundation in Bulgaria under the name of Kiril Gorianov, the Bulgarian lawyer who nominated Yank Barry for the Nobel Peace Prize.

Gorianov is also Vitapro’s representative in Bulgaria.

A document purporting to show that Vitapro’s subcontractor shipped 20,000 kilograms of Vitapro meat substitute to Vitapro’s representative in Bulgaria is not evidence that the Vitapro was donated to needy children. If it had been donated to needy children, Yank would have provided me with additional evidence to prove that it had been donated.

Even if we are to assume that it was donated, that 20,000 kilograms of Vitapro was the largest shipment of food in 2014, judging by the evidence on the Global Village Champions Foundation website, and 20,000 kilograms of Vitapro costs less than $20,000. It is also a lot less than a billion meals.

As further evidence of its charity in 2014, the Global Village Champions Foundation includes on its website a shipping document (posted here at DeepCapture.com) addressed to “Saint Vincent de Paul” in Arizona from a company called Vican Trading. The space on this shipping document where one would normally write in what was shipped and at what price is entirely blank, and the shipping document is not signed, meaning it is likely, in this case, that nothing at all was shipped. This is just a random, blank document that Yank posted as supposed evidence of his charity.

Another document on the Global Village Champions website, purporting to be evidence of the Global Village Champions Foundation’s charity in 2014, is a shipping document (posted here at DeepCapture.com) showing that the same company, Vican Trading, shipped 1,270 pounds of “New Commercial Goods” to a man in Miami. Shipping new commercial goods to Miami is not an act of charity, and this document, like the one mentioned above, does not name the Global Village Champions Foundation.

Yet another shipping document for 2014 (downloaded from the Global Village Champions Foundation website, and posted here at DeepCapture) is also from Vican Trading, this one addressed to the “Las Vegas Rescue Mission.” But again, the space on the document that is supposed to identify what was shipped is entirely blank, and the signature line is blank as well, meaning that this document is not evidence that anything at all was shipped, and could well be just a random, blank document that Yank included as supposed (and entirely unconvincing) evidence of his charity.

Also posted as evidence of the Global Village Champions Foundation’s charity in 2014 is a certificate from the Red Cross in China thanking Yank personally for donating around $60,000 worth of rice, and a letter from an outfit in Bulgaria thanking the Global Village Champions Foundation for donating 50,000 gallons of water. Those are the two most convincing documents on the Global Village Champions Foundation website, and that $60,000 worth of rice, along with 50,000 gallons of water, is not evidence that Yank is the “undisputed world leader in private humanitarian delivery of nutrition.”

The only other documents that the Global Village Champions Foundation posts as evidence of its charity in 2014 are documents from a “charity” called the Universal Aide Society purporting to show that the Universal Aide Society received from Yank Barry and distributed to the needy 1,440 buckets of Vitapro dehydrated meat substitute. The Universal Aide Society, based in Yank’s hometown of Montreal, was operating illegally because the Canadian Revenue Agency, back in 2009, revoked the Universal Aide Society’s license to operate as a charity, and reported that the Universal Aide Society could not show that its activities were charitable.

The Canadian Revenue Agency stated in part that the Universal Aide Society “has not shown that through its programs and arrangements for the undertaking of activities, it devotes all of its resources to its own charitable activities.” The Canadian Revenue Agency stated further that the Universal Aide Society “has not shown that [its] activities are charitable…” According to the Canadian Revenue Agency, the Universal Aide Society’s principals were using money from their donors to fund their vacations in the south of France and other popular vacation destinations. The Universal Aide society also used money from donors to buy hand bags, smoked salmon, duty-free cigarettes and various luxury items unrelated to charity.

Soon after its registration was revoked, the Universal Aide Society was exposed in a big Forbes magazine article as a fraud that had falsely claimed to be delivering food to Serbian residents of Kosovo. Rather than rehash all of the facts contained in that Forbes Magazine article, I will simply encourage readers to see the article themselves (click here to read the article). See also a lengthy document from the Canadian Revenue Agency (posted here at DeepCapture.com) providing details of the reasons why the Canadian Revenue Agency determined that the Universal Aide Society was not engaged in any actual charitable activities, and why its license was revoked.

We will see that in years prior to 2014, far more of the Global Village Champions Foundation’s alleged deliveries of food to the needy was, more specifically, delivered (or not delivered at all) through the Universal Aide Society.

When, during one of my phone conversations with Yank, I mentioned to Yank that the Universal Aide Society’s license had been revoked in 2009, he assured me that its license had been quickly reinstated. But when I contacted the Canadian Revenue Agency to ask whether the Universal Aide Society’s license had been reinstated, I received an email from a Canadian Revenue Agency spokeswoman (the email is posted here at DeepCapture.com) confirming that the Universal Aide Society’s license had most certainly not been reinstated.

The Canadian Revenue Agency spokeswoman also confirmed that the Universal Aide Society’s license had been revoked because the Canadian Revenue Agency had determined that the Universal Aide Society was not engaged in any actual charity work. The spokeswoman sent me a long document (i.e. the document to which I provided a link above) outlining the many reasons why the Canadian Revenue Agency determined that the Universal Aide Society was not engaged in any actual work that could be described as “charity.”

I have just described to you every piece of documentation that the Global Village Champions Foundation provides as evidence of its charity in 2014, and keep in mind that Yank says that 60 percent of his profits from sales of not only ProPectin, but also Vitapro are delivered to charity through his foundation. When asked to provide documents showing what his profits were, Yank failed to do so, but he has stated that Vitapro alone has annual revenues of more than $1 billion dollars, and that he donates “most of it” to charity.

Clearly, Yank donated nowhere close to that amount of money to charity in 2014.

The documentation that the Global Village Champions Foundation website provides as evidence of its charity in earlier years is considerably sparser than even the paltry documentation that it provides for 2014. The evidence for charity in 2013, for example, includes little more than a number of random receipts for random purchases, and though the total expenditure is more than in 2014, while some of the purchases were of food, there is no evidence that most of the items purchased were delivered to charity.

One of the 2013 receipts is from a Subway sandwich shop. There are also: 1) several receipts for purchases of hamburgers from the local McDonald’s hamburger restaurant in Bulgaria; 2) a receipt for an extra-large pizza; 3) grocery store receipts showing purchases of potato chips and other junk food, and 4) a receipt from the luxurious Grand Hotel in Sofia, which is presumably where Yank stays during his visits to Bulgaria. (Yank has told the media that he is housing Syrian refugees in luxury hotels, and many journalists actually believed that Yank was housing Syrian refugees in luxury hotels,  but that receipt for the Grand Hotel was not for housing Syrian refugees, and there are no other receipts from hotels that housed refugees of any kind).

The above receipts, it should be stressed, are presented as evidence that the Global Village Champions Foundation has fed close to a billion people. Yank’s companies, Vitapro and ProPectin, are based in Bulgaria, and it should be recalled that most of the receipts that Yank provides as evidence of his charity in 2014 are in Bulgarian currency, despite the fact that Yank claims to be feeding needy children in nations all around the world, “eradicating hunger from the face of the planet Earth.”

In addition to those receipts, the Global Village Champions Foundation provides as evidence of its activities in 2013 receipts from a Walmart in Sarasota, Florida, where Yank has a house. Those receipts show that Yank purchased at Walmart various items of clothing, including a pair of women’s panties, and a magazine.

Oddly, the Global Village Champions Foundation’s website posts multiple receipts for purchases of women’s panties at various stores. It could be that Yank was delivering panties to the girls in Bulgaria, but panties weren’t meals, and girls wearing panties are not hungry children.

Most of the other documents that the Global Village Champions Foundation provides as evidence of its “charity” in 2013 are shipping documents showing that Aliments Ed Foods, the subcontractor that manufactures the Vitapro dehydrated meat substitute product, shipped various quantities of Vitapro to Yank and/or his business partners, but there is no evidence that the Vitapro was donated to charity.

Again, most humanitarian organizations provide evidence that their shipments of food was actually delivered to hungry people, and shipping documents showing that Yank’s subcontractor shipped product to Yank does not count as evidence that the Global Village Champions Foundation has delivered significant quantities of food to hungry people, much less nearly one billion people, most of them children.

One of the shipping documents for 2013 shows that Aliments Ed Foods shipped around 17,000 kilograms of “Seasoning” to a company in India called Viva Enterprises. There is, of course, no evidence that the seasoning was delivered to hungry people, and it is, in any case, hard to imagine that hungry people would benefit much from seasoning rather than actual food. A large shipment of seasoning does not count as nutrition, much less show that the Global Village Champions Foundation is an “undisputed leader of private humanitarian deliver of nutrition to needy people everywhere.” And a shipping document showing that Yank’s subcontractor shipped product to Viva Enterprises, which is not a charity, does not count as evidence of anything.

The documentation that the Global Village Champions Foundation provides as evidence of its supposed charitable activities between the years 1999 and 2012 is even sparser (and you can find the full compendium of documentation posted here at DeepCapture.com). All told, the Global Village Champions Foundation website posts 42 documents purporting to be evidence of its charitable activities between 1999 and 2012, and of those 42 documents, a full 20 are documents provided by the above-mentioned Universal Aide Society, which, recall, was deemed by the Canadian Revenue Agency to be fraud..

It should be stressed that the Canadian Revenue Agency determined that the Universal Aide Society was engaged in no actual charitable activities, and so it is probably safe to assume that the Global Village Champions Foundation’s dealings with the Universal Aide Society did not, in fact, involve feeding hungry children. It should also be stressed that nearly half the documents provided by the Global Village Champions Foundation as evidence of its charity between 1999 and 2012 are Universal Aide Society documents.

Aside from those, there are only the following documents (all of which can be viewed here at DeepCapture.com): 1) a few more shipping documents showing that Yank’s subcontractor shipped Vitapro to Yank; 2) a few blank shipping documents that show that nothing was shipped; 3) a letter from a charity thanking Yank for donating a pair of Muhammad Ali boxing gloves (and nothing else); 4) a document showing that Yank donated around $500 worth of canned sardines to charity; and 5) documents showing that Yank did business with a company called United International, which was not a charity.

Aside from that, the only documents provided by the Global Village Champions Foundation as evidence of its charity between 1999 and 2012 (all of these documents can be viewed here at DeepCapture.com) are: 1) a few letters thanking Yank for attending charity events at various country clubs; 2) a letter thanking Yank for playing in a golf tournament that was for charity; and 3) numerous letters thanking Yank for attending parties at the Crystal Palace casino and nightclub in the Bahamas.

In other words, Yank has posted a bunch of letters showing that he went to parties at a casino as evidence that he has fed nearly one billion people, most of them children. We will see that Yank had other business with the management of the Crystal Palace casino in the Bahamas (some of the above-mentioned letters are addressed to “Yank Barry, c/o of the Crystal Palace”), and though the parties that Yank attended at the Crystal Palace were ostensibly fundraisers for charity, attending parties at a casino does not make Yank Barry an “undisputed leader in private humanitarian delivery of nutrition” worthy of the Nobel Peace Prize.

It is literally the case that aside from the documents showing his dealings with the Universal Aide Society, which was, according to the Canadian Revenue Agency, not involved in any activities that were actually charitable, and aside from documents showing that he attended various functions at country clubs and the Crystal Palace casino, Yank has provided almost nothing in the way of evidence that the Global Village Champions Foundation donated to charity between the years 1999 and 2012.

The documentation for the year 2014 was a bit more substantial, but only a bit, and not more than what I have described above, with little evidence that even those expenditures were for food that was delivered to needy children. In other words, we have shown that Yank’s charity is a massive fraud, but there is more.

As I already mentioned, there are documents showing that in 2014, for example, Aliments ED Foods, which manufactures Yank’s Vitapro product, shipped Vitapro product to Global the Village Champions Foundation in Bulgaria. There were no other shipping documents for 2014, other than those documents showing that Vitapro had been shipped to Bulgaria in the name of the Global Village Champions Foundation and its local representative Kiril Gorianov (who, recall, is also Vitapro’s representative in Bulgaria, and who was the first person to nominate Yank for the Nobel Peace Prize).

Since Bulgaria is where Yank’s company, Vitapro International, has its headquarters (Vitapro International being the company that markets and sells the Vitapro product, manufactured by, among other subcontractors, Aliments ED Foods), it is likely that these shipping documents show nothing other than the fact that the manufacturer of Yank’s product sent some of that product to Yank in Bulgaria, while Yank had the product shipped in the name of the Global Village Champions Foundation so that he could claim the product was for charity and not pay import or export taxes on the shipment of Vitapro product, which Yank then sold for a profit.

There is only one other shipping document that, if genuine, seems to show that the Global Village Champions Foundation has delivered at least some meals to charity. That document shows, more specifically, that around 38,000 kilograms of Vitapro was shipped to the government of the Philippines, and that document, at least, was evidence that the Vitapro product had been sent to someone other than Yank himself.

It might well be that the government of the Philippines delivered that Vitapro product onwards to hungry people, but that one shipment of 38,000 kilograms of Vitapro during 2013 is not evidence that Yank or the Global Village Champions Foundation has fed close to one billion people. (The Global Village Champions Foundation website does have a video showing Global Village Champions Foundation volunteers delivering some Vitapro to people in the Philippines, and maybe that was the Vitapro that Yank shipped to the government of the Philippines, but there is no evidence that the full 38,000 kilograms went to needy people).

Aside from what I have just described, the only other documentation provided by the Global Village Champions Foundation website (and, remember, Yank told me this was all the documentation we need, and he failed to deliver any additional documentation, despite multiple requests) were a number of letters and certificates, some of them from charitable organizations, others from friends of Yank, thanking the Global Village Champions Foundation (or, quite often, thanking just Yank alone) for donations. All told, there were 113 letters and certificates thanking Global Village Champions Foundation (or, in many cases, just thanking Yank Barry).

Presumably, these 113 letters and certificates (all of them to be found, as of this writing, in the Global Village Champions Foundation website’s “Letters of Appreciation” section (which you can view by clicking this link) represented the entirety of the Global Village Champions Foundation’s work over more than two decades since the 1990s, when the foundation was established, along with its supposed goal to feed one billion people.

A few of these letters and certificates at least appeared to be genuine, so, for example, there was a certificate from the Red Cross Society of China thanking Yank Barry for donating 377,000 Rmb (around $62,330) worth of rice to victims of an earthquake, namely the same $62,000 worth of rice mentioned above. But that donation of $62,330 worth of rice was one of the largest donations cited in the various letters and certificates, and while it was a generous donation, it didn’t quite add up to the one billion meals.

A number of the letters were handwritten notes, purportedly written by children, each child thanking Yank in general terms for being a nice guy. It was impossible to verify whether these children had really been helped, and it was impossible to verify whether the children even existed. Supposing that they did exist, their letters (13 letters out of the 113 letters posted on the website were these handwritten notes from children) certainly did not constitute evidence that the Global Village Champions Foundation had delivered nearly one billion meals to needy children.

Many of the certificates and letters on the website were the sorts of certificates and form letters that one receives simply for donating a few dollars to a charity on the charity’s website. As a typical example, the Global Village Champions Foundation posted a letter (the letter is reposted here at DeepCapture.com) from CARE Canada that begins “Dear Yank Barry” (suggesting that CARE Canada was not on familiar enough terms with Yank to address him as Dear Yank, or even Dear Mr. Barry). The letter thanks “Yank Barry” for making a donation (it doesn’t say how much was donated) and provides instructions on how one can donate more over the internet.

Anybody can obtain such a letter by donating $10 to CARE Canada, and if Yank had donated a large sum, he surely would have received a more formal letter. Certaintly, this letter and the many others like it posted on the Global Village Champions Foundation website are not evidence that the Global Village Champions Foundation has donated significant sums to charity, much less enough to buy one billion meals for needy children.

The Global Village Champions Foundation did post a somewhat more formal letter, allegedly from CARE Canada, thanking Yank Barry generally for delivering Vitapro food to Rwandan refugees, but this letter (which is posted here at DeepCapture.com) was written on Vitapro stationery (i.e. Yank’s stationery, not CARE Canada stationery). In other words, it is likely that someone at Vitapro wrote this letter, and Yank is trying to pass it off as a letter from CARE Canada.

A number of other letters were from various of Yank’s friends, including Congresswoman Sheila Jackson Lee, and though Congresswoman Jackson Lee, in her speech on the floor of Congress, reported that Yank’s charity had fed nearly a billion children, her letter posted on the Global Village Champion Foundation website (and reposted here at DeepCapture) thanked Yank for nothing more than donating some undisclosed amount to a “Toys for Kids” event that was hosted by the congresswoman.

Some of the other letters were vague letters of commendation from various government officials in underdeveloped countries, and none of those letters cited any specifics as to what, if anything, Yank had donated to those countries. One of the letters was not a letter at all. It was just a business card of one Andre Azoulay. The business card identified Azoulay as “The Counsellor to His Majesty the King” of Morocco, but a business card is not, of course, evidence that Yank donated anything to charity.

One of the letters on the Global Village Champions website is a letter from a charity in Britain thanking Yank for donating a piece of paper with Evander Holyfield’s thumbprint (and nothing else). Another of the letters, from a general in the Thai army, was merely commending Yank for being a friend of the Thai armed services. Yank has also posted on his Facebook page letters of commendation from other foreign armed services, including a letter thanking him for being a friend of the Mexican Army.

Having lived in Thailand for a number of years myself, I know that it is possible to buy a letter of commendation from a Thai general, and it doesn’t cost much at all. I myself have received commendations from the Vietnamese military, and to earn these commendations, I had to do nothing more than promise to introduce American businessmen to the Vietnamese military. (I was, at the time, a consultant who specialized in helping U.S. companies do business in Vietnam).

Some of the other letters, as I mentioned, seemed to be standard “Dear Yank Barry” form letters that charities send to donors, no matter how small their donation, and the letters did not specify how much Yank had donated, much less constitute evidence that Yank had fed nearly one billion people.

The letters that did specify how much Yank and his charity had donated did not portray Yank as an “undisputed world leader in private humanitarian delivery of nutrition.” One letter thanked Yank for helping the Calgary Food Bank feed 65,330 bowls of soup to homeless people in Canada, but again, that was one of the largest acts of charity cited in the various letters and certificates on the Global Village Champions Foundation website, and around 65,000 bowls of soup (along with all the rest described above) does not add up to one billion meals.

Another letter, from a gospel church in Tokyo, thanked Yank for donating 33 boxes of ProPectin, and 33 boxes of ProPectin is a lot less than a billion meals. Indeed, ProPectin is not a meal at all, and nor is ProPectin in any other way useful to needy people. There was also a letter on the Global Village Champion Foundation website thanking Yank for buying a $2,533 ticket to the “Celebrity Chef and Wine Tasting and Golf Challenge” at the Long Boat Key Club and Resort.

In other words, Yank paid $2,500 to drink wine and play golf at a country club, and this (along with his many letters thanking him for attending charity fundraisers at other country clubs and at the Crystal Palace casino in the Bahamas) is what Yank means by “shipping documents” and “manifests” documenting that he has delivered nearly one billion meals to needy children everywhere.

Other letters posted on the Global Village Champions Foundation’s website as supposed evidence of Yank Barry’s charity came from the Young Presidents Organization and another outfit called The Russian Children’s Relief Fund Inc. Elsewhere, the Young Presidents Organization had stated its suspicions that Yank Barry was a fraud, and The Russian Children’s Relief Fund was not a real charity.

In 2002, the Young Presidents Organization withheld payment of $150,330 in contributions that it raised at a Yank Barry fund-raiser for the Russian Children’s Relief Fund because the Young Presidents Organization learned that the Russian Children’s Relief Fund did not legally exist anymore, having been dissolved the year before. In other words, the Russian Children’s Relief Fund was a fraud, and Yank attempted (but failed) to abscond with $150,330 that he raised for this “charity.”

The Russian Children’s Relief Fund had been operated out of a Miami condominium by a man named Gordon Stula, whose name appears on many of the Universal Aide Society documents discussed above.

Other letters on the Global Village Champions Foundation website were from charities that thanked Yank for nothing more than showing up at their premises with famous boxers, including Evander Holyfield and Mohammed Ali, and though those charities expressed hope that Yank was actually going to donate something to the charities, there is no evidence on Yank’s website that Yank made the hoped-for donations.

Notably, after I asked Yank whether there was evidence, aside from that posted on his website, that Yank had donated close to one billion meals to needy children, Yank posted a letter from the head of the Liberian consulate in Atlanta stating that the Liberian consulate had received from Yank a “bill of lading” for “5 million meals” that Global Village Market had ostensibly donated to Liberia.

It is doubtful that the Liberian consulate actually received a “bill of lading” for “5 million meals” (a typical bill of lading would specify the weight or size of the food that was shipped, not the number of meals that could be made with that food, and Yank did not post a copy of the actual bill of lading). Furthermore, the letter from the head of the Liberian consulate was dated 1999, when the Global Village Champions Foundation was still known as Global Village Market, and not long after the Montreal Gazette had reported that Global Village Market was a fraud that was not delivering significant quantities of food to charity.

Among all the remaining letters posted on the Global Village Champions Foundation website as supposed evidence that the Global Village Champions Foundation had donated close to a billion meals to charity, only a few thanked Yank for donating specific amounts of food. Three of the letters thanked Yank for donating “one container” of Vitapro, but again, those letters were dated between 1998 and 2001, when the Global Village Champions Foundation was still known as Global Village Market, and a few containers of Vitapro did not add up to 1 billion meals.

One of the letters on the Global Village Champions Foundation website was from a company in India called Viva Enterprises, namely the same company, mentioned above, that took a large shipment of “seasoning” from Vitapro’s subcontractor, if we are to believe the shipping document that Yank posted. When I first checked the Global Village Champions Foundation website, the letter from Viva Enterprises thanked Yank Barry for delivering “144 boxes” of Vitapro and “33 boxes” of ProPectin.

After I began asking Yank about the evidence on the Global Village Champions Foundation website, though, Yank removed that letter from Viva Enterprises and replaced it with another letter from Viva Enterprises, this one thanking Yank for shipping “154 containers” (a lot more than 144 boxes) of Vitapro and “13 boxes of Propectin (over 11,000 kilograms).” Yank also posted a letter from the “Late Shri. Vishnu Waman Thakur Charitable Trust” referring to this same alleged shipment of 154 containers of Vitapro and “13 boxes (over 11,000 kilograms)” of ProPectin.

The letter from the Late Shri. Vishnu Waman Thakur Trust stated that the Trust would “ensure that our volunteers distribute this aid to the most in need. We are also making arrangements for ProPectin to be included for distribution to type 2 diabetes patients through the mobile hospitals. We have been instructed…to ensure that pictures and video of the recipients of the products are taken and data on their reactions etc. are captured which we can send to you. We will ensure that this is done.”

Given that Yank removed the earlier letter from Viva Enterprises, and replaced it with a new letter, changing “144 boxes of Vitapro” to “154 containers of Vitapro,” it is likely that Yank simply asked his business partner to produce a new letter with different numbers. It is, in any event, highly unlikely that that the Late Shri. Vishnu Waman Thakur Trust, which is not a significant charity, had the resources to distribute “154 containers” of Vitapro, and nor is it likely that any “mobile hospitals” would accept ProPectin as a cure for type 2 diabetes.

Yank has also yet to show me the alleged video of needy people in India receiving their 154 containers of Vitapro or even evidence that Vitapro’s subcontractor has ever manufactured that much Vitapro meat substitute.

In addition, Yank has not posted any shipping documents showing that he actually shipped 154 containers of Vitapro to Viva Enterprises in India. He has posted only that one shipping document, discussed above, showing that he allegedly shipped “seasoning” to his business partners at Viva Enterprises, a company affiliated with the Late Shri Vishnu Waman Thakur Trust. If Yank actually delivered 154 containers of Vitapro to needy people in India, there would be far more evidence than a suspect letter from his business partner, and Yank has provided no such evidence.

The most impressive letters in Yank’s whole collection, meanwhile, were letters from the Universal Aide Society. The Global Village Champions Foundation posted a total of eight letters from the Universal Aide Society, one of which thanked Yank for donating 2 million meals worth of Vitapro, and another of which thanked Yank for donating 15 million meals worth of Vitapro.

There are good reasons to doubt any documentation provided by the Universal Aide Society or its affiliates because, as we know, the Universal Aide Society’s license had been revoked after it was shown to have been involved in no work that was actually charitable. (I called the Universal Aide Society’s number in Canada and left a message saying that I wished to give the Universal Aide Society a chance to respond to allegations in this story, but my call was not returned. A Universal Aide Society representative has stated elsewhere that the organization believes it was treated unfairly by the Canada Revenue Agency, and that the Universal Aide Society would have its name cleared in the courts).

It must be stressed that most of the letters and certificates posted on the Global Village Champions Foundation website either provided no numbers or suggested that Yank donated between “33 boxes of ProPectin” [which is not a meal) to one container of Vitapro, or, in no more than a few cases, around $60,330 worth of soup or rice, and a few containers of Vitapro back in 1998-2001 when the Global Village Champions Foundation was known as Global Village Market (a fraudulent company).

Those donations, assuming that they were real donations, were better than nothing, but they were a lot less than one billion meals, and a lot less than the billions of dollars that Yank says he has delivered to charity. It must, in addition, be stressed that the most important letters in Yank’s collection were the letters from the Universal Aide Society, including the letter stating that Yank had donated 15 million meals to charity.

No other letters stated that Yank or the Global Village Champions Foundation had donated anywhere close to 15 million meals, and with the exception of the letter from the head of the Liberian consulate (which was authored way back in 1999), and the dubious letter from Viva Enterprises, no other letters gave the impression that Yank was a major donor of anything.

It must also be stressed that in 2009, the Canadian Revenue Agency revoked the registered charity status of the Universal Aide Society because the Universal Aide Society was not engaged in any real charity work. Recall that not only those eight letters (namely, the only letters that thanked Yank for donating anywhere close to “2 million” or “15 million” meals), but also half of the documents posted by the Global Village Champions Foundation as evidence of its charity work between 1999 and 2012 came from the Universal Aide Society (which was engaged in no real charity work).

I will repeat that when I asked Yank Barry about this, he assured me that the Universal Aide Society’s license had been reinstated, and that the Universal Aide Society was now in good standing. He said if there were any suspicions that the Universal Aide Society were a fraud, the documentation from the Universal Aide Society would not appear on the Global Village Champions Foundation website. But I will also repeat that when I contacted the Canadian Revenue Agency, the Canadian Revenue Agency confirmed that the Universal Aide Society’s license had not been reinstated, and that the Universal Aide Society was still regarded as a fraud that had not engaged in any work that the Canadian Revenue Agency deemed to be charitable.

The Universal Aide Society’s fraud, though, pales in comparison to the massive fraud perpetrated by Yank Barry and the Global Village Champions Foundation, which has taken in a lot of money, but which has not used much of that money to feed the poor. If Yank Barry really had fed nearly a billion people, there would be evidence that he had done so, and Yank would make that evidence available to the public.

Assuming that the letters on the Global Village Champions Foundation website are authentic, Yank has made a few donations to charity, and again, I do not mean to disparage those donations, as some needy people probably benefited from them. But again, there is no evidence on that website that Yank has donated anywhere close to a billion meals to needy people, and though the Global Village Champions Foundation has taken in a lot of money with its claims to have fed close to a billion people, it is not clear what happened to that money, most of which was certainly not used to feed the needy.

Yank’s statements (at Jeunesse conventions and elsewhere) that his website contains such evidence is itself a fraud because the only evidence posted on that website is as I have described it. That is to say, there is no evidence whatsoever that Yank is “striving to become the undisputed world leader in private humanitarian delivery of nutrition to needy persons everywhere.” That statement, too, is a case of fraud, because it suggests that the Global Village Champions Foundation ranks up there with other undisputed leaders, such as Save the Children.

It is true that a few celebrities, including not only Mohammed Ali, but also the famous boxer Evander Holyfield, have endorsed Global Village Champions Foundation and its claim to have delivered nearly a billion meals, but it is possible that those celebrities were either duped, or that they are themselves conspiring with Yank to perpetrate the fraud. Yank certainly seems to have convinced other celebrities and prominent people (e.g. members of the Kingsmen and several members of the U.S. Congress) to make fraudulent statements on his behalf. (Muhammad Ali and Evander Holyfield did not reply to questions that I sent for this story to their official websites).

It is also true that the Global Village Champions Foundation appears to boast an illustrious board of advisors, all of whom endorse the claim that the Global Village Champions Foundation is “striving to become the undisputed world leader in private humanitarian delivery of nutrition to needy persons everywhere.” However, on closer inspection, the Global Village Foundation’s board of advisors is not so illustrious, and the few genuinely illustrious people on that board of advisors are arguably “illustrious” only in the light of our culture’s warped values.

The chairman of the Global Village Champions Foundation’s advisory board at the time of this writing is Oliver “Buck” Revell, who is the most decorated FBI hero in history.

Buck Revell was formerly the associate deputy director (second-in-charge) of the FBI, meaning he was formerly one of the highest-ranked law enforcement officials in the land. Surely, the Global Village Champions Foundation must be legit if the chairman of its advisory board is Buck Revell.

But another possibility is that Buck Revell’s position as chairman of the advisory board might partially explain why others involved with Global Village Champions Foundation, including Yank Barry, have not yet been arrested by the FBI. And while Buck Revell is the most decorated FBI hero in history, he was, more specifically, decorated for having led some of the more notorious FBI investigations in history.

For example, Buck Revell led the FBI’s investigations of: 1) the Bank of Credit and Commerce International (BCCI), an outfit that had business with numerous terrorists and organized crime figures, including Yank’s mobster associates in Canada. (See earlier DeepCapture stories for more on the BCCI enterprise, including details of BCCI’s business with the Commisso crime family in Canada. We will discuss Yank’s dealings with Cosimo Commisso in greater detail); and 2) the Iran-Contra scandal, which saw U.S. officials, in league with the BCCI enterprise, among others, selling sophisticated weaponry to the regime in Iran and using the proceeds to arm the so-called “contra” rebels in Nicaragua, while the contras and their business partners, including the leading Colombian drug cartels, laundered drug money through the BCCI enterprise.

Buck Revell also led the FBI’s investigation of the 1993 bombing of the World Trade Center, perpetrated by terrorists, including a terrorist named Omar Abdul Rahman, otherwise known as the Blind Sheikh, who had extensive involvement with the BCCI enterprise. The Blind Sheikh (who was not just a terrorist, but also a banker)  co-founded BCCI’s most important affiliate, Faisal Islamic Bank, and earlier DeepCapture stories provided details of the FBI’s attempt to protect the Blind Sheikh from prosecution.

Revell also led the investigation of the 1988 terrorist bombing of Pan Am Flight 103 over Lockerbie, Scotland, which was the most deadly terrorist attack in history prior to the terrorist attack of September 11, 2001. It is now almost universally accepted that the perpetrators of the Pan Am Flight 103 bombing were terrorists with ties to the BCCI enterprise, though the FBI found otherwise, and a strong taint of scandal hung over not only the FBI’s investigation of the Pan Am Flight 103 bombing, but also all of the other FBI investigations mentioned above.

That is to say, all of those investigations were dogged by allegations that the FBI, under Buck Revell’s direction, had perpetrated cover-ups, protected criminals and terrorists, and persecuted honest U.S. government officials and others who tried to report the truth. It is not the purpose of this article to discuss all of those FBI investigations in detail, and others besides myself have already done excellent reporting on this subject, so it will suffice if I encourage readers to educate themselves by reading: 1) the many books reporting on the FBI’s protection of the BCCI enterprise, and subsequent cover-up of the BCCI scandal; and 2) the many books noting FBI management’s deliberate obstruction of attempts by others to investigate the Iran-Contra scandal

While the more famous protagonist Oliver North was the key figure in the Iran-Contra enterprise, Buck Revell oversaw an FBI operation to harass, surveil, and terrorize ordinary American citizens who opposed the U.S. government’s support of the contras and dictators in Latin America. For more on this subject, see the book “Break-ins, Death Threats and the FBI,” by Pulitzer Prize winning journalist Ross Gelbspan. That book details Buck Revell’s involvement in a program that saw FBI agents terrorizing and surveilling thousands of innocent Americans.

See also the extensive literature (including three books on this subject by prominent journalist Peter Lance) about the FBI’s attempts to protect some of the terrorists linked to the 1993 WTC bombing; and the extensive literature that has proven beyond a shadow of a doubt that FBI management and other U.S. officials protected the terrorists (including a BCCI figure named Monzer al-Kassar, who was also a U.S. government agent and key figure in the Iran-Contra enterprise) most widely suspected of involvement in the 1988 bombing of Pan Am Flight 103, while falsely pinning the blame on the Libyan government and persecuting all who tried to tell the truth. (The numerous books on this subject are cited in a DeepCapture story entitled “Monzer al-Kassar, Model Citizen;” the most recent book is “Cover-up of Convenience, The Hidden Scandal of Lockerbie”).

It was, of course, also Buck Revell who hired Lindley DeVecchio, chief of the FBI’s organized crime task force during the 1990s, later indicted for having allegedly corrupt relationships with members of the Colombo crime family. DeVecchio, like Buck Revell, is a close associate of Yank Barry.

It is, in addition, certain that Buck Revell knows that Yank Barry is a convicted criminal (recall that Yank Barry did jail time for his involvement in a Mafia extortion scheme), as does Chin Ho Lee, another member of Global Village Champions Foundation’s advisory board. Chin Ho Lee is a former FBI special agent and a partner in the Revell Group, a company founded by Buck Revell that specializes in “intelligence” gathering for corporate and government clients, though the Global Village Champions Foundation website names Chin Ho Lee only as “Chairman, Hyundai Aluminum Industries.” (He says he formerly worked as a high-level executive for that company).

When I contacted Buck Revell and told him that there were good reasons to believe that the Global Village Champions Foundation was making fraudulent claims, and that Yank Barry was a criminal, he said he had seen no evidence to support my allegations. I then asked Revell if he would disassociate himself from Yank Barry and the Global Village Champions Foundation if I were to send him evidence that Yank Barry was engaged in criminal activity and that the Global Village Champions Foundation was a fraud.

Revell said, yes, he would certainly do so.

I then asked Revell if he would report Yank Barry to his associates at the FBI if I were to send him evidence that Yank Barry was engaged in criminal activities, and he, Revell, said, yes, he would certainly do so. This was good news, and it suggested that maybe Buck Revell was going to do the right thing.

But when I sent Revell an email containing a great deal of evidence that Yank Barry was engaged in criminal activity and that the Global Village Champions Foundation was a fraud, Revell never answered my email. To this day, Revell has not disassociated himself from Yank Barry, and he continues to serve as chairman of the Global Village Champions Foundation’s “illustrious” advisory board.

In other words, the former associate deputy director of the FBI (formerly one of the highest ranked law enforcement officials in the nation) is failing to report Yank Barry to the authorities, and continuing to promote Yank Barry’s charity, knowing that Yank is a criminal and that his charity is a fraud. We will review much more evidence that Yank is currently engaged in criminal activity, and I sent this evidence to Buck Revell, but he ignored it.

Other members of the Global Village Champions Foundation’s illustrious board of advisors are not who they say they are. A screenshot from the Global Village website listing the members of the Global Village Champions Foundation’s advisory board and their supposed professions is posted here at DeepCapture.com, and make sure to have a look because this information might be removed from the Global Village Champions Foundation website soon after publication of the story you are now reading.

It might be removed because this story will now expose most of the members of the Global Village Champions Foundation’s illustrious advisory board as frauds and imposters. For example, The Global Village Champions Foundation’s website lists one Dr. Ibrahim Achmed Al-Sharef as a member of the Global Village Champions Foundation’s advisory board, and the website describes Dr. Ibrahim Achmed Al-Sharef as the “Coordinator, Doctors Without Borders, Tripoli, Libya.”

Doctors Without Borders is a prominent charity, but when I called Doctors Without Borders, a spokesman for that charity stated that the charity’s computers held no record of a Dr. Ibrahim Ahmed al-Sharef working in any capacity for Doctors Without Borders When I asked Yank Barry about this, he assured me that Dr. Ibrahim Ahmed al-Sharef was, in fact, the Coordinator of Doctors Without Borders in Libya, and that Doctors Without Borders would confirm this. He said I should check with Medecins Sans Frontiers, which, according to Yank, was the “original French organization” because maybe the French organization was different from the organization with the same name in English (“Medecins Sans Frontiers” translates as “Doctors Without Borders”).

Medecins Sans Frontiers is, in fact, the same organization as Doctors Without Borders, but I checked again with Doctors Without Borders/Medecins Sans Frontiers, and a spokesmen for that organization confirmed again that Dr. Ibrahim Ahmed al-Sharef had never worked for Doctors Without Borders. The spokesmen sent me an email (the email is posted here at DeepCapture.com) stating that “There is no individual by the name Dr. Ibrahim Achmed Al-Sharef with the Doctors Without Borders/Medecins Sans Frontiers (MSF) team in Libya.”

As to what Dr. Al-Sharef’s real job might be, that is unknown, since his name is mentioned nowhere on the internet, other than on various Yank Barry websites that identify him as “Coordinator of Doctors Without Borders, Tripoli, Libya.”

Meanwhile, the Global Village Champions Foundation lists a man named James Shelley as being a member of its “illustrious” advisory board, and the Global Village Champions Foundation website describes James Shelley as “Former President/CEO, Bank of America Canada.” But James Shelley has never worked for Bank of America in any capacity whatsoever, much less as president of Bank of America in Canada.

When I asked Yank Barry about this, Yank assured me that Shelley had been president of Bank of America Canada, and Yank stated that Bank of America would certainly have records showing that Shelley was, at a minimum, president of Bank of America’s “farm and real estate” division in Canada. Yank said, “We have no reason to exaggerate.”

Clearly, Yank was telling me that Shelley really had been president of at least an important division of Bank of America, the big financial institution, so I did some further research, and I can now confirm that Shelley absolutely never worked for Bank of America in any capacity, much less as president of an important Bank of America division. However, I did discover that Shelley and few other people had incorporated a small company called Bank of America Canada Realty.

The fact that Shelley incorporated a small company called Bank of America Canada Realty is recorded on a website called businessprofiles.com (a screenshot from that website is posted here at DeepCapture.com), but the Bank of America Canada Realty incorporated by Shelley has absolutely nothing to do with Bank of America, the big financial institution. Most likely, Shelley incorporated this company precisely so that he could say that he was “President, Bank of America Canada,” while fraudulently suggesting that this means he was a president of Bank of America, the big financial institution. (He has stated in multiple forums that he was president of Bank of America, the big financial institution, and this statement is fraudulent).

To repeat: both Shelley and Yank Barry have stated unequivocally that Shelley was president of at least an important division of Bank of America, the big financial institution, but Shelley has never worked in any capacity for Bank of America, the big financial institution, and I have been made aware that Bank of America is going to go after Shelley for incorporating a company in the name of Bank of America, and fraudulently describing himself as being affiliated with Bank of America.

Yet another member of the Global Village Champions Foundation’s illustrious advisory board is Tony Lichaa, who is described on the Global Village Champions Foundation website as the President of the Lebanese Association for the Prevention of Disease. That sounds impressive, but there is no record that any such organization exists. If it does exist, it is not active in any way, much less in the prevention of disease, and it was founded by Tony Lichaa himself.

Elsewhere (see this screenshot from a company that Tony Lichaa co-founded, for example), Tony Lichaa is, at the time of this writing, describing himself as the “former head of internal medicine and cardiology” at the Montreal Heart Center, one of the most prestigious hospitals in Canada. When I called the Montreal Heart Center, I was told that Tony Lichaa never worked there in any capacity, much less as the “head of internal medicine and cardiology.” When I asked Yank Barry about this, Yank assured me that Tony Lichaa really had been the head of cardiology at the Montreal Heart Center, but again, I can confirm (and the Montreal Heart Center confirms) that Tony Lichaa never worked in any capacity for that prestigious hospital, much less as its head of cardiology.

Whether or not Tony Lichaa is even a doctor is unknown, but he seems to have spent most of his career working for fraudulent companies, offering products that fraudulently claimed to have various miracle health benefits. For example, Tony Lichaa co-founded a company called BioAesthetica, which purports to have a miracle anti-aging treatment that eliminates wrinkles and grows new hair.

While BioAesthetica is operated by, among a few others, Tony Lichaa, who claims to be president the Lebanese Association for the Prevention of Disease (which sounds like a big Lebanese medical association, though it seems to have no other members other than Tony Lichaa, and there is no evidence that this association is active in any way), the only address shown on BioAesthetica’s website is an address in Bangkok, Thailand (where Yank Barry has a house).

On the BioAesthetica website, Tony Lichaa, of course, describes himself not only as the president of the Lebanese Association for the Prevention of Disease, but also as the “former head of internal medicine and cardiology” at the Montreal Heart Center. Making false claims concerning medical treatments and professional experience in the medical world is a federal crime in the United States, and in Bangkok, where Tony Lichaa appears to have his base of operations, it is a crime as well.

But while Tony Lichaa is a frequent visitor to the United States, and offers his miracle anti-aging treatments to patients in the United States while falsely claiming to be the former head of cardiology at Montreal’s most prominent heart hospital, it is unlikely that he will be prosecuted in this county, where Buck Revell is the most decorated FBI hero in history, much admired by top officials of the American “justice” system.

It is unclear what products BioAesthetica uses to rejuvenate people, but one of BioAesthetica’s proprietors, Michael Nobel, also promotes ProPectin, the Yank Barry product that purports to have anti-aging properties. Yank, of course, says that the more ProPectin that his distributors sell, the more meals for the children are provided by Global Village Champions Foundation, and Michael Nobel is key figure in this scam, as we will see momentarily.

It is, in addition, probably no coincidence that Tony Lichaa (who never worked for the Montreal Heart Center, though he claims to have been “head of cardiology” at that prestigious hospital) was formerly chairman of a company called Biochem Solutions, which was co-founded by Yank Barry. We will return to Biochem Solutions when we discuss some of Yank’s business dealings with people linked to organized crime, but suffice it to say that Biochem Solutions was another massively fraudulent company that claimed to have a cure for AIDS and a cure for arthritis.

Biochem Solutions never had any product whatsoever other than a fake potion that had, according to Biochem press releases, been tested under “FDA protocols,” though it had never been tested by anyone other than a doctor in Kenya named Davy Koech, who falsely claimed that Biochem’s potion was an effective treatment for AIDS, and who was subsequently (in 2012) indicted for fraud and grand theft.

Again, we will discuss Biochem in more detail (and I will provide more links to documentary evidence supporting all that I have just reported), but for our present discussion, it is enough to know that Davy Koech was another member of the Global Village Champions Foundation’s illustrious board of advisors until he was indicted for fraud and grand theft. (Yank Barry told me that he did not know that Koech was a fraud and a thief until after he was indicted).

Yet another member of the Global Village Champions Foundation’s illustrious advisory board is the above-mentioned Michael Nobel, whom the Global Village Champions Foundation’s website describes as the “Executive Chairman of the Nobel Charitable Trust.” That is clearly meant to sound as if Michael Nobel is the chairman of a prestigious “charitable” organization affiliated with both the Nobel Prize and the Nobel Foundation, a philanthropic organization operated by the famous Nobel family.

Elsewhere, Michael Nobel has described himself as the “patriarch of the Nobel Prize.” Michael Nobel has also described himself (and Yank Barry has described him) as a direct descendent of Alfred Nobel, founder of the Nobel Peace Prize. But Michael Nobel was born Michael Oleinkoff (he only recently changed his name to Nobel, which was his grandmother’s maiden name, or so he says), and he has nothing to do with the Nobel Prize or the Nobel Foundation.

While it is true that he is chairman of the Nobel Charitable Trust, which he founded, that is not a prestigious organization, and nor indeed is it even active in any way.

Michael Nobel’s fraud has been exposed by various media organizations. Few of those media organizations were in the United States, which has no functioning media, but The Times of India, for one, reported that “Michael Nobel is the executive chairman of the Nobel Charitable Trust—which has nothing to do with the Nobel Foundation. He is not “the patriarch of the Nobel Prize” as his PR machinery describes him….Michael has had a number of run-ins with the [real] Nobel Foundation when he tried to institute a parallel award using the famous name. The [Nobel] Foundation even threatened legal action.”

The Times of India continued: “In an exclusive interview…executive director of the Nobel Foundation Michael Sohlman wrote from Stockholm: ‘Michael Nobel has no relation whatsoever with the Nobel Foundation…He is in no way entitled to represent or give any official information about the Foundation. He has taken several initiatives which could be seen as infringements on the goodwill built over 100 years by the Nobel Prize awarding institutions.’”

When the Times of India confronted Michael Nobel, he responded as follows: “I must admit that several advantages come with my new last name. However, I do not require the permission of the Foundation to use it, after all, my paternal grandmother was born a Nobel. There is no controversy. It is a civil matter that can easily be solved in the courts by arbitration.”

The Times of India reported that Michael Nobel was giving awards, suggesting they were related to the Nobel Peace Prize, and when asked about this, Michael Nobel said “Well, we do not have to call it the Nobel Prize, we could name it the Michael Nobel Award or Medal.”

No doubt, Yank Barry will win that award if he doesn’t win the real Nobel Peace Prize, for which he has, in fact, been nominated by three members of Congress.

When the real Nobel family began voicing complaints about Michael Nobel using the Nobel name, Michael Nobel stopped making the claim that he was a direct descendent of Alfred Nobel (founder of the Nobel Prize), though somebody recently  informed The New York Times that he is, in fact, the “great grandnephew” of Alfred Nobel.

More often, now, he says he is a descendent of someone named Ludwig Nobel, and there have suddenly appeared dozens of websites (possibly created by Yank Barry and associates), along with a convincing Wikipedia entry (Wikipedia is routinely manipulated by con-artists and propagandists) describing Ludwig Nobel as having once been the richest man in the world because he single-handedly built the oil industries in multiple countries, including Russia and Azerbaijan.

Michael Nobel has also claimed to be one of the world’s most esteemed doctors and scientists, responsible for having invented magnetic resonance imaging, and Yank Barry has repeated that claim, but there is no evidence that Michael Nobel was the inventor of magnetic resonance imaging, and his most prestigious job was a stint at an obscure university in Azerbaijan (or possibly, he found a university in Azerbaijan that was willing to vouch for him when he said he was a resident scientist at that university).

The Global Village Champions Foundation, of course, describes Michael Nobel as the chairman of the Nobel Charitable Trust, which sounds impressive, but to repeat: not only does the Nobel Charitable Trust have nothing to do with the Nobel Prize or the Nobel Foundation, but there is no evidence that the Nobel Charitable Trust has ever done anything at all, other than give dubious awards, pretending that those awards have something to do with the Nobel Prize. There certainly is no evidence that the Nobel Charitable Trust has done much of anything that is “charitable.”

Presently, the Nobel Charitable Trust is not active in any way, other than to be affiliated with the Global Village Champions Foundation. (The Nobel Charitable Trust has no website or contact information listed on the internet, and I was unable to reach Michael Nobel for comment, nor even determine his present whereabouts).

Michael Nobel describes himself as a world renowned doctor, but like Tony Lichaa, the other supposedly prominent doctor on the Global Village Champions Foundation advisory board, Michael Nobel’s medical practice has consisted mostly of promoting bogus (fake) medical cures and fraudulent companies. Recall that Michael Nobel is involved, along with Tony Lichaa, in BioAesthetica, the outfit in Bangkok that offers miracle anti-aging treatments, while falsely claiming that Lichaa is the former head of cardiology at Montreal’s most prestigious heart hospital.

Aside from that, Michael Nobel’s most important job, apparently, is to promote Yank’s ProPectin product. I will repeat that no credible doctors have ever suggested that ProPectin has any health benefit whosoever.

Yank did find three supposed doctors in Bulgaria to produce reports stating that ProPectin might help prevent diabetes, but not even the Bulgarian doctors would hazard any proof of that, other than to note that ProPectin is made of apple-pectin, and some studies have suggested that eating apples might help prevent diabetes. The Bulgarian stooges also did not go so far as to say that ProPectin can actually cure diabetes, a claim that Yank has made repeatedly, and there is zero evidence from anyone that ProPectin has anti-aging properties, that it prevents cancer, or that it rids the body of radioactive contamination—three claims that Yank has made repeatedly, even telling people that ProPectin has saved millions of people from Fukushima’s radioactive fallout.

The only doctor who has endorsed ProPectin as having any of those miracle properties is, naturally, Michael Nobel. In a typical video, produced by Yank Barry’s publicists, a woman announcer repeatedly introduces Michael Nobel as a descendent of Alfred Nobel, founder of the Nobel Peace Prize, and describes Michael Nobel as an “award winning scientist and humanitarian.”

Then Michael Nobel (whose most impressive credentials include a supposed professorship at the “National Academy of Science in Azerbaijan”) appears in the video to confirm that ProPectin is “incredibly effective” and that it should be used to decontaminate people all around the world who have been exposed to the Fukushima nuclear fallout. Watch the video here:

Another member of the Global Village Champions Foundation’s illustrious advisory board is Dr. Ali Gadayye, whom the Global Village Champions website describes as the “Secretary General of the Community of the Sahel-Saharan States.”

Yank Barry and the Global Village Champions Foundation have also filled the internet with photographs of Yank and Dr. Ali Gadayye, always described as the Secretary General of the Community of Sahel-Saharan States, meeting with officials in Libya, and purportedly negotiating the release of five Bulgarian nurses whom the Libyan government jailed after convicting the nurses of infected 433 children with HIV. (Recall from Chapter 1 of this story that Yank’s supposed efforts to secure the release of those Bulgarian nurses was cited as a reason why Gorianov, also of the Global Village Champions Foundation, had nominated Yank Barry for the Nobel Peace Prize).

While “Secretary General of the Community of Sahel-Saharan States” sounds like an impressive position, Dr. Ali Gadayye was never the secretary general of that organization, and has not been involved with the organization since 2008. Furthermore, I have been unable to find much information about what this organization does.

The few places on the internet where the Community of Sahel-Saharan States is mentioned (see, for example, this website, allegedly created by the African Union, Advisory Board on Corruption) lists the Community of Sahel-Saharan States official website at cen-sad.org, but as of this writing, that website shows nothing other than marketing for a dodgy looking currency exchange company in Germany.

Aside from that, there are few descriptions of the Community of Sahel-Saharan States to be found anywhere on the internet other than on Wikipedia, which describes the Community of Sahel-Saharan States as working to establish a free trade area among Sahel and Saharan countries. Wikipedia also reports that this organization has observer status with the United Nations.

After a month of phone calls and emails to people at the United Nations, I could find only one person at the United Nations who had ever heard of the organization. This person was unsure of the organization’s purpose, but she was kind enough to give me the contact information of somebody who works for the Community of the Sahel Saharan States, a man who asked to be named only as a certain Mr. Issa.

I sent Mr. Issa an email asking if Dr. Ali Gadayye was the Secretary General of the Community of Sahel-Saharan States, and after a few hours, Mr. Issa called me from Libya. When Mr. Issa called me, he said that Dr. Ali Gadayye was not the secretary general of the Community of Sahel-Saharan States. Then he called me again, this time in a rage, because, he said, Mr. Ali Gaddaye “is NOT secretary general of Community of Sahel Saharan States. He NEVER was secretary general of CEN-SAD [apparently, the acronym for the Community of Sahel-Saharan States].He never was secretary general of our organization. He is not secretary general! He never was secretary general!”

Mr. Issa continued, shouting into the phone, “This man going all around everywhere saying he is secretary general. He is not secretary general! Why do you ask me if he is secretary general? What did he do? What trouble is he finding? Mr. Ali Gaddaye only worked for CEN-SAD many years ago. Not since 2008 does he work for CEN-SAD.”

“Was he secretary general in 2008?” I asked.

“Not secretary general! This man was never secretary general! He was, in 2008, deputy secretary general, but he is leaving our organization in 2008. And I am telling him, stop and desist to say he is secretary general! He is meeting people in Libya! Government officials of Libya! I see the photographs from the Mr. Yank Barry—he is saying he is secretary general, but he is NOT secretary general! He is nothing with CEN-SAD.”

“And what, exactly, is CEN-SAD? What does it do?” I asked.

“It is nothing!” said Mr. Issa. “We try to make something, but we have no success. Can you help us?”

So it went, another strange conversation in pursuit of the surreal truth so far as it concerns the famous Yank Barry, another stop on the magical mystery tour–and make no mistake: The Global Village Champions Foundation really is (to quote its website more fully) “striving to be the undisputed world leader in private, humanitarian delivery of nutrition to needy persons everywhere, sustaining human life and eradicating hunger from the entire face of the planet Earth.’”

To be continued….Click here to read Chapter 3 of this story

The next chapter of this story will discuss some of Yank Barry’s recent business ventures with people tied to organized crime, showing that those business ventures were affiliated with the Global Village Champions Foundation. All claims in this story will be backed up with documentary evidence.

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Deep Capture Files Major Lawsuit Against the SEC

Deep Capture Files Major Lawsuit Against the SEC

I have filed a  lawsuit against the Securities and Exchange Commission (SEC), which previously failed to respond adequately to my Freedom of Information Act (FOIA) requests seeking SEC documents related to the SEC’s various investigations (and failure to perform adequate investigations) of naked short selling crimes that undermined the stability of the American financial system.

This is the first lawsuit against the SEC ever filed by a journalist seeking information about the SEC’s failure to regulate naked short selling, one of the most serious crimes affecting the American markets. I have filed the lawsuit with help from Gary Aguirre, a former senior enforcement official with the SEC, famous for having blown the whistle on the protection that top SEC officials were providing to hedge fund Pequot Capital and Morgan Stanley CEO John Mack.

Aguirre made headlines in 2006 by reporting in Congressional testimony that he had been improperly fired by the SEC after complaining that top SEC officials had derailed an investigation into an insider trading scheme perpetrated by Pequot Capital, and that the investigation had likely been derailed because the Aguirre had also been investigating Mack in connection with the insider trading, while Aguirre’s supervisor at the SEC was preparing to take a job with Mack’s law firm.

What did not make the headlines was the fact that Aguirre reported in that same Congressional testimony that when he was improperly fired, he had been investigating not only insider trading, but also naked short selling. “The investigation was two-pronged,” Aguirre reported to Congress. One prong concerned “insider trading.” However, the second, and far more important prong, concerned “market manipulation” and, more specifically, “two suspected violations: wash sales and naked shorts.”

“My colleagues,” Aguirre reported to Congress, “believed [the naked short selling] held a greater potential to severely injure the financial markets.” Indeed, Aguirre reported to Congress that naked short selling had the potential to deliver a market crash similar to the crash of 1929, from which followed the Great Depression.

Two years later, in 2008, that prediction proved correct when naked short selling contributed to a meltdown just as severe as the great crash of 1929. At that time in 2008, the CEOs of multiple Wall Street investment banks (long among the perpetrators of naked short selling) complained that naked short selling was contributing to the death spirals in their stock prices, and the SEC responded by issuing an unprecedented “Emergency Order” that temporarily banned all short selling of stock in more than 900 companies in the financial industry.

In that Emergency Order, the SEC effectively admitted that naked short sellers were contributing to the worse financial crisis since the Great Depression, and the SEC subsequently enacted new rules that supposedly made it more difficult for traders to engage in naked short selling, but those new rules were not sufficient, and to this day, the SEC has not sanctioned even one trader for perpetrating the naked short selling that (according to the SEC) contributed to the great meltdown of 2008, and nor has the SEC released any documents concerning its supposed investigation into that naked short selling—one of the great unsolved crimes of the century.

One purpose of my lawsuit is to force the SEC to hand over documents related to its investigation, or failure to investigate, the naked short selling that contributed to the great meltdown of 2008, but that is not all. There is massive amount of other information my lawsuit seeks to extract from the SEC, and I encourage you to read the lawsuit in its entirety because it is a gory chronicle indeed of the crimes that naked short sellers have perpetrated against the markets, and an even more shocking tale of how the SEC has failed to enforce the law while actually providing cover for the perpetrators of a crime that, at the present moment, is still undermining the stability of the global financial markets.

The lawsuit is posted in its entirety below:

United States District Court

FOR THE NORTHERN District of ILLINOIS

Eastern division

MARK MITCHELL

Plaintiff,

v.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Defendant.

Case No. ____________________

 

 

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

  1. This is an action under the Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, as amended, to compel Defendant United States Securities and Exchange Commission (“SEC”) to produce, provide access to, and make available certain records specified below that were requested by Plaintiff Mark Mitchell.
  2. As specifically alleged below, Plaintiff seeks records under FOIA from the SEC relating to:
    1. the opening of matters of inquiry (MUIs), the opening of investigations, and the filing of any enforcement proceedings by the SEC in relation to individuals or institutions who may have violated SEC Regulation SHO (“Reg SHO”) and/or engaged in the naked short selling of the stock of public companies, or
    2. the opening of MUIs, opening of investigations, or the filing of any enforcement proceedings involving specific public companies whose stock was the subject of possible violations of Reg SHO and/or naked short selling.

JURISDICTION

  1. This Court has jurisdiction over this action pursuant to 5 U.S.C. § 552(a)(4)(B).

PARTIES

  1. Plaintiff is a citizen of the United States, a resident of Cook County, and a journalist.
  2. Defendant is an agency of the United States Government and has possession and control of the records that are the subject of this action.

 

RELEASE OF THE RECORDS SOUGHT TO PLAINTIFF WOULD SERVE THE HIGHEST PUBLIC INTEREST

  1. The release and disclosure of the information sought by Plaintiff’s FOIA requests as alleged in this complaint would serve the highest public interest because Plaintiff would utilize the released information to contribute significantly to the public’s understanding of the following:
    1.  the inherent flaws in regulations created by the SEC to stop naked short selling;
    2. the lack of transparency in the regulatory system relating to the processing of short sale trades;
    3. the SEC’s lax enforcement of the securities acts and related rules, including Reg SHO, against those who engage in naked short selling, and, most importantly;
    4. how these factors combine to create a dangerously high and unacceptable level of risk to the integrity of the nation’s and the world’s capital markets.

The records should be furnished without any charge in that the information is in the public interest because it is likely to contribute significantly to the public understanding of the operations or activities of the SEC and is not primarily in the commercial interest of the requester.

  1. Federal regulations describe how the SEC has been entrusted with powers and duties of “great social and economic significance to the American people,” the prevention of abuses that would undermine the integrity of the nation’s economic institutions. Section 200.53 of Title 17 of the United States Code of Federal Regulations spells out that trust:

Members of the Securities and Exchange Commission are entrusted by various enactments of the Congress with powers and duties of great social and economic significance to the American people. It is their task to regulate varied aspects of the American economy, within the limits prescribed by Congress, to insure that our private enterprise system serves the welfare of all citizens. Their success in this endeavor is a bulwark against possible abuses and injustice which, if left unchecked, might jeopardize the strength of our economic institutions.

  1. As more specifically alleged below, naked short selling by broker-dealers in their own accounts and on behalf of other market participants is exactly the type of abuse that could “jeopardize the strength of our economic institutions.” The SEC has not merely failed to stop this form of market abuse. It has created a regulatory system which conceals naked short selling, prevents the public (including investors and other victims of naked short selling) from investigating the naked short sales, rewards those who engage in it, and also rewards securities exchanges, which have a duty to enforce the law, for closing their eyes to the unlawful practices consummated through them.
  2. As specifically alleged below, the SEC has sponsored, supervises, and presides over a regulatory system that has allowed and in fact encouraged broker-dealers and other market participants to create billions of shares of counterfeit stock in hundreds of millions of trades which collectively put the integrity of the capital markets at risk. The counterfeit stock has been and continues to be created through a practice commonly referred to as “naked short selling.”  Naked short sales share no properties in common with lawful short sales, except both involve a purported sale of stock.
  3. In a lawful short sale, the seller borrows the stock from a third party and makes real delivery of the borrowed stock to the buyer.  In a naked short sale, the market participant neither owns nor has borrowed the stock, but nevertheless purports to sell genuine stock of the public company to the buyer.  In substance, a market participant who engages in a naked short sale delivers counterfeit stock to the buyer.
  4. Once the counterfeit stock is sold through a naked short sale, it continues in circulation in the securities markets much like counterfeit bank notes continue in circulation after they are introduced into the monetary system. It has the effect of increasing the supply of stock available on the market for sale, which generally has a depressing effect on the price of the genuine stock of the public company whose name the counterfeit stock bares. The naked short sales of counterfeit stock harm investors holding genuine stock, investors who receive the counterfeit stock, and the public company whose stock is diluted with counterfeit stock.  The aggregate creation of counterfeit stock creates high and unacceptable risks to the integrity of the nation’s and the world’s capital markets.
  5. Plaintiff is a reporter for DeepCapture.com, an online financial news service.  He previously worked as editorial page writer for The Wall Street Journal in Europe, chief business correspondent for Time magazine’s Asia edition, and as assistant managing editor responsible for the Columbia Journalism Review’s online critique of business journalism. He holds an MBA from the Kellogg Graduate School of Management at Northwestern University.
  6. Plaintiff gathers information from numerous sources often overlooked by the mainstream financial media, uses his editorial skills to turn this raw information into narratives regarding the financial industry, and regularly publishes that information on an internet website known as DeepCapture at no cost to the public.[1]
  7. Deep Capture also publishes news stories by other authors whose stories meet DeepCapture’s scope of interest and editorial standards.
  8. The website is called DeepCapture because it focuses on objectively presenting in-depth news coverage of events and actions that demonstrate that the independence of a federal agencies have been compromised by regulatory capture. Regulatory capture occurs when a regulatory agency, such as the SEC, which was created to act in the public interest, instead advances the commercial or special concerns of interest groups that dominate the industry or sector it is charged with regulating. These agencies are called “captured agencies.”
  9. The DeepCapture website, for which Plaintiff writes, has received awards, such as Business Insider’s award for best investigative journalism and the Webby award for best business reporting. The DeepCapture website has also been discussed by mainstream news organizations, e.g., CNBC and Wired magazine.
  10. Plaintiff has also written numerous articles on the DeepCapture website about how the SEC is not only a captured agency but is part of a larger group of institutions that have been captured by the financial industry in this country.
  11. Plaintiff has published numerous articles on the DeepCapture website describing how financial institutions and individuals have engaged in naked short selling in the stock of public companies. These violations were rarely reported by the mainstream or financial media. To the extent that naked short selling was reported in the financial media, some mainstream news organizations, including Bloomberg News,[2] reported that naked short selling was a serious problem, but these reports were few in number, and other journalists often expressed skepticism that naked short selling was even occurring, thereby giving false comfort to the public regarding the risks naked short selling posed to the nation’s capital markets.
  12. Plaintiff is one of the few journalists, perhaps the only one, who regularly writes about naked short selling. Plaintiff believes it is vitally important for the American public to be aware that the SEC is failing to contain market participants such as large investment banks, market-makers, and multibillion dollar hedge funds from engaging in naked short selling. It is as if the Department of the Treasury were aware of massive printing of US currency by counterfeiters and yet declined to take any action to stop them.
    1. The following examples illustrate the depth and uniqueness of news stories published on the DeepCapture website relating to naked short selling:
      1. In relation to the settlement between FINRA and UBS in October 2011,  Plaintiff was one of two media sources that reported that FINRA had found and UBS had admitted committing “tens of millions” of violations of Reg SHO and that those violations put at risk the integrity of the capital markets.[3] In the light of FINRA’s finding and UBS’s admissions, the FINRA enforcement proceeding against UBS was unquestionably the single most significant regulatory case brought by the government or a Self-Regulating Organization (“SRO”) relating to naked short selling since Reg SHO became operative on January 1, 2004. In contrast, neither the financial nor the mainstream media reported that UBS had committed “tens of millions” of violations of Reg SHO and that the cumulative effect was to create a significant risk to the integrity of the capital markets.[4]
      2. In a story written by another reporter, DeepCapture was one of two media sources that reported on the investigation conducted by the SEC’s Office of the Inspector General (“OIG”) which resulted in a finding by the OIG in Case No. 512 (Unauthorized Disclosure of Non-Public Information) that two SEC attorneys had passed along nonpublic information through a corrupt FBI agent to a cabal engaged in naked short selling.[5] Through the reporter’s own exhaustive research and investigation, he identified the two SEC employees and published an article in DeepCapture, Moral Hazard at the SEC, which described in detail how the two SEC investigators had communicated the nonpublic information through a corrupt FBI agent to the naked short selling cabal.[6] The financial and mainstream media did not cover the story.
  13. As specifically alleged below, the magnitude and scope of naked short selling creates major risks to the stability of the nation’s capital markets. Equally disturbing, as alleged below, the SEC, a captured agency, is not protecting the nation’s investors or the capital markets from this form of market abuse.
    1. Plaintiff seeks the records described in this complaint to use in articles he and other guest authors will write and publish on the DeepCapture website informing the public of the risks naked short selling poses to the integrity of the nation’s capital markets and the SEC’s complicity in creating a regulatory system that does not deter naked short selling. All of the information from the SEC is vitally needed because, as alleged below, the system created by the SEC relating to the short sale trades of public companies has little if any transparency. Plaintiff intends to make avaiable to the public all records obtained through this proceeding.

FACTUAL BACKGROUND

  1. The regulatory history relevant to the current naked short selling of stock in public companies began in 1985 when the National Association of Securities Dealers, Inc. (“NASD”) commissioned Irving M. Pollack (“Pollack”)[7] to conduct a study of short selling (“Pollack study”). As stated in his report, Pollack concluded:  “The fail-to-deliver / fail-to-receive problem has the potential for causing serious difficulties in a lengthy bear market.”[8] Naked short sales routinely result in failures to deliver and failures to receiveunless they are concealed by the broker-dealers who execute them. Pollack’s report also noted that there was no inherent mechanism to constrain the buildup of failures to deliver and warned of the consequences: “[T]he fact that there is no automatic mechanism preventing the substantial buildup of short positions at the clearing corporation and of fails to receive in the brokerage firms carries the potential for serious problems, particularly in the event of crisis market conditions.”[9] Pollack’s warning would prove prophetic two decades later in 2008, when giant investment banks began to collapse due in part to naked short selling.
  2. Based on the conclusions in the Pollack Study, the NASD proposed an amendment to Section 59 of the NASD Uniform Practice Code which amendment was designed to curb naked short selling. In approving the amendment, SEC Exchange Release No. 26694, issued on April 4, 1989, the SEC concluded, “the NASD is taking a reasonable approach to deal with the problems that the Pollack study revealed. While fails-to-deliver resulting from short sales may be relatively infrequent, we cannot say that the proposed mandatory buy-in rule for public customers is an unwarranted restriction on short selling.”[10] The same SEC release also recognized: “naked short selling potentially can present substantial manipulative concerns. …  The ability of naked short sellers to employ this leverage to effect ‘bear raids’ would appear to provide support for the NASD’s decision to impose additional discipline on naked short selling.” For the next 14 years, the SEC limited its role in relation to naked short selling to approving rules proposed by SROs relating to containing naked short selling. The constraints incorporated into the amendment to NASD Section 59 proved inadequate to stop or contain naked short selling.
  3. On October 28, 2003, the SEC implemented its own rules to prohibit naked short selling when it issued Exchange Act Release No. 48709 (“Release 48709”) which included a preliminary version of Reg SHO.[11]
  4. In Release 48709, the SEC explained the negative effects of naked short selling on the securities market:

Naked short selling can have a number of negative effects on the market, particularly when the fails to deliver persist for an extended period of time and result in a significantly large unfulfilled delivery obligation at the clearing agency where trades are settled. At times, the amount of fails to deliver may be greater than the total public float. In effect the naked short seller unilaterally converts a securities contract (which should settle in three days after the trade date) into an undated futures-type contract, which the buyer might not have agreed to or that would have been priced differently. The seller’s failure to deliver securities may also adversely affect certain rights of the buyer, such as the right to vote. More significantly, naked short sellers enjoy greater leverage than if they were required to borrow securities and deliver within a reasonable time period, and they may use this additional leverage to engage in trading activities that deliberately depress the price of a security.

 

  1. In Release No. 48709, the SEC also explained how the SEC believed Reg SHO “would address the problem of ‘naked’ short selling.” The SEC pointed to two principal mechanisms that were expected to contain naked short selling:

[1] Proposed Regulation SHO would, among other things, require short sellers in all equity securities to locate securities to borrow before selling, and [2] would also impose strict delivery requirements on securities where many sellers have failed to deliver the securities. In part, this action is designed to address the problem of “naked” short selling.[12]

 

As more particularly alleged below, the financial crisis demonstrated that neither mechanism curbed naked short selling

  1. Reg SHO became operative on January 1, 2005. In the commentary accompanying the final rule, the SEC expressed its optimism that Reg SHO and, in particular, Rule 203 would contain naked short selling:

As adopted, Rule 203 creates a uniform Commission rule requiring broker-dealers, prior to effecting short sales in all equity securities, to “locate” securities available for borrowing, and imposes additional delivery requirements on broker-dealers for securities in which a substantial amount of failures to deliver have occurred (“threshold securities”). We believe that strong and uniform requirements in this area will reduce short selling abuses. The locate and delivery requirements will act as a restriction on so-called “naked” short selling.[13]

 

  1. From the date Reg SHO became operative, January 1, 2005, until the financial crisis struck in September 2008, the SEC’s enforcement of Reg SHO was almost nonexistent. Two SEC administrative decisions made passing reference to naked short selling and Reg SHO in 2006. In both cases, SEC administrative judges were dismissive of contentions that public companies were being ravaged by naked short selling.[14]
  2. The SEC brought two administrative decisions to enforce Reg SHO in 2007.[15]  In both cases, the alleged Reg SHO violations were limited to allegations that the respondents had falsely characterized short sales as long sales. The SEC’s minimal enforcement of Reg SHO from 2005 through 2008 implies its belief that the mere issuance of Reg SHO had convinced broker-dealers, traders, and other market participants to suspend their practice of naked short selling. Those engaged in naked short selling were unimpressed by a new regulation which the SEC chose not to enforce. The SEC’s tough talk in Reg SHO, absent its enforcement, did not deter or frighten them.
  3. The SEC’s tepid enforcement of Reg SHO from its operative date, January 1, 2005, until the financial crisis struck in 2008 gave no clue that naked short selling was festering in the shadows, invisible to public companies afflicted by it. Few saw naked short selling as a serious risk to public companies, and virtually none saw it as a systemic risk that could threaten the capital markets. Until the 2008 financial crisis, the common perception was that naked short selling, if it existed, afflicted only a few, relatively small public companies.
  4. One industry group, the broker-dealers, knew before the 2008 financial crisis that naked short selling was rampant and also knew the supposed constraints of Reg SHO were easily circumvented.
  5. The Securities Industry Group (“SIA”), which represents more than 600 broker-dealers, has been particularly effective in blocking legislative and rule-making efforts to contain naked short selling. The SIA and its members successfully lobbied the SEC to draft the language in Reg SHO and other rules so that broker-dealers could conceal their lucrative naked short selling practices within loopholes the SEC incorporated into Reg SHO.
  6. The SEC dubbed one of the loopholes the “Madoff exemption,” since it was the brainchild of Bernard Madoff (“Madoff”). Madoff was held in high esteem by the SEC in July 2004 when it issued the release accompanying the final version of Reg SHO. The “Madoff exemption” effectively allows a “bona fide” market-maker to engage in naked short selling briefly, supposedly as part of its role as a true market-maker.  The limitation (bona fide) generally requires the market participant to simultaneously place a buy order at or near the best bid and a sell order at or near the best ask.  As a practical matter, it is difficult  if not impossible for public companies and market participants, with exception of the broker-dealers, to determine whether a specific short sale is a naked short sale or a trade by a “bona fide market-maker,” because the data necessary to make the determination is generally unavailable.
  7. As a consequence of the Madoff exemption, more accurately described as the Madoff loophole, and SEC’s inability to track compliance with Reg SHO as alleged herein, the SEC has brought only one proceeding for abusing the bona fide market maker exemption, a case against an individual who was an insignificant market participant.[16]  The SEC has never brought a case against a broker-dealer for abusing the bona fide market-maker exception.
  8. The “Madoff exemption” was not the only loophole the SEC incorporated into Reg SHO at the behest of the SIA and its members. Market participants can also engage in short term naked short sales if they have “reasonable grounds to believe” they can borrow the stock before they have to deliver it to the buyer.[17]  This creates an even bigger loophole in Reg SHO.
  9. The SEC has been and continues to be incapable of determining whether short sale trades by broker-dealers and other market participants are in compliance with Reg SHO, because it has lacked the market surveillance expertise and equipment to track the volume and speed of the securities trading since Reg SHO became operational in January 1, 2005. The discrepancy between trading activity, now at approximately 5 million messages per second, and the SEC’s capacity to track that trading activity has progressively widened since Reg SHO became operative. The decision by the SEC to create Reg SHO, which purports to contain naked short selling, when the SEC knew it lacked the capacity to monitor the securities markets for violations of Reg SHO leads to the inescapable conclusion that Reg SHO was a sham to appease the public companies, investors and traders who had been harmed by naked short selling, while not offending the broker-dealers, especially the mega broker-dealers owned by Wall Street investment banks, who engaged in naked short selling since Reg SHO was in fact unenforceable.
  10. The SIA has also vigilantly monitored the state legislatures for possible legislation which could fill the glaring gaps in Reg SHO and thereby threaten the broker-dealers’ lucrative naked short selling practice. In July 2006, the SIA learned that Utah had enacted a statute designed to stop naked short selling. The SIA immediately filed a civil action for injunctive relief to stay the enforcement of the statute. Later, the SIA led the successful charge to repeal the statute. The SIA’s actions to block the enforcement and then repeal the Utah statute is exactly the type of “protection” the SIA promises its broker-dealer members on its website with this words: “The Security Industry Association (SIA) protects and advances our members’ interests by: advocating pro-industry policies and legislation on Capitol Hill and throughout the 50 states…”[18]
  11. Despite the lax enforcement of Reg SHO, the tone of the SEC’s releases relating to Reg SHO began to change in August 2007 to reflect the growing and legitimate concern by public companies and their investors about the harmful effects of naked short selling. For the first time, the SEC releases relating to Reg SHO contained this language:

[M]any issuers and investors continue to express concerns about extended fails to deliver in connection with “naked” short selling. To the extent that large and persistent fails to deliver might be indicative of manipulative “naked” short selling, which could be used as a tool to drive down a company’s stock price, fails to deliver may undermine the confidence of investors. These investors, in turn, may be reluctant to commit capital to an issuer they believe to be subject to such manipulative conduct. In addition, issuers may believe that they have suffered unwarranted reputational damage due to investors’ negative perceptions regarding large and persistent fails to deliver. Any unwarranted reputational damage caused by large and persistent fails to deliver might have an adverse impact on the security’s price.[19]

 

Though the SEC had begun to hear public companies and their investors complain about naked short selling and sharpened its own rhetoric about naked short selling to appease the institutions and individuals harmed by naked short selling, it still took no meaningful action to enforce Reg SHO or the antifraud provisions of the securities acts against those who were engaged in the unlawful practice.

  1. The SEC sharply escalated its verbal war against naked short selling in July 2008 when the chief executive officers of some of the world’s largest investment banks frantically sought protection from Congress and the SEC in relation to the naked short selling which was contributing to the collapsing prices of the stock of those banks. For the first time, it was not merely stock of smaller public companies which was being ravaged by naked short selling. Instead, naked short selling was perceived as a contributing cause of the failures of the nation’s oldest and biggest investment banks: Bear Stearns,[20] Merrill Lynch,[21] and Lehman Brothers.[22] The warning by the Pollack Study two decades earlier that naked short selling “carries the potential for serious problems, particularly in the event of crisis market conditions” seemed to be coming true.[23]
  2. The voices of the CEOs reached a crescendo in September 2008 after three international and venerable U.S. investment banks (Bear Stearns, Merrill Lynch, and Lehman Brothers) had failed, leaving Morgan Stanley and Goldman Sachs teetering on the edge of the abyss. Time magazine quoted from a memo that John Mack, Morgan Stanley’s Chief Executive Officer, had sent to employees: ‘“What’s happening out there? It’s very clear to me — we’re in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down,’ fumed John Mack.”[24] On September 17, 2008, Barron’s reported: “[T]he Securities & Exchange Commission’s head Christopher Cox is investigating naked short selling of shares of Morgan Stanley and Goldman Sachs after receiving calls from Morgan Stanley CEO John Mac [sic] about improper short-selling that was responsible for the stock’s nearly 30% decline today.”[25]
  3. The pleas of the banks’ CEOs brought instant credibility to the notion that naked short selling could destroy public companies, even huge ones if the time was ripe. But the failing banks had special credibility. Bear Stearns, Lehman Brothers and Merrill Lynch all had their own proprietary desks manned by astute traders who had the skill and technology to recognize naked short selling. Each bank also had affiliated broker-dealers whose traders made markets in thousands of public companies. No one was better equipped than the traders in the banks’ brokerage firms to recognize that the banks’ stocks were in the crosshairs of traders who were pulling the trigger on naked short sales. More than likely, these banks through their proprietary desks and affiliated brokerage firms had pulled the trigger on naked short selling aimed at other public companies in the past.
  4. The SEC quickly recognized the credibility and urgency of Morgan Stanley’s and Goldman Sachs’s pleas for help, particularly in view of the fact that three other banks had so quickly failed. Not surprisingly, Rule 203 had failed to deter naked short selling when that deterrence was most needed, during a financial crisis, just as the Pollack Study had predicted. The SEC responded with a series of emergency regulations and amendments to Reg SHO from July 2008 through July 2009 to stop or at least contain naked short selling.
  5. On July 15, 2008, the SEC issued an emergency order prohibiting any short sales in the stock of 19 financial institutions, including Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs). In the release accompanying this emergency order, the SEC directly linked the order to the naked short sales of Bear Stearns stock. The release begins with the following explanation for the halting of naked short sales:

False rumors can lead to a loss of confidence in our markets. Such loss of confidence can lead to panic selling, which may be further exacerbated by “naked” short selling. As a result, the prices of securities may artificially and unnecessarily decline well below the price level that would have resulted from the normal price discovery process. If significant financial institutions are involved, this chain of events can threaten disruption of our markets.

 

The events preceding the sale of The Bear Stearns Companies Inc. are illustrative of the market impact of rumors. During the week of March 10, 2008, rumors spread about liquidity problems at Bear Stearns, which eroded investor confidence in the firm. As Bear Stearns’ stock price fell, its counterparties became concerned, and a crisis of confidence occurred late in the week. In particular, counterparties to Bear Stearns were unwilling to make secured funding available to Bear Stearns on customary terms. In light of the potentially systemic consequences of a failure of Bear Stearns, the Federal Reserve took emergency action.[26]

 

  1. In issuing another emergency order in September 17, 2008, the SEC expressed even greater alarm how naked short selling had “exacerbated” other factors in causing the widening collapse of the securities markets. The SEC issued a protective stay on short sales trades in the stock of more than 900 banks, insurance companies, and securities firms. The SEC explained the rationale for the broadened stay with these words:

The Commission continues to be concerned that there is a substantial threat of sudden and excessive fluctuations of securities prices and disruption in the functioning of the securities markets that could threaten fair and orderly markets. As evidenced by our recent publication of an emergency order under Section 12(k) of the Securities Exchange Act of 1934 (the “July Emergency Order”), we are concerned about the possible unnecessary or artificial price movements based on unfounded rumors regarding the stability of financial institutions and other issuers exacerbated by “naked” short selling. Our concerns, however, are no longer limited to just the financial institutions that were the subject of the July Emergency Order. In addition, we have become concerned that some persons may take advantage of issuers that have become temporarily weakened by current market conditions to engage in inappropriate short selling in the securities of such issuers.[27]

 

  1. On October 14, 2008, as the financial crisis deepened, the SEC released an interim amended version of Reg SHO to stop naked short selling (Exchange Act Release No. 58773). The summary to the release announcing the interim rule explained its purpose as follows:

The Securities and Exchange Commission (“Commission”) is adopting an interim final temporary rule … to address abusive “naked” short selling in all equity securities by requiring that participants of a clearing agency registered with the Commission deliver securities by settlement date, or if the participants have not delivered shares by settlement date, immediately purchase or borrow securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the settlement day following the day the participant incurred the fail to deliver position.[28]

 

  1. In the same release (Exchange Act Release No. 58773), the SEC revised its description of how naked short selling could harm public companies. The SEC no longer described the harm caused by naked short selling as a perception held by public companies and their investors. The SEC described the harm as real. On October 14, 2008, for the first time, the SEC described how naked short selling inflicted harm on public companies as follows:

To the extent that fails to deliver might be part of manipulative “naked” short selling, which could be used as a tool to drive down a company’s stock price, such fails to deliver may undermine the confidence of investors. These investors, in turn, may be reluctant to commit capital to an issuer they believe to be subject to such manipulative conduct.[29]

 

  1. On the same date, October 14, 2008, the SEC issued a separate release announcing another amendment to Reg SHO eliminating the options market-maker exception and narrowing the bona fide market-maker exception, all to contain naked short selling. The summary to the 2008 amendment explained the purpose of the amendment as follows:

The Securities and Exchange Commission (“Commission”) is adopting amendments to Regulation SHO under the Securities Exchange Act of 1934 (“Exchange Act”). The amendments are intended to further reduce the number of persistent fails to deliver in certain equity securities by eliminating the options market-maker exception to the close-out requirement of Regulation SHO. As a result of the amendments, fails to deliver in threshold securities that result from hedging activities by options market-makers will no longer be excepted from Regulation SHO’s close-out requirement. The Commission is also providing guidance regarding bona fide market making activities for purposes of the market-maker exception to Regulation SHO’s locate requirement.[30]

 

  1. Between July 15, 2008, and July 27, 2009, the SEC issued eight releases relating to amendments to Reg SHO and “naked” short selling, including some emergency orders, all intended to contain naked short selling.[31]
  2. Had those who engage in naked short selling not chosen the investment banks as victims during the financial crisis in 2008, the scope of these violations would likely remain unknown, except of course to those who are committing them. Now that those banks are prospering again, there is little motivation for them to speak publicly about naked short selling. Many of the records sought by Plaintiff relate to the SEC’s aborted investigations of naked short selling of the investment banks (Bear Stearns, Lehman Brothers, Merrill Lynch, Morgan Stanley, and Goldman Sachs) whose collapse or near collapse deepened the financial crisis.
  3. After the SEC issued the amendments to Reg SHO and emergency amendments in 2008 and 2009, the minor administrative proceedings brought by the SEC’s Division of Enforcement again gave the impression that naked short selling was more an irritant than a serious threat to public companies. The SEC brought two classes of cases to enforce Reg SHO: one alleged intentional violations against minor market participants who used options to circumvent Reg SHO,[32] and the other alleged inadvertent and narrow violations against broker-dealers affiliated with large investment banks.[33] None of these cases hinted that the violations of Reg SHO were systemic or created a risk to the stability of the capital markets. There seemed to be a disconnect at the SEC between (1) the five SEC Commissioners who had acted expeditiously to issue half a dozen rules and emergency orders to contain naked short selling during the 2008 financial crisis and (2) the SEC’s Division of Enforcement which again reverted to its tepid enforcement of Reg SHO and the non-enforcement of the antifraud provisions of the securities acts against those engaged in naked short selling.
  4. The conflict in the courses of action between the five Commissioners and the SEC Division of Enforcement suggests the SEC believed it could deter the market participants who engaged in naked short selling, including those who had deepened the financial crisis by contributing to the collapse or near collapse of five US based international investment banks (Bear Stearns, Merrill Lynch, Lehman Brothers, Morgan Stanley, and Goldman Sachs), by strengthening the regulations prohibiting naked short selling without meaningfully enforcing those regulations, i.e., by tough words without action. In short, the numerous revisions strengthening Reg SHO and other emergency orders were the rough equivalent of the SEC repeatedly telling those engaged in naked short selling: “Don’t do that again. This time we are really serious.”
  5. The willingness of the world’s largest brokerage firms to flout the SEC rules designed to prohibit naked short selling was established beyond doubt in the fall of 2011 when FINRA’s Department of Enforcement released its Letters of Acceptance, Waiver and Consent (“AWC”), which included FINRA’s findings and conclusions, arising out of its enforcement proceedings against two of the world’s largest brokerage firms, UBS Securities, the brokerage arm of UBS Financial Services, a financial institution with $2 trillion in assets, and Credit Suisse Securities,  the brokerage arm of Credit Suisse Financial Services, a financial institution with nearly $1 trillion in assets.
  6. In its AWC with FINRA, UBS signed off on committing approximately 30 different classes of Reg SHO violations over the five-year period from January 2005 through December 2010. The total number of Reg SHO violations committed by UBS is an unknown, since the best FINRA could do in quantifying the number of UBS violations of Reg SHO was to place them in the “tens of millions.”[34] Likewise, FINRA could not fix a date when the UBS violations of Reg SHO had stopped.
  7. The magnitude of these violations may be more easily grasped when viewed in terms of the dollar value of the phantom stock UBS created out of thin air through the naked short sales it executed. When UBS short sold stock it did not own, possess, had not borrowed, and had not arranged to borrow, it was in essence selling counterfeit stock. Under the conservative assumption that the average size of each trade was 100 shares and the average price was $10, the average transaction would have created $1,000 worth of counterfeit stock. Since UBS engaged in tens of millions of transactions creating counterfeit stock, it created counterfeit stock pretending to be worth tens of billions of dollars. By way of example only, if UBS created counterfeit stock in 50 million transactions, it would have created $50 billion worth of counterfeit stock.
  8. As alleged above, UBS was not alone in committing massive violations of Reg SHO.  In its AWC with FINRA, Credit Suisse admitted committing massive violations of Reg SHO during the four-and-a-half-year period from June 2005 through December 2010. In all, Credit Suisse also signed off on committing approximately 30 classes of violations directly or indirectly relating to Reg SHO. For its part, Credit Suisse entered “more than ten million short sale orders without locates.”[35]  Using the same conservative assumptions as before, Credit Suisse likely effectively created at least $10 billion in counterfeit stock. Once again, the scope and volume of the violations raise serious concerns regarding the effectiveness of the regulatory system designed to stop naked short selling.
  9. The massive Reg SHO violations by UBS and Credit Suisse did not merely create risks of harm to public companies and their investors. The scope and magnitude of these violations of Reg SHO had the potential to destabilize the system itself. In the settlement agreement, FINRA found and UBS conceded that the “duration, scope and volume of the trading [violations] created a potential for harm to the integrity of the market (emphasis added).”[36] The only aspect of the settlement more stunning than the scope of UBS’s violations—whose sale of counterfeit stock threatened the integrity of the capital markets—was the tiny fine paid by this $2 trillion company:  $12 million.
  10. FINRA’s release of the AWCs with UBS and Credit Suisse in the fall of 2011 redefined the magnitude of counterfeit stock which giant broker-dealers could create. The number of violations–in the tens of millions—the scope of the violations–approximately 30 classes—and magnitude of the harm, which put at risk the integrity of the market, point to one simple, overarching question: how did the SEC, FINRA, and the exchanges overlook the massive UBS and Credit Suisse violations of Reg SHO for at least half a decade?
  11. The Depository Trust & Clearing Corporation (“DTCC”), which settles and closes virtually all stock sales, supposedly also monitors those trades for violations of Reg SHO and naked short selling. The same question must be asked: How did the DTCC overlook the massive violations by UBS and Credit Suisse for at least half a decade?
  12. Supposedly, Reg SHO should have kept UBS and Credit Suisse in check. The regulation was not untested when it became operative in January 2005. It incorporated the SEC’s enforcement experience with earlier regulations designed to curb naked short selling.[37] The SEC released the preliminary version of Reg SHO on October 28, 2003.[38] It then went through a fourteen-month trial process before it became operative on January 1, 2005. Since then, it has been refined from time to time to work out the kinks.[39] It was significantly amended in October 2008 to stop the naked shorts which were destabilizing the nation’s investment banks during the financial crisis.[40] UBS and Credit Suisse were nonetheless able to engage in massive violations of Reg SHO for years after the regulation became operative, including twenty-seven months after the 2008 amendments were supposed to have cured the flaws in Reg SHO.
  13. The UBS and Credit Suisse cases highlight another inherent and major flaw in Reg SHO: the regulation purports to prohibit trading practices which are largely invisible to law enforcement, regulators, public companies, and market participants (except those committing the violations). The lack of transparency pervades every nook and cranny in the stock trading system as a short sale passes through it. By inadvertence or design, the lights are switched off on short sales as they are electronically processed by the executing broker, the clearing broker, the exchanges, and the DTCC. The lack of transparency continues even when the SEC and FINRA release their decisions and settlements relating to naked short selling or the enforcement of Reg SHO to the public.
  14. The FINRA AWCs with UBS and Credit Suisse illustrate how FINRA itself shut off the lights on UBS’s and Credit Suisse’s violations. Despite the tens of millions of violations of Reg SHO admitted by UBS and Credit Suisse, not a single public company was identified as a victim of those violations.  Although at least 270 UBS customers participated in those violations, none was identified. Although UBS and Credit Suisse could not have committed the Reg SHO violations without the participation of its employees, FINRA brought no proceeding against any executive or employee of either company for participating in any of the tens of millions of violations. The same is true of the SEC’s releases describing its settlements with Goldman Sachs in 2007[41] and 2010,[42] and UBS in 2011.[43] The silence surrounding the SEC’s and FINRA’s enforcement of Reg SHO violations is deafening, and that silence is inexplicable in view of the potential harm those violations can cause. Again, according to the FINRA-UBS settlement, “The duration, scope and volume of the trading created a potential for harm to the integrity of the market.”[44]
  15. A June 2009 study, Analysis of Twenty-First Century Risks in Light of the Recent Market Collapse, commissioned by the U.S. Department of Defense addressed how the lack of transparency makes it impossible to identify those responsible for the bear raids of the nation’s investment banks during the financial crisis. The report observed:

While substantial, unusual trading activity can be identified, the source of the bear raids has not been traceable to date due to serious transparency gaps for hedge funds, trading pools, sponsored access, and sovereign wealth funds. What can be demonstrated, however, is that two relatively small broker dealers emerged virtually overnight to trade “trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value” (emphasis in the original).[45]

 

  1. Naked short selling occurs in the shadows, where it is too dark to see. It is dark because the government, the SROs, and exchanges who have the duty to regulate short sales have turned off the lights where this trading occurs. The light with the highest wattage was switched off by the DTCC. The DTCC has a virtual monopoly in clearing and settling all the stock trades in the U.S., with the exception of internalized trades which broker-dealers need not report to it. The DTCC refuses to provide public companies with any useful information regarding violations of Reg SHO and naked short selling, unless it is ordered to do so by a court. As a private institution, the DTCC is not subject to FOIA. Consequently, absent a court order, every window into the DTCC is shuttered from the view of every public company. With his complaint, Plaintiff seeks records of the SEC’s five-year investigation of the DTCC for aiding and abetting violations of Reg SHO and naked short selling.
  2. Virtually no useful information relevant to Reg SHO violations is available from the exchanges and trade reporting facilities. Only the NASDAQ exchange, where only a tiny fraction of the stock of public companies is traded, provides any meaningful information to public companies, the public or journalists. Further, since NASDAQ is the most “lit” trading center, a fact well known to those who engage in naked short selling, it is not their favorite venue. As noted in a 2012 academic study, broker-dealers and their customers prefer more user-friendly venues where the rules are ignored so price manipulation through naked short sales can flourish,[46] like the Chicago Board Options Exchange.[47] Not surprisingly, the largest number of short sales are conducted over the FINRA TRF, which has the least visibility of all of the trading centers.
  3. As the facts demonstrate, the system itself is designed so public companies, investors and other market participants can never know whether they are being victimized by naked short selling. The words of Ferdinand Pecora (whose investigation of Wall Street after the 1929 crash led to the creation of the SEC) ring as true today as they did in 1939 when he first uttered them: “The Public was always in the dark. It could not tell whether sales were due merely to the ‘free play of supply and demand,’ or whether they were the product of manipulated activities…It all looks alike on the ticker (emphasis added).”[48]
  4. The lack of transparency creates multiple obstacles for investors and public companies to determine whether a stock trade is an unlawful naked short sale. None of the fifteen exchanges or trade reporting facilities identifies the market participant who engaged in a short sale. Likewise, no trading center or exchange releases information relevant to whether a short sale was executed within an exemption to Rule 203.
  5. Assuming someone harmed by a naked short sale could ascertain that the trade was a short sale, the seller had not borrowed the stock, the market-maker exemption did not apply, and the identity of the short seller, there would still be no violation of Rule 203 if the short seller believed he could borrow the stock, which is nearly impossible to verify. No regulator even purports to track whether a market participant has located stock to borrow before executing a sale.
  6. A case filed and settled by the SEC in June 2013, In the Matter of Chicago Board Options Exchange,[49] offers insight into why the exchanges are so reluctant to provide public companies with any information relating to short sales. Simply put, the Chicago Board Options Exchange (“CBOE”) was profiting on the illegal short sales.  These are some of the relevant facts which the SEC alleged and the CBOE admitted:

Not only did [the CBOE] fail to enforce the Commission’s rules by not adequately investigating a member firm’s compliance with Regulation SHO of the Exchange Act (“Reg. SHO”), CBOE’s conduct also interfered with the Commission’s Division of Enforcement (“Enforcement Division”) staff’s Reg. SHO investigation of the same member firm. This conduct was egregious. CBOE assisted that member firm by taking the unprecedented step of providing information for, and edits to, the member firm’s Wells submission to the Commission ─ even more troubling, the information and edits provided by CBOE resulted in the member firm providing the Commission with inaccurate and misleading information. When questioned by Enforcement Division staff about the underlying matter, CBOE failed to disclose that it had assisted the member firm with its Wells submission. CBOE also failed to enforce Reg. SHO because it employed a Reg. SHO surveillance program that failed to detect a single violation, despite numerous red flags that its members engaged in violative conduct.[50]

 

  1. As a SRO, the CBOE was obligated to enforce its members’ compliance with the federal securities laws and rules, including Reg SHO. In effect, the CBOE was a deputy of the SEC.  However, instead of enforcing Reg SHO, the CBOE closed its eyes to hundreds of millions of dollars in naked short sales consummated by one of its members, optionsXpress (a subsidiary of Charles Schwab) and some of optionsXpress’ biggest customers in 25 public companies and then the CBOE tried to obstruct the SEC’s investigation.[51]
  2. The SEC’s release on the CBOE’s failure to enforce Reg SHO and subsequent efforts to obstruct the SEC’s investigation pointed to the reason the CBOE was behaving in this way:

CBOE’s Regulatory Services Division is responsible for enforcing the federal securities laws and regulations and CBOE rules. Until recently, CBOE had no formal policies separating its Regulatory Services Division from its business side, which was responsible for CBOE’s income generation. In fact, until recently, CBOE’s Chief Regulatory Officer reported up to a senior business executive. As a result, the line between business and regulation became blurred.[52]

 

  1. The violations the CBOE had permitted optionsXpress to commit were not merely violations of Reg SHO. In a separate case, the first of its kind, SEC Chief Administrative Law Judge Brenda Murray found that the naked short sales by the optionsXpress cabal constituted violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10(b)(5) and 10(b)-21.[53] The CBOE had closed its eyes to the fraudulent naked short sales by one of its members and then tried to obstruct the SEC’s investigation of the fraud.
  2. The optionsXpress decision found the optionsXpress cabal had designed a fraudulent scheme using options to circumvent the stock delivery requirements of Reg SHO Rule 204. But broker-dealers and market participants who engage in naked short selling do not have to resort to fraud to circumvent the Rule 204 stock delivery requirements. Other terms of Rule 204 create an exception to its delivery requirements, perhaps more accurately perceived as a huge loophole.  Whether exception or loophole, the effect is the same: the huge void in Rule 204 in effect converts the rule into an honor code. To understand how this exception-loophole emasculates Rule 204, some understanding of Rule 204’s moving parts may be helpful.
  3. In essence, Rule 204 is supposed to prevent short term naked shorts from becoming long term naked shorts. To that end, it requires delivery of the stock in three days[54] for non-market-makers and six days[55] for market-makers. As alleged above, the SEC issued Rule 204 at the height of the financial crisis, after three investment banks (Bear Sterns, Merrill Lynch and Lehman Brothers) had failed and Morgan Stanley and Goldman Sachs were teetering on the edge of failure.
  4. Regulators, broker-dealers and market participants commonly refer to the huge loophole in Rule 204 with a comforting euphemism: “internalization.” As a practical matter, it is more accurate to think of it as a de facto exception to Rule 204. It allows executing and clearing brokers to happily engage in naked short selling, so long as neither party tattles on the other. With billions to be made, tattling is extremely rare.
  5. In the official lexicon, “internalization” occurs where broker-dealers execute client trades as agents or principals within their own trading system.[56] These internalized trades are not reported to the DTCC, and thus the DTCC will never know whether the trade resulted in a failure to deliver. The DTCC has repeatedly informed the SEC that it recognizes this exception.[57] On this point, its fourth quarter June 2006 Rule 19b-4 filing stated:

Trades executed in the normal course of business between a Member that clears for other broker/dealers, and its correspondent, or between correspondents of the Member, which correspondent(s) is not itself a Member and settles such obligations through such clearing Member (“internalized trades”) are not required to be submitted to the Corporation and shall not be considered to violate the “pre-netting” prohibition.[58]

 

  1. A DTCC white paper has defined internalization in even broader terms than described in the DTCC’s Rule 19b-4 filings with the SEC. It defined the term as follows:

Internalization, for purposes of this paper, is the execution of separate correspondents’ trades by a clearing broker within its own record keeping system, and the related practice of failing to submit trade data on these “internalized” trades to the clearing corporation, so that not all activity is reported to the clearing corporation. For example, a clearing broker has a correspondent relationship with two separate broker dealers. One correspondent enters into a transaction with another correspondent of the same NSCC member. In effect, one correspondent is short and one is long. The NSCC member, however, is net flat for the transaction. The member clears the activity internally and does not report it for clearance at NSCC.[59]

 

  1. The same DTCC paper went on to discuss the risks of internalization:

Internalization and summarization (a first cousin of internalization) have come into play recently because while these trade data submission techniques enable members to reduce their trade recording and clearing fees, these practices also introduce new clearing risks because all trades are not submitted for clearance and because correspondent broker activity may not be reported accurately.[60]

 

  1. As pointed out in the DTCC white paper, internalization introduces new risks that “broker activity may not be reported accurately.” A FINRA disciplinary action fleshes out a little how the “broker activity may not be reported accurately” in the 2012 case:

The findings stated that in each instance of the fictitious loans, Luerman falsely stated that one of the various financial institutions that frequently loaned securities to the firm was the counterparty and had agreed to the fictitious transaction. For each of the fictitious transactions, Luerman also invented and reported a false lending fee. The firm did not receive any securities in connection with the fictitious transactions, and the firm’ systems automatically cancelled these transactions.[61]

  1. The phony booking of loans between broker-dealers is not the exclusive territory of small fry. The big players do this more astutely. In Overstock.com v. Morgan Stanley,[62] attorneys for Goldman Sachs and Merrill Lynch accidentally released excerpts of emails written by Goldman Sachs and Merrill Lynch employees. These emails offer a window into how the big broker-dealers play the game:   One Merrill Lynch executive suggests the firm “might want to consider allowing…customers to fail,” to which a colleague replies: “We are going to look into that.” Another asks: “How and when can we prevent the delivery [of shares]?” In another e-mail he requests an update from a lieutenant on “how we are going to fix fails and I want to know what we nees [sic] to do to make 369 market-makers fail.” In response to a question from a large client about efforts at “cleaning up” fails, a Goldman Sachs employee says that “we will let you fail.” In another message, he refers to a senior colleague “really backing down from…cleaning up fails.”… The e-mails also suggest close commercial links between the two firms [Merrill Lynch and Goldman Sachs]… [63]
  2. In essence, the internalized trades include all trades except those traded over an exchange or traded through pools. These internalized trades and the trades executed in dark pools, are reported through the FINRA Trade Reporting Facility (“TRF”). Like the internalized trades, the trades executed in dark pools, as their name suggests, have no transparency. Both the internalized trades and the trades executed in dark pools create an enormous hole in Rule 204.
  3. As the case with Rule 203, there is little transparency whether broker-dealers comply with Rule 204. The transparency boils down to a list published by the SEC every two weeks identifying the public companies that have had failures to deliver and the amount of those failures.[64] No other information, e.g. the identity of the broker-dealer who failed to deliver the stock, is disclosed.  Of course, this does not include all the fail-to-deliver trades that are hidden by “internalization.”
  4. The SEC has direct responsibility for creating numerous flaws in Reg SHO, the creation of market rules which cloak in darkness every step in the process of a short sale trade, and, of course, its lax and discriminatory enforcement of Reg SHO (serious prosecutions of tiny market participants and mild rebukes to the mega brokerage firms).
  5. The multiple flaws in Reg SHO, the lack of transparency in short sale trading and the SEC’s lax enforcement have combined to make compliance with Reg SHO a form of self-regulation. The notion that Wall Street banks and hedge funds can self-regulate was disproved in 1929 and again in 2008.
  6. Plaintiff has filed this complaint, because the SEC has flaunted his FOIA requests, which seek records relating to the SEC’s purported efforts to investigate and civilly prosecute those who engage in naked short selling. By way of example, Plaintiff’s FOIA requests have sought records of the SEC’s administrative proceeding against optionsXpress, In the Matter of optionsXpress.[65] For the first time, in that case the SEC alleged and proved that optionsXpress (a broker-dealer), one of its highest officers, and one of its biggest customers committed securities fraud by engaging in naked short sales. Yet, the SEC has refused to release the transcripts of the public hearing or any of the documents admitted into evidence.
  7. In another of those requests which are the subject matter of the complaint, Plaintiff sought records relating to an investigation of the DTCC for possible violations of Reg SHO. Plaintiff is informed and believes, and thereon alleges, that the SEC conducted a six-year formal investigation of the DTCC in connection with its possible participation in naked short selling. Plaintiff is informed and believes, and thereon alleges, that the SEC has eighteen storage boxes relating to its investigation of the DTCC which are responsive to Plaintiff’s requests. The SEC has failed to release any of these records.
  8.  The SEC has failed to release records sought by Plaintiff’s 26 FOIA requests relating to (1) the SEC’s matters under inquiry, investigations and administrative proceedings of those suspected of engaging in naked short selling or aiding and abetting the violation and (2) the SEC’s matters under inquiry, investigations and administrative proceedings of those victimized by naked short selling. In this way, another regulator, this time the SEC, switched off the lights which could bring some visibility to the shadows where naked short selling has flourished and continues to threaten the integrity of the capital markets themselves, according to FINRA.[66]

FIRST CAUSE OF ACTION

  1. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In The Matter of Peter J. Bottini and Kevin E. Strine, Administrative Proceeding File No. 3-14848, Securities Exchange Act of 1934 Release No. 710:

 

  1. All transcripts of any hearings during said administrative proceeding;
  2. All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;
  3. All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;
  4. All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and
  5. All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

  1. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 1.
  2. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 1 and assigned it tracking number 14-02120-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 2.
  3. Exhibit 2 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02120-FOIA.

SECOND CAUSE OF ACTION

  1. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of Rhino Trading, LLC, Administrative Proceeding File No. 3-13677, Securities Exchange Act of 1934 Release No. 60941:

 

a)            All transcripts of any hearings during said administrative proceeding;

b)            All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c) All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)            All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)            All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

  1. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 3.
  2. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 3 and assigned it tracking number 14-02121-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 4.
  3. Exhibit 4 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02121-FOIA.

THIRD CAUSE OF ACTION

  1. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of Jeffrey A. Wolfson, Administrative Proceeding File No. 3-14726, Securities Exchange Act of 1934 Release No. 67451:

 

a)       All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

  1. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 5.
  2. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 5 and assigned it tracking number 14-02122-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 6.
  3. Exhibit 6 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02122-FOIA.

FOURTH CAUSE OF ACTION

100. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS received or generated by the SEC in any matter under inquiry (MUI) or INVESTIGATION relating to possible violations of Regulation SHO, for the naked short sale of any stock, or for failures to deliver any securities from January 1, 2007, to the present. These MUIs or investigations can be identified by doing a search of the CATS, its replacement, or any other system maintaining a list of SEC investigations using the search terms “Regulation SHO,” “Reg SHO,” “Rule 203,” “Rule 204,” “naked short,” “naked shorts,” or any other terms commonly used within the SEC in referring to MUIs or investigations relating to violations of Regulation SHO.

 

101. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 7.

102. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 7 and assigned it tracking number 14-02123-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 8.

103. Exhibit 8 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02123-FOIA.

FIFTH CAUSE OF ACTION

104. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of Goldman Sachs Execution & Clearing, L.P., Respondent, Administrative Proceeding File No. 3-13877, Securities Exchange Act of 1934 Release No. 62025:

 

a)      All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

105. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 9.

106. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 9 and assigned it tracking number 14-02124-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 10.

107. Exhibit 10 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02124-FOIA.

 

SIXTH CAUSE OF ACTION

108. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of TJM Proprietary Trading, LLC, Administrative Proceeding File No. 3-13569, Securities Exchange Act of 1934 Release No. 60440:

a)      All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

109. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 11.

110. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 11 and assigned it tracking number 14-02125-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 12.

111. By letter of April 22, 2014, the SEC’s FOIA Office notified Plaintiff that it had not located or identified “any information responsive to [Plaintiff’s] request”. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 13.

112. By letter of April 22, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02125-FOIA (Exhibit 13). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 14.

113. By letter of April 23, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 14) and assigned it tracking number 14-00167-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 15. Exhibit 15 is the last communication Plaintiff has received from the FOIA Office regarding FOIA Request 14-02125-FOIA or its appeal.

SEVENTH CAUSE OF ACTION

114. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following All RECORDS of any INVESTIGATION or matter under inquiry (MUI) relating to Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI, INVESTIGATION, administrative proceeding or civil action where Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com was a subject of the MUI, investigation, administrative proceeding or civil action.

115. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 16.

116. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 16 and assigned the portion of the request regarding Sam Antar tracking number 14-02126-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 17.

117. Exhibit 17 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02126-FOIA.

 

EIGHTH CAUSE OF ACTION

118. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following All RECORDS of any INVESTIGATION or matter under inquiry (MUI) relating to Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI, INVESTIGATION, administrative proceeding or civil action where Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com was a subject of the MUI, investigation, administrative proceeding or civil action.

 

119. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 16.

120. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 16 and assigned the portion of the request regarding Barry Minkow tracking number 14-02127-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 18.

121. Exhibit 18 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02127-FOIA.

 

NINTH CAUSE OF ACTION

122. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following All RECORDS of any INVESTIGATION or matter under inquiry (MUI) relating to Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI, INVESTIGATION, administrative proceeding or civil action where Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com was a subject of the MUI, investigation, administrative proceeding or civil action.

 

123. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 16.

124. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 16 and assigned the portion of the request regarding Fraud Discovery Institute tracking number 14-02128-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 19.

125. Exhibit 19 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02128-FOIA.

TENTH CAUSE OF ACTION

126. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following All RECORDS of any INVESTIGATION or matter under inquiry (MUI) relating to Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI, INVESTIGATION, administrative proceeding or civil action where Sam Antar, Barry Minkow, the Fraud Discovery Institute, or WhiteCollarFraud.com was a subject of the MUI, investigation, administrative proceeding or civil action.

 

127. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 16.

128. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 16 and assigned the portion of the request regarding WhiteCollarFraud.com tracking number 14-02129-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 20.

129. Exhibit 20 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02129-FOIA.

ELEVENTH CAUSE OF ACTION

130. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of Hazan Capital Management, LLC, Administrative Proceeding File No. 3-13570, Securities Exchange Act of 1934 Release No. 60441:

 

a)      All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

131. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 21.

132. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 21 and assigned it tracking number 14-02130-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 22.

133. Exhibit 22 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02130-FOIA.

TWELFTH CAUSE OF ACTION

134. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of UBS Securities LLC, Administrative Proceeding File No. 3-14620, Securities Exchange Act of 1934 Release No. 65733:

 

a)      All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

135. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 23.

136. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 23 and assigned it tracking number 14-02131-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 24.

137. Exhibit 24 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02131-FOIA.

THIRTEENTH CAUSE OF ACTION

138. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In the Matter of OptionsXpress, Inc., Administrative Proceeding File No. 3-14848, Securities Exchange Act of 1934 Release No. 710:

 

a)      All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

139. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 25.

140. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 25 and assigned it tracking number 14-02132-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 26.

141. Exhibit 26 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02132-FOIA.

FOURTEENTH CAUSE OF ACTION

142. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying the following RECORDS relating to In The Matter of Gary S. Bell,  Administrative Proceeding File No. 3-14660, Securities And Exchange Commission, Securities Exchange Act of 1934 Release  No. 65941:

 

a)      All transcripts of any hearings during said administrative proceeding;

b)      All documents or other writings filed by either the SEC or the respondents in said administrative proceeding;

c)       All exhibits attached to any filing by the SEC or the respondents during said administrative proceeding;

d)      All transcripts of any testimony taken during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding; and

e)      All exhibits marked or identified during the MUI, informal investigation or formal investigation that occurred prior to the commencement of said administrative proceeding.

 

143. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 27.

144. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 27 and assigned it tracking number 14-02133-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 28.

145. Exhibit 28 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02133-FOIA.

FIFTEENTH CAUSE OF ACTION

146. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of Wedbush Securities for possible violations of Regulation SHO and/or naked short selling since January 1, 2009, to the present.

 

147. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 29.

148. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 29 and assigned it tracking number 14-02134-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 30.

149. By letter of March 4, 2014, the FOIA Office informed Plaintiff that it had “located 194 pages of records, of which 175 pages are released in full or in part, and the other 19 pages are withheld in full. The withheld records are exempt from release under Exemptions 4, 5, 6, 7(A) and/or 7(C), 5 U.S.C. § 552(b)(4), (5), (6), (7)(A) and/or (7)(C), 17 CFR § 200.80(b)(4), (5), (6), (7)(A) and/or (7)(iii),…” A true and correct copy of the March 4, 2014, letter from the FOIA Office, without enclosures, is attached hereto and incorporated by reference as Exhibit 31.

150. By letter of March 5, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02134-FOIA (Exhibit 31). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 32.

151. By letter of March 13, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 32) and assigned it tracking number 14-00044-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 33. Exhibit 33 is the last communication Plaintiff has received from the FOIA Office regarding FOIA Request 14-02134-FOIA or its appeal.

SIXTEENTH CAUSE OF ACTION

152. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS of any SEC matter under inquiry (MUI) or INVESTIGATION of Global Securities involving possible naked shorting or violations of Regulation SHO by Global Securities from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI and/or INVESTIGATION relating to Global Securities from January 1, 200, to the present.

 

153. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 34.

154. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 34 and assigned it tracking number 14-02135-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 35.

  1. 155.  By letter of January 22, 2014, the FOIA Office informed Plaintiff that it had not located or identified “any records responsive to [Plaintiff’s] request.” A true and correct copy of the January 22, 2014, letter from the FOIA Office is attached hereto and incorporated by reference as Exhibit 36.

156. By letter of January 22, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02135-FOIA (Exhibit 36). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 37.

157. By letter of January 29, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 37) and assigned it tracking number 14-00027-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 38.

158. By letter of March 6, 2014, Associate General Counsel Richard M. Humes denied Plaintiff’s appeal regarding FOIA Request 12-02135-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 39.

SEVENTEENTH CAUSE OF ACTION

159. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of any individual or business entity in connection to possible violations of Regulation SHO and/or naked short selling in relation to Morgan Stanley during 2008.

 

160. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 40.

161. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 40 and assigned it tracking number 14-02136-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 41.

162. Exhibit 41 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02136-FOIA.

EIGHTEENTH CAUSE OF ACTION

163. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of any individual or business entity in connection to possible violations of Regulation SHO and/or naked short selling in relation to Merrill Lynch during 2008.

 

164. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 42.

165. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 42 and assigned it tracking number 14-02137-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 43.

166. Exhibit 43 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02137-FOIA.

NINETEENTH CAUSE OF ACTION

167. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of any individual or business entity in connection to possible violations of Regulation SHO and/or naked short selling in relation to Lehman Brothers during 2008.

 

168. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 44.

169. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 44 and assigned it tracking number 14-02138-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 45.

170. Exhibit 45 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02138-FOIA.

TWENTIETH CAUSE OF ACTION

171. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of Citadel Securities for possible violations of Regulation SHO and/or naked short selling since January 1, 2009, to the present.

 

172. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 46.

173. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 46 and assigned it tracking number 14-02139-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 47.

174. By letter of April 21, 2014, the FOIA Office informed Plaintiff that it had not located or identified “any records responsive to [Plaintiff’s] request.” A true and correct copy of the April 21, 2014, letter from the FOIA Office is attached hereto and incorporated by reference as Exhibit 48.

175. By letter of April 22, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02139-FOIA (Exhibit 48). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 49.

  1. By letter of April 23, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 49) and assigned it tracking number 14-00169-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 50.

177. Exhibit 50 is the last communication Plaintiff has had from the SEC regarding FOIA request 14-02139-FOIA.

TWENTY-FIRST CAUSE OF ACTION

178. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of any individual or business entity in connection to possible violations of Regulation SHO and/or naked short selling in relation to Bear Stearns during 2008.

 

179. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 51.

180. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 51 and assigned it tracking number 14-02140-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 52.

181. Exhibit 52 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02140-FOIA.

TWENTY-SECOND CAUSE OF ACTION

182. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS relating to any matter under inquiry (MUI) or INVESTIGATION of Knight Capital for possible violations of Regulation SHO and/or naked short selling since January 1, 2009, to the present.

 

183. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 53.

184. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 53 and assigned it tracking number 14-02141-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 54.

185. Exhibit 54 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02141-FOIA.

TWENTY-THIRD CAUSE OF ACTION

186. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA and the Privacy Act, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS or COMMUNICATIONS from January 1, 2006, to the present, relating to any exemption from, exception to, or non-application of Regulation SHO to Al Safi Trust in whole or in part or any preferred status of Al Safi Trust under regulation SHO.

 

187. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 55.

188. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 55 and assigned it tracking number 14-02142-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 56.

  1. 189.  By letter of April 3, 2014, the FOIA Office informed Plaintiff that it had not located or identified “any records responsive to [Plaintiff’s] request.” A true and correct copy of the April 3, 2014, letter from the FOIA Office is attached hereto and incorporated by reference as Exhibit 57.

190. By letter of April 10, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02142-FOIA (Exhibit 57). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 58.

191. By letter of April 11, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 58) and assigned it tracking number 14-00137-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 59.

192. By letter of April 28, 2014, Associate General Counsel Richard M. Humes denied Plaintiff’s appeal regarding FOIA Request 12-02142-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 60.

TWENTY-FOURTH CAUSE OF ACTION

193. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS of any SEC matter under inquiry (MUI) or INVESTIGATION of Penson Financial and/or Wedbush (or any of its previous names) involving possible naked shorting or violations of Regulation SHO by Penson Financial and/or Wedbush from January 1, 2008, to the present.

This request is limited to RECORDS maintained in a MUI and/or INVESTIGATION relating to Penson Financial and/or Wedbush (or any of its previous names) from January 1, 2008, to the present.

194. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 61.

195. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 61 and assigned tracking number 14-02143-FOIA to the portion of the request regarding Penson Financial. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 62.

  1. 196.  By letter of February 5, 2014, the FOIA Office informed Plaintiff that it was “withholding records responsive to [Plaintiff’s] request under 5 U.S.C. § 552(b)(7)(A), 17 CFR § 200.80 (b)(7)(i).” A true and correct copy of the February 5, 2014, letter from the FOIA Office is attached hereto and incorporated by reference as Exhibit 63.

197. By letter of February 12, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02143-FOIA (Exhibit 63). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 64.

198. By letter of February 19, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 64) and assigned it tracking number 14-00037-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 65. Exhibit 65 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02143-FOIA.

TWENTY-FIFTH CAUSE OF ACTION

199. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS of any SEC matter under inquiry (MUI) or INVESTIGATION of Penson Financial and/or Wedbush (or any of its previous names) involving possible naked shorting or violations of Regulation SHO by Penson Financial and/or Wedbush from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI and/or INVESTIGATION relating to Penson Financial and/or Wedbush (or any of its previous names) from January 1, 2008, to the present.

 

200. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 61.

201. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 61 and assigned tracking number 14-02144-FOIA to the portion of the request regarding Wedbush. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 66.

  1. 202.  By letter of March 4, 2014, the FOIA Office informed Plaintiff that “all records responsive to this request have been processed and provided to you in response to FOIA request 14-02134-FOIA.” A true and correct copy of the March 4, 2014, letter from the FOIA Office is attached hereto and incorporated by reference as Exhibit 67.

203. By letter of March 5, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02144-FOIA (Exhibit 67). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 68.

204. By letter of March 13, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 68) and assigned it tracking number 14-00043-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 69. Exhibit 69 is the last communication Plaintiff has received from the SEC regarding FOIA request 14-02144-FOIA.

TWENTY-SIXTH CAUSE OF ACTION

205. By letter of November 29, 2013, pursuant to the applicable provisions of FOIA, Plaintiff requested access to and copies of specified documents as follows:

I am requesting that you release for inspection and copying all RECORDS of any matter under inquiry (MUI) or INVESTIGATION which became SEC investigation HO-09973. All RECORDS of any SEC MUI or INVESTIGATION of Adnan Khashoggi/Genesis Intermedia for possible naked shorting or violations of Regulation SHO by Adnan Khashoggi/Genesis Intermedia from January 1, 2008, to the present.

 

This request is limited to RECORDS maintained in a MUI and/or INVESTIGATION relating to Adnan Khashoggi/Genesis Intermedia from January 1, 2008, to the present.

 

206. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 70.

207. By letter of December 3, 2013, the SEC’s FOIA office acknowledged receipt of Exhibit 70 and assigned it tracking number 14-02145-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 71.

  1. 208.  By letter of March 4, 2014, the FOIA Office informed Plaintiff that it had not located or identified “any records responsive to [Plaintiff’s request.” A true and correct copy of the March 4, 2014, letter from the FOIA Office is attached hereto and incorporated by reference as Exhibit 72.

209. By letter of March 5, 2014, Plaintiff appealed the FOIA Office’s decision regarding request 14-02145-FOIA (Exhibit 72). A true and correct copy of said appeal, without enclosures, is attached hereto and incorporated by reference as Exhibit 73.

210. By letter of March 13, 2014, the FOIA Office acknowledged receipt of Plaintiff’s appeal (Exhibit 73) and assigned it tracking number 14-00042-APPS. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 74.

211. By letter of May 13, 2014, Associate General Counsel Richard M. Humes denied Plaintiff’s appeal regarding FOIA Request 12-02145-FOIA. A true and correct copy of said letter is attached hereto and incorporated by reference as Exhibit 75.

PLAINTIFF’S CLAIM FOR RELIEF: VIOLATIONS OF FOIA

212. Plaintiff re-alleges and incorporates by reference all preceding paragraphs.

213. Plaintiff is entitled by law to access the records requested under the FOIA.

214. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully comply with paragraphs a through e of Plaintiff’s November 29, 2013, request for the records (Exhibit 1), as specified in paragraph 88 above.

215. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 3) as specified in paragraph 92 above.

216. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 5) as specified in paragraph 96 above.

217. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 7) as specified in paragraph 100 above.

218. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 9) as specified in paragraph 104 above.

219. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 11) as specified in paragraph 108 above.

220. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 16) as specified in paragraphs 114, 118, 122, and 126 above.

221. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 21) as specified in paragraph 130 above.

222. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 23) as specified in paragraph 134 above.

223. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 25) as specified in paragraph 138 above.

224. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 27) as specified in paragraph 142 above.

225. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 29) as specified in paragraph 146 above.

226. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 34) as specified in paragraph 152 above.

227. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 40) as specified in paragraph 159 above.

228. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 42) as specified in paragraph 163 above.

229. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 44) as specified in paragraph 167 above.

230. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 46) as specified in paragraph 171 above.

  1. 231.   Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 51) as specified in paragraph 178 above.

232. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 53) as specified in paragraph 182 above.

233. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 55) as specified in paragraph 186 above.

234. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill Plaintiff’s November 29, 2013, request for records (Exhibit 61) as specified in paragraphs 193 and 199 above.

235. Defendant SEC is in violation of the FOIA, 5 U.S.C. § 552, by failing to fully and lawfully fulfill paragraphs a through e of Plaintiff’s November 29, 2013, request for records (Exhibit 70) as specified in paragraph 205 above.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests that the Court:

  1. Declare that Defendant SEC has violated the FOIA by failing to satisfy Plaintiff’s November 29, 2013,  requests for records as specified in paragraphs 88, 92, 96, 100, 104, 108, 114, 118, 122, 126, 130, 134, 138, 142, 146, 152, 159, 163, 167, 171, 178, 182, 186, 193, 199, and 205 above;
  2. Order Defendant SEC to immediately search for and release all records responsive to

Plaintiff’s November 29, 2013, requests for records  as specified in paragraphs 88, 92, 96, 100, 104, 108, 114, 118, 122, 126, 130, 134, 138, 142, 146, 152, 159, 163, 167, 171, 178, 182, 186, 193, 199, and 205 above;

  1. Award Plaintiff his  costs and reasonable attorney’s fees and litigation costs in this action; and
  2. Grant such other and further relief as the Court may deem just and proper.

 

Dated: May 28, 2014                                                       MARK MITCHELL

Plaintiff.

 

 

 

By:          /s/ Hal J. Wood                

One of His Attorneys

 

 

Hal J. Wood (ARDC #6217069)

hwood@hmblaw.com

HORWOOD MARCUS & BERK CHARTERED

500 West Madison Street, Suite 3700

Chicago, Illinois  60661

Phone: (312) 606-3200

Fax: (312) 267-2197

 

Gary J. Aguirre (ARDC #6315132)

gary@aguirrelawapc.com

AGUIRRE LAW, APC

501 West Broadway, Suite 800

San Diego, California 92101

Phone: (619) 400-4960

Fax: (619) 501-7072

 

 

 

 

.

 

 

 

 

 

 


[1] The home page for Deep Capture is https://www.deepcapture.com/ (last visited May 20, 2014).

[2]  Gary Matsumoto, Naked Short Sales Hint Fraud in Bringing Down Lehman, Bloomberg.com, March 19, 2009, available at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aB1jlqmFOTCA (last visited May 20, 2014).

[4] There were a few, very brief articles indicating that UBS had violated Reg SHO, but none offered a clue of the magnitude of the violations or their potential impact on market integrity. See for example: FINRA Fines UBS $12M for Alleged Short-Sale Violations, Dow Jones News Service, Oct. 25, 2011.

[5]  U.S. SEC OIG Report of Investigation, Unauthorized Disclosure of Non-Public Information, Jan.12, 2010, available at http://www.sec.gov/about/offices/oig/reports/investigations/2010/OIG-512(redacted).pdf (last visited May 20, 2014).

[6] Judd Bagley, Moral Hazard at the SEC, DeepCapture.com, July 28, 2010, available at https://www.deepcapture.com/moral-hazard-at-the-sec/ (last visited May 20, 2014).

[7] Irving M. Pollack joined the SEC staff in 1946 and was Director of the Division of Enforcement beginning in Sep. 1972. In Feb. 1974, Mr. Pollack began to serve as Commissioner, filling the unexpired term of Hugh F. Owens who resigned. He continued as Commissioner until 1980.

[8] Irving M. Pollack, Short-sale Regulation of NASDAQ Securities, July 1986. See http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=1359&print=1.

[9] Id.

[10] SEC Exchange Release No. 26694, 1989 SEC LEXIS 652 (April 4, 1989).

[11] “On October 28, 2003, the Commission published for public comment a proposed rule, Regulation SHO, on short sales.” Related to Proposed Short Sale Rule, Regulation SHO, Replacing Rules 3b-3, 10a-1, 10a-2 and Amending Rule 105 of Regulation M,  SEC Exchange Act Release No. 48709,  2004 SEC LEXIS 1674 (July 28, 2004).

[12] Id.

    [13] Id.

    [14] In the Matter of Vladlen “Larry” Vindman, Securities Act Release No. 8679, 2006 SEC LEXIS 862 at 28,  (April 14, 2006) relegated the issue to a footnote:

 

Although “naked short selling” is not a defined term in the federal securities laws, the Commission has taken regulatory action to reduce short selling abuses. See Short Sales, Exchange Act Rel. No. 50103 (Aug. 6, 2004), 83 SEC Docket 1492, 1493 (noting that location and delivery requirements of Regulation SHO “will act as a restriction on so-called ‘naked’ short selling”)

 

See also:  In the Matter of Eagletech Communications, Inc., Initial Decisions Release No. 287, 2005 SEC LEXIS 1318 (June 7, 2005); In the Matter of Eagletech Communications, Inc. Exchange Act Release No. 54095, 2006 SEC LEXIS 1534 (July 5, 2006).

[15] Sandell Asset Management Corp., et al., Exchange Act  Release No. 8857, 2007 SEC LEXIS 2377, (Oct. 10, 2007) and In the Matter of Goldman Sachs Execution & Clearing, L.P., Exchange Act Release No. 55465, (March 14, 2007).

[16] In the Matter of Jeffrey A. Wolfson, Exchange Act Release No. 67451, 2012 SEC LEXIS 2265 (July 17, 2012).

[17] In this regard, Rule 203(b) provides as follows:

 

(b) Short sales. (1) A broker or dealer may not accept a short sale order in an equity security from another person, or effect a short sale in an equity security for its own account, unless the broker or dealer has:

(i) Borrowed the security, or entered into a bona-fide arrangement to borrow the security; or

(ii) Reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due; and

(iii) Documented compliance with this paragraph (b)(1).

(Emphasis added)

[19] Exchange Act Release No. 56212, 2007 SEC LEXIS 1754, (Aug. 7, 2007).

[20] “Any investigating commission must examine the role of short selling, especially naked short selling, in deepening the crisis. Did short selling ultimately cause the collapse of Bear Stearns Cos., Lehman Brothers Holdings Inc. and the near death of American International Group Inc.?” Keeping Markets Vital, Pensions and Investments, Sep. 29, 2008, available at http://www.pionline.com/article/20080929/PRINT/309299985/keeping-markets-vital (last visited May 21, 2014).

[21] “Investors like Hardesty contend that naked short-selling, if left unchecked, would have given hedge funds and other aggressive short sellers an unfair advantage to attack other victims after Lehman Brothers, Merrill Lynch…were said to be among the likely targets.” Naked Short-Selling Blamed in Wall St Crisis, The New Zealand Herald, Sep. 16, 2008, available at http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10532426&ref=rss (last visited May 21, 2014).

[22]

Lehman’s demise was brought on by many destabilizing factors — the collapse of the real estate market, naked short attacks, false rumors, widening spreads on credit default swaps, rating agency downgrades, a loss of confidence by clients and counterparties, and buyers sitting on the sidelines waiting for an assisted deal.

Lehman Bros. CEO Testifies, CNBC/Dow Jones Business Video, Oct. 6, 2008.

[23] Supra, n. 7.

[24] Bill Saporito, Are Short Sellers to Blame for the Financial Crisis? Time Magazine, Sep 18, 2008, available at http://www.time.com/time/business/article/0,8599,1842499,00.html (last visited May 21, 2014).

[25] CNBC: SEC Investigating Shorting of Morgan, Goldman, Barrons.com, Sep. 17, 2008; available at: http://blogs.barrons.com/stockstowatchtoday/2008/09/17/cnbc-sec-investigating-short-selling-of-morgan-goldman/ (last visited May 21, 2014).

[26] Exchange Act Release No. 58166, 2008 SEC LEXIS 1633, (July 15, 2008).

[27] Exchange Act Release No. 58572, 2008 SEC LEXIS 2058 (Sep. 17, 2008).

[28] Amendments to Regulation SHO, Exchange Act Release No. 58773, 2008 SEC LEXIS 2320 (Oct. 14, 2008) at 1.

[29] Id.

[30] Exchange Act Release No. 58775, 2008 SEC LEXIS 2319 (Oct. 14, 2008).

[31] Exchange Act Release No. 60388, 2009 SEC LEXIS 2563 (July 27, 2009); Exchange Act Release No. 59748, 2009 SEC LEXIS 1219 (April 10, 2009); Exchange Act Release No. 58774, 2008 SEC LEXIS 2318 (Oct. 14, 2008); Exchange Act Release No. 58775, 2008 SEC LEXIS 2319 (Oct. 14, 2008); Exchange Act Release No. 58773, 2008 SEC LEXIS 2320 (Oct. 14, 2008); Exchange Act Release No. 58711, 2008 SEC LEXIS 3216 (Oct. 1, 2008); Exchange Act Release No. 58572, 2008 SEC LEXIS 2868 (Sep. 17, 2008); Exchange Act Release No. 58166, 2008 SEC LEXIS 1633 (July 15, 2008).

[32] In the Matter of Gary S. Bell, Exchange Act Release No. 65941, 2011 SEC LEXIS 4379 (Dec. 13, 2011); In the Matter of Peter J. Bottini, et al., Exchange Act Release No. 66814, 2012 SEC LEXIS 1223 (April 16, 2012); In the Matter of Jeffrey A. Wolfson, et al., Exchange Act Release No. 66283, 2012 SEC LEXIS 350 (Jan. 31, 2012); In the Matter of Rhino Trading, et al., Exchange Act Release No. 60941, 2009 SEC LEXIS 3925 (Nov. 4, 2009); In the Matter of Hazan Capital Management, LLC et al., Exchange Act Release No. 60441, 2009 SEC LEXIS 2722  (Aug 5, 2009); In the Matter of TJM Proprietary Trading, LLC, et al., Exchange Act Release No. 60440, 2009 SEC LEXIS 2721  (Aug 5, 2009); In the Matter of OptionsXpress, Inc., et al., Exchange Act Release No. 66815, 2012 SEC LEXIS 1222 (April 16, 2012); and In the Matter of Jeffrey A. Wolfson, Exchange Act Release No. 67451, 2012 SEC LEXIS 2265 (July 17, 2012).

[33] In the Matter of Goldman Sachs Execution & Clearing, L.P., Exchange Act Release No. 62025 (May 4, 2010) and In the Matter of UBS Securities LLC, Exchange Act Release No. 65733 (Nov. 10, 2011).

[34] The agreement repeatedly states that some of the violations lasted at least until December 2010. Financial Industry Regulatory Authority Letter of Acceptance, Waiver and Consent No. 20080144511, (“UBS settlement”) available at http://www.finra.org/web/groups/industry/@ip/@enf/@ad/documents/industry/p124887.pdf.

[35]  Financial Industry Regulatory Authority Letter of Acceptance, Waiver and Consent No. 20080144512, (“Credit Suisse settlement”) at 9-10; available at http://www.finra.org/web/groups/industry/@ip/@enf/@ad/documents/industry/p125336.pdf.

[36] UBS settlement, supra, n. 34.

[37] Securities Exchange Act Release No. 48709, 2003 SEC LEXIS 2594 (Oct. 28, 2003): “The Securities and Exchange Commission (Commission) is publishing for public comment new Regulation SHO, under the Securities Exchange Act of 1934 (Exchange Act), which would replace Rules 3b-3, 10a-1, and 10a-2.”

[38] Id.

[39] See for example: Amendments to Regulation SHO, Securities Exchange Act Release No. 54154,  2006 SEC LEXIS 1611 (July 14, 2006); Regulation SHO and Rule 10a-1, Securities Exchange Act Release No. 55970, 2007 SEC LEXIS 1398 (June 28, 2007); and Amendments to Regulation SHO, Securities Exchange Act Release No. 56212, 2007 SEC LEXIS 1754 (Aug. 7, 2007).

[40] See Amendments to Regulation SHO, Securities Exchange Act Release No. 58775, 2008 SEC LEXIS 2319 (Oct. 14, 2008).

[41] In the Matter of Goldman Sachs Execution & Clearing, L.P., Securities Exchange Act Release No. 55465, (March 14, 2007).

[42] In the Matter of Goldman Sachs Execution & Clearing, L.P., Securities Exchange Act Release No. 62025, 2010 SEC LEXIS 1601 (May 4, 2010).

[43]  In the Matter of UBS Securities LLC, Securities Exchange Act Release No. 65733, 2011 SEC LEXIS 3985 (Nov. 10, 2011).

[44] UBS settlement, supra, n. 34.

[45]  Kevin D. Freeman, CFA, Economic Warfare: Risks and Responses; Analysis of Twenty-First Century Risks in Light of the Recent Market Collapse, June 2009, at 2; available at http://www.vectorpub.com/economic-warfare-risks-and-responses-by-kevin-d-freeman.pdf (last visited May 22, 2014).

[46] “During such price reversal episodes, short sellers actively consume bid side liquidity and tend to route their orders to venues that do not abide by the rules that restrict short sales.” Andriy Shkilko, Bonnie Van Ness, and Robert Van Ness, Price-destabilizing Short Selling, Financial Management, Vol. 41, No. 2, summer 2012; available at http://www.researchgate.net/publication/228985117_Price-destabilizing_short_selling/file/79e4150b8af163074a.pdf (last visited May 22, 2014).

[47] In the Matter of Chicago Board Options Exchange, Inc. et al., Exchange Act Release No. 69726, June 11, 2013.

[48] Ferdinand Pecora, Wall Street under Oath: The Story of Our Modern Money Changers, at 267.

[49] In the Matter of Chicago Board Options Exchange, Inc. et al., supra, n. 47.

[50] Id., at 3.

[51] Id. Also, In the Matter of optionsXpress Inc., et al., Exchange Act Release No. 66815, 2012 SEC LEXIS 1222 (April 16, 2012) and In the Matter of optionsXpress, Inc., et al., IDR Release No. 490, 2013 SEC LEXIS 1643 (June 7, 2013).

    [52] In the Matter of Chicago Board Options Exchange, Inc. et al., supra, n. 47 at 13.

[53]  Regarding Jonathan I. Feldman, a customer of optionsXpress, Judge Murray’s decision observed:

 

The options market, like other securities markets, operates on the understanding that sellers of securities will settle with delivery on the required date. Feldman’s actions constitute fraud because by writing calls he represented to the market as a whole and to purchasers of his deep-in-the-money calls that he was going to make delivery if his calls were exercised and assigned when he had no intention of doing so, and, in fact, by entering buy-writes, he did not cover his short position.

In the Matter of optionsXpress, Inc., et al., IDR Release No. 490, 2013 SEC LEXIS 1643 (June 7, 2013), at 233.

[54] See Rule 204(a)(1).

[55] See Rule 204(a)(3).

[56] Securities Exchange Act Release No. 60997, 2009 SEC LEXIS 3700 (Nov. 13, 2009).

[57] See for example: DTCC Form 19b-4 for 2013, available at http://www.dtcc.com/~/media/Files/Downloads/legal/rule-filings/2013/nscc/SR-NSCC-2013-14.ashx (last visited May 22, 2014); and DTCC Form 19b-4 for 2006, available at http://www.gpo.gov/fdsys/pkg/FR-2013-07-05/html/2013-16088.htm (last visited May 22, 2014).

[58] DTCC Form 19b-4 for 2006 at 5, fn 11, id.

[59] DTCC, Managing Risk in Today’s Equity Market: A White Paper on New Trade Submission Safeguards, Feb. 28, 2003, at 7; available at http://164.109.172.95/downloads/leadership/whitepapers/managingrisk.pdf (last visited May 22, 2014).

[60] Id. at 2.

[61]Disciplinary and Other FINRA Actions, August 2012, at 37; available at http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p151416.pdf (last visited May 22, 2014).

[62] Overstock.com v. Morgan Stanley et al., CGC-07-460147, Superior Court of the State of California (San Francisco).

[63] The Economist, An Enlightening Mistake, Economist.com, May 15, 2012, available at http://www.economist.com/node/21555472 (last visited May 22, 2014).

[64]

The first half of a given month is available at the end of the month. The second half of a given month is available at about the 15th of the next month. We cannot guarantee that the data will be posted by a particular date. We cannot guarantee the accuracy of the data.

See http://www.sec.gov/foia/docs/failsdata.htm (last visited May 22, 2014).

[65] In the Matter of optionsXpress Inc., et al., Exchange Act Release No. 66815, 2012 SEC LEXIS 1222 (April 16, 2012).

[66] UBS settlement, supra, n. 34, and Credit Suisse settlement, supra, n. 35.

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SAC Capital and (and Steve Cohen, Too) Should Be Convicted of Murder

SAC Capital and (and Steve Cohen, Too) Should Be Convicted of Murder

Former SAC Capital portfolio manager Mathew Martoma was convicted today for insider trading, and there is much discussion that SAC Capital founder Steve Cohen might be next, despite earlier reports that Cohen was to escape criminal charges even as the DOJ described Cohen as operating a hedge fund that was a criminal enterprise through and through.

That, in itself, is big news, and the government continues to advertise this case as the largest crackdown on Wall Street crime since the 1991 conviction of Michael Milken on charges of insider trading. It is also crack-down long in coming given that the SEC (way back in the 1980s) investigated (but did not charge) Steve Cohen for allegedly trading on inside information that Cohen had received from Milken’s shop at Drexel Burnham Lambert.

What the government and the media seem to be missing, however, is that SAC Capital has done far worse than trade on inside information, just as Milken did far worse than engage in the insider trading for which he was famously convicted. As has been documented at great length by Deep Capture, Milken and his associates operated a global market manipulation and money laundering network that busted out (i.e. deliberately destroyed) numerous public companies, including some of the nation’s most important savings and loan banks.

In more recent years, Milken and his associates, including Steve Cohen, have similarly busted out numerous public companies, with a component of those bust-outs being manipulative short selling. In light of revelations during the trial of Martoma that SAC Capital profited to the tune of more than $275 million from short-selling a pharmaceutical company, anyone interested in the real damage done by SAC Capital would do well to read my book, “The Dendreon Effect: How Felons, Con-men, and Wall Street Insiders Manipulate High-Tech Stocks.”

That, I confess, is shameless advertisement, but it is also a plea for justice because my book documents the fact that a network of short sellers, including the proprietors of SAC Capital and the famous Michael Milken, have (in recent years) not only traded on inside information about multiple pharmaceutical companies, but also nearly destroyed a company called Dendreon, which had a promising treatment for prostate cancer (a disease about which Milken’s “philanthropic” organization, the Prostate Cancer Foundation, purports to be concerned).

During the trial of Martoma, DOJ prosecutors confirmed that SAC Capital traded on inside information provided by a doctor at the University of Michigan, which was all well and good, but as I documented in my book, SAC Capital not only traded on inside information from another University of Michigan doctor, but also profited from short selling Dendreon’s stock after multiple doctors (some of whom had financial relationships with Milken) conspired to undermine Dendreon’s treatment by convincing the FDA (also corrupted by Milken and his associates) to delay approval of Dendreon’s treatment (which had already been proven effective).

Some journalists and their Wall Street sources have argued that insider trading is an essentially harmless offense and that SAC Capital deserves leniency, but their arguments obscure the fact that SAC Capital’s insider trading has involved the wholesale corruption of the FDA and some of the nation’s most prominent doctors, all of whom have (as my book documents in detail) shown themselves more than willing not only to provide inside information to Steve Cohen and his associates, including Milken, but also to undermine pharmaceutical companies with effective treatments while promoting other companies (i.e., companies that are financed by Milken and his associates) whose treatments were actually killing people.

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All Publicity is Good Publicity if You’re Bill Ackman

All Publicity is Good Publicity if You’re Bill Ackman

John Hempton at Bronte Capital (see his blogs here) is going to some lengths to stir up a scandal concerning letters that were authored (or not authored, as it were) by U.S. Senator Edward Markey. In the letters (sent to the SEC and other government agencies), Senator Markey seeks information about a company called Herbalife, and expresses his supposed concerns that Herbalife is engaged in wrong-doing.

Since the senator’s concerns about Herbalife are similar to the concerns that have been expressed by hedge fund manager Bill Ackman, and since the senator’s letters seem to have been created on Bill Ackman’s computer, Hempton theorizes that Ackman has captured a U.S. senator, and that Ackman was even able to ghostwrite the senator’s letters about Herbalife and profit from the damage that the letters caused to Herbalife’s stock price.

Far be it from us at DeepCapture to argue with that theory, but it could also be that both Ackman and Hempton (who, like Ackman, is short selling Herbalife stock) are themeselves keen to advertise this “scandal” so as to reinforce the perception that Ackman’s superpowers are such that not just stocks, but also senators follow his commands. Superpowers are all the more super for there being (from the point of view of our captured media) no scandal at all.

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The Global Bust-Out Series (Chapter 8): Boris Berezovsky and the “Nexus” Between Organized Crime, Terrorism, and the Global Oligarchy

The Global Bust-Out Series (Chapter 8): Boris Berezovsky and the “Nexus” Between Organized Crime, Terrorism, and the Global Oligarchy

In earlier chapters of this series, we learned about an incredible enterprise known as the Bank of Credit and Commerce International (BCCI), which was operated by oligarchs with ties to the Muslim Brotherhood in partnership with royal families and government officials who were among the Muslim Brotherhood’s principal sponsors. We also learned that the BCCI enterprise operated with the consent, protection, and involvement of the regime in Washington even though BCCI not only counted among its partners numerous organized crime syndicates and most of the world’s leading terrorist organizations, but also was itself a transnational organized crime syndicate involved in everything from the trafficking of narcotics and nuclear weapons components to the funding of terrorism and the perpetration of destructive financial crime.

In addition, we learned that BCCI counted among its important business partners some of the leading figures of the American establishment, including Michael Milken, who was, during the 1980s, the most powerful financial operator of Wall Street. As we know, Milken and some of his closest associates, in league with the BCCI enterprise, perpetrated the “bust-outs” of numerous savings and loan banks, thereby contributing to the devastating savings and loan crisis that began in the late 1980s, and which ultimately cost taxpayers more than $2 trillion in bailouts—a portent of bigger and better things to come.

Also involved with these bust-outs were (see earlier chapters of this series) some of the nation’s leading organized crime figures, such as Carlos Marcello, who was then the top Mafia boss in the city of New Orleans.  Meanwhile, we know, BCCI was involved with a global network of brokerages, most of them operated by people with ties to organized crime, and most of them specializing in the bust-outs of small to medium-sized publicly listed companies. As a judge remarked after BCCI shut its doors in 1991, the BCCI enterprise singlehandedly “shattered the integrity of the global financial system.”

And, of course, history did not end in 1991, when BCCI was shut down.

That same year, 1991, a Muslim Brotherhood leader named Hasan al-Turabi (also a top official in the government of Sudan) appointed Osama bin Laden to serve as chairman of an outfit called the Islamist International, and Osama bin Laden’s most important mission in that capacity was to help lead a Muslim Brotherhood initiative—“The Financial Jihad”—to replace the BCCI enterprise with a global financial network that would exceed the BCCI enterprise in scope and destructive power. That mission was largely a success, and by 1996, the Muslim Brotherhood (with the help of Osama bin Laden, among others more important than him) had built a global financial network that was also a transnational organized crime syndicate involved in all of the activities—from terrorism and destructive financial crime to the trafficking of narcotics and sophisticated weaponry—that had characterized the earlier BCCI enterprise.

Moving forward, I will sometimes refer not only to the “BCCI network” that operated in the 1980s, but also to the “ongoing BCCI enterprise” that continued to operate in later years. This terminology is, in fact, not quite correct because even prior to 1991, BCCI was just one of many similar outfits in a global market manipulation and money laundering network. In addition, BCCI was not necessarily the most important outfit in the network. But most of the outfits in the network did business with BCCI, and BCCI was a common denominator linking most of the financial operators and criminals in the network. Similarly, in 1996, earnest FBI agents discovered (or, rather, rediscovered) what they described at the time as a “global market manipulation and money laundering network” and most of the people involved with the network had formerly been involved with the BCCI enterprise.

In other words, there existed as of 1996 a global market manipulation and money laundering network that was operated not only by leaders of the Muslim Brotherhood (most of them, including Osama bin Laden, formerly involved with the BCCI enterprise), but also numerous others formerly involved with the BCCI enterprise, among them the leaders of multiple terrorist organizations (spawned by the Muslim Brotherhood), most of the world’s leading transnational organized crime syndicates, numerous rogue intelligence operatives, multiple royal families, some of the most powerful people on Wall Street, and other elements of the global criminal oligarchy. All that had changed since BCCI days was that the network had come to include some new players, notable among them a select number of Russian oligarchs, elements of the Russian intelligence services, and some newer organized crime syndicates (in Russia, the Balkans, and other former east-bloc nations) that had emerged upon the global scene after the fall of the Soviet Union.

In subsequent years, this network remained in business, the only difference being that it came to include still more new and younger players, meanwhile innovating new and eminently more destructive financial weapons (e.g. self-destruct CDOs, an innovation of Michael Milken and associates) that were used to bust out major financial institutions and national economies. Indeed, we will see that this same network contributed mightily to the great meltdown of 2008, and we will see that this same network is presently threatening to deliver a repeat performance. This might be why the president of the United States was, in 2011, moved to take the unprecedented step of formally declaring a state of “National Emergency” in response to certain conditions that currently prevail in the American financial markets.

See Chapter 1 of this series for more on the “National Emergency,” but I will remind readers that President Barack Obama, in 2011, stated that he had formally declared a state of “National Emergency” because there was a clear “nexus” between the world’s leading transnational organized crime syndicates, the world’s leading terrorist organizations, and the intelligence services of several unnamed countries. The president explained further that this was a “National Emergency” because transnational organized crime syndicates (and, we can confirm, others in the “nexus”) had not only “penetrated” the “legitimate” financial sector, but were “undermining markets” to such an extent that they now posed a serious and imminent “threat to the stability of the global financial system.”

The president did not quite put it this way, but what he meant was that there presently exists a global market manipulation and money laundering network (or “nexus”) that is inhabited by transnational organized crime syndicates, leading terrorist organizations, rogue intelligence officials, and “legitimate” financial operators who do business with all of the above. In addition, we can assume that when the president said that miscreants in this network (or “nexus’) were “undermining markets,” he meant that miscreants in the network were, in fact, “undermining the markets.” Put another way, they were perpetrating all manner of schemes that can broadly be defined as short-side market manipulation (i.e. manipulation that was “undermining markets”). And the president was right: this was (and still is) a “National Emergency.”

Unfortunately, the president seems to have declared this “National Emergency” so as to usurp for himself the “emergency” powers to handle the “National Emergency” as he sees fit. Furthermore, it seems that the president intends to handle the emergency by doing precisely nothing whatsoever. For example, the president’s administration has yet to prosecute any of the transnational organized crime syndicates that have (in the president’s words) “penetrated” the “legitimate” financial sector. In addition, the president’s administration has yet to prosecute any “legitimate” financial operators, and nor has the president prosecuted any of the other criminal oligarchs who are (in league with organized crime syndicates, terrorist organizations, and others in the “nexus”)  “undermining markets” to such an extent that they now pose a serious “threat to the stability of the global financial system.”  

Later chapters of this series will discuss in much greater detail our current predicament, but by way of introduction to that discussion, it will be useful for us to first review some history so far as it concerns a Russian oligarch named Boris Berezovksy, who veritably epitomized the “nexus” between transnational organized crime syndicates, terrorism, and the global criminal oligarchy. This history has already been well-documented by others, but it is necessary for me to repeat some of the more salient facts not only because these facts have been widely ignored by the major U.S. news organizations, but also because knowing these facts is essential to any proper understanding of the threat that is presently posed to the stability of the global financial system. Indeed, we will see that this history (like the related history of the BCCI enterprise) is entirely pertinent to any discussion of the great meltdown that occurred in 2008, and the financial crisis that continues to the present day.

* * * * * * * * *

In 2013, Boris Berezovsky died, apparently having committed suicide, at which point the major U.S. news organizations, concerning the life and times of Boris Berezovsky, reported precisely the same party line. According to this party line, Berezovsky had been one of Russia’s most “prominent” and “successful” oligarchs, but had been forced to move to London in 2000 when Russian President Vladimir Putin threatened to press criminal charges against him, not because Berezovsky had committed any crimes, but simply because Putin was a tyrant intent upon persecuting all those who challenged his power.

The major U.S. news organizations suggested further that upon moving to London, Berezovsky ceased to be an oligarch (there are no oligarchs in London, according to the major U.S. news organizations). Instead, Berezovsky (according to the media party line) embarked upon a new career as a Russian “exile” and “dissident” in the mold of the heroic Solzhenitsyn, and during all his years in London (with frequent trips to the U.S.A. where he had purchased many of America’s leading politicians, though the purchased media never mentioned that) Berezovsky was employed full-time  either exposing corruption or otherwise waging his larger campaign for freedom, democracy, and justice for all.

There was, however, more to the story, and much of it had been told by journalist Paul Klebnikov, who, in 2000, published a book (title: “The Godfather of the Kremlin”) reporting that Berezovsky had built his business empire in partnership with leading Russian and Chechen organized crime syndicates. Klebnikov’s book also described the key role that Berezovsky played in orchestrating the rise to power of Vladimir Putin. Indeed, Klebnikov suggested that Berezovsky, who was then the wealthiest and most influential man in Russia, played the most important role in orchestrating Putin’s rise to power, though he had help from other oligarchs and elements of the Russian intelligence services.

Putin had spent his early years working as a Russian intelligence operative in East Germany, and later assumed the leadership of the Federal Security Service (FSB), previously known as the KGB. In 1999, Putin became prime minister, and he was anointed president a few months later. (In 2008, Putin became prime minister again, and in 2012, he was reelected as president). In Russia today, it is almost unanimously accepted that Berezovsky and his allies orchestrated Putin’s rise to power, but it is also true that soon after Putin assumed the presidency in 1999, Putin threatened to file criminal charges against Berezovsky and a few oligarchs who were close allies of Berezovsky, at which point Berezovsky and a few other oligarchs (e.g. Vladimir Gusinsky) left Russia, and settled in foreign countries.

Pundits and journalists in Russia have opposing views about Berezovsky and his “exile” in London. One view has it that Berezovsky elevated Putin to the presidency, but in doing so, he miscalculated, failing to realize  that Putin would not return the favor by allowing Berezovsky and his associates to continue looting Russia, and would, to the contrary, crack down on the oligarchs and strip of them of the power they wielded over the Russian government. The other view has it that Putin’s move against Berezovsky was a ruse, intended only to score political points, and that Putin and Berezovsky secretly maintained close relations. In support of the latter point of view, pundits and media in Russia report that Putin and Berezovsky continued in the years following 2000 to hold secret meetings, and that Berezovsky continued to have business dealings with elements of the Russian intelligence services.

In further support of the latter view, pundits and media in Russia also note that oligarchs and crime syndicates that were among Berezovsky’s closest business partners, and which, along with Berezovsky, played important roles in elevating Putin to the presidency in 1999, continue to this day to operate in Russia with the apparent protection of the Putin government, and in partnership with the powerful Russian intelligence services. Therefore, it cannot be possible, or so it is argued, that Berezovsky, during his years as an “exile” in London, genuinely desired to remove Putin from the presidency.

It might even be (in the view of some Russian pundits) that Berezovsky moved to London not to lead a dissident movement against the Putin government, but to serve Putin as some sort of master spy, seizing control of the dissident movement so as to defuse it, and meanwhile leading the expansion of Russian influence into Britain and other Western nations. Alternatively, some suggest that Berezovsky had been an agent of Western governments at the time when he was the most powerful man in Russia, and Putin became aware of this, one reason why Putin forced Berezovsky to leave Russia, even though it was Berezovsky who had orchestrated Putin’s rise to power. We will see that there is no question that Berezovsky was an asset of Western governments, including the regime in Washington, but the nature of his relationship with Putin after his move to London remains a matter of debate.

Either way, the party line put forth by most major U.S. news organizations is patently false, and it says a lot about the state of the U.S. media that the only mainstream journalist to report the truth about Berezovsky was Paul Klebnikov, author of the 2000 book (“The Godfather of the Kremlin”) and other writings about Berezovsky’s criminality. Even more disturbing is the fact that Klebnikov (who had reported receiving death threats from Berezovsky) was, in 2004, gunned down on a Moscow street, and when he was killed, many of his fellow American journalists did not see fit to report that Klebnikov’s seminal work had linked Berezovsky to organized crime.

For a long time, the last word on Klebnikov’s murder was a 2007 story in Forbes Magazine (the magazine that had employed Klebnikov at the time when he was killed), and this story, authored by a journalist named Gary Weiss, did not even mention Berezovsky’s name, much less the fact that Klebnikov had devoted most of his career to exposing Berezovsky’s criminality. Only after Berezovsky himself was dead did Forbes Magazine publish a story suggesting that Berezovsky had, in fact, been a likely suspect in the murder of Klebnikov. There could be no greater evidence of the timidity of Forbes magazine’s editors than that they could not bring themselves to name a likely suspect in the murder of their own reporter until after the suspect was dead.

All the more appalling was that Forbes had previously given the last word on the subject of Klebnikov’s murder to the journalist Gary Weiss, who was meanwhile helping direct the activities of an outfit called The Klebnikov Project, which had been established by some of America’s most prominent journalists, ostensibly to investigate Klebnikov’s murder, and ostensibly to send a strong message that America’s most prominent journalists would not tolerate the murder of one of their own, and would indeed expose any and all miscreants who would dare so much as threaten a journalist or otherwise seek to infringe upon the freedom of the press. Incredibly, not one of those prominent journalists, in the many stories that they published about Klebnikov’s murder, reported that Berezovsky had threatened to murder Klebnikov, and nor did they report that Klebnikov’s seminal work had not only exposed Berezovsky’s ties to organized crime, but had also linked Berezovsky to multiple murders.

In addition, of course, not one of those prominent American journalists reported that Berezovsky was a likely suspect in Klebnikov’s murder, which was quite in contrast to journalists in Russia, where there is still a free press, and where numerous journalists had not only exposed Berezovsky’s ties to organized crime and had not only indentified Berezovsky as the likely suspect in Klebnikov’s murder, but had also linked Berezovsky to the murders of other journalists besides. All the more incredible was the fact that Gary Weiss, the prominent journalist who helped direct The Klebnikov Project (and who, until after Berezovsky’s death, had the last word in Forbes magazine on Klebnikov’s murder) had previously been employed by the lawyers of none other than…Boris Berezovsky.

Not only that, but Weiss (the journalist who hijacked The Klebnikov Project, an outfit ostensibly devoted to protecting freedom of the press) had been employed by Berezovsky’s lawyers to help quash freedom of the press. More specifically, Weiss (the journalist who also hijacked the Klebnikov Project, which was ostensibly investigating the murder of Paul Klebnikov) had been employed by Berezovsky’s lawyers to provide assistance to a libel lawsuit that Berezovsky had filed against…Paul Klebnikov. In addition, Weiss had been employed (by Berezovsky) to lead a smear campaign aimed at trashing Klebnikov’s reputation.

As part of this campaign, Weiss had authored dozens of anonymous internet reviews trashing Klebnikov’s book, and in these reviews (which DeepCapture reporter and computer technologist Judd Bagley traced to Gary Weiss’s IP address) maintained (falsely) that Klebnikov had fabricated the information in his book linking Berezovsky to organized crime. And if you think we have a free press in this nation, consider that The Klebnikov Project (set up by America’s most prominent journalists to expose those who threaten freedom of the press) not only failed to expose Berezovsky (who threatened the free press), but was, in fact, enthusiastically supported by none other than…Berezovsky.

Meanwhile, many of America’s leading news organizations (e.g. the Wall Street Journal) had come to be owned by people (e.g. Rupert Murdoch) who were among Berezovsky’s closest associates. In addition, the major U.S. news organizations seemed to view with total approval or indifference the fact that Berezovsky (who, after all, was some kind of democracy activist) had meddled in our own democracy, becoming one of the largest  donors (or, rather, buyers) of both the Democratic and Republican parties. Equally important, the major U.S. news organizations completely ignored the massive damage that Berezovsky and his mafia associates did to the U.S. economy during all those years while Berezovsky was ostensibly employed full-time as a Russian “exile” and “dissident” in the mold of the heroic Solzhenitsyn.

* * * * * * * * *

In any event, though the information has never appeared in any major U.S. news organization, it has been widely reported elsewhere, and confirmed to be true by numerous prominent investigators, that Berezovsky did (as Klebnikov reported in his book) build his business empire in partnership with leading Russian and Chechen organized crime syndicates. It has also been confirmed to be true (as Klebnikov reported in his book) that Berezovsky, more specifically, built his business empire in partnership with the Mogilevich organization (led by Semion Mogilevich, often referred to as “the most dangerous mobster in the world”) and a Chechen organized crime syndicate who leaders were (in addition to being mobsters) notorious terrorists, trained by trained by Osama bin Laden’s operation and by U.S. military contractors who took their orders from a faction of the regime in Washington.

Berezovsky himself admitted to investing more than $1 million with a Chechen terrorist named Shamil Basaev, who had once planted a radioactive materials in a Moscow park, informing the Russian police that next time the radioactive materials would be exploded as a so-called “dirty bomb,” thereby afflicting thousands of people with deadly radioactive poisoning. In 2004, Basaev did one better by leading a horrific terrorist attack on an elementary school in Beslan, Russia. That atrocity resulted in the deaths of more than 300 people, most of them young children, though there is debate over whether the children were killed by Basaev and his associates, or by Russian police who stormed the school in a botched attempt to rescue the children whom Basaev was holding hostage.

That same year, 2004, of course, Klebnikov, was murdered. That murder has never been solved, and nor have the murders of numerous Russian journalists who reported extensively on Berezovsky. One of those journalists was named Anna Politkovskaya, and when she was assassinated in 2006, it was widely assumed in Russia that her mistake had been to report the same story that Klebnikov had reported. Politkovskaya had been regarded as being Russia’s best investigative journalist, and the American media establishment conferred upon her numerous awards for her reporting and for her efforts to maintain press freedoms in Russia. However, America’s free press failed to inform the public that Politkovskaya’s seminal investigative reporting had been about Berezovsky’s ties to Chechen organized crime and his role in securing the presidency for Vladimir Putin.

Politkovskaya worked for the Russian newspaper Novaya Gazeta, which is one of the world’s finest media organizations. I cannot help but note the irony of the fact that U.S. newspapers (which operate in a country that boasts of having a “free” press) no longer publish much in the way of investigative reports, and seem to be in large part captured by a ruling oligarchy, while Novaya Gazeta (operating in a nation said by the U.S. media to be something close to a police state) employs dozens of full-time investigative journalists who have not only defied and exposed their own ruling oligarchy, but have done so with little in the way of financial reward.

That is a bitter reality, but, in addition, it seems like something close to absurdity when you consider that the U.S. media gives favorable treatment to the same Russian oligarchs whom Russian journalists have exposed as being criminals and mobsters. Of course, those same Russian oligarchs are also important business partners of America’s leading oligarchs, and make no mistake: the American oligarchy (and their Russian counterparts)  influence what you read in the (American) papers. They also influence what you see on cable news. Strangely enough, the only television news network in the United States that provides accurate and in-depth reporting on important subjects like government corruption and Wall Street miscreancy is RT News, which is operated by… the Russian government.

* * * * * * * *

Paul Klebnikov of Forbes magazine was a rarity. He was an American journalist who investigated the oligarchs. He investigated only Russian oligarchs, but he reported that Russian oligarchs had extensive business in the United States, and their business partners in the United States—certain American oligarchs—were not so different in kind. Klebnikov was an American journalist who knew that all oligarchs (distinct from entrepreneurs) earn their billions from destruction, not from creation. He was a rare American journalist who understood the threat that the global oligarchy posed to the global financial system, and he was the rare American journalist who recognized the threat that the global oligarchy posed to freedom in all the nations of the world.

Klebnikov was, moreover, one of the only American journalists to investigate the ties that bind many oligarchs to transnational organized crime syndicates. He was the rare American journalist who, moreover, understood that there exists what amounts to global organized crime syndicate that has wrought destruction not only in places like Russia, but here in the United States as well. Klebnikov investigated this syndicate and, of course, he was rewarded with death.

The prevailing theory advanced by the Western press was that Klebnikov was murdered by Chechen gangsters who did not appreciate his second book, this one written in Russian and titled “Conversations with a Barbarian,” which was about a Chechen mafia boss named Khozh-Ahmed Nukhaev. Perhaps it was, in fact, Nukhaev who killed Klebnikov, but what the Western press failed to report was that Nukhaev was one of Berezovsky’s most important business partners. Even worse, the major U.S. news organizations failed to report that Nukhaev’s organized crime syndicate (whose other leaders are notorious terrorists, trained by Osama bin Laden’s operation and U.S. military contractors) has a massive presence in the United States, and even operates its own lobbying outfit in Washington.

The lobbying outfit is called the American Committee for Peace in Chechnya, and this lobbying outfit, established by a Chechen organized crime (and terrorism) syndicate, not only operates with the full approval of officials in Washington, but also has a board of directors that includes some of the most prominent former officials of the U.S. government. Which is an important fact related to an important story that Paul Klebnikov published about this same Chechen organized crime syndicate and Boris Berezovsky. This  story was also reported by Politkovskaya, among other Russian journalists who were subsequently killed, and the story goes like this:

In the 1990s, Berezovsky developed close business ties to the Chechen organized crime syndicate, the top leader of which was a mobster named Movladi Atlangeriyev.  Among other things, this organized crime syndicate provided protection services to Berezovsky, helping Berezovsky fight off other organized criminals who threatened the companies– Logovaz and AvtoVaz—that were the early foundations of Berezovsky’s business empire.  One leader of the Chechen syndicate, Mogomed Ismailov, served as the head of Berezovsky’s security service.

Another leader of the syndicate was Nukhaev (the subject of Klebnikov’s second book). Nukhaev was granted a significant stake in LugoVaz, and later the Chechen organized crime syndicate (sometimes referred to as the Lozanskaya Gang, though it goes by other names as well) helped Berezovsky and another oligarch, Roman Abramovich, gain control over the larger portion of Russian’s massive aluminum and other mining industries.

The aluminum industry was so infested with organized criminals that there were pitched gun battles and dozens of murders as competing syndicates fought for control. This was known in Russia as the “aluminum wars” and the winners were organized criminals who handed control to Berezovsky and Abramovich.  One of those organized crime figures was named Michael Chernoy, who remained a partner of Berezovsky and Abramovich. It was widely reported that Chernoy (like Berezovksy)had business ties to not only Russian and Chechen organized crime syndicates, but also elements of the Russian intelligence services.

Notably, Chernoy (like Berezovksy) also had close ties to at least one faction of the regime in Washington.  In addition, Chernoy was the lead sponsor of an organization called The Intelligence Summit, which invited spymasters from around the world to discuss their tradecraft. Former CIA director James Woolsey sat on The Intelligence Summit’s board of advisers until he resigned, citing Chernoy’s ties to Russian organized crime and various murders.

Chernoy, through Berezovsky, was also a business partner of a hedge fund manager and oil trader named Martin Schlaff, who had been one of Vladimir Putin’s closest associates since the 1980s, when Schlaff worked for the East German Stasi in Dresden and Putin was a KGB operative in that city. It has also been widely reported that Schlaff was a key financial advisor to Libyan dictator Muammar Qaddafi, and brokered a deal that saw leading Israeli politicians allowing Qaddafi to provide financial support to Hamas, the jihadist outfit that controlled Gaza. Schlaff has also been alleged to have paid bribes to successive Israeli prime ministers.

All of these people—Schlaff, Berezovsky, and Chernoy—have, in addition, had dealings with Semion Mogilevich, the Russian organized crime boss who is often referred to as “the most dangerous mobster in the world.” A 1996 classified FBI report (since made public) implicated Mogilevich in everything from market manipulation, narcotics trafficking, and prostitution to the proliferation of radioactive materials. European governments and numerous overseas media reports have stated that the Mogilevich organization has extensive ties to Al Qaeda, and the Mogilevich organization, on at least one occasion,  at offered to procure for Al Qaeda highly enriched (bomb grade uranium.

The White House national security staff has identified the Mogilevich organization as one mafia outfit that not only has ties to the Russian intelligence services, but has also “penetrated” the “legitimate” financial sector (i.e. Wall Street), hence our “National Emergency.”

The FBI now lists Mogilevich as one of its ten “Most Wanted” criminals. But while the White House has described the Mogilevich organization as contributing to the present “National Emergency,” the FBI has failed to arrest even one member of the Mogilevich organized crime syndicate, though many members of that crime syndicate reside in the United States, and all members of that crime syndicate are, of course, criminals. Meanwhile, Mogilevich has hired a lobbyist in Washington, and if you think the republic is in great shape, consider that the lobbyist for the world’s most dangerous mobster is William Sessions, formerly head of the FBI (the outfit that publishes those “Most Wanted” lists).

In 2008, Moscow police arrested Mogilevich. There was a brief story in The New York Times, and that was the last time the name “Mogilevich” was mentioned in that newspaper or by any other major American media organization . The American media did not report that the FBI made no effort to extradite its “Most Wanted” criminal. Nor did the U.S. media report that the arrest in Moscow was a farce—that Mogilevich was quickly released, with the Russian Interior Minister announcing that the charges against the world’s most notorious mafia boss were “not of a particularly grave nature.” Indeed, that was true. The only law enforcement agency that has charged Mogilevich with any crime is the U.S. Department of Justice, and the DOJ indicted Mogilevich for nothing more than perpetrating a relatively routine fraud at company called YBM Magnex.

As of 2013, reports from Moscow suggest that Mogilevich may face no charges whatsoever. This is not a surprise, given Mogilevich’s importance to at least some elements of both the Russian government and the regime in Washington. In 1999, Mogilevich was the central figure in a massive scandal that saw Russian organized crime working with not only elements of the Russian intelligence services and Russian oligarchs, including Berezovksy, but also elements of the regime in Washington, to launder upwards of $10 billion through the Bank of New York. Also linked to the Bank of New York scandal, of course, was Berezovksy, and we will see that the money laundering through the Bank of New York was indeed not only condoned, but also facilitated by a faction of the regime in Washington.

* * * * * * * *

There is more to the story that got Klebnikov killed. As mentioned, this same story was reported (in part) by Russia’s leading investigative  journalist, who was also killed. Indeed, more than 30 Russian journalists have been killed since 1999, and many of them had reported elements of the same story. It is a story (also told in Wikileaks diplomatic cables, and by numerous media outlets in Europe and Russia) about the ties that bind Chechen organized crime syndicates to not only the Russian intelligence services, but also to elements of the regime in Washington. It is, moreover, the story of how Boris Berezovsky orchestrated the rise to power of Vladimir Putin, and how he might have done it with help from Chechen mobsters who are also known as “terrorists” with ties to Al Qaeda.

In 2000, Al Qaeda operatives traveled to Russia to meet with a Chechen organized crime (and terrorism) syndicate that had informed Al Qaeda that it was able to acquire nuclear weapons. The Chechens who met with the Al Qaeda operatives (but did not ultimately deliver the nukes) were members of the same syndicate that was then in business with Berezovsky. The meetings between Al Qaeda operatives and the Chechen organized crime syndicate were reported in cables sent to Washington by the U.S. embassy in Moscow, and the FBI subsequently indicted an outfit called Benevolence International, alleging that Benevolence International had been involved with the Chechen organized crime syndicate and its efforts to acquire nuclear weapons for Osama bin Laden.

The director of the Benevolence International office in Chechnya was a man named Saif e-Masry, and he was not only a top Al Qaeda operative, but also a member of the Chechen crime syndicate that had tried to acquire nukes for Osama bin Laden. The headquarters of Benevolence International, meanwhile, was in Chicago, and the FBI reported not only that the Benevolence International office in Chicago was an “Al Qaeda front,” but also that that the Benevolence International office in Chicago had been involved in the effort to acquire nuclear weapons for Osama bin Laden. However, no Benevolence International official ever did any jail time, and Benevolence International was allowed to remain open for business. At the time when it was dealing with the Chechens, Benevolence International was even partly funded by the U.S. government.

Other members of that same Chechen organized crime (and terrorism) syndicate operated in Chechnya under the auspices of an outfit called the International Islamic Relief Organization (IIRO), which was based in the suburbs of Washington, DC. As we know from earlier chapters of this series, both the IIRO and Benevolence International were founded by leaders of the Muslim Brotherhood, most of them Saudi billionaires. One of the IIRO’s co-founders was Osama bin Laden. Another was Abdurrahman Alamoudi, a key figure in Osama bin Laden’s organization who (see earlier chapters) was employed as consultant to multiple U.S. government agencies. During the 1990s, Mr. Alamoudi also worked at the White House as an advisor to President Bill Clinton.

The IIRO, meanwhile, received funding from the U.S. government,  and it, too, remains open for business to this day, despite the fact that the United Nations (and earnest U.S. government investigators) have described IIRO offices in multiple countries as having been “Al Qaeda fronts.”

The most important of the Muslim Brotherhood billionaires (a co-founder of both the IIRO and Benevolence International) was Sheikh Khalid bin Mahfouz, who was not only Saudi Arabia’s most prominent banker, but also one of history’s most destructive financial criminals. In the 1980s, Sheikh Mahfouz had been the largest shareholder and executive director of the Bank of Credit and Commerce International (BCCI), and he was later sentenced to pay a fine of around $250 million (a fraction of what he  had looted) for his BCCI crimes—crimes that had (in the words of the judge who sentenced Sheikh Mahfouz to pay the fine) “shattered the integrity of the global financial system.”

In later years, Sheikh Mahfouz became quite active in Russia, and he was among the oligarchs who, along with Berezovsky and others, looted the Russian financial system, which collapsed in 1997.

Later chapters of this series will describe the looting of Russia in greater detail, and in those chapters we will see that many others linked to the collapse of the Russian financial system were, like Sheikh Mahfouz, formerly involved with the BCCI enterprise. We will also see that numerous American oligarchs were linked to the looting of Russia, and many of those American oligarchs had similarly been involved with the BCCI enterprise during the 1980s. For the purposes of this chapter, though, it is enough to know that one other person linked to the looting of Russia was Adnan Khashoggi, who built his business empire with finance from Sheikh Mahfouz, and who was also a key figure in the BCCI enterprise during the 1980s, when he was linked (along with Sheikh Mahfouz and others) to the savings and loan crisis that devastated the U.S. economy and ultimately cost American taxpayers upwards of $2 billion in bailouts—a portent of bigger and better things to come.

* * * * * * * * *

In 1999, two years after the collapse of the Russian financial system, Berezovsky and few other Russian oligarchs orchestrated the rise to power of Vladimir Putin, and this was accomplished with help from the Chechen organized crime syndicate that was a partner in Berezovsky’s financial empire. Notably, this same Chechen organized crime syndicate had formerly had involvement with the BCCI enterprise, and some of the leaders of this Chechen organized crime syndicate (e.g. Shamil Basaev) were, of course, terrorists, trained by Osama bin Laden and Co. (and also trained by U.S. military contractors who took their orders from a faction of the regime in Washington). This was the same Chechen organized crime syndicate that allegedly worked with Benevolence International (co-founded by Muslim Brotherhood billionaires, some of them formerly involved with the BCCI enterprise) in an attempt to acquire nukes for Osama bin Laden.

Professor Peter Dale Scott, then of the University of California-Berkley, described the various figures involved in the machinations that resulted in Putin gaining the presidency as a “Meta-Group” that resembled the BCCI enterprise. That is to say, Professor Scott noted not only that some of the people in the “Meta-Group” had formerly been involved with the BCCI enterprise, while others (e.g. Berezovsky) were business partners of  former BCCI figures, but the “Meta Group” resembled the BCCI enterprise in that it often pursued political and geopolitical objectives that had the advantage of being profitable (with the profits enabling members of the Meta Group to accumulate further power for themselves, and the power, in turn, delivering still more profits).

I will not repeat everything that has been reported about this “Meta-Group” and its machinations to deliver the presidency to Vladimir Putin, but I will repeat some key facts, and introduce some additional facts, many of which have been noted not only by Professor Scott, but also by Paul Klebnikov, former Russian intelligence officials, officials of numerous countries around the world (none of them in Washington), and leading journalists almost everywhere other than in the United States. In every case, the people who seriously investigated the facts have concluded that Berezovsky and others in the “Meta Group” elevated Putin to the power by instigating the second war in Chechnya, which began in 1999, and which rallied the Russian public behind Putin’s candidacy for the presidency.

Klebnikov and all the others (including former Russian intelligence officials)  alleged that in the lead-up to the second war in Chechnya, elements of the Russian intelligence services orchestrated several terrorist attacks, and attributed them to Chechens. Since then, it has been concluded even by the Russian courts that the Russian intelligence services did stage at least one Chechen “terrorist attack”, a bombing that killed an unspecified number of people and collapsed a bridge. The FSB says that it was merely a training exercise to prepare Russia’s intelligence operatives for real Chechen attacks.

In September 1999, residents of an apartment complex in the Russian city of Ryazan discovered explosives in the basement of their building. The Russian government initially attributed the explosives to “Chechen terrorists” and vowed to arrest the terrorists in short order. But when all evidence pointed to the explosives having belonged to the FSB (the former KGB), Russian government spokesmen admitted that the FSB had planted them.  As in the case of the exploded bridge, however, the spokesmen claimed that the FSB had planted the explosives in Ryazan as a “training exercise” to see if local officials were vigilant in the face of the terrorist threat emanating from Chechnya.

The Russian government also insisted that the explosives were not real, which seemed to contradict the findings of police officers who had initially examined them with equipment that detected Hexogen, an explosive that had been stockpiled by the Russian intelligence services but would have been almost impossible for Islamic terrorists to have obtained without the assistance of rogue officials of some government. Meanwhile, in August 1999, a few weeks prior to the Ryazan incident, an army of several thousand Chechen soldiers had invaded Dagestan, and proclaimed both Chechnya and Dagestan (which neighbored Chechnya) to be independent Islamic Republics.

Citing the alleged terrorist attacks and the invasion of Dagestan as justification, the Russian government ordered the Russian military to invade Chechnya, where the Chechen “rebels” were based, and so began the second war in Chechnya—a war that rallied the Russian public behind strongman Vladimir Putin’s campaign for the presidency.

The invasion of Dagestan was led by two men. One was an Islamic fundamentalist from Saudi Arabia who went by the name Ibn al-Khattab, and who had been trained by Al Qaeda. The other was the notorious Chechen terrorist Shamil Basaev. As noted earlier, Basaev had received training at Al Qaeda camps and he had also received training from U..S. military contractors. Recall also that he had once (in 1995) planted radioactive substances in a Moscow park. When Basaev and Ibn al-Khattab led the invasion of Dagestan, the Russian military invaded neighboring Chechnya, where the rebels were based. This, of course, ignited a terrible war, and as noted by Klebnikov and countless others, there were excellent reasons to believe that this war was orchestrated by Berezovsky and other oligarchs.

One reason we would be justified in at least raising questions about this war is that Berezovsky (who was then the Russian government’s modern-day Rasputin) had, of course, boasted of a long-standing relationship with Basaev. Not only was Basaev a member of the same Chechen organized crime syndicate that had helped Berezovsky build his business empire, but Berezovsky had long led Russia’s negotiations (many of them with Basaev) for the release of people who had been kidnapped for ransom by the Chechens. Berezovsky always insisted that he was just trying to help secure the release of hostages, but as Klebnikov reported, former Moscow police officials who monitored the negotiations concluded that “Berezovsky served as a banker for the Chechen kidnappers, rounding up and transferring the ransom payments from the Russian side…” Klebnikov cited taped conversations that seemed to support the allegation that Berezovsky was essentially helping the Chechens run a kidnapping racket.

Meanwhile, Berezovsky had been forced to admit that he had once “donated” $1 million dollars to Basaev. When pressed to explain this donation, Berezovsky claimed that it was for the “reconstruction of a cement factory.” That is possibly true, but it seemed strange to some people that Berezovsky was building a cement factory in Chechnya for a guy (Basaev) who was one of the world’s most notorious Islamic terrorists, and who was about to lead the invasion of Dagestan, thereby igniting a second war in Chechnya (which was already in ruins as the result of an earlier war).

In 2004, as noted, Basaev ordered what turned out to be one of the most horrific terrorist operations of all time. That operation saw Chechen terrorists take more than 1,000 people hostage at a school in the Russian city of Beslan. Russian security forces stormed the school with tanks, incendiary rockets and other heavy weapons. Ultimately, more 300 people, including 186 children, were killed (either by the terrorists or the Russians, depending on who is telling the story). Nobody has accused the Russian government of complicity in the Beslan hostage-taking, but, of course, elements of the Russian intelligence services were accused of orchestrating the 1999 terrorist attacks that were cited (along with the invasion of Dagestan) as justification for Russia entering into the second Chechen war. We will see that there is some justification for asking whether elements of the regime in Washington were also involved.

As Klebnikov wrote: “The fact that Berezovsky, together with other members of the [then Russian President] Yeltsin inner circle had long maintained a secret relationship with Chechen extremists gave rise to the suspicion that the 1999 apartment bombings had been organized by the Russians themselves.”  Klebnikov suspected the same of the Dagestan invasion, and he was far from the only one. The French newspaper Le Monde reported that the Russian arms export monopoly (now headed by Sergei Chemezov, who features in later chapter of this story, wherein we will discuss his ties to the regime in Washington) had provided Basaev’s men with weapons before they invaded Dagestan..

The French newspaper also reported that in the summer of 1999, just prior to the invasion, Basaev and other Chechen commanders (a.k.a. terrorist/mobsters) had traveled to the French resort town of Biarritz to meet with Berezovsky and Alexander Voloshin, who was then Yeltsin’s chief of staff, and was among those trying to ensure that Putin would be Yeltsin’s successor. Berezovsky responded that he had not met a Chechen commander in Biarritz, but had gone to Biarritz to meet with Vladimir Putin, the president in waiting.

The Le Monde story was remarkably similar to other stories about Basaev meeting with Russian officials in France. For example, the Russian newspaper Versiya reported that the French secret services had monitored a meeting in France between Basaev and Russian government officials, including Alexander Voloshin (the chief of staff named in the Le Monde story). A Russian intelligence official named Aleksander [a.k.a. Anton] Surikov (who was himself placed at the meeting) later corroborated this story, and it was also corroborated in a book (“Blowing up Russia”) that was co-authored by a Boston academic named Yuri Felshtinsky and Alexander Litvinenko, a former Russian intelligence operative who was (at the time when he co-authored the book) employed by Berezovsky. The book asserts that the meetings between Basaev and Voloshin occurred, but unlike some media stories, it does not mention the presence or involvement of Berezovsky.

In addition, the many reports are consistent in stating that the result of this meeting was that Basaev agreed to lead the invasion of Dagestan, while the Russians (including, in most accounts, Berezovksy) at the meeting agreed that they would arrange for the Russian government to respond by invading Chechnya, thereby precipitating a second war in Chechnya. The Russian officials involved in this meeting included not only Alexander Voloshin, but also the above-mentioned Anton Surikov, who was an official of the GRU, Russia’s military intelligence service, and also a board member with company called Far West, LLC. Surikov, as mentioned, has confirmed that the meeting occurred, but he has not elaborated on the outcome.

Others who attended the meeting were, like Surikov, board members of Far West,  LLC. Importantly, Far West, meanwhile, had been linked to the drug trade, and it was, at this time in 1999, operating as joint venture business with Halliburton, the big U.S. contractor. Far West, LLC also had dealings with Diligence, LLC, a U.S. military contractor that was, at this time in 1999, providing training to the Chechen separatists. Those same Chechen separatists were, of course, also mobsters and narco-terrorists, and they had received some additional training from Osama bin Laden & Company.

Notably, U.S. military contractors were, at this time in 1999, also training the Kosovo Liberation Army, and President Clinton had ordered to the U.S. military to go to war in support of the Kosovo Liberation Army’s campaign against the army of Serbian leader Slobodan Milosevic. Like the Chechens, the KLA was a narco-terrorist organization (founded by Albanian organized crime figures) and the KLA received training not only from U.S. military contractors, but also from members of Osama bin Laden’s organization who were operating in the Balkans under the auspices of the IIRO.

Others who attended the meeting with Basaev and Berezovksy in France (all board members of Far West LLC) were: Ruslan Saidov, who had extensive dealings with the Habib Bank, which controls what used to be BCCI’s operation in Pakistan;  Alfonso Davidovich, a Venezuelan banker, who was formerly involved with the BCCI enterprise, and who was widely reported to have business relationships with the Cali Cartel and the FARC (i.e. a narco-terrorist outfit in Colombia); and Yakov Kosman, an Israeli-German businessman who was, at the time, the top financial advisor to Hashim Thaci, leader of the Kosovo Liberation Army (KLA).

Every account further states that the meeting between Basaev, Russian government officials, and the others, including Berezovksy, took place at a villa near the French resort of Nice. And all of these accounts (citing French secret service sources, among others) report that the villa belonged to the former BCCI figure Adnan Khashoggi, a long time associate of Berezovsky. It was Khashoggi who hosted the meeting. And it was likely he who brokered the discussions about the invasion of Dagestan.

Khashoggi, meanwhile, was involved with both the IIRO and  Benevolence International, whose offices in Chechnya were, of course, managed by members of the same Chechen organized crime (and terrorism) syndicate that had invaded Dagestan.  Meanwhile (see earlier chapters of this series), the IIRO’s offices in the Balkans were managed by Al Qaeda operatives who were training the Kosovo Liberation Army, and the White House employed several IIRO officials (including Mr. Alamoudi, who was key figure in Osama bin Laden’s organization) as advisors to President Bill Clinton (who, of course, had just ordered the U.S. military to go to war in support of the Kosovo Liberation Army’s campaign against Serbian President Slobodan Milosevic).

At this time, of course, not only was the Clinton administration quietly sponsoring the Chechens who had invaded Dagestan, but the Chechens had established their lobbying outfit in Washington, and Berezovsky was already one of the biggest donors to both the Democratic and Republican parties. Khashoggi, too, was big donor to the Republican-Democratic Party, and he had been on close terms with every U.S. president since the days of Richard Nixon. Others in the “Meta-Group” had close ties to Washington as well, and it is possible that their goal in orchestrating the invasion of Dagestan was not only to elevate Putin to the presidency, but also to curry favor in Washington.

In any event, the rest was history. Putin unexpectedly cracked down on Berezovsky and some of his associates, including the Chechens, and the U.S. government (along with the official U.S. media) reported that the crackdown was evidence that Russia, under Putin, had become a tyrannical police state. Meanwhile, Berezovsky and his associates, among them the Chechens and a host of former BCCI figures, including Sheikh Mahfouz (one of Osama bin Laden’s most important business partners) and Khashoggi, achieved still greater favor with the U.S. government, which treated them all as if they were themselves prominent members of the American establishment. The U.S. government also welcomed these criminals, mobsters, and terrorists to the United States, where, of course, they were never be arrested for the crimes (such as busting out the global economy) that they perpetrated in partnership (as we shall see) with elements of the regime in Washington and some of America’s leading oligarchs.

* * * * * * * * *

After Putin and Berezovsky allegedly had their falling out, Berezovsky moved to London where he and other “exiles” formed a peculiar group called “The London Circle,” which frequently advocated for reform in Russia and for the removal of Putin from the presidency. Until 2006, one member of “The London Circle” was Alexander Litvinenko, the former intelligence (FSB) operative who was employed by Berezovsky (and who later co-authored a book alleging that Basaev and Russian officials had conspired together in the terrorist attacks and the invasion Dagestan that resulted in the second Chechen war, though this book did not mention Berezovsky’s role in any of these events).

In 1998, while still employed by the FSB, Litvinenko had held a dramatic press conference announcing that the FSB had ordered him to assassinate Berezovsky. Many people (including Klebnikov) found his story improbable, and speculated that it might have been intended to benefit Berezovsky, who had been working closely with Litvinenko in his dealings with the Chechens. At the time, Litvinenko was also moonlighting as Berezovsky’s bodyguard, and Berezovsky had just been embarrassed by the publication of compromising information about some of his business dealings related to his part ownership of the Russian airline Aeroflot.

There were, more specifically, suspicions (never proven) that the compromising information had come from the FSB, and there were reports that Berezovsky’s allies in the Russian government wished to remove the head of the FSB, Nikolai Kovalev, and replace him with someone who was more amenable to the Berezovsky clique’s agenda. The scandal surrounding Litvinenko’s announcement seemed to serve those purposes. When Litvinenko said he had been ordered to kill Berezovsky, Kovalev was forced to resign, and Vladimir Putin was named to replace him as head of the FSB, which was the first big step in Putin’s rise to the presidency a year later.

According to Klebnikov, “most knowledgeable observers concluded that the alleged FSB plot to assassinate Berezovsky was a fabrication.” Sergei Kiriyenko, who was then Russian prime minister, told Klebnikov that it was “some sort of a trick” devised by Berezovsky in furtherance of his ambitions to greater power in Russia. All of which left many observers surprised when Putin and Berezovsky later had their falling out. Most Western media assume that Putin and Berezovsky had become bitter rivals, but some in Russia think that the two men remained secret allies. According to this theory, their dramatic falling out (which occurred immediately after Berezovsky orchestrated Putin’s rise to power) was another conspiratorial “trick” aimed at covering up the true nature of their relationship and the role that Berezovsky and Chechen terrorists played in elevating Putin to the presidency.

Meanwhile, numerous credible sources (including, for example, most Russian accounts of the 1992-1993 war in Abkhazia, where Basaev and other Chechen terrorists had their first exposure to battle) have come close to proving that the Chechens had long-standing ties to the Russian military and intelligence services. This is an opinion shared by earnest U.S. diplomats (distinct from the official spokesmen in Washington), who inadvertently shared their opinions with Wikileaks.

As for the nature of the relationship between Berezovsky and the Russian intelligence apparatus (led by Vladimir Putin), I do not have further insight, except to say that the relationship had a strange history, and it became only more surreal after Berezovsky (once the most powerful oligarch in Russia, the man who made Putin president, and also the man most widely credited with the wholesale corruption of the Russian government, not to mention the bust-out of the Russian economy) suddenly assumed a new identity as a conscientious reformist, dissident, and exile.

The weirdness reached its peak in 2006, when Berezovsky’s employee, Aleksander Litvinenko (the former FSB officer, then living with Berezovsky in British “exile”), was poisoned by radioactive polonium and died. More specifically, Litvinenko was killed with polonium 210, and it was a matter of grave concern that this radioactive substance was smuggled into Britain. In 2003, the Nuclear Regulatory Commission had listed polonium 210 as one of the ten radioactive materials that were of “greatest concern” because they could be used by terrorists to make a “dirty” bomb.  The amount of polonium 210 that killed Litvinenko was enough to have built a bomb that would have been capable of contaminating a large segment of any major city with cancer-causing radioactive poison.

Litvinenko had devoted much of the three years prior to his death to advancing the theory (reported also in his book, “Blowing Up Russia,”) that the Russian intelligence services had ties to Chechen terrorists and orchestrated the 1999 terrorist attacks in Russia and the invasion of Dagestan to elevate Putin in the presidency. However, as I mentioned, Litvinenko did not name his employer, Berezovsky, as having any role in the supposed conspiracy.

Just prior to his death, Litvinenko had promised to release new evidence that (according to Litvinenko) linked the Russian government directly to Al Qaeda. After his death, the Russian government announced that it was Litvinenko and Berezovsky who had ties to Al Qaeda, and that Litvinenko had accidentally poisoned himself with the radioactive polonium while building a dirty “nuclear bomb” for Osama bin Laden. The British government (and most of the Western media) blamed the Litvinenko murder on the Russian government.

Many also blamed the Russian government for the murders of Anna Politkovskaya and other journalists who had close working relationships with Litvinenko and had been killed that same year (2006). However, another theory (and one worth seriously considering) is that Litvinenko was killed by Berezovksy or other agents of the regime in Washington. The British government has reported that the prime suspect was an FSB official named Andrei Logovoy, but he was one of Berezovsky’s long-time coconspirators, with close ties to the regime in Washington. Litvinenko’s father, meanwhile, has reported that Litvinenko feared that he might be killed by Berezovksy, and had been threatened by Berezovsky’s mysterious publicist, Alexander Goldfarb, who was also a microbiologist and “political activist” linked to the Soros Foundation various other U.S. government-sponsored programs to unseat governments in Eastern Europe. (Goldfarb, however, has not been accused of wrongdoing by any law enforcement agency).

Shortly before Litvinenko was killed, Basaev (the Chechen terrorist at center of the supposed conspiracy) was killed, and many of the Chechen organized crime figures that had played a role in building Berezovsky’s business empire were also killed. It seems likely that all of these killings were likely part of larger effort to witnesses to the machinations leading to the Chechen war. This might also explain the mysterious “suicide” of Berezovsky this year.

Nukhaev, the Chechen mafia boss (and Berezovsky business partner) who had featured in Klebnikov’s second book, and whom the Western media suspected of ordering Klebnikov’s murder in 2004, has since  disappeared (his whereabouts remain unknown). However, other members of this same Chechen organized crime syndicate are known to be residents of the United States. They were (and are) still operating their influential lobbying organization (the American Committee for Peace in Chechnya).

Meanwhile, the Russian government has stated repeatedly that Berezovsky had ties to “Chechen terrorists” (many of them trained by Al Qaeda) and that Berezovsky might have coordinated the invasion of Dagestan, but the Russian government insists that Putin was unaware of this at the time when Berezovsky was serving as Putin’s consigliore-in-chief.  Russian Deputy Interior Minister Arkady Yadelev has announced that Litvinenko, prior to his death, had visited Chechnya to kill witnesses who linked Berezovsky to the terrorist leader Basaev.

Previously, of course, Litvinenko (who was then employed by Berezovsky) was among those leading efforts to expose ties between Basaev and the Russian intelligence services.

Since it had been widely accepted by almost everyone that Basaev had ties to Berezovsky, and it has also been widely accepted that Berezovsky worked with elements of Russian intelligence to orchestrate Putin’s rise to power, it is unclear why Berezovsky’s employee (the former intelligence officer Litvinenko) would have advertised Basaev’s ties to Russian intelligence, and it is unclear why the Russian government would have advertised Basaev’s ties to Berezovsky. It seems as if they were all telling basically the same story, and at the same time sowing confusion as to the specifics and their implications.

Meanwhile, the new “Godfather of the Kremlin” is widely reported to be Roman Abramovich, who was Berezovsky’s most important business partner (for a time, Abramovich and Berezovsky effectively ran a joint-venture that controlled many of Russia’s biggest businesses and its most lucrative commodities, including oil and metals) until recently when the ruling family of Abu Dhabi (formerly among the founding shareholders of BCCI) was chosen to broker a division of their assets.

Many reports described Putin and Abramovich has having something like a father-son relationship, with there being some dispute as to who is the father—Abramovich or Putin. Abramovich and Berezovsky, meanwhile, fought a $3.2 billion lawsuit, with Berezovsky claiming that Abramovich forced him to sell his shares in their joint ventures at below-market prices, and Abramovich claiming that he had to pay $2 billion simply to finance Berezovsky’s activities as Russia’s “political godfather.”

More specifically, Abramovich says he had to pay $2 billion in bribes and luxurious gifts that Berezovsky and Abramovich used to cement their relationships with the Russian government. So Abramovich, who is now Putin’s “son” or “father”, claims that he had to pay $2 billion so that his business partner, Berezovsky, could be Putin’s “godfather.” Why Abramovich would admit this remains an unanswered question, but it fits the pattern of admitting to corrupt relationships, while at the same time sowing confusion as to the precise nature of those relationships and their implications.

At any rate, while there remains plenty of confusion with regards to Russia, there is enough clarity to say with a high degree of certainty that Russian oligarchs and associated mobsters and terrorists (all of them either ignored by the major U.S. news organizations or, in the case of the oligarchs, described by the major U.S. news organizations as “prominent businessmen”) pose a threat to what is commonly referred to as “civilization.” In addition, there is no doubt that President Obama was right to say that there remains a “nexus” between Russian organized crime syndicates, the Russian intelligence services, and various terrorist organizations, though the “nexus” seems also to include elements of the regime in Washington and the president himself, not to mention many of Wall Street’s leading lights.

Therefore, we need to examine this “nexus” in greater detail. Indeed, it is matter of some urgency that we identify all of the miscreants in this “nexus” because the “nexus” presently poses what is, without doubt, the single biggest threat to not only the stability of the global financial system, but also pretty much everything else that matters—e.g. our freedom, our democracy, and the future of our kids. This will become more than apparent to readers of the next chapters in this, the Global Bust-Out Series, wherein the other miscreants in the nexus will be identified and more full exposed, while the damage that they have done will be more precisely explicated and quantified. So please stay tuned to DeepCapture.com (motto: “We are the red pill”).

To be continued…

Mark Mitchell spent most of his career working for mainstream news publications before joining DeepCapture.com

 

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“The Global Bust-Out Series (Chapter 7): Michael Milken and the “Insider Trading” Network (as of 2013)

“The Global Bust-Out Series (Chapter 7): Michael Milken and the “Insider Trading” Network (as of 2013)

This is Chapter 7 of a multi-chapter series. On your right is a Table of Contents to all chapters published so far.

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In earlier chapters of this series, we learned about an incredible enterprise known as the Bank of Credit and Commerce International (BCCI), which was operated by oligarchs with ties to the Muslim Brotherhood in partnership with governments that were among the Muslim Brotherhood’s principal state sponsors. We also learned that the BCCI enterprise operated with the consent and protection of Washington even though it not only counted among its partners numerous mobsters and global terrorists, but was also operating what amounted to a transnational organized crime syndicate involved in everything from the trafficking of narcotics and nuclear weapons components to terrorism and the perpetration of destructive financial crime.

In addition, we learned that BCCI counted among its most important business partners some of the leading figures of the American establishment, including Michael Milken, who was, during the 1980s, the most powerful financial operator on Wall Street. As we know, Milken and some of his closest associates, in league with the BCCI enterprise, perpetrated the “bust-outs” of numerous savings and loan banks, thereby contributing to the devastating savings and loan crisis that began in the late 1980s, and which ultimately cost taxpayers more than $2 trillion in bailouts—a portent of bigger and better things to come.

Also involved with these “bust outs” were (see earlier chapters of this series) some of the nation’s leading organized crime figures, such as Carlos Marcello, who was then the top Mafia boss in the city of New Orleans. Meanwhile, we know, BCCI was involved with a global network of brokerages, most of them operated by people with ties to organized crime, and most of them specializing in the “bust outs” of small to medium-sized publicly listed companies. As a judge remarked after BCCI shut its doors in 1991, the BCCI enterprise singlehandedly “shattered the integrity of the global financial system.”

And history did not end in 1991, when BCCI was shut down.

Most of BCCI’s former principals and their partners (“the larger BCCI enterprise”) continued in the years that followed to involve themselves with similar enterprises, the only difference being that the enterprises came to include some new and younger players, while the enterprises innovated new and more destructive financial schemes. Indeed, we will see that people formerly involved with the BCCI enterprise, along with their newly acquired business partners, contributed significantly to the great meltdown of 2008, and are presently threatening to deliver a repeat performance.

This might be one reason why the president of the United States was recently moved to take the unprecedented step of declaring a state of “National Emergency” in response to certain conditions that currently prevail in the American markets. See Chapter 1 of this series for more on the “National Emergency,” but I will remind readers that in the summer of 2011, President Barack Obama, in explaining why he had declared a “National Emergency,” stated that there was a clear “nexus” between transnational organized crime syndicates, the intelligence services of several unnamed countries, and the world’s leading terrorist organizations.

In addition, the president explained that transnational organized crime syndicates (and, we can confirm, others in the “nexus,”) had “penetrated” the “legitimate financial sector” (i.e. Wall Street). Not only that, but the president stated that this was a “National Emergency” because transnational organized crime syndicates with ties to terrorist organizations (presumably with help from the “legitimate” financial sector on Wall Street) were “undermining markets” to such an extent that they now posed a serious and imminent “threat to stability of the global financial system.”

Unfortunately, officials in Washington have yet to prosecute any of the people (e.g. mobsters, terrorist financiers, and miscreants on Wall Street) who account for our present “National Emergency.” Indeed, as was the case in the 1980s, when BCCI and its partners owned many of America’s leading politicians (including multiple U.S. presidents), it presently seems to be the case that Washington has been “deep captured” by a network (or “nexus,” as the president calls it) that includes the world’s leading mobsters, billionaires with ties to terrorist organizations, and the “legitimate” miscreants on Wall Street who do business with mobsters and terrorists.

In addition, officials in Washington have done little to crack down on the sorts destructive financial weapons (e.g. the “bust outs” of major banks and associated schemes, such as manipulative short selling, self-destruct CDO’s, mortgage fraud, death spiral finance, toxic debt, etc.) that nearly destroyed the world in 2008, and which are now, once again, threatening to collapse the global financial system.

Later chapters of this series will discuss in much greater detail the “global bust-out” that accounts for our current predicament, but first it will be useful to review a bit more history so far as it concerns the network of Michael Milken, formerly known as the most powerful man on Wall Street, later known as one of history’s most destructive financial criminals, and presently known (to readers of the major U.S. newspapers and officials in Washington) as one of Wall Street’s all-time greatest heroes and a “prominent” fixture of the American establishment, worthy of our respect and admiration.

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When Michael Milken was indicted in 1989, the major U.S. news organizations reported that he and one of his co-conspirators, Ivan Boesky, were the central figures in a nationwide “insider trading” network. In addition, the major U.S. news organizations reported that Milken was indicted thanks mostly to the fact that Boesky had cooperated with the government, providing the key evidence that allowed prosecutors to expose the “insider trading” network. It was true that Milken and Boesky were involved in “insider trading,” but the reports by the major U.S. news organizations contained some important omissions.

For starters, Milken and his network were involved in much more than “insider trading.” As we know from earlier chapters of his series, Milken and his closest associates, including Boesky, conspired with the BCCI enterprise and some of the nation’s leading organized crime figures to “bust out” (i.e. loot and destroy) many of the nation’s leading savings and loan banks. We also know that Milken was involved with numerous brokerages (some of them linked to the BCCI enterprise) that specialized in perpetrating the “pump and dump” bust-outs of small to medium-sized publicly listed companies.

In addition, a careful reading of Milken’s 99-count indictment (with many of those counts pertaining to his “bust-outs” of savings and loan banks and other companies, though he pled guilty to only seven counts) reveals that Boesky provided little of the information that was used to prosecute Milken. Instead, the government obtained the vast majority of the evidence used against Milken (and Boesky) in a 1989 raid of a major investment and brokerage operation called Princeton Newport, which had been a key component of the Milken network, involved not only in insider trading, but also the full panoply of other schemes that Milken and his network perpetrated during the 1980s. At the time, Princeton Newport was operated by man named Edward O. Thorpe, who was most famous for having worked with the Genovese Mafia family to develop a method for beating the black-jack tables in Las Vegas (Thorpe has never been charged with any crime, and he is presently one of the nation’s most prominent hedge fund managers).

Pulitzer Prize winning author James Stewart similarly reported in “Den of Thieves” (the seminal work on the government’s prosecution of Milken) that Boesky provided little information to the government. According to Stewart, Boesky told the government that he could not testify against Milken because he was afraid of what might happen to him. As Boesky put it, Milken had “friends in Vegas” – an apparent reference to the Mafia. As Stewart also reported, soon after Boesky expressed his fears, one of Milken’s closest associates, John Mulheren, got into his car and headed towards Boesky’s house. Police officers had been watching Mulheren, and knew that he had a gym bag in his car loaded with two handguns, a 12-gauge shotgun, and a .233 caliber Galil assault rifle.

Suspecting that Mulheren planned to murder Boesky, the cops arrested Mulheren and put him in jail, where Mulheren spent most of his time conversing with Anthony “Fat Tony” Salerno, who had been the top boss of the Genovese Mafia family until he was jailed on charges of manslaughter. Mulheren himself was investigated for his alleged role in Milken’s network, so it is possible that Mulheren thought about killing Boesky to keep Boesky from providing the government with information about his own (Mulheren’s) activities. Alternatively, it is possible, as some have reported, that Mulheren was simply on the wrong psychiatric medications and didn’t know what he was doing.

Either way, Mulheren was never charged for his suspected role in Milken’s insider trading (and “bust out”) network, and nor was he charged for trying to kill Boesky. He was quickly released from prison, and he subsequently reconciled with Boesky. Contrary to the message put forth by Milken’s public relations machine (which maintains that Milken despises Boesky, and that Milken was convicted only because Boesky was a dirty rat who provided the government with false information about Milken’s activities), Milken also reconciled with Boesky, and after Milken was released from prison (he served two years of a ten year sentence), he and Boesky began again to do business together.

Meanwhile, Mulheren c0-founded, with a trader named Izzy Englander, a hedge fund called Millennium Management, and though Mulheren died in 2003, Millennium is presently one of the most powerful hedge funds in the nation.

In 2010, the media began reporting that the FBI was once again investigating what the FBI described as a “network” of financial operators who were involved in “insider trading.” According to the FBI, this was, in fact, the biggest “insider trading” investigation in FBI history. This investigation is presently ongoing, and a key focus of the investigation, according to media reports, is the giant hedge fund SAC Capital, which is run by Steve Cohen. Back in the 1980s, Cohen was investigated by the Securities and Exchange Commission (SEC) for allegedly trading on inside information that he received from Milken’s shop at Drexel Burnham Lambert, and back in the 1980s, Cohen and all the others in Milken’s insider trading “network” were, of course, involved in much else (e.g. manipulative short selling, the “bust-outs” of publicly listed companies, etc.) besides insider trading.

Similarly, the “insider trading network” that the FBI is presently investigating has been involved in much else besides insider trading. Previous DeepCapture stories have provided ample evidence that SAC Capital and other hedge funds in its “network” have perpetrated a great deal of manipulative short selling, and they have, along with others, including Michael Milken (who is. to this day a key figure, along with SAC Capital and others, in an “insider trading” network), perpetrated the “bust-outs” of publicly listed companies. Cohen himself has not been charged with any crime, but multiple traders have been indicted for insider trading that they conducted while working for SAC Capital, and the media has reported that prosecutors are hoping to indict Cohen and SAC Capital, though the media continues to report that SAC Capital’s only alleged offense has been to trade on inside information.

Meanwhile, it is clear from SEC filings that SAC Capital and a larger “network” of other hedge funds (many of which employ former SAC Capital traders, and many of which have ties to Milken going back to the 1908s) regularly trade in the same stocks, and many of these hedge funds have not only coordinated their manipulative short selling attacks, but have also come under closer scrutiny during the course of the FBI’s investigation into what the FBI continues to describe as a “network” of financial operators.

One hedge fund in this “network” is Millennium Management, the outfit that was founded by Mulheren and Izzy Englander. The FBI has not publicly implicated Millennium in the “insider trading” network, but Millennium has acknowledged that it is concerned about the greater scrutiny. Indeed, soon after the FBI investigation became big news, Millennium hired an advisory board whose job is to make sure the hedge fund remains in compliance with regulations. Millennium’s advisory board includes former FBI Director Louis Freeh, former SEC enforcement division chief Stanley Sporkin, and former SEC Chairman Harvey Pitt (who has been a leading advocate of reform to address the problem of manipulative short selling).

Hopefully that advisory board will keep Millennium in compliance with the rules, and it will certainly keep Millennium immune from further scrutiny on the part of the FBI and the SEC, but it is clear that Millennium and SAC Capital, along with others in their “network” of hedge funds, have continued to collaborate with Milken, investing in companies that Milken was promoting, and attacking companies that Milken was seeking to undermine or destroy. Some details can be found in my recently published book (title: “The Dendreon Effect: How Felons, Con-men, and Wall Street Insiders Manipulate High-tech Stocks”) which also provides other information about the techniques used by a network of powerful hedge funds (and Michael Milken) to undermine the markets and hurt individual investors.

As we will see in later chapters of this series, this same crowd (i.e. Milken and the “network” that the FBI is now investigating, though so far with no prosecutions of any big fish) contributed to the meltdown of 2008, and continue to pose a threat to the markets today.

For our present purposes, we need to stress that Boesky was right when he said that Milken had “friends in Vegas.” Milken’s best friend in the world, according to Milken, is Steve Wynn, the Las Vegas casino mogul. Meanwhile, Wynn’s friends, according to Scotland Yard, have included the dons of the Genovese Mafia family. Indeed, according to a declassified report written in the late 1980s by Scotland Yard investigators, Wynn had “been operating under the aegis of the Genovese Mafia since he first went to Las Vegas in the 1960s.” Scotland Yard noted that both Wynn and his father had a long standing relationship with Genovese Mafia boss Anthony “Fat Tony” Salerno (the mobster with whom Mulheren spent most of his time convening during his stint in jail).

Wynn, however, denies any relationships with the Mafia, and he has won a defamation lawsuit against a Las Vegas newspaperman who published a book (title: “Running Scared”) that advertised itself as “explaining why a confidential Scotland Yard report calls Wynn a front man for the Genovese crime family.” Wynn also filed a suit against the book’s publisher, Lyle Stuart, who had published other controversial books, such as the “Anarchist Cookbook,” and “Turner Diaries,” which is a fictional account of home-grown rebels overthrowing the “Zionist” government of the United States. In explaining why he had filed a lawsuit against the publisher, Wynn said, “I want to put Lyle Stuart out of business. Every law enforcement agency has always vouched for me that any suggestion of me and organized crime is preposterous. I know one thing: If anybody says any different, they’re a fucking defendant.”

It is true that law enforcement agencies (other than Scotland Yard) have vouched for Wynn. Indeed, former FBI Director Louis Freeh (the same fellow who is employed by Millennium Management) is presently employed by Wynn. Freeh is helping Wynn investigate one of Wynn’s former business partners, a Japanese billionaire named Kazuo Okado. Meanwhile, Wynn has won multiple other defamation lawsuits against people and journalists who have accused him of having ties to the Mafia. For example, Wynn has successfully sued Joe Francis, creator of the “Girls Gone Wild” porn empire. Francis had said that Wynn wanted to “hit me in the back of the head with a shovel and bury me in the desert.” Wynn said that was a “terrible lie,” and that his friend, the Dalai Lama, taught him to be a man of peace and calm.

The takeaway, we must conclude, is that Wynn has no ties to the Mafia. As for Milken’s other closest friends and business partners, however, there can be no doubt that many of them have ties to the Mafia. As we know from earlier chapters of this series, Milken’s closest business partner is Gene Phillips, who was the central figure in the junk bond merry-go-round that Milken operated in the 1980s, and which was a key component of the larger operation to “bust-out” savings and loan banks. Phillips operated (and still does operate) an outfit called Southmark Corporation, which was the largest recipient of Milken junk bond finance in the 1980s. The largest subsidiary of Southmark in the 1980s, meanwhile, was San Jacinto Savings and Loan, which was “busted-out” with help from such Mafia luminaries as Herman Beebe and Carlos Marcello (the top boss of the New Orleans Mafia).

The man whom Gene Phillips appointed as the chief loan officer of San Jacinto Saving and Loan was named Joseph Grosz. Aside from being a banker, Grosz was a leading mobster, affiliated with the Chicago Syndicate, according to prominent journalist Pete Brewton, who is one of the nation’s leading experts on the involvement of organized crime in the savings and loan crisis. Brewton has also reported that San Jacinto’s parent, Southmark, was “used as a mob dumping ground to buy the investments of mobsters,” including not only Herman Beebe and Carlos Marcello, but also organized crime figure Harry Wood, and Morris Shenker, a former lieutenant of Meyer Lansky, then the most powerful mobster in the nation.

In 2000, Phillips was arrested and charged with manipulating stock prices in league with other leading figures in La Cosa Nostra. More specifically, Phillips was arrested as part of Operation Uptick, which was described by FBI spokesmen as the largest Mafia bust in U.S. history. More than 120 people, all with ties to organized crime, were arrested in Operation Uptick, and FBI officials described them as being part of nationwide “network” of stock manipulators, some of whom had committed various other crimes, which included (according to an FBI statement): “controlling and infiltrating broker-dealers…and employing tactics of violence, including threats, extortion, physical intimidation, and the solicitation of murder…”

Some of the 120 people arrested in Operation Uptick were members of Russian organized crime syndicates, while others were, variously, described by the FBI as having ties to each of La Cosa Nostra’s five major families—Genovese, Colombo, Gambino, Bonanno, and Lucchese. Among the 120 defendants, aside from Phillips, were: Robert “Little Robert” Lino, a capo in the Bonanno crime family; Anthony Stropoli, a soldier in the Colombo crime family; Frank “Frankie” Persico, a Colombo Mafia family capo; Sebastian “Sebbie” Rametta, an associate of the Colombo crime family; Robert Gallo, an associate of the Genovese crime family; and John Black, an associate of the Lucchese crime family.

The DOJ charged that Phillips, in league with various members of La Cosa Nostra, had manipulated the stock of one of his companies, an outfit called Transcontinental. Aside from Phillips, the largest shareholder in that company was Michael Milken. Meanwhile, the Dallas Business Journal reported that Phillips “allegedly met with two associates of New York’s legendary Bonanno organized crime family to discuss a plan to bilk a couple of ‘very friendly’ union pension funds through the sale of inflated stock.” However, Phillips was acquitted on all charges. In addition, most of the other people who were arrested as part of Operation Uptick got off with nothing worse than small fines, though this was the biggest Mafia bust in history, according to then FBI director Louis Freeh (who, of course, is now employed by Wynn and Millennium Management).

That same year, 2000, the media reported that an outfit called Sinex Bank was linked to the Bank of New York scandal, which saw the Bank of New York laundering upwards of $10 billion ($3.9 billion of which passed through Sinex Bank) for organized crime syndicates. The syndicate most closely linked to that scandal was the Mogilevich organization, the leader of which was (and is) a Russian (actually Ukranian, but he is a Russian citizen) named Semion Mogilevich, widely known as “the most dangerous mobster in the world.” What the media did not report was that the money laundering involved a network of brokerages that first invested dirty cash into the “bust outs” of publicly listed companies, with the money coming out partially cleaned as short selling profits that were delivered onwards to cooperative banks, including Sinex Bank and the Bank of New York.

Also linked to that money laundering was a brokerage called Sinex Securities, which was a subsidiary of Sinex Bank. Sinex Securities was controlled by Gene Phillips, though it was registered in the name of his son, Brad Phillips (Sinex changed its name to National Alliance Securities when it was linked to the Bank of New York scandal). SEC filings show that Transcontinental (the Phillips outfit whose largest shareholder was Milken, and which was at the center of the Operation Uptick charges) had placed more than 700 thousand of its shares with Sinex as “collateral for borrowings”. That is to say, a chunk of the cash that went through Sinex was delivered, as collateral, to Transcontinental shareholders. However, neither Sinex nor Phillips were charged with any crime related to the Bank of New York scandal.

With the exception of Mogilevich himself, nobody else of any significance was charged with any crime related to the Bank of New York scandal, and Mogilevich (“the most dangerous mobster in the world”) subsequently hired a lobbyist in Washington. Mogilevich’s lobbyist is William Sessions, formerly director of the FBI. The FBI still lists Mogilevich as one of the “Ten Most Wanted” criminals in the world, but there is no evidence that the FBI has ever tried to arrest Mogilevich, and others in the Mogilevich organization continue to this day to operate openly in the United States.

Some of them, we will see, are key figures in the Milken network.

* * * * * * * * *

Back in the 1980s, another of Milken’s closest business associates was Fred Carr, who, like Phillips, was a central figure in the junk bond merry-go-round that was part of the larger scheme (that had help from BCCI) to “bust out” numerous savings and loans banks. Fred Carr used Milken junk bond finance to seize control of Executive Life, and that financial institution (like most of the other savings and loans that Milken’s closest associates took over with Milken junk bond finance) was subsequently looted and demolished (that is, “busted out”).

Prior to taking control of Executive Life, Carr had been a principal with Investors Overseas Service, which had ties to BCCI, and which was, at the time, the biggest Ponzi scheme in history. Investors Overseas had been founded by a financier named Bernard Cornfield, and later involved a criminal named Robert Vesco, who subsequently fled to Cuba and became involved (according to CIA reports) in trafficking drugs with Cuban dictator Fidel Castro. (Castro later claimed that Vesco had been imprisoned in Cuba).

One of Investors Overseas Services’ key “feeders” (that is, one of the people who “fed” the Ponzi much of its money) was Sylvian Ferdman, a Genovese Mafia courier, who routed money into the Investor’s Overseas racket from clients in South America. Another Investors Overseas feeder was John Pullman, whom the U.S. government had named as a close associate of Genovese Mafia boss Anthony “Fat Tony” Salerno. That’s the same “Fat Tony” who was later conversing with Mulheren in prison, and whom the Scotland Yard report linked to Wynn (The Scotland Yard report, however, was false, according to Wynn, and U.S. law enforcement officials have not accused Wynn of having ties to organized crime).

Another key component of Milken’s junk bond merry-go-round in the 1980s was MDC Global, an insurance and savings and loan company that (see Chapter 6 of this series) had been co-founded by a BCCI subsidiary. MDC Global, meanwhile, controlled a brokerage called Blinder Robinson, which specialized in “busting out” small to medium-sized publicly listed companies. MDC Global, of course, was itself “busted out,” and in 1989, Blinder Robinson was indicted, along with its founder, Meyer Blinder.

Blinder Robinson was known as “Blind’em and Rob’em” because it was not only a key player in a nationwide stock manipulation network, but also among the most crooked brokerages in America. Among the miscreants who manipulated stocks in league with Blinder Robinson were (according to various indictments) Thomas Quinn and Arnold Kimmes, both of whom (as we know from earlier chapters) had operated a number of brokerages linked to BCCI. Quinn, recall, was an associate of the Genovese Mafia family, while Kimmes had been identified in a 1973 FBI report as a “major organized crime figure.”

When Kimmes was arrested, he escaped prison by ratting on Meyer Blinder, who did not escape prison (though he was quickly released). In 2000, Richard Walker, then the SEC’s director of enforcement, gave testimony to Congress in which he described Blinder Robinson as being part of a “network” of brokerages — including D.H. Blair, Rooney Pace, FN Wolf, A.R. Baron, and many others – that were tied to organized crime. Most of these brokerages had been financed by Michael Milken and/or his close associates.

The proprietor of Rooney Pace, which was financed directly by Milken, was Randolph Pace, who was later indicted for running a $200 million stock manipulation scheme with a man named Judah Wernick. Many of the other brokerages mentioned in the SEC’s Congressional testimony – including D.H. Blair, A.R. Baron, and FN Wolf — were financed by Zev Wolfson, a Milken business associate who also financed Millennium, the hedge fund co-founded by Boesky’s prospective assassin John Mulheren.

D.H. Blair was particularly close to Milken. It was founded by Morty Davis, and run with help from Davis’s son-in-law, Lindsay Rosenwald, who served as vice chairman. After Milken went to prison in 1991, one of Milken’s top Drexel Burnham employees, Richard Maio, became president of D.H. Blair. In 2000, D.H. Blair was charged on multiple counts of stock manipulation and forced to shut its doors. To describe the full extent of D.H. Blair’s relations with La Cosa Nostra and Russian organized crime, I would have to bore you with a list of names so long that this story would begin to read like a telephone directory. But to give you just a small sampling, I will mention that the people indicted in just one of the hundreds of stock manipulation schemes perpetrated by D.H. Blair included: Frank Coppa, a capo in the Bonanno Mafia family; Edward Garafola, a soldier in the Gambino Mafia family; Daniel Persico, a capo in Colombo Mafia family; and Ernest Montevecchi, a soldier in the Genovese Mafia family.

After Milken got out of prison, he hooked up again with D.H. Blair’s former vice chairman, Lindsay Rosenwald, who is now one of the most powerful hedge fund managers in America, and perhaps the single biggest player in the world of biotech stocks. As described in my book (“The Dendreon Effect”), Milken and Rosenwald have sought to destroy biotech companies that were developing promising medicines while promoting dubious companies (financed by Rosenwald and Milken) whose medicines were killing people.

Many other powerful hedge fund managers operating today got their start in the 1980s working for Milken-financed brokerages with ties to organized crime. SEC filings and other evidence compiled by DeepCapture show with perfect clarity that all of the hedge fund managers in this network regularly trade in unison, investing in (or, more often, attacking) the same companies.

This does not mean that they have necessarily broken any laws, but, again, press reports suggest that some of the biggest players in this “network” are currently the targets a massive FBI investigation said to be targeting a “network” of financial operators suspected of insider trading. As I mentioned, one of them is SAC Capital’s Steve Cohen, who was investigated in the 1980s for trading on inside information that he allegedly received from Milken’s shop at Drexel. Cohen has been described by BusinessWeek magazine as “The Most Powerful Trader on the Street.”

When Cohen was investigated for trading on inside information that he received from Drexel, he was not yet a famous hedge fund manager, but he was among the select traders who effectively ran Gruntal & Company , a Mafia-tied brokerage that received much of its finance from Michael Milken.

There were just a few other traders who had special partnership agreements with Gruntal, and who effectively ran the place. I will name most of them, beginning with Maurice Gross, who handled the accounts of the Gambino Mafia family. Gross later founded his own operation with a Pakistani trader and former BCCI figure named Mohammad Ali Khan, who (according to a case filed by the New York attorney general) alighted with some of the Gambino family’s cash. This was no doubt much to the dismay of Gruntal CEO, Howard Silverman, who had come to depend on the Mafia’s good graces.

As of 2008, Silverman was running one of the nation’s biggest “dark pool” trading platforms, an outfit that enabled his hedge fund clients to conduct trading in total anonymity. It should be a matter of concern that a guy who once ran a brokerage with ties to the Mafia went on to run a major “dark pool”–especially since experts such as the authors of a report (see Chapter 1 of this series for details) commissioned by the Department of Defense say that such platforms could easily be deployed to do serious damage to the markets.

One of the people Silverman brought in to help run his brokerage – another of the select traders with special partnerships at Gruntal – was a fellow named Felix Sater, who was (and is) a Russian mobster and a member of the Mogilevich organization (controlled by Semion Mogilevich, often described as the “most dangerous mobster in the world”). While still at Gruntal, Sater was charged with stabbing a Wall Street trader in the face with the broken stem of a wine glass (actually, it was martini glass, according to a man who witnessed the attack).

While still at Gruntal, Sater and several other former Gruntal traders founded a brokerage called White Rock Partners. Most of White Rock’s employees were former Gruntal employees, and there is no doubt that White Rock’s partners all had ties to organized crime. In 1996, the FBI discovered a locker at a Manhattan Mini-Storage in Soho that belonged to Evgeny Klotsman, a White Rock principal who was formerly among the select traders who had effectively run the Milken-financed Gruntal & Company. The FBI announced that the locker contained guns and documents that linked Klotsman and Sater to a “global market manipulation and money laundering network controlled by Russian organized crime.”

In 1999, White Rock (renamed State Street Capital Partners) was indicted for orchestrating stock manipulation schemes in league with the above-mentioned D.H. Blair and A.R. Baron (financed by Zev Wolfson) and five members of La Costa Nostra, including a Genovese Mafia soldier named Ernest Montevechi, and Danny Persico, a capo in the Colombo Mafia family (and the son of Alphonse “Allie Boy” Persico, the top boss of the Colombo Mafia family). White Rock’s principals, in fact, included some of the top bosses of the Colombo Mafia family, among them not only Danny Persico (who was arrested, along with Gene Phillips, in Operation Uptick), but also a Colombo Mafia capo named Greg Scarpa, to whom we will return.

According to one of Felix’s White Rock partners (and according to The New York Times, which lent credence to the story), Felix escaped indictment (he was named only as an unindicted co-conspirator in the White Rock case) because Felix and his other partner, Evgeny Klotsman , had ties to the Russian intelligence services, and promised the U.S. government that they could work with Russian intelligence to buy Osama bin Laden’s stockpile of Stinger missiles (thereby preventing Al Qaeda from using the missiles to shoot down commercial airlines).

It should not be surprising that Felix Sater, a member of the Mogilevich organization, would have ties to Russian intelligence, and it is equally unsurprising that he would be capable of cutting a deal with Al Qaeda. As the White House national security staff made clear in August 2011, when the president announced that organized crime had “penetrated” the financial system (thereby inspiring the president to officially declare an “Emergency Order”), the Mogilevich organization has close ties to both the Russian intelligence services and to multiple terrorist organizations, including Al Qaeda.

A 1996 classified FBI report (since made public) noted that the Mogilevich organization was involved in everything from major league market manipulation to prostitution, Afghan heroin, and trafficking in nuclear weapons materials. This is why Semion Mogilevich sits high on the FBI’s list of “Ten Most Wanted” criminals. But, of course, Mogilevich has a good lobbyist (i.e. a former director of the FBI, the outfit that publishes that “Most Wanted” list), and few, if any, members of the Mogilevich organization are presently in jail. Many of them are residents of the United States, and we will see that many of them, including Sater, remain active in the U.S. markets.

Multiple reports from law enforcement, the United Nations, non-governmental organizations in Russia, and the mainstream media in London (distinct from the mainstream media in the United States, which has a peculiar reluctance to publish anything interesting) state unequivocally that members of the Mogilevich organization have been selling conventional weapons to Al Qaeda for many years. On at least one occasion, the Mogilevich organization tried to sell highly enriched (nuclear bomb grade) uranium to Al Qaeda. This is a matter of dispute for some “experts”, but European Union officials confirm that it is true, and there is evidence that members of the Mogilevich organization did, at a minimum, claim in meetings with Al Qaeda operatives in Europe that they could obtain the nuclear materials.

Felix, through Russian intelligence, was prepared to cut a deal with Osama bin Laden, but the CIA balked when Klotsman demanded that the U.S. government pay him and Felix $3 million for each Stinger missile. Nonetheless, Felix escaped doing jail time, and some of his other associates say that this is because he and his Russian intelligence associates promised that their relationship with Al Qaeda would eventually be put to use for the U.S. government. However, if American officials believe Felix is helping the U.S. government, they are certainly mistaken. Indeed, it is a bit unsettling that this dangerous criminal is still on the loose. Not only was Felix once charged with stabbing a Wall Street trader in the face with the broken stem of a wine glass (actually, a martini glass), but Felix has also threatened to kill multiple other people. For example, Felix Sater has threatened to kill DeepCapture founder Patrick Byrne.

According to one of Felix’s White Rock partners (who has written about this in a book called “The Scorpion and the Frog”), Felix also once threatened to kill a short seller named Alain Chalem, who then ran a brokerage called Taluca Pacific in partnerships with DeCalvacante Mafia capo Phil Abramo, who was widely known at the time as “The King of Wall Street.” As we know from earlier chapters of this series, Abramo had formerly been involved with brokerages linked to the BCCI enterprise.

Felix’s partner says that Felix did not ultimately kill Chalem, and we should assume that he did not, but soon after the threat (in late 1999), Chalem was, in fact, murdered, execution-style, in his New Jersey mansion. The FBI has yet to prosecute anyone for the murder, but media reports have suggested that one suspect was Danny Persico, the Colombo Mafia capo who was a partner in Felix’s White Rock Partners. Other media have reported that the FBI believes the murder was related to Chalem’s dealings with Russian organized crime.

In later years, Felix co-founded a real estate and mortgage outfit called Bayrock. As we will see in later chapters, Bayrock played a role in the larger “bust out” of the mortgage markets, but for the purposes of this chapter, I will note that Bayrock’s former CFO, Jody Kriss, has alleged that Bayrock is a massive money laundering operation. In 2009, Kriss filed a lawsuit to this effect, and noted that Felix had once threatened to have him (Kriss) tortured and then murdered.

One of Bayrock’s co-founders was Tevfik Arif. In 2011, Arif was arrested in Turkey after Turkish commandos raided a party that Arif was holding on a yacht that had once belonged to Mustafa Kemal Ataturk, Turkey’s founding president. Arif, a native of Kazakhstan, was arrested along with a small harem of prostitutes and some unnamed government officials from Central Asia. (It is unclear why the commandos raided the yacht; the media has reported that Arif was charged only with illegally hiring prostitutes, a crime that does not usually result in commando raids).

Another Bayrock partner was Tamir Sapir, a billionaire real estate investor whose real estate portfolio was managed by a man named Frederick Contini, whom the government has named as an associate of the Genovese Mafia family. In 2008, Contini entered a secret plea to racketeering. He has also faced charges for stabbing a man in the face with the stem of a broken wine glass. It seems to be the thing to do.

As Tamir Sapir himself has admitted, he spent his formative years running a company that specialized in selling high-tech electronics equipment to KGB operatives in New York. As Sapir has not admitted (though public records show that it is true), Sapir’s partner in his espionage operation was Semyon Kislin, who was (according to the FBI) a “member” of the Russian organized crime syndicate run by Vyacheslav Ivankov, then the top boss of the Russian mafia in the United States. In 2009, Ivankov was assassinated on a Moscow street, but not before admitting that his organized crime syndicate (which had close ties to the Mogilevich organization) had long been employed by the Russian intelligence services.

It is clear that Felix Sater has maintained relationships that he developed while working as a trader for Gruntal & Company. For example, he remains a close associate of SAC Capital’s Steve Cohen, and a man involved with a private investigation of Felix’s Bayrock says that Felix has laundered money for Cohen and other hedge fund managers. (Cohen presumably would deny this, and he has not been charged with any wrongdoing).

Meanwhile, Bayrock has had partnerships with several investment funds, nearly every one of which is controlled either by Milken’s former top employees at Drexel Burnham, or by others among the small band of people who are Milken’s closest associates. One of Bayrock’s partners, for example, is Apollo Real Estate, part of Apollo Management, a private equity fund controlled by Leon Black, who is one of the most powerful investors in America. Leon Black is the son of Eli Black, who was, in the 1970s, the head of United Brands, formerly known as United Fruit, a company that was accused of everything from bribing tin-pot dictators to dealing with La Cosa Nostra and funneling money to Latin American narco-terrorists.

In 1975, Carl Lindner, another of Milken’s closest associates and a key participant in Milken’s junk-bond merry-go-round and “bust out” scheme , used Milken finance to take over United Brands. In the midst of this takeover, Eli Black crashed through a plate glass window on the 44th floor of the Pan Am Building in New York, and fell to his death (the death was reported as a suicide). After this incident, Eli’s son, Leon Black, was named head of mergers and acquisitions at Drexel Burnham, the investment bank effectively controlled by Milken. The two men became friends, and after Milken’s criminal indictments, Black insisted that Drexel defend his friend at all costs. Even after Milken’s indictments resulted in Drexel’s collapse, Black continued to insist that Milken was innocent, and today the two men are close friends, involved together in multiple business ventures (some described in my book). Milken’s son, Lance, is a partner at Apollo, the Leon Black fund.

Another of the most powerful financiers in America (and also among Milken’s closest associates) is Carl Icahn. In the early 1980s, Icahn was the head of the options department at Gruntal & Company (the outfit whose key clients included the Gambino Mafia family, and whose key traders, such as Felix Sater and Evgeny Klotsman, were major Russian organized crime figures). After leaving Gruntal, Icahn started his own investment outfit, funded mostly by Michael Milken and Zev Wolfson (Wolfson being the guy who funded Mulheren and the above-mentioned Mafia-tied brokerages, which were indicted for schemes they perpetrated with La Cosa Nostra and Felix Sater).

As soon as he launched his investment fund, Carl Icahn hired several key employees: Harvey Houtkin, Allen Barry Witz, Gary Siegler, and Alan Umbria. Meanwhile, Umbria, who represented Icahn on the floor of the American Stock Exchange, served as the front-man for the Genovese Mafia in a New York restaurant called Crisci’s, which was featured in the movie “Donnie Brasco”—a movie about an undercover FBI agent who infiltrates the Mob. Umbria was also the Mafia’s front-man in another New York restaurant — The Court of the Three Sisters.

One day in the late 1980s, Umbria’s close business associate walked into The Court of the Three Sisters and found Umbria presiding over a meeting in one of the restaurant’s private rooms. The business associate was asked to leave before he could hear what was discussed at this meeting, but the businessman knows who was in attendance – namely, Alan Umbria, a collection of Genovese Mafia thugs, and Louis Micelli, who was a stock broker until his untimely death in 2005. In addition to being a stock broker, Micelli was a major league narco-trafficker with deep connections to the drug cartels of Colombia, and to a Paraguay cell of Hezbollah, the jihadist outfit that takes its directions from the regime in Iran.

It was the Paraguay cell of Hezbollah that helped Iran blow up a synagogue in Argentina, and for a long time, this cell trafficked in cocaine from bases in Ciudad del Este and other cities in the “tri-border” region where Brazil, Argentina, and Paraguay meet. That region has since come under greater scrutiny, so Hezbollah’s drug kingpins have moved deeper inside Paraguay, but they continue to traffic coke, working with Hezbollah jihadis resident in North America – especially in Toronto, Detroit, New York, and my hometown, Chicago. Hezbollah’s trafficking operation continues to be a partnership with La Cosa Nostra, the Russian mafia, and (yes) some stock brokers, more of whom we will meet later.

* * * * * * * * *

Back to Gruntal & Company, the brokerage that was financed by Milken.

As we know, there were just a few traders who had special partnerships with Gruntal, and who effectively ran the place. In addition, we know, all of these traders had close ties to Milken. One of them, of course, was Steve Cohen, future founder of SAC Capital. Another was the Russian crime figure Evgeny Klotsman. And yet another, of course, was the Russian mobster Felix Sater, who, along with Klotsman, was, in 1996 linked to what the FBI described as a “global market manipulation and money laundering network controlled by Russian organized crime.” Other key figures in that “global market manipulation and money laundering network” were, of course, members of La Cosa Nostra, several of whom were involved, along with Felix, Klotsman and other Gruntal principals, in White Rock Partners.

There were just a few other traders who effectively ran Gruntal, and one of them was Andrew Redleaf, whose wealthy family did a lot of business with Milken’s operation at Drexel. Redleaf got his job at Gruntal on Milken’s recommendation. After leaving Gruntal, Redleaf invested in Sun Country Airlines in partnership with Tom Petters, who was arrested in 2008 and indicted for orchestrating a massive Ponzi scheme in cahoots with Michael Catain, the son of a famous Genovese Mafia enforcer named Jack Catain. Redleaf currently runs a large hedge fund called Whitebox Partners, another of the hedge funds that regularly trade in unison with SAC Capital and others in the network. (Neither Whitebox nor its principals has been charged with any crime).

Another one of the hedge funds in this network is the massive and eminently powerful Cerberus Capital, run by Stephen Feinberg and Ezra Merkin. In the early 1980s, Feinberg was one of Michael Milken’s top employees at Drexel Burnham. In the mid-1980s, Milken asked Feinberg to move to Gruntal & Company to help the others (namely, Russian mafia boss Felix Sater, Evgeny Klotsman, Gambino Mafia broker Maurice Gross, and Steve Cohen, among a few others) oversee Gruntal’s operations, which had become important to Milken’s nationwide network. But aside from the SEC’s investigation of Steve Cohen, regulators did not catch on to Gruntal’s criminality until the mid-1990s, when it was forced to pay the largest fines in SEC history after a series of scandals that saw some of its other managers charged with embezzlement and cooking the books. By then, the traders who really ran the place in the 1980s had moved on to much bigger projects, one of which, we know, was Feinberg’s Cerberus Capital.

In 2006, Mainichi Shimbun, Japan’s most respected business newspaper, reported that Cerberus was tied to the Japanese Yakuza. Feinberg said it wasn’t true and he sued the Japanese newspaper for libel, but there is no doubt that Mafia outfits worldwide are becoming more closely intertwined, and I think we would be justified in asking whether Feinberg came into contact with various Mafia outfits while working for Gruntal & Company (which was effectively controlled by a select number of traders, some of whom were mobsters). Feinberg’s partner in Cerberus, Ezra Merkin, meanwhile, has been charged with civil fraud for his role in the massive “Ponzi” scheme (in fact, it was not just a “Ponzi” scheme, but more on that later) perpetrated by the infamous Bernie Madoff. One of Merkin’s other funds, Ascot Partners, was the second biggest “feeder” to the Madoff criminal operation.

Other big “feeders” to Madoff’s operation were, according to court documents, “made” members of the Mafia. One of them was Ralph Mafrici, who had a joint account with Madoff’s investment fund in the name of Eleanor Cardile, a relative of Madoff’s right hand man, Frank DiPascali. Mafrici was a Genovese Mafia capo who allegedly ordered the assassination of another Mob boss named Albert Anastasia. Since Anastasia was getting his hair cut at the time, the assassination was famously dubbed “The Barber Shop Hit.” In fact, Madoff’s operation had extensive ties to organized crime, as we will see in later chapters, wherein we will also see that Madoff’s brokerage was a key component of the Milken network (and had, in the 1980s been a key component of the larger BCCI enterprise). First, though, let us meet some of the other characters in the “network” that will feature in our later discussion of the 2008 meltdown.

Another of the traders who, in the 1980s, effectively ran Gruntal & Company was Sam Israel, who later became the proprietor of a criminal hedge fund called Bayou. When Israel was indicted in 2008, Bayou was said to be the “biggest Ponzi scheme in history.” Before that, the biggest Ponzi schemes in history had been the Ponzi schemes run by the above-mentioned Fred Carr and Tom Petters. Unfortunately, in December of 2008, Sam Israel’s Ponzi was topped by Bernard Madoff, who turned himself in to the FBI and announced that his “Ponzi” scheme (which absconded with upwards of $65 billion) was bigger.

When it came time for Israel to show up for prison, Israel instead parked his car on a bridge and left a note in the window that said, “Suicide is Painless.” Then he ran away.

After that, Israel had second thoughts and decided to turn himself in. Meanwhile, it emerged that Israel had been in business with Robert Booth Nichols, whom the FBI had identified as a close associate of both the Gambino and Genovese Mafia family and perhaps the key U.S. contact for the Japanese Yakuza. Back in the 1980s, Nichols had been involved with BCCI, and he was tied to a big scandal surrounding a software program called Promis.

The developers of Promis alleged that the software was stolen from them by the U.S. government, which (according to the developers) modified it so that it included a back door feature that would allow the U.S. government to access information on computers that had installed the software. At the time, the media gave considerable credence to this story, and suggested that the U.S. government had sold Promis software to multiple foreign governments. What has not been widely reported is that Mafia-tied Robert Booth Nichols also managed to gain rights to sell Promis software, and Nichols handed those rights to the famous Saudi arms dealer and market manipulator Adnan Khashoggi, who had been a key figure in the larger BCCI enterprise.

As a document obtained by DeepCapture shows, Khashoggi, in turn, licensed the software to Sheikh Khalid bin Mahfouz, then the largest shareholder of BCCI and executive director of the bank. (Recall from earlier chapters of this series that Sheikh Mahfouz was, until his death in 2009, also one of Osama bin Laden’s most important business partners). Mahfouz proceeded to sell this software to major banks around the world, raising the question of whether he used its back-door feature to obtain confidential information from the computer systems of banks that used the software.

The bizarre nature of the business that Nichols and Israel later did together has been reported in an entertaining book called “Octopus: Sam Israel, the Secret Market, and Wall Street’s Wildest Con,” which suggests that Israel was conned by Nichols into believing that he, Israel, could recoup his hedge fund losses by tapping into a “secret market” that was, according to Nichols, controlled by 13 powerful families who also controlled the whole world. The book, of course, casts doubt on the notion that the 13 families actually control a secret market, much less the whole world, and the book reports further that Israel was scammed by Nichols into paying a large sum of money to get his hands on U.S. Treasury notes with a face value worth billions.

The Treasury notes were said to be linked to “Yamashita’s gold,” which was reputed to be gold that had ostensibly been stashed in the Philippines by the Japanese just prior to the end of World War II, and later recovered by a secret U.S. government operation. This, too, seems an unlikely proposition, but there might, in fact, be more to this story than a tale of a hapless hedge fund manager (Sam Israel) who lost millions to a clever con-man (Nichols). Which is not to say that 13 families actually control the world (though, of course, anything is possible), but as court documents obtained by DeepCapture show, Nichols and Israel had, in fact, obtained U.S. Treasury notes valued at $250 billion (as in a quarter-of-a-trillion dollars).

Israel and Nichols told people that their $250 billion in Treasury notes were secured by 2,500 metric tons of gold (serial number SC 3040-20) at the Atlanta Federal Reserve. In fact, physical gold in this quantity was not sitting with the Federal Reserve, but Nichols and Israel said the Atlanta Federal Reserve had issued a serial number in confidence that the gold would be forthcoming, much of it from the Philippines.

More specifically, Nichols and Israel told people that many of their $250 billion in Treasury bonds were secured by “Yamashita gold” that had been located years earlier by then Philippine dictator Ferdinand Marcos, who had moved the gold to a new hiding place in the jungles of Mindanao, an island at the south end of the Philippine archipelago. According to Nichols, Adnan Khashoggi (who was once indicted for laundering money on behalf of Imelda Marcos, then widow of the former dictator) had reported that this gold was now in the possession of the Abu Sayyaf terrorist group on Mindanao, and that his associates were traveling to the Philippines to retrieve the gold.

Nichols later changed the story and said that the $250 billion in U.S. Treasury bonds were related to long-standing U.S. government obligations to the offspring of Chinese nationalist leader Chiang Kai-shek. Specifically, Nichols said the obligations had been confirmed by Tansri Teong, a representative of the Maiwah family, descendents of Chiang Kai-shek who lived in Luxembourg. However, Nichols began telling the Chiang Kai-shek story after Israel was arrested, perhaps to distract investigators from the fact that their scheme revolved primarily around Khashoggi’s assurances concerning the Yamashita gold in the Philippines.

In either case, while Khashoggi had spoken of this gold in the past, many considered the story to be rather implausible. Of course, anything is possible, but it is equally possible that the $250 billion Treasury bonds were a fake. Nonetheless, according to journalist Cheryl Seymour (who first reported parts of this story, though not the information about the gold in the Philippines), bankers around the world were convinced that the Treasury notes were real. And, again, they had a face value of a quarter trillion dollars—which is around 60% of what the U.S. government pays each year in interest on the national debt. It’s also around 60% of the U.S. government’s annual defense expenditures. Moreover, Nichols and Israel circulated the story about this supposed massive obligation just as the U.S. financial system was beginning to weaken.

That is, just as the system was weakening in 2008, Israel and Nichols claimed that they were going to cash in notes that would (if it they were real) effectively bankrupt the U.S. government and fuel panic with regard to any major banks that had liens on Treasury notes. As one banker told Seymour, this “shook the financial foundation around the world.” Other bankers reiterated that statement: Sam Israel’s claim (whether true or false) to have $250 billion in Treasury bonds linked to a stash of gold in the Philippines actually rocked the global financial system (though, of course, there were other activities that did quite a lot more to rock the global financial system).

After Israel was arrested, he and Nichols filed lawsuits against each other. Soon after, in 2009, reports emerged that Nichols had been found dead in Switzerland. People close to Nichols insist that Nichols faked his own death, but the truth remains unknown. It is also unlikely that we will learn whether the U.S. Treasury notes were fake because soon after Nichols and Israel filed their lawsuits, the notes vanished. They had been briefly entered into the public record, but they are not there anymore. There is no doubt, though, that the notes (whether they were counterfeit or not) did exist. And some bankers apparently did take them seriously.

No doubt I will be ridiculed as a conspiracy theorist simply because I have told this true (albeit weird) story, but I have been accused of worse, and I will note that an almost precisely similar story (though with a different set of protagonists) was recently discussed on the floor of the British parliament.

* * * * * * * *

Before he got involved with the bizarre $250 billion Treasury note scheme, and after he left Gruntal & Company, Israel spent time working for one of Michael Steinhardt’s hedge funds. In that capacity, Israel helped Steinhardt corner the market for U.S. Treasuries, posing a threat to economic stability until the government threatened to press criminal charges, convincing Steinhardt to back off.

John Lattanzio, the manager of Steinhardt’s hedge fund, was extremely secretive. There wasn’t much information on him until a court case revealed that Lattanzio once proposed marriage to a Russian hooker and gave her a $289,275 diamond ring. Nothing wrong with that (marriage is a wonderful thing), but the interesting development in this case was that the lovers quarreled, Lattanzio wanted his ring back, and the prospective wife told the judge that Lattanzio had big-time Mafia connections. She also said that Lattanzio “would not hesitate to use [the Mafia] to harm me.” Which is not surprising because the man who launched Lattanzio’s career, Michael Steinhardt, also has big-time Mafia connections.

When it became evident that Steinhardt’s ties to the Mafia might become public, Steinhardt preemptively published a book in which he revealed (as if were no big deal) that his father, Sol “Red” Steinhardt, had done time in Sing-Sing prison because he was, in the words of a Manhattan district attorney, the “biggest Mafia fence in America.” In fact, as noted in earlier chapters of this series, Steinhardt’s father was effectively the chief financial officer for the Genovese Mafia family. In his book, Steinhardt admitted that the first and most important investors in his first hedge fund were: the Genovese Mafia family; Ivan Boesky (Milken’s most famous criminal co-conspirator); and Marc Rich (who then shared office space with Boesky).

In previous chapters of this series, I discussed Marc Rich’s ties to BCCI and the Iranian regime, noting that Steinhardt’s lobbying helped convince President Bill Clinton to pardon Rich from his indictment for illegal trading with Iran. Although Rich was pardoned, he still owes the U.S. government taxes, so he lives in Switzerland, where his palatial home is guarded by a private army of mercenaries.

Rich has done quite a lot of business with companies, such as Highland Capital, that were under the control of Russian organized crime boss Semion Mogilevich, and Rich was linked to the late 1990s scandal that saw Russian organized crime syndicates (most notably the Mogilevich organization) launder more than $10 billion through the Bank of New York. This was the same scandal that involved Sinex, which handled around $3.9 billion of that money, most of it belonging to the Mogilevich organization. Rich was not charged in the Bank of New York affair, and nor were any of the other oligarchs (many of them previously linked to the BCCI enterprise) who were implicated in the Bank of New York affair.

Of course, Steinhardt was also among Milken’s closest associates. Nowadays, Steinhardt runs a big exchange traded fund (ETF) outfit called Wisdom Tree Investments. His partner in that operation is Jonathan Steinberg, son of Saul Steinberg, who was a key player in the junk bond “bust out” scheme that Milken ran in the 1980s. Steinberg used Milken junk bonds to seize Reliance, a giant insurance and financial services firm, which was subsequently looted and destroyed (i.e. “busted out”). Steinberg was not charged with any crime.

As noted in Chapter 6 of this series, a Wall Street Journal story published in 1985 (read it, as it was the last serious investigative report on short-side market manipulation published before the media started describing these miscreants as heroes worthy of our admiration) identified Steinhardt as being part of a “network” of short sellers who regularly attacked public companies using unscrupulous tactics, such as posing as journalists to obtain inside information and conspiring to cut off victim companies’ access to credit.

Among the others identified as being part of that “network” was Jim Chanos, who is now the proprietor of a famous hedge fund called Kynikos Capital, and the head lobbyist for the hedge fund industry. Chanos is also a favorite source for the New York financial media, one reason why the media no longer publishes stories about short-side market manipulation (which does not occur, according to the lobby headed by Chanos). When DeepCapture first started reporting on Chanos’s ties to Michael Milken and associates, Chanos went to lengths to distance himself from Milken, telling journalists that he had identified the fraud at Milken-financed companies.

In an email to some of his associates (the email was obtained by lawyers for the Canadian financial institution called Fairfax Financial, and later obtained by DeepCapture), Chanos outlines the party line, suggesting to the recipients of the email (namely, a long list of Milken-tied hedge fund operators and billionaires, such as Carl Icahn, who owed their careers to Milken) that they communicate the fact that he, Chanos, had been a short seller of companies financed by a “certain junk bond king” (i.e. Milken). But while Chanos, Steinhardt, and others in their “network” were certainly short sellers of Milken-financed companies, their short selling was always beneficial to Milken, and was simply the tail-end of the “bust-out” schemes that I have described, noting that every “bust-out” ends in a wave of short selling.

Indeed, as was revealed in the 1985 Wall Street Journal story, Chanos got his big start by shorting a company called Baldwin United. According to this story, Chanos went so far as to go to Baldwin’s bankers with false information that convinced the bankers to cut off Baldwin’s access to credit. As a result, Baldwin went bankrupt, and Milken got himself named as the advisor to the bankruptcy. According to a well-known and highly respected businessman who was involved in the bankruptcy proceedings, Milken abused his advisory role and ensured that all of Baldwin’s assets were delivered to his cronies at firesale prices. This success brought Chanos to the attention of Michael Steinhardt.

At the time, Chanos (who is now revered by The Journal) was working for a Mafia-tied brokerage called Gilford Securities. In 2000, five Gilford brokers were arrested (along with Phillips) in Operation Uptick, which was, of course, then the biggest Mafia bust in the history of the FBI. Gilford’s brokers were charged with manipulating stocks in league with ten members of La Cosa Nostra and a corrupt New York cop. By then, though, Chanos had left Gilford to start his own hedge fund, receiving his initial finance from Steinhardt (son of the biggest Mafia fence in America) and Steinhardt’s limited partner, Ivan Boesky (Milken’s most famous co-conspirator). Steinhardt’s other limited partner, Marty Peretz, introduced Chanos to Dirk Ziff, another powerful hedge fund manager (Och-Ziff Capital and Ziff Brothers), and for a while Chanos ran his hedge fund out of Ziff’s offices.

While Chanos was launching his hedge fund, future CNBC reporter Jim Cramer (who had once planned to work in partnership with Boesky) was running a hedge fund out of Steinhardt’s offices. Later, Cramer and Chanos were the biggest fundraisers for the political campaign of New York Governor Elliot Spitzer, who had been Cramer’s college roommate. For a time, Spitzer’s favorite hooker, “Ashley Dupree” lived (rent free) at Jim Chanos’s beachside villa. She called him “Uncle Jim.” As Patrick Byrne once said, Ashley should be ashamed of herself for associating with this crowd.

SEC filings make it clear that Chanos regularly trades in league with other hedge funds in the Milken network, and in 2006 they were attacking Fairfax Financial, one of the largest financial institutions in Canada. Fairfax filed a lawsuit against others in his “network,” including SAC Capital, and some of its affiliates, such as Exis Capital and Sigma Capital. (A judge has ruled that SAC Capital should be dropped from the suit, but Sigma and Exis are still in litigation, and Fairfax has appealed the ruling).

Emails obtained by Fairfax’s lawyers make it clear that these hedge funds were using the same tactics (such as trying to cut off the company’s access to credit) that they had been using since the 1980s.In one email, an employee of Exis Capital (a SAC Capital subsidiary) wrote that “the way to get this thing [Fairfax] down is to get them where they eat, like the credit analysts and holders. We’re taking this baby down for the count.” This email was addressed to Jonathan Kalikow, son of Peter Kalikow, who had, in the 1980s, been one of largest investors in Ivan Boesky’s criminal arbitrage fund (or “hedge fund,” as it would now be called).

Kalikow is also a former owner of The New York Post. At the time, the newspapers’ fleet of delivery trucks was controlled by La Cosa Nostra. The operation was run by Bonanno Mafia soldier Richard “Shellack-head” Cantrella. Soon enough, the New York Post delivery fleet began transporting cargos of smuggled weaponry and cocaine, in addition to newspapers. (Kalikow was not charged with any crime, and it is possible he was unaware that his delivery trucks were controlled by the Mob).

At any rate, back in 2006, this network was going to take Fairfax “down for the count.” Fortunately, though, Fairfax was a strong company. Its bankers did not cut off access to credit, and it had the good luck to buy a lot of credit default swaps that massively boosted its profits.

However, two years later, Bear Stearns, Lehman Brothers, and other banks were taken “down for the count.” The public attack on Lehman began in May, 2008 with a speech by David Einhorn, a famous short seller who got his start working for Gary Siegler, one of the first people whom Carl Ichan hired after leaving Gruntal & Company. Einhorn is, for all intents and purposes, Ichan’s boy, and when he gave his Lehman speech, he was standing by Icahn’s side, just as he was standing by Ichan’s side when he initiated previous attacks on public companies.

In his speech and subsequent media tour, Einhorn cited data from a strange firm called The Markit Group to support his exaggerated contention that Lehman had improperly accounted for the value of its property and collateralized debt obligation holdings. See my earlier DeepCapture story, “The Markit Group: A Black Box Company that Devastated Markets,” which notes that this company was founded by a few hedge funds, which the company refuses to identify. It was, in 2008, run by two former Canadian bankers and a developer of Bulgarian property, and seemed to cherry-pick its data, which was provided by a few investment banks that are passive investors in the company.

The Markit Group is wholly without transparency, and yet it essentially dictates perceptions of market prices for collateralized debt obligations and other instruments (including credit default swaps) that are important barometers of health in the banking sector. And during the crisis of 2008, it consistently churned out wildly overstated valuations on credit default swaps, while valuing all collateralized debt obligations based on a sampling of CDOs that included only the worst of the worst (or more specifically, the “synthetic” CDOs that had been designed by short sellers to self-destruct).

The Markit Group’s wildly off-base statistics fueled the panic that helped bring down Bear Stearns, and it was a useful tool for Einhorn, when he initiated his attack on Lehman. That attack was akin to the launch of a new Ipod, with much-hyped speeches and a whirlwind media tour handled by a public relations firm, which presented Einhorn as the boy-wonder fraud-buster who had proved his mettle in an earlier battle with a financial services firm called Allied Capital. (See DeepCapture’s story, “Notes on David Einhorn: The Predator in a Cute T-Shirt,” for a fuller deconstruction of Einhorn’s blatantly dishonest attack on Allied Capital, which was perpetrated in league with Michael Milken and Carl Icahn).

While Einhorn was on his media tour, most of the other hedge funds in his network initiated a short selling attack on Lehman. After Lehman’s collapse, the bank’s creditors filed a lawsuit against the above-mentioned Steve Cohen and Dirk Ziff, alleging that the two hedge fund managers (along with Citadel Investment) helped destroy Lehman with manipulative short selling.

To be continued…Click here to read Chapter 7

Mark Mitchell is a journalist who spent most of his career working as a correspondent for mainstream media publications before joining DeepCapture.com. Mitchell is the author of a recently published book: The Dendreon Effect: How Felons, Con-men, and Wall Street Insiders Manipulate High-tech Stocks, which is available from most major online booksellers.

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The Global Bust-Out Series (Chapter 5): Monzer al-Kassar, Model Citizen

The Global Bust-Out Series (Chapter 5): Monzer al-Kassar, Model Citizen

This is Chapter 5 of a multi-chapter series. On your right is a Table of Contents to all chapters so far published.

* * * * * * * * *

In this chapter of the Global Bust-Out Series, we learn more about the Bank of Credit and Commerce and International (BCCI) and its business partners (the “larger BCCI enterprise”). Although this might seem like ancient history, it is history that we must not forget because the people who were involved with the BCCI enterprise did not simply disappear when BCCI collapsed in 1991. To the contrary, most of them remained in business and only one BCCI figure (Abbas Gokal) did any jail time. This despite the fact that Manhattan District Attorney Robert Morgenthau had described BCCI as “the largest banking fraud in world financial history.”

Recall, too, that the larger BCCI enterprise did more than operate “the largest banking fraud in world financial history.” It also deployed a variety of schemes to “bust-out” publicly listed companies, some of them among the largest savings and loan banks in the United States. This contributed to the savings and loan crisis that began in the late 1980s, and which ultimately cost American tax-payers upwards of $1 trillion in bail-outs—a portent of bigger and better things to come.

The larger BCCI enterprise “busted out” (i.e. looted and destroyed) other national economies as well, and when a few BCCI principals were brought to trial (they were sentenced to pay nothing more than fines that were fraction of what they had looted), the sentencing judge correctly remarked that the BCCI enterprise had single-handedly “shattered the integrity of the global financial system.”  They had also shattered the integrity of Washington, where officials went to lengths to protect them from prosecution.

Because the BCCI enterprise was never seriously prosecuted (or exposed in the media), the people who had been involved with BCCI and the larger BCCI enterprise continued during all the years that followed not only to remain in business, but also to operate an almost precisely similar enterprise, the only difference being that the enterprise came to include some new and younger players, while people involved with the enterprise innovated new and more destructive financial schemes. More specifically, they innovated new ways to “bust-out” publicly listed companies and national economies.

Indeed, as we will see, they contributed to the great meltdown of 2008, and they are presently threatening to deliver a repeat performance.

It is no overstatement to say that miscreants who were formerly involved with BCCI and the larger BCCI enterprise presently pose the single biggest threat to the stability of the global financial system and our economic well-being.  More than that, they pose a serious threat to the future of our democracy and to political stability in many other nations as well.  This is, in other words, the history that accounts for our present predicament, and it is the history that has (already to the great detriment of our democracy) been covered up by officials in Washington, and ignored by the major U.S. news organizations (some of them owned by people previously linked to the BCCI enterprise).

* * * * * * * * *

The BCCI enterprise, we know, had extensive business with a great many of the most prominent fixtures of the American establishment. That is to say, some of the world’s most destructive financial criminals (i.e. people formerly involved with BCCI and the larger BCCI enterprise) have had extensive business with not only some of the leading lights on Wall Street, but also with numerous politicians and officials in Washington, including nearly every U.S. politician who has ever so much as considered running for president, every politician who has ever served as president, and multiple people who have held cabinet-level positions in Washington.

In earlier chapters of this series, we discussed relationships between the BCCI enterprise and two sitting presidents, Richard Nixon and Jimmy Carter. As has been well-documented elsewhere, the BCCI enterprise also had extensive dealings (the Iran-Contra affair being only one example) with the administration of President Ronald Reagan, and his vice president (later President) George Bush, Sr.

Meanwhile, in the 1980s, various BCCI figures had business with George Bush, Jr., who would, of course, later serve as president. For example, a businessman named James Bath fronted investments that a Saudi sheikh and billionaire named Khalid bin Mahfouz made in an oil company called Harken Energy, which was then controlled by George Bush, Jr. Sheikh Mahfouz was the largest shareholder in BCCI, and he served as executive director of the bank throughout the 1980s. In 1985, Sheikh Mahfouz also purchased (at a premium to the market price) the Texas Commerce Bank Tower, which was then Houston’s tallest skyscraper, from James Baker, who was then President Ronald Reagan’s Secretary of the Treasury, and later Secretary of State under President George Bush, Sr.

We have already seen that key figures in the larger BCCI enterprise later played a key role in delivering the presidency to Bill Clinton. One of those BCCI figures, we know, was an American oligarch named Jackson Stephens. Another was a man named Michael Steinhardt, known as one of the nation’s most prominent hedge fund managers, and also known as the son of Sol “Red” Steinhardt, said by a Manhattan district attorney to be the “biggest Mafia fence in America.” It was at Steinhardt’s urging that President Clinton pardoned a criminal oligarch named Marc Rich, who had previously had extensive involvement with the BCCI enterprise, and who had been sentenced to prison for doing business (through BCCI figures) with the Iranian regime during the 1979-1980 Iran hostage crisis.

We can add to this list of captured presidents our present leader, Barrack Obama, who has faced allegations of shady dealings with a man named Nadhmi Auchi, who is widely regarded as representing the interests of Adnan Khashoggi, formerly one of the most important figures in the larger BCCI enterprise (and one of history’s most destructive financial criminals). We will return to Auchi, but it suffices to say that his business (which continues to be conducted without interference from the Obama administration) has not been good for the country. Hedge fund manager George Soros, who played a key role in delivering the presidency to Obama, also previously had dealings with the BCCI enterprise.

Therefore, it is important for us to remember that the BCCI enterprise (which had extensive links to the Muslim Brotherhood) was notable for having waged a “Financial Jihad” against Western civilization (albeit a jihad waged in partnership with some of the self-anointed leaders of Western civilization). I will remind the reader that Yossef Bondansky, who served a director of the House Task Force on Terrorism from 1988 to 2005, described the BCCI mission as follows: “providing ‘special services’ in support of worthy causes—from laundering money for terrorists, Muslim intelligence services, and mujahedeen; to clandestinely funding deals for conventional weapons, weapons of mass destruction…to shipping around and laundering huge sums embezzled by corrupt leaders.”

As we also know, the BCCI enterprise’s larger mission (i.e. “The Financial Jihad”) was: 1) to build a global financial empire that could compete with Western financial institutions; and 2) to deploy financial weapons of mass destruction to undermine the global financial system that was perceived as being dominated by the West.

Recall that numerous global terrorists (also known as prominent bankers) were directly involved with the larger BCCI enterprise, and among them were Osama bin Laden and his associate, the Blind Sheikh. Osama bin Laden, of course, was later alleged to have perpetrated the September 11 attacks on the World Trade Center and the Pentagon. The Blind Sheikh was alleged to have been involved in the 1993 bombing of the World Trade Center. In addition, we know, the Blind Sheikh (co-founder of Faisal Islamic Bank, which was the most important affiliate of BCCI during the 1980s) issued a famous fatwah suggesting that it would be a good idea for his fellow jihadis (and bankers?) to “tear down the edifices of capitalism” and to “destroy their (our) economies.”  Which, of course, the BCCI enterprise had already done.

In 1991, the same year that BCCI collapsed, we know, a Muslim Brotherhood leader named Hasan al-Turabi appointed Osama bin Laden to help lead a Muslim Brotherhood initiative to replace the BCCI enterprise with a global financial network that would exceed the BCCI enterprise in scope and destructive power. Bodansky (then director of the House Task Force on Terrorism) reported in 2000: “Turabi urgently needed an expert to salvage whatever was possible and rebuild a global financial system [to replace the BCCI enterprise]. By then Osama bin Laden was the most qualified individual in Khartoum to untangle this financial mess. In late summer 1991, Turabi approached bin Laden and asked for help.”

Osama bin Laden agreed to help—and he pursued his task with enthusiasm. By 2000, he had played a key role in helping the Muslim Brotherhood rebuild a global financial network and he had done more than merely replace the BCCI enterprise. He and other Muslim Brotherhood billionaires had built what was, without doubt, one of the greatest financial empires the world has ever known. That financial empire remains in business today—and it is not only one the most powerful financial empires on the planet, but also one the world’s leading transnational organized crime syndicates, involved in all of the activities—from narco trafficking and the smuggling of radioactive materials, to the perpetration of destructive financial crime—that characterized the BCCI enterprise of the 1980s.

In addition, the global financial network/organized crime syndicate that Osama bin Laden helped build, like the BCCI enterprise before it, was operated in partnership with some elements of the American establishment, and with the full connivance of officials in Washington.

* * * * * * * * *

The director of the House Task Force on Terrorism reported (in 2000) that Osama bin Laden built a global financial network in collaboration with what he referred to as “The Brotherhood Group,” a close-knit network of no less than 130 extremely wealthy financial operators in the Persian Gulf states. The director of the House Task Force on Terrorism reported further that: “The key members of the Brotherhood Group have a well-known and established financial presence in the West—sixty five of them have major companies and businesses in the United States.”

In Chapter 2 of this series, we met some of those billionaires, noting that some of them (e.g. Sheikh Mahfouz) had not only been involved with the BCCI enterprise in the 1980s, but had been among the founding fathers of Osama bin Laden’s terrorist organization. In later chapters of this series, we will learn more about the global financial network that Osama bin Laden helped build, but by way of introduction to that discussion, we should meet another former BCCI figure—a man named Monzer al-Kassar—because Monzer al-Kassar veritably epitomized both the BCCI enterprise and the global financial network that Osama bin Laden and other billionaires (including Monzer al-Kassar) built to replace the BCCI enterprise.

Monzer al-Kassar was not officially an executive of BCCI, but he brokered many of BCCI’s most important business relationships (including relationships with leading figures of the American establishment), and he played a key role in many of the initiatives (including the “Financial Jihad”) that made the BCCI enterprise so special. That is to say, Monzer al-Kassar was not only a global terrorist, but also the world’s leading narcotics kingpin, a dangerous mobster, a mercenary, a murderer, an arms dealer, an intelligence asset, a sophisticated financial operator, a billionaire several times over, and one of the world’s most prominent oligarchs, famous for the lavish cocktail parties that he held for the rich and famous.

Monzer al-Kassar was, indeed, one of the most important people in the world.

Therefore, the remainder of this chapter will be devoted to Monzer al-Kassar’s long and amazing career–his immense influence over the course of world events and his many assaults on the stability of the global financial system. And we can begin by examining the contents of every single article that was published about Monzer al-Kassar by the major U.S. news organizations during the years leading up to 2008, when Monzer al-Kassar’s career came to a strange and untimely end.

* * * * * * * * *

The major U.S. news organization did not publish any articles about Monzer al-Kassar.

One exception to this rule was my favorite publication, People magazine, which published fairly regular reports about the fabulous parties—attended by Hollywood celebrities, glamorous billionaires, European royalty, Saudi princes, sheikhs and emirs, not to mention Western diplomats and some of Wall Street’s leading lights–that Monzer al-Kassar hosted at his white, Parthenon-like mansion in the Spanish resort town of Marbella. People magazine described Monzer al-Kassar as “The Prince of Marbella,” and that is how he was known to his powerful and influential friends, all whom were, no doubt, avid readers of People magazine.

Another exception to the rule was Forbes Magazine, which regularly listed Monzer al-Kassar as one of the 50 “Most Powerful” people in the world. However, the Forbes list of “Most Powerful” people didn’t include much information about what, exactly, made those people so powerful. Indeed, Forbes Magazine didn’t even provide its readers with any information about Monzer al-Kassar’s parties in Marbella, and unlike People magazine, Forbes Magazine did not inform its readers as to the purchase prices of Monzer al-Kassar’s sports cars, beautiful lady friends, and cutlery.

To be fair, Forbes Magazine is, in fact, the best mainstream business publication in the United States. It is also the only major news publication to devote space (see, for example, ground-breaking stories by Forbes reporters Nathan Vardi and Liz Moyers) to some of the most important issues (e.g. manipulative short selling and the involvement of organized crime) affecting the markets. In addition, aside from its list of “Most Powerful” people, Forbes Magazine did publish one story that at least mentioned Monzer al Kassar’s name in passing, noting that he had ties to Osama bin Laden.

Aside from that, though, the major U.S. news organizations reported nothing about Monzer al-Kassar prior to 2008, when Monzer al-Kassar’s career came to a strange and untimely end, at which point the U.S. media published a few stories about him, most of those stories being false. Not just false, but false to the extent that the major U.S. news organizations completely covered up the true (and scandalous) story of Monzer al-Kassar. Indeed, this cover-up was a conspiracy of significant proportions, or at least it was a cover-up to rival the media’s cover ups of just about every other major scandal in recent history.

That is not to say that the media has been a witting accomplice to any conspiracy. To the contrary, the American media has no wits. It is also, of course, not to say that the media has ever investigated or published any story about a conspiracy. Most major media journalists simply have no time to do anything other than take dictation from official government spokesmen and other professionals in the fields of black propaganda and disinformation. (I confess, I was once a mainstream journalist, and in that capacity, I unwittingly authored plenty of disinformation and devious party lines, though I did, at least, manage to have myself permanently ousted from that profession, thereby saving myself, were it not for so many other sins, from the eternal fires of hell).

At any rate, it is inadvisable to rely on the major U.S. news outfits for stuff like…news.

Fortunately, there are other sources of information, and there is, indeed, a vast amount of information about Monzer al-Kassar contained in the following: 1) mainstream publications of just about every civilized nation other than the United States;  2) a variety of documents that can be found in the public record; 3) some excellent American blogs (see, for example, BoilingFrogsPost.com, whose authors include former U.S. national security officials turned whistleblowers, all of whom are known to rant about the abysmal state of the American media).

In addition, many of the more salient facts concerning Monzer al-Kassar can be found in books by (among others) the following people: former U.S. Department of Justice prosecutor John Loftus, former Defense Intelligence Agency employee Lester Coleman; former Israeli intelligence official Ari Ben Menashe; former Israeli intelligence official Victor Ostrovsky; and Patrick Seale, the most eminent biographer of a terrorist named Abu Nidal, who was sponsored by Monzer al-Kassar. In addition, former Israeli intelligence official turned private investigator named Juval Aviv has revealed some important information about Monzer al-Kassar.

The best book on Monzer al-Kassar is a book written in the German language, and aptly titled “Des Pates des Terrors” (translation: “The Godfather of Terror,” which is different from “The Prince of Marbella”). This book (available on Amazon to anyone who can read German) was authored under a pseudonym by a German intelligence official who quotes extensively from the files of the German intelligence services, Interpol, and other intelligence agencies that tracked (and, in some case, employed) Monzer al-Kassar. There exists an English-language translation of this book, but it has been acquired by the U.S. government, which seems disinclined to allow the translation to be published in the United States.

In other words, so far as the English-speaking citizens of the U.S.A. are concerned, this book has not yet been burned, but it has, effectively, been banned.

We will get to the story of Monzer al-Kassar in a moment (and this might seem like an overly long prelude to that story) but it is first necessary to stress that every one of the above sources has been smeared in one way or another by official U.S. government spokesmen and major U.S. news organizations. These smears are always ad hominem—the facts themselves are never addressed. And others who have attempted to relate some of the facts have been accused of weaving outlandish conspiracy theories. But because this is such an important story, it must be stressed: all of the above sources have (independently of each other) related many of the same facts, and I myself have been able to confirm certain facts to be true.

There is, moreover, a near consensus among just about everyone who has investigated Monzer al-Kassar (including many earnest employees of the U.S. government’s national security agencies, though not the official U.S. government spokesmen) as to the broad outlines of the Monzer al-Kassar story.

The story goes like this:

Monzer al Kassar was the son of a Syrian government official and a close confidant of both Hafez al-Assad, who served as president of Syria from 1971 to 2000, and Bashar al-Assad, who replaced his father as president in 2000. As of this writing in 2013, Bashar al Assad is still president, but his army is fighting “Arab Spring” rebels who are (with the support of the U.S. government and its allies) attempting to overthrow the government of Syria. The “Arab Spring” rebels have ties to the Muslim Brotherhood and associated jihadi terrorist organizations, some of which were sponsored by the Syrian government until 2008, at which point the jihadi outfits (and Washington) turned on the Syrian government, and Monzer al Kassar’s career came to strange and untimely end—but we are getting ahead of ourselves.

In the beginning, Monzer al-Kassar and his family, in partnership with, and with the protection of the Syrian government, became involved in the heroin trade out of Syria and Lebanon. By the 1980s, Monzer al-Kassar was not only the world’s leading narcotics kingpin, but also a global terrorist and the proprietor of an organized crime syndicate that was closely intertwined with the operations of leading terrorist organizations (which is to say that the terrorists were also key figures in Monzer al-Kassar’s transnational organized crime syndicate).

Among the terrorist organizations intertwined with Monzer al-Kassar’s organized crime (and terrorism) syndicate were several that had been founded by people who had once been key figures in the Palestinian Liberation Organization (PLO), but who had split with PLO leader Yasser Arafat to found their own, more radical, terrorist outfits. These included: the Palestinian Liberation Front; the Popular Front for the Liberation of Palestine–Special Command (PLFP-SC); the Popular Front for the Liberation of Palestine–General Command (PLFP-GC); and Fatah, Revolutionary Council (also known as Black September and the Arab Revolutionary Brigades), whose leader, Abu Nidal, was the world’s most notorious terrorist before Osama bin Laden achieved notoriety in the 1990s.

Monzer al Kassar’s closest friend (going back to their childhoods together) was Abu Abbas, leader of the Palestinian Liberation Front. Meanwhile, Monzer’s brother, Ghasshan, was a top official of the PLFP-SC, and various other members of Monzer’s family were members, at various times, of the PLFP-SC and the other PLO splinter outfits (i.e. all of the above). In addition, Monzer al-Kassar, in his capacity as a Syrian intelligence asset, played an important role in directing the operations of at least one faction of Hezbollah, the world’s largest terrorist organization, based in Lebanon, with operations in numerous nations across the globe, most notably in Latin America and Africa, though Hezbollah also operated (and still does operate) quite openly in a few major U.S. cities, such as Detroit and my hometown, Chicago.

All of the leaders of these terrorist organizations, and Monzer al-Kassar himself, had close ties to the Muslim Brotherhood, and in 1991, they all became key figures in the Islamist International, the outfit that was founded that year by Muslim Brotherhood leader Hasan al-Turabi, and whose chairman, of course, was Osama bin Laden. This runs contrary to the official party line that Osama bin Laden’s organization and the Muslim Brotherhood were comprised entirely of Sunnis who could not tolerate other Muslim sects. The truth is that the Muslim Brotherhood membership includes Muslims of many different sects, and the Islamist International, which was founded by the Muslim Brotherhood, included some people who were not even Muslims. For example, the leader of the PLFP-SC, George Habash, was a Marxist and an atheist.

Some accounts suggest that Hezbollah, which is a Shiite outfit, may even have been founded as a Shiite wing of the Muslim Brotherhood, and it is certainly the case that Hezbollah was a key component of the Islamist International. In addition, Hezbollah has carried out at least one violent terrorist attack (in 1996, on a building housing U.S. troops in Saudi Arabia) on the orders of Osama bin Laden. Presently, Hezbollah claims to have sided with the Syrian government against the Muslim Brotherhood and Al Qaeda (i.e. Muslim Brotherhood) rebels in Syria, but for reasons to be discussed, there are excellent reasons to believe that Hezbollah and the rebels share a common interest in fomenting chaos in that country.

Monzer al-Kassar, meanwhile, ascribes to Marxist tenets, and he might properly be regarded as an atheist, though he was born a member of the Alawite sect. According to most accounts, Sunni Muslims regard the Alawites as heretics, which might be true, but such theological differences are largely academic. For the purposes of our discussion, it is enough to know that the heretics, atheists, Sunnis, Shiites, and other figures in the Islamist International (one of them being Monzer al-Kassar) were united behind what a famous Muslim Brotherhood document (authored upon the founding of the Islamist International in 1991) described as a “Grand Jihad in eliminating and destroying the [sic] Western civilization from within…”  Perhaps more important, they were all businessmen and criminals who understood that there was money to be made by undermining not just Western civilization, but all civilization, as that concept is universally understood by law-abiding people in every nation of the world.

As for Monzer al-Kassar, he was a key figure in the jihad, as were the other terrorists in his organized crime syndicate. In addition, of course, he played a key role, along with Osama bin Laden and other Muslim Brotherhood leaders, in building a global financial network to replace the BCCI enterprise. And one purpose of that global financial network was to launder money that Osama bin Laden, Monzer al Kassar’s organized crime syndicate, and other key figures in the Islamist International, including a jihadi warlord named Gilbuddin Hekmatyar, were making from the trafficking of heroin and other narcotics.

As the director of the House Task Force on Terrorism (in 2000) reported in 2000: “Hekmatyar was getting ready to ship drugs from Afghanistan to the West and divert profits from this drug trade to support the fledgling terrorist networks [of the Islamist International]. Another system of money laundering was required for this. Bin Laden adopted a twin-track approach [using standard money laundering techniques through major banks and brokerages]…”

During the 1980s, Hekmatyar had received the greater share of the weapons and money that the U.S. government supplied for the mujahedeen’s war against the Soviets. The official party line from Washington has it that U.S. support for Hekmatyar was a basically innocent blunder, with naïve U.S. government officials unaware that Hekmatyar was not only the most virulent and anti-American warlord in Afghanistan, but also one of the world’s leading narcotics kingpins. However, many researchers (see, for example, the work of University of California-Berkley professor Peter Dale Scott) have provided ample evidence that U.S. officials were, in the 1980s, well aware that Hekmatyar and other jihadi warlords who received support from Washington were leading narco-traffickers.

By the end of the 1980s, more than 80 percent of the world’s heroin traffic originated (and still does originate) from just a few countries, namely Afghanistan, Pakistan, Syria, and Lebanon. In addition, most of that heroin was (and still is) supplied by a relatively few people, namely the leading jihadi warlords, terrorists, and organized crime bosses in those countries. Throughout the 1980s, most of these narco-traffickers were closely involved with the BCCI enterprise. And the role of BCCI was not merely to launder money for these narco-traffickers. During the 1980s, many of those narco-traffickers (e.g. Monzer al-Kassar) were themselves key figures in the larger BCCI enterprise.

Meanwhile these same narco-traffickers, along with other key BCCI figures, formed business relationships with many of the world’s leading transnational organized crime syndicates, including the Sicilian Mafia, La Cosa Nostra, and the Columbian drug cartels, all of which were themselves closely involved with the BCCI enterprise. In addition, as of the 1980s, there existed a global network of brokerages linked to the BCCI enterprise, and many of these brokerages were operated in partnership with leading organized crime figures. Later chapters of this series will examine these brokerages in greater detail (not least because their proprietors presently operate some of the biggest brokerages in the world), but for now it is enough to know that they specialized in perpetrating so-called “pump and dump” schemes.

See Chapter 1 of this series for fuller description of pump and dump schemes, but the short of it is that the objective is to first “pump” up the stock price of a public company, and then “dump” the stock into the market while attacking the stock with manipulative short selling. Sometimes the companies are fraudulent companies to begin with. Sometimes they are legitimate companies until such time as miscreants gain a degree of control over the company and/or its stock price. Either way, the end result is the same: the target company is “busted out” (i.e. destroyed), with the miscreants making most of their money on the “dump” end of the equation.

For reasons that are discussed in Chapter 1, the “bust-outs” of public companies not only undermine the financial system (one goal of the “Financial Jihad), but they have the added advantage of being a highly effective way in which to launder money for terrorists, drug traffickers, and other organized criminals.

Therefore, it is not surprising that some terrorist organizations, jihadi warlords, drug traffickers, and organized criminals were involved with the global network of brokerages that were linked to the BCCI enterprise in the 1980s. The terrorist organizations and jihadi warlords had grown immensely wealthy from the drug trade, and, of course, they used some of this money to fund their wars and violent terrorism. However, many terrorists and warlords were also businessmen involved not only in the trafficking of drugs, but also in the full panoply of crimes that we normally associate with transnational organized crime syndicates.

In addition, many of these terrorists were sophisticated financial operators who not only laundered money through BCCI, but also were among the BCCI figures who, along with the larger BCCI enterprise, perpetrated the various crimes that ultimately “shattered the integrity of the global financial system.”

And again: one of the most important of these BCCI figures was Monzer al-Kassar.

* * * * * * * * *

As already mentioned, Monzer al-Kassar was, as of the 1980s, the world’s leading narco-trafficker. In the mid-1980s, Monzer al Kassar formally merged his drug trafficking cartel (which, of course, included leading terrorist organizations) with the operations of the Ochoa family, co-founders of the Medellin cartel in Colombia. Monzer-al Kassar had, to some extent, also integrated his narco-trafficking and associated banking operations with those of other leading syndicates, including the Sicilian Mafia, the Corsican Mafia, Turkish and Israeli syndicates, the leading syndicates and jihadi warlords in Afghanistan and Pakistan, the multiple crime families collectively known as La Cosa Nostra, and others to be discussed.

All of these syndicates operated independently of each other, and all of them, to some extent, competed with each other, but they also collaborated to such an extent that it is proper to describe them as having established what amounted to a global cartel that controlled much of the world supply of heroin, coke, crack, hashish, pot, pills, and other drugs, much as the big oil companies of the early 20th century were independent businesses that competed with each other to some extent, but also collaborated to establish a cartel that effectively controlled the global supply of oil.

Meanwhile, of course, Monzer al-Kassar, being a global terrorist, was, along with others in his syndicate, linked to multiple terrorist atrocities that killed hundreds of people, including many Americans.

Some of these terrorist attacks were perpetrated to advance political agendas (i.e. in the name of jihad, Karl Marx, the destruction of Israel, socialism, the destruction Lebanon, and various other agendas, depending on the occasion), but we will see that at least some of the terrorist attacks were perpetrated for money. That is to say, terrorism was another line of business, and the terrorists in Monzer al-Kassar’s syndicate were more than happy to rent themselves out as mercenaries to the highest bidder, whatever the bidder’s politics or religion might be.

At other times they perpetrated violent acts of terrorism to create conditions that were more conducive to their other criminal enterprises, especially the trafficking of drugs out of Afghanistan and Lebanon (where the narco-trade expanded exponentially as the nation descended into chaos during the 1980s, with much of the chaos caused by Monzer al-Kassar and his terrorist associates). Meanwhile, Monzer al-Kassar and his global crime syndicate (including those terrorist organizations), along with the syndicates that cooperated with Monzer al Kassar to control the drug trade, were involved together in other lines of business, including grand theft auto, sex slavery, murder for hire, and the trafficking of liquor, cigarettes, sophisticated weaponry, radioactive materials, and components for the manufacture of nuclear bombs.

In addition, of course, Monzer al Kassar and associated organized crime syndicates were involved together in the perpetration of destructive financial crime. Not only were Monzer al-Kassar involved with the global network of brokerages linked to BCCI, but Monzer al-Kassar (often in league with associated organized crime syndicates) perpetrated everything from securities fraud and market manipulation to mortgage fraud, Ponzi schemes, and sophisticated derivatives scams. All of which is to say: Monzer al-Kassar was precisely the sort of fellow one would expect to be employed by the government of the U.S.A.

And Monzer al-Kassar was employed by the regime in Washington. Or perhaps it is more correct to say that the regime in Washington was employed by Monzer al Kassar.

In any event, officials in Washington and Monzer al Kassar’s syndicate (including some of those terrorist organizations) had a profitable business relationship, going back to at least the late 1970s, when an American official named Edwin Wilson cut a deal with Monzer al Kassar that saw Monzer supplying American weapons to the regime of Moammar Qadaffi in Libya, while Wilson and other U.S. government officials (all of whom, notably, were also operating private businesses that profited from these deals) were supplying American troops (recruited from within the ranks of the American military) to help the Qadaffi regime train the PLFP-GC, one of the terrorist organizations in Monzer al-Kassar’s syndicate.

In 1981, Wilson was indicted for supplying explosives (indeed, he supplied almost the entire existing stockpile of C-4 military explosives then available in the United States) to the Qaddafi regime, at which point the regime in Washington denied that Wilson was an employee of the U.S. government, and also denied that Wilson had been acting in any official capacity, much less at the direction of Washington. The major U.S. news organizations, taking their cues from U.S. officials, reported that Wilson was a “former” U.S. government employee who had gone rogue, and that the U.S. government had nothing to do with Wilson’s dealings with Qaddaffi, terrorists, and Monzer al-Kassar.

It is important for us to specifically identify the U.S. officials who were most closely involved in the investigation of Wilson and the party line that was fed to the media, because these same officials have been the central players in numerous other events that will feature in later sections of the story that you are now reading, and these events will pertain to our later discussion of the global financial system in its present and deteriorating condition. There are, in fact, numerous officials whom we need to discuss in this context, but for now it will suffice for the reader to remember three names: Oliver “Buck” Revell, who was the FBI’s chief of counter-terrorism; a DOJ and FBI official named Robert Mueller (who is now director of the FBI); and Lindley Devecchio, who was chief of the FBI’s organized crime task force, and who led the FBI’s investigation of Wilson.

These were the officials who reported that Wilson was a “former” U.S. government employee who had gone rogue, and that the U.S. government had nothing to do with Wilson’s dealings with Libya and Monzer al-Kassar. And when Wilson attempted to correct the record, the FBI and the DOJ (at the direction of those same three officials) went to all lengths to discredit and destroy him. As a result, Wilson was sentenced to prison in 1982, and he remained in jail for the next 22 years, all the while protesting that his activities had been conducted in his capacity as an employee of the U.S. government, and all the while filing Freedom of Information Act requests for documents that, he said, would prove that he was telling the truth.

Ultimately, Wilson obtained enough documents to convince a judge that he was, in fact, telling the truth, and in 2004, the judge ordered his release from prison. Since then, it has been established that Wilson (who died in 2012) had, in fact, been employed as an agent of the U.S. government, and that many of his dealings—including his dealings with Monzer al-Kassar and associated terrorists—had been sanctioned by officials working at the highest levels of government in Washington. It has also been established that the Department of Justice and the FBI, among other U.S. government agencies, covered up the truth regarding Edwin Wilson and his dealings with Monzer al-Kassar.

In addition, it is now more than evident that other officials of the U.S. government continued to maintain increasingly profitable business relationships with Monzer al-Kassar in all the years following Wilson’s indictment in 1981. For example, not long after Wilson was sentenced to prison, the U.S. government hired Monzer al Kassar to work with a man named Bill Buckley, who was then the chief of the CIA station in Lebanon. Buckley seems to have been an honorable man, and it is possible that he was unaware of Monzer al-Kassar’s pedigree, but one day he found himself instructed by his superiors to work with Monzer al-Kassar to devise a scheme to kidnap militia leaders who were operating in Lebanon and Syria. As it happened, though, that plan was not carried out and Buckley himself was kidnapped by terrorists.

More specifically, Buckley was kidnapped by a Hezbollah faction that took its directions from none other than Monzer al-Kassar. And soon after kidnapping Buckley, the same terrorists kidnapped many other Americans. But that did not deter Washington from continuing to work with Monzer al-Kassar. To the contrary, Monzer al Kassar became the single most important partner of the U.S. government in the many business dealings and machinations that later culminated in what is now known as the Iran-Contra scandal. That scandal was, in fact, largely covered up by the major U.S. news organizations and by top officials in Washington—including the same DOJ and FBI officials who covered up the earlier Wilson scandal. However, much of the truth can be found elsewhere in the public record. We are especially indebted to a former DOJ prosecutor named John Loftus for some of the key facts that follow, though the facts come from a variety of sources (including those named above), and the reader is encouraged to seek out the dozens of books about the Iran-Contra scandal for a fuller picture.

In any event, it is not the purpose of this story to discuss the Iran-Contra scandal at length, but the short version is that somebody hatched a plan for the U.S. government to sell (through brokers) sophisticated American weaponry to the regime in Iran, ostensibly in exchange for the Iranian regime’s agreement to secure the release of the Americans (including Bill Buckley, the former CIA chief in Lebanon) who had been taken hostage by terrorists—namely Hezbollah terrorists, all presumed to be proxies of the Iranian government. Meanwhile, U.S. officials, having sold the weapons to the regime in Iran, used some of the proceeds to illegally fund and arm the so-called “Contras,” a collection of rebel armies that were fighting to overthrow an ostensibly Marxist regime in Nicaragua.

That, anyway, is the official story as it has been related by the major U.S. news organizations, which have provided little in the way of detail, and which have left the American public with only a vague awareness that the Iran-Contra scheme involved some mild skullduggery on the part of a few otherwise patriotic American officials who desired nothing more than to secure the release of American hostages and secretly lend support to rebels who were fighting the Communist menace in Latin America. There is, however, more to the story—and it is principally a business story. It is a story about a dubious cast of characters who made a boatload of money. That is to say, it is story about (what else?)—the famous and ever-present BCCI enterprise. Indeed, the Iran-Contra scheme was one of BCCI’s most successful initiatives.

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It is difficult to discern through the haze of disinformation who, precisely, masterminded the Iran-Contra scheme, but most accounts cite the involvement of the Saudi billionaire and BCCI figure Adnan Khashoggi and an Iranian arms dealer named Manucher Gorbinafar. They were no doubt at the center of the Iran-Contra dealings, but so too was Monzer al-Kassar, and it was certainly Monzer al-Kassar who earned the greatest profits from the Iran-Contra dealings, though the larger BCCI enterprise (and multiple U.S. government officials who were also proprietors of private companies that were in business with Monzer al-Kassar and the larger BCCI enterprise) profited as well.

In addition, there is no doubt that U.S. officials regarded Monzer al-Kassar not only as their most important business partner, but also as their point man for the political machinations that were necessary for the proper effectuation of the Iran-Contra disaster.

Indeed, Monzer al-Kassar handled every end of the operation, and from every end of the operation, he earned a massive profit for himself and his partners. It was Monzer al-Kassar who sold most of the American weapons that U.S. officials supplied to the Iranian regime, and it was Monzer al-Kassar who sold most of the weapons that U.S. officials supplied to the Contras in Nicaragua. In supplying weapons to the Contras, Monzer al-Kassar also expanded his drug empire, with the Contras and associated drug cartels supplying him with ever greater quantities of cocaine, and the coke smuggled into the United States on the same airplanes that were transporting weapons to the Contras in Latin America. The planes would fly into Latin America with weapons, and return to the U.S. loaded with coke.

All of this business was transacted in partnership with other BCCI figures as well, and much of Monzer al-Kassar’s arms dealing was conducted in partnership with not only BCCI, but also with U.S. government agents who had established private companies as proprietaries of the U.S. government (though the government agents themselves, and not the taxpayers, pocketed the profits from these companies). Monzer al-Kassar was also the man who handled the vast money laundering operation associated with the Iran-Contra dealings, and most of that money laundering was transacted through BCCI.

Meanwhile, of course, BCCI was conspiring with a cast of criminal oligarchs and mobsters to “bust out” major savings and loan banks in the United States. Some of the loot from those “bust-outs” was used to finance the Iran-Contra dealings, and a lot of that loot ended up in the pockets of Monzer al-Kassar. Still greater sums of the money that BCCI looted from the global financial system was, of course, also delivered to the world’s leading terrorist organizations, including the terrorist outfits that were intertwined with Monzer al-Kassar’s organized crime syndicate.

At the center of all this activity, we know, was Adnan Khashoggi.

At Khashoggi’s urging, U.S. officials appointed Monzer al-Kassar as the point man in the supposed effort to secure the release of the U.S. hostages (i.e. the hostages whose capture by terrorists justified the massive Iran-Contra enterprise to begin with). And, naturally, the terrorists had originally taken the American hostages on the orders of…Monzer al-Kassar.

Unsurprisingly, most of those hostages were not released, and indeed, the more weapons that U.S. officials delivered (mostly through Monzer al-Kassar and his BCCI associates, though others arms dealers were involved) to the Iranian regime, the more hostages were taken. Ultimately, a few hostages were released, but the most important of them (including Buckley, the CIA chief) were tortured and killed.

There is, moreover, some doubt as to the sincerity (or at least, some doubt as to the wisdom) of the U.S. officials who believed that they would secure the release of the hostages by supplying the Iranian regime with weapons because the Iranian regime had no control over the Hezbollah terrorists who had taken the hostages. The terrorists who took the hostages all belonged to a Hezbollah faction that took its orders not from Iran, but rather from Syria, and more specifically, from one of Syria’s most important intelligence assets…Monzer al-Kassar.

Meanwhile, Monzer al-Kassar was employed by the Soviet intelligence service, the KGB, and he was, of course, keeping the KGB apprised of Washington’s dealings with the Iranian regime and the Contras. In addition, Monzer al-Kassar and others in the BCCI enterprise, including Adnan Khashoggi, were helping the Soviets in their efforts to prop up the ostensibly Marxist regime in Nicaragua (i.e. the regime whose existence ostensibly justified the massively profitable enterprise to support the Contras by selling them guns, and buying their cocaine for resale at marked up prices in the United States).

Some chroniclers of these machinations, including former U.S. prosecutor John Loftus and the author of the German-language biography of Monzer al-Kassar, suggest that Monzer al Kassar had also taken “deep capture” to new levels—i.e. that he not only had lucrative business relationships with U.S. officials, but had also blackmailed some top U.S. officials. That is, he threatened to expose everything from their early involvement in the Edwin Wilson affair and the illegal scheme to kidnap people in Lebanon, to the subsequent Iran-Contra adventure. And to avoid exposure, officials in Washington were obliged to not only provide full protection and immunity to Monzer al-Kassar and his organized crime syndicate, but to pursue policies that were favorable to the Palestinian terrorist movement.

It might or might not be true that U.S. officials were blackmailed, but there is a vast body of evidence to support the contention that the regime in Washington did, in fact, afford its protection to not only Monzer al-Kassar but also the terrorist outfits that were part of his organized crime syndicate. This first became apparent in 1985, at the height of the Iran-Contra dealings, when Monzer al-Kassar was linked to multiple terrorist atrocities, including the hijacking that year of a luxury cruise ship called the Achille Lauro. Multiple foreign governments and news organizations reported that Monzer al-Kassar had sponsored the hijacking, and that the hijacking was perpetrated by Abu Abbas, leader of the Palestinian Liberation Front (and Monzer al-Kassar’s closest friend since childhood).

After the Palestinian Liberation Front terrorists seized control of the ship, they killed an elderly and handicapped American passenger named Leon Klinghoffer, and dumped his body into the sea. Subsequently, the ship docked at Port Said, in Egypt, and from there the terrorists were able to negotiate safe passage for themselves on a flight that was scheduled to land in Tunisia. The flight was reportedly intercepted by U.S. fighter jets, which forced the plane to land at Sigonella, a NATO base in Italy. But for some reason, Abu Abbas, who had been on the plane, was not arrested when he landed at the NATO base. And for reasons that were never explained, the Italians permitted Abu Abbas to board another civilian passenger flight, and this flight reached its scheduled destination in Yugoslavia.

The regime in Washington publicly requested the extradition of Abbas from Yugoslavia, but U.S. officials did not pursue their request with any particular enthusiasm, and Abu Abbas remained a free man. Abbas later ended up in Iraq (then an American ally) but still he was not arrested.

Some years later, Ari Ben Menashe, a former top Israeli military intelligence official, among others, alleged that the Achille Lauro hijacking and other terrorist attacks had been paid for by Israeli intelligence as part of an ongoing propaganda campaign aimed at gaining sympathy for Israel’s sometimes brutal war against the Palestinians. Meanwhile, a large cast of Israeli officials and arms dealers were involved with Monzer al-Kassar in the Iran-Contra dealings.

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Some have cast doubt on Ari Ben Menashe’s claims regarding the Achille Lauro, but there is no doubt the Israeli government was at the time funding and even arming some of the terrorist outfits that were part of Monzer al-Kassar’s crime and terrorism syndicate. The Israelis sponsored these terrorist outfits (most of them PLO splinter groups) believing (correctly as it turned out) that the more radical terrorists would harass and suck support away from Yasser Arafat and the mainstream PLO, which the Israeli government regarded as Enemy Number One.

For the same reasons, the Israelis (and their allies in Washington) sponsored the Muslim Brotherhood, and in 1988, they began to sponsor Hamas, which had been founded that year by the Brotherhood. Both the Muslim Brotherhood and Hamas, of course, had stated that their most important mission was to eliminate the state of Israel, but Israel anticipated (correctly, as it turned out) that the Brotherhood and Hamas would not only steal support from the PLO, but also destabilize countries (e.g. Egypt, Tunisia, Libya, Syria, Jordan) that Israel considered to be enemy states.

Presently, Israel is expressing concern that the Muslim Brotherhood has seized power in some of those countries, but Israel’s prior support for the Brotherhood and Hamas is not surprising, and many analysts suggest that there was more to it than just a desire to derail the PLO and enemy states. Indeed, there is much to give credence to reports that right-wing Israeli politicians and the more radical Palestinian terrorist organizations agree that maintaining the status quo of low-intensity conflict is not just politically advantageous, but also financially lucrative for both Israeli politicians and the Palestinian terrorists.

One reason to believe this might be the case is related to the emergence of powerful Russian organized crime syndicates that accompanied the collapse of the Soviet Union, beginning in the late 1980s. Many leaders of these Russian organized criminals set up shop in Israel and obtained Israeli citizenship, and as detailed in diplomatic cables made public by Wikileaks, the major Russian organized crime syndicates quickly became among the largest funders of the same Israeli politicians who have provoked conflicts in Palestine and Lebanon. Those Russian crime syndicates were (and are) also important partners (involved in all of the lines of business already discussed) of the Palestinian terrorist outfits, including those that were part of Monzer al-Kassar’s organized crime operation.

The Russian mobsters are, in addition, big players in Israel’s flourishing “homeland security” industry, which profits from selling services that purport to provide Israel with protection from those same terrorists. The homeland security businesses (and many other businesses, including narco-trafficking and financial crime), of course, benefit from the continuing state of low-intensity conflict and chaos in Palestine and neighboring Lebanon. They also benefit so long as the Israeli government remains focused on conflict, rather than cracking down on organized crime.

Beginning in the 1980s, Monzer al-Kassar himself had developed relationships with Israeli intelligence, and this relationship might similarly have been as much about business as politics. Among other ventures, Monzer al-Kassar brokered deals (financed by BCCI) that saw Israeli intelligence selling weapons to Iran at the same time when he was leading BCCI efforts to provide a full suite of services to Palestinian terrorist organizations that were ostensibly fighting Israel.

Owing to Monzer al-Kassar, BCCI had a particularly strong relationship with Abu Nidal, who was the most murderous of all the terrorists operating at that time. Over the course of few years in the 1980s, Abu Nidal’s terrorist organization killed more than 900 innocent people (some of them Americans) in more than 20 separate terrorist attacks. During some of that time, Abu Nidal was working out of an office at BCCI headquarters in London.

Abu Nidal’s most in-depth biographer, Patrick Seale, has written that Abu Nidal had, for a time, been employed by the Mossad (Israel’s intelligence service), and that some of his terrorist attacks had been paid for by the Israelis. Indeed, by all accounts, Abu Nidal was a mercenary willing to hire himself out to the highest bidder. During the 1980s, Abu Nidal was paid by Syrian intelligence to help the Syrian government crush a rebellion that was led by the Muslim Brotherhood, and a few years later, Abu Nidal, who had been mentored by leading Muslim Brotherhood clerics, was among the terrorists who had joined the Islamist International, the outfit that was founded by Muslim Brotherhood leader Hasan al-Turabi, and whose chairman was Osama bin laden.

In subsequent years, Syria’s government became a key sponsor of the Muslim Brotherhood and Hamas (which of course was founded by the Muslim Brotherhood), though, of course, the Muslim Brotherhood and Hamas are now once again (with the support of the U.S. government and its allies, including Israel) fighting to overthrow the Syrian government.

During the late 1980s, many of the top leaders of Hamas were involved with the BCCI enterprise, and during most of the 1980s and 1990s, many of them resided in the United States. For example, Mousa Abu Marzook, political chief of Hamas (and a key figure in the Islamist International) resided in Texas, and operated quite openly there even though earnest FBI agents had linked him to the 1993 bombing of the World Trade Center. In 1996, the FBI briefly arrested Marzook, but he was immediately released at the request of the Israeli government, which issued a statement saying that Marzook was “important to the peace process.”

The truth was that those earnest FBI agents had learned in 1993 that Marzook and other Hamas leaders in the United States had undertaken a major initiative to sabotage the peace process, and more specifically to undermine the 1993 Oslo Peace Accords that the Israeli government had signed with the PLO. Many Israeli politicians were similarly displeased with the Oslo Accords because they believed the Accords granted too much legitimacy to Yasser Arafat, the PLO leader. In other words, many Israeli politicians shared the ambition to sabotage the peace process. Meanwhile, of course, the Israeli government, or at least one faction of the Israeli government, was providing support in the form of money and even weapons to Hamas, hoping that a stronger Hamas would undermine Arafat’s authority.

Presently, Marzook resides in Qatar (one of Washington’s closest allies), where he not only has the full protection of the Qatari ruling family, but is also helping the Qataris (and Washington) support the activities of the “Arab Spring” rebels in Syria. However, back in 1996, Marzook was more friendly with the Syrian government, and at that time, Washington also had friendly relations with Syria. After he was released by the FBI in 1996, Marzook moved to Syria, where (at the request of Washington) the Syrian government provided him with full protection.

As of 2000, the director of the House Task Force on Terrorism was reporting that Marzook was among those who, along with Osama bin Laden and other key figure in the Islamist International were plotting to perpetrate a “spectacular” terrorist attack inside the United States. At the time, of course, Marzook and other key figures in the Islamist International had already been linked to the 1993 bombing of the World Trade Center. One of them was the Blind Sheikh (co-founder of Faisal Islamic Finance, formerly BCCI’s most important affiliate). Others were terrorists who were part of Monzer al-Kassar’s organized crime syndicate, the most notable among them being Abu Nidal.

Abu Nidal had dispatched one his deputies, Mohammed Ajaj, to participate in the 1993 World Trade Center bombing, after which the distinguished journalist Robert Friedman reported in the Village Voice that Ajaj was, at that time, an agent of the Israeli intelligence service. Also linked to the 1993 World Trade Center bombing was a fellow named Mohammed Salameh, and the International Herald Tribune reported that the telephone number and apartment address used by Salameh were registered in the name of one Josie Hadas, who had been identified as an agent of the Mossad. This is not to say that Israel was necessarily involved in the 1993 WTC bombing, but it is to say that numerous terrorists were on the payroll of not only the Israeli government, but also the U.S. government (which was, at the time, funding not just Monzer al-Kassar, but also Abu Nidal and the Blind Sheikh).

Some years later, in 2000, Abu Nidal was reported to be among those who were, along with Osama bin Laden and others in the Islamist International, plotting to perpetrate a “spectacular” terrorist attack inside the United States. After a spectacular terrorist attack occurred on September 11, 2001, some major news organizations reported that Abu Nidal had been operating an Al Qaeda training camp in Iraq in cahoots with Iraqi leader Saddam Hussein. According to these reports, Abu Nidal had personally overseen the training of Mohammed Atta, identified by U.S. officials as the terrorist who piloted the first airplane that had crashed into the World Trade Center. We can, however, hope those reports were not true because it has since been revealed that Abu Nidal was, at the time, an employee of the United States government.

That Abu Nidal was an agent of the U.S. government was first reported by prominent British journalist Robert Fisk, whose reporting on terrorism and the Middle East should be required reading for all Americans because Fisk is one of several mainstream journalists (too few of them Americans) whose reporting is usually true. In 2009, Fisk, then writing for The Independent, a newspaper in England, reported that he, Fisk, had obtained a report from Iraq’s “Special Intelligence Unit M4” confirming that Saddam’s regime had killed Abu Nidal after discovering that Abu Nidal was employed by the U.S. government.

According to Fisk, the regime in Washington (using Kuwaiti and Egyptian intelligence as intermediaries) paid Abu Nidal to provide information to the American government about Iraq’s ties to Al Qaeda. Fisk did not specify as to the nature of the information provided by Abu Nidal, but we might assume that Abu Nidal either provided authentic information that Mohammed Atta received training in Iraq, or that he, Abu Nidal, helped fabricate this information, which U.S. officials proceeded to leak to the media in support of their contention that Saddam had ties to Al Qaeda.

A similar story was subsequently published by Janes, a respected national security journal, which revealed that Saddam Hussein’s regime sentenced Abu Nidal to death in 2002 after discovering that Abu Nidal had in his possession classified U.S. government documents outlining plans for the U.S. invasion of Iraq–leading Saddam to conclude that Abu Nidal was an American spy. Which was a reasonable assumption in light of all we know about the U.S. governments relationship with Monzer al-Kassar’s organized crime and terrorism operation, which, of course, included Abu Nidal.

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Back in 1988, Monzer al-Kassar was linked to another terrorist atrocity—the bombing of Pan Am Flight 103 over Lockerbie, Scotland. The fact that al-Kassar was linked to the Pan Am Flight 103 bombing was reported at the time by a collection of mainstream journalists, most of them in Britain, but those journalists were viciously smeared by some U.S. government officials and journalists who were bent on pinning the bombing on Libyan dictator Muammar Qadaffi.

To this day, the cowed U.S. media reports that only “conspiracy theorists” believe that anyone other than Qaddaffi was involved in the Flight 103 atrocity, but the evidence is overwhelming that terrorists who worked for Monzer al-Kassar’s organized crime syndicate were the perpetrators.

In fact, it was not just “conspiracy theorists” who believed that al-Kassar was involved in the Pan Am Flight 103 bombing. It was, among others, numerous U.S. government officials, government investigators in Germany (where the bomb was loaded on to Flight 103), lawyers for Pan Am, members of Congress, a private investigator named Juval Aviv (formerly of the Mossad, with extensive experience tracking terrorist organizations) who was hired by Pan Am to investigate the bombing, and a former Defense Intelligence Agency asset named Lester Coleman.

When Coleman blew the whistle on the true story of Flight 103, he was indicted by the DOJ on trumped up charges that he had applied for a passport using false documents, and then he was smeared relentlessly by U.S. officials and journalists who described him as a con-man and a criminal. Meanwhile, U.S. officials denied that Coleman had anything to do with the U.S. intelligence community. As a result, he was forced to flee the United States, and he became the first American ever to receive political asylum in a foreign country (Sweden).

A reporter named Steve Emerson was among those who did the most to discredit Coleman, leading some to accuse Emerson of being a government stooge. Since then Emerson has done excellent research into terrorism (some of which I have borrowed for my own stories), so I don’t think he is a stooge, but he probably got the Flight 103 story wrong. Coleman has since proven that he did, in fact, work for the Defense Intelligence Agency (and that it was CIA officials who ordered him to apply for a passport using false documentation).

Coleman’s story about Pan Am Flight 103 (laid out in book called “Trail of the Octopus”) is more than plausible, and is, in fact, now widely acknowledged to be true. Meanwhile, the official story from the U.S. government has been thoroughly discredited–and notably, the official story emanated from many of the same officials—e.g. FBI counter-terrorism chief Oliver “Buck” Revell, Robert Mueller (now director of the FBI), top FBI official Lindsey Devecchio– who were involved in covering up the Edwin Wilson and Iran-Contra affairs.

The official story was that a Libyan intelligence officer named Abdelbaset al-Megrahi (on orders from Muammar Qaddafi) planned and carried out the bombing of Flight 103. This story was based almost entirely on the claims of the FBI and MI5 (Britain’s domestic spy service) that a shop-keeper in Malta had sold clothes that were found in the same suitcase that contained the bomb. The shop-keeper, Tony Gauci, was located by the FBI, and he fingered al-Megrahi as the man who had bought the clothes.

However, several documentaries have presented evidence that the U.S. Department of Justice paid Gauci, the shop keeper, at least $1 million in exchange for his agreement to name al-Megrahi. In 2009, lawyers for al-Megrahi (who was serving a life sentence in Scotland, owing largely to information provided by the FBI and DOJ) were about to present evidence of the pay-off and additional evidence pointing to the real perpetrators, but before they were able to do so, the Scottish released al Megrahi on compassionate grounds, saying that he had advanced cancer and only weeks left to live. (Three years later, al Megrahi died of cancer, in Libya).

In addition, it has since been widely acknowledged (as Pan Am’s lawyers, Coleman, German authorities, some CIA officers, Juval Aviv, and many others argued at the time) that the Pan Am 103 atrocity was the work of terrorists who were linked to Monzer al-Kassar, and who were also important figures in a heroin trafficking ring that was overseen by al-Kassar and protected by the U.S. government.

According to former Defense Intelligence Agency officer Coleman and others, the Drug Enforcement Agency and the FBI had made arrangements at the Frankfurt Airport that allowed al Kassar’s terrorist network to smuggle heroin on to airplanes (including Flight 103) without problems from airport security. There is no evidence that the DEA itself was (as some have said) dealing in heroin. These were so-called “controlled deliveries.” In other words, the DEA and other American government agencies (including the Defense Intelligence Agency) had recruited al-Kassar’s men as agents, allowing them to smuggle heroin into the United States in exchange for their cooperation in other investigations. Once the heroin was smuggled into the U.S., the DEA monitored its distribution to learn more drug dealers who were operating in the United States.

Meanwhile, of course, the U.S. government had employed Monzer al Kassar in many other capacities.

Unfortunately, according to Coleman and many others, one of the controlled deliveries contained not only the usual narcotics, but also a bomb—namely, the bomb that blew up Flight 103. That is, U.S. government agencies had created the conditions that allowed terrorists (who were, meanwhile, working as DEA informants and were employed by the U.S. government in other capacities ) to smuggle a bomb onto an airplane. In a frantic effort to cover up the U.S. government’s negligence, the FBI’s chief of counter-terrorism and the Department of Justice persecuted just about everyone who tried to reveal the truth.

Eventually, Coleman was convicted of perjury, at which point he publicly apologized and said that he had made up some elements of the story to get attention for himself. But his conviction was overturned on appeal, and Coleman recanted his apology. The court documents outlining the reasons why the conviction was overturned were sealed. Meanwhile, a general consensus emerged that Coleman was, at a minimum, correct to say that terrorists with links to Monzer al-Kassar were responsible for the bombing, and that top officials of the U.S. government covered up the involvement of Monzer al-Kassar and associated terrorists.

We might never know the full truth about the Pan Am Flight 103 bombing, but if we are to believe the majority opinion of former national security officials who investigated the bombing, and who have since come forth to challenge the official party line, Monzer al-Kassar was hired by either the Iranian regime or Syrian intelligence to organize the terrorist attack, and the terrorists who (on Monzer al-Kassar’s orders) carried out the attack were members of either Abu Nidal’s Black September or the PFLP-GC (the latter being the outfit that had, in the late 1970s, been trained by Edwin Wilson’s operation).

Whatever the truth, the bombing of Pan Am Flight 103 and the resulting liabilities soon resulted in Pan Am declaring bankruptcy. And it might or might not be noteworthy that Monzer al-Kassar and some key figures in the larger BCCI enterprise (whom I will not name because I cannot say with certainty that they should be implicated in a terrorist atrocity, though it is perhaps a possibility worthy of further investigation by others more capable than I am) earned a handsome profit from the bankruptcy of Pan Am, and these same BCCI figures made money on the later bankruptcy of TWA airlines.

TWA was forced into bankruptcy as a result of liabilities that it accrued from a series of disasters between 1985, when a TWA airliner was hijacked (by the Hezbollah faction that took orders from Monzer al-Kassar) en route from Cairo to Athens, and 1996, when TWA Flight 800 exploded soon after taking off from New York’s JFK international airport, destination Paris. The FBI and DOJ ruled that the explosion of TWA Flight 800 was the result of mechanical failure, but the general consensus among former U.S. government investigators is that TWA Flight 800 was bombed by terrorists whose identities remain unknown.

* * * * * * * * *

In 1991, we know, Monzer al0Kassar and the other terrorists in his syndicate had joined the Islamist International, whose chairman was, of course, Osama bin Laden. The first order of business was to replace the BCCI enterprise with something even better, and, of course, Monzer al-Kassar played a key role in this effort—the effort known as “The Financial Jihad.” Monzer al-Kassar also lent his full support to the more general “Grand Jihad in eliminating and destroying Western civilization,” meanwhile establishing new business relationships with major banks and hedge funds in the United States, and committing a host of destructive financial crimes with some of Western civilization’s leading oligarchs.

As Monzer al-Kassar continued to perpetrate eminently destructive financial crimes and operate his terrorism and organized crime syndicate, he apparently remained protected by the U.S. government, which certainly did nothing to stop him until 2008, when he was arrested in Spain and extradited to the U.S., where he presently faces trial for the one crime that he did not commit. That is to say, the DOJ has charged Monzer al-Kassar only with selling weapons to the FARC (a narco-terrorist paramilitary outfit in Colombia), but he did not actually sell weapons to the FARC. He merely agreed to sell weapons to undercover DEA agents who were posing as FARC representatives.

It is nice to know that Monzer al-Kassar has been arrested and that he is no longer described as the “Prince of Marbella,” but in charging him only with the one crime that he did not commit, the DOJ seems to be covering up (or at least neglecting to publicize, much less prosecute) the many crimes (from terrorist atrocities to narco-trafficking and destructive financial crime perpetrated against the American economy) that he did commit during his long and colorful career as one of the world’s most prominent oligarchs.

In addition, it is possible that Monzer al-Kassar was finally arrested in 2008 only because of his importance to the Syrian government (he was, indeed, one of Syrian President Assad’s most important associates), and because the U.S. government had decided at that point to lend its support to the jihadi guerrillas who were then already gearing up to overthrow the Syrian government. Those jihadis, of course, are now (with U.S. support) fighting the Syrian military under the banner of an “Arab Spring” campaign for freedom and democracy.

In any event, Monzer al-Kassar accomplished much over his career, and with few exceptions, the major U.S. news organizations have yet to give him any credit for these accomplishments. One exception, as I mentioned before, was Forbes Magazine. In 2004, Forbes (without otherwise providing the details of Monzer al-Kassar interesting biography) reported that Monzer al-Kassar not only had ties to Osama bin Laden, but was involved, along with two British citizens—Jared Brook and Lincoln Fraser—with a “high flying financial outfit” called Imperial Consolidated Group.

Imperial Consolidated was involved in multiple destructive financial crimes, most of them involving pump and dump schemes and the “bust-outs” of publicly listed companies in Europe and the United States. All told, Imperial Consolidated looted at least $300 million from the Western financial system. The British miscreants were charged for their involvement in this monumental criminal enterprise, and, meanwhile, they had sued Monzer al Kassar for slander, accusing him of telling people that Imperial Consolidated had fronted arms sales to Osama bin Laden. The merits of that lawsuit remain unclear, but it is clear that Monzer al-Kassar was himself involved with Imperial Consolidated (though he has never been charged on any count other then selling weapons to undercover DEA agents).

Meanwhile (to cite just one more accomplishment), Monzer al-Kassar had long been one of the world’s leading counterfeiters of American currency. His fake U.S. $100 bills were of such high quality that they were known as “Supernotes,” and he created such vast quantities of them that they had a negative impact on the value of the U.S. dollar. As early as 1996, Kenneth Timmerman, a reporter for Time magazine and The Wall Street Journal, prepared an official document for U.S. Congressman Spencer Bacchus outlining the details of Monzer al-Kassar’s counterfeiting operation. This report was promptly deposited in a trash can somewhere in Washington.

In addition, so far as I can tell, Timmerman’s employers at Time Magazine and The Wall Street Journal did not see fit to publish any stories about Timmerman’s important findings.

To be continued…Click here to read Chapter 6

Mark Mitchell is a journalist who spent most of his career working as a correspondent for mainstream media publications before joining DeepCapture.com. He is the author of the book entitled “The Dendreon Effect: How Felons, Con-Men and Wall Street Insiders Manipulate High-Tech Stocks”.

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There is More to the SAC Capital Story

There is More to the SAC Capital Story

Around 10 years ago a small number of citizen activists began identifying SAC Capital as being a central player in a “network” of hedge funds that engaged in all manner of dubious practices.

The media ignored the citizen activists.

In 2005, Patrick Byrne, then CEO of internet retailer Overstock.com (and future reporter for  DeepCapture.com) gave a famous conference call titled “The Miscreants Ball” in which he sought to expose a “network” of miscreant hedge funds. Soon after, Patrick identified SAC Capital as being the central player in that miscreant network.

The media ridiculed Patrick.

In 2007, DeepCapture was founded, and in May 2008, we published “The Story of Deep Capture” to tell the story of how DeepCapture came into being and to expose a pack of prominent journalists who seemed to be doing the bidding for (i.e. they were “captured” by) a “network” of miscreant hedge funds, including SAC Capital.

Since then, DeepCapture has published numerous stories exposing various misdeeds that have been perpetrated by these journalists and hedge funds, including SAC Capital. Some of the journalists ignored us. Some of them ridiculed us. Some of them, such as the eminently corrupt Gary Weiss, ridiculed us and fought us at the same time.

Gandhi said: “First they ignore you, then they ridicule you, then they fight you, then you win.

Then the news broke (this week) that SAC founder Steve Cohen has received a subpoena to appear before a grand jury, possibly a prelude to an indictment of Cohen and/or his hedge fund. In addition, the media has reported that SAC Capital is the main target of the largest insider trading investigation in FBI history, and the media has even reported (at long last and accurately) that SAC Capital is part of a larger “network” of financial operators and hedge funds involved in insider trading. So, apparently, we win.

But we have not won.

We will not have won until the day when the media reports that SAC Capital and other hedge funds in its “network” are involved in activities that are more damaging to the markets than mere insider trading. For example, some of the creditors to Lehman Brothers have sued SAC Capital and two other hedge funds for allegedly perpetrating manipulative short selling that triggered the 2008 death spiral in the stock price of Lehman Brothers and the resulting collapse of that bank.

You will recall that the collapse of Lehman Brothers brought the global financial system to the brink of apocalyptic ruin.

It is not clear what the status of that lawsuit is, so we cannot yet say with certainty that SAC Capital was the culprit behind the manipulative short selling that contributed (as even the SEC noted in 2008 “Emergency Order”) to the collapse of Lehman, but there is little doubt that hedge funds in the “network” have schemed to destroy other important companies. Have a read, for example, of the following email.

= = = = =Begin Message= = = = =

Message # : 727

Message Sent: 02/22/2006 08:57:48

From: AHELLER3@bloomberg.net|ANDY HELLER|EXIS CAPITAL MANAGEM

To: JONKALIKOW@bloomberg.net|JONATHAN KALIKOW|STANFIELD CAPITAL

Subject: CNBC – FAIRFAX

Reply:

He did this one time before, and the stock went down 3 on the open, then closed up 1. the way to get this thing down is to get them where they eat, like the credit analysts and holders. we’re taking this baby down for the count. ads and I are going to toronto in 2 weeks for a group lunch. J

= = = = =End Message= = = = =

That email was authored by a top employee of Exis Capital, which is an offshoot of SAC Capital, and as you can see, it concerns a conspiracy to take “this baby down for the count.” The “ads” to attend the “group lunch” was former SAC trader Adam D. Sender, head of Exis. The “baby” to be taken “down for the count” (unsuccessfully, in the end) was Fairfax Financial, a major, publicly listed insurance and financial firm.

The emails were acquired through discovery in Fairfax’s lawsuit against a group of hedge funds, one of which was SAC Capital. Although SAC Capital was ultimately dropped from the lawsuit, SAC’s satellite funds (including Exis and an outfit called Sigma Capital) were not dropped from the suit, which is ongoing. And the discovery from that lawsuit has produced additional evidence of shenanigans at SAC Capital. See, for example, DeepCapture stories “Hedge Funds Reading Tomorrow’s Headlines Today,” and “Hedge Funds Scurry…”

It is important for the media to begin paying attention to SAC Capital’s more egregious behavior because far too many people believe that SAC has done no worse than engage in a bit of insider trading, and a lot of people regard insider trading as nothing worse than “good research.” In addition, failing to tell the full story ensures that history will repeat.

Back in 1991, when Michael Milken was sentenced to prison, the media reported that Milken’s principal crime was insider trading when, in fact, he and others in his “network” had also “busted out” (i.e. looted and destroyed) multiple savings and loan banks, some of them among the most important financial institutions in the nation. Those “bust-outs” contributed to the savings and loan crisis that began in the late 1980s, and which ultimately cost American tax-payers billions of dollars in bailouts—a portent of bigger and better things to come.

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Will the SEC Investigate What Matters About Milken?

Will the SEC Investigate What Matters About Milken?

For those who missed it, news broke this week that the Securities and Exchange Commission (SEC) is investigating Michael Milken for allegedly violating his life-time ban from working in any capacity as an investment advisor. The investigation reportedly is focused on Milken’s relationship with Guggenheim Partners, a big investment firm, but as readers of DeepCapture know, there is much else the SEC should be investigating so far as Michael Milken is concerned.

For starters, the SEC might want to read our story “Michael Milken and the Story of Dendreon” (or my book, “The Dendreon Effect: How Felons, Con-Men and Wall Street Insiders Manipulate High-Tech Stocks“) because that story (and the book) demonstrate that Milken has not only violated his ban from working as an investment advisor, but has also violated (but, of course, not been charged for) a host of other laws, from insider trading to influence peddling and scheming under the cloak of his cancer “charity” to manipulate the stocks of publicly listed pharmaceutical companies.

More specifically, Milken has used his Prostate Cancer Foundation to “capture” a few of the nation’s most prominent cancer doctors and to promote (with help from the doctors) pharmaceutical companies in which Milken and/or Milken cronies have large investments. Meanwhile, Milken and his associates have schemed to destroy at least one pharmaceutical company (i.e. Dendreon Corp.) that had a promising treatment for prostate cancer (and which was a competitor to companies promoted by Milken’s Prostate Cancer Foundation).

In addition, Milken and his associates have (with the help of those same doctors) “captured” the Food and Drug Administration (FDA) so as to influence FDA decisions about treatments for prostate cancer. This influence peddling, of course, has involved convincing the FDA to endorse treatments that were developed by companies with ties to Milken, and it has involved convincing the captured FDA to delay approval of Dendreon’s promising prostate cancer treatment (one that could have extended the lives of 60,000 men during the three years while Milken’s cronies successfully schemed to keep it from coming to market).

Unfortunately, the (captured) SEC is not (so far as I  know) investigating the more egregious infractions. In addition, Milken has successfully captured most of the major U.S. news organizations, all of which have bought into the party line put forth by Milken’s impressive public relations machine that Milken was one of Wall Street’s all-time greatest “innovators” in the 1980s, when he ostensibly helped build some of America’s most successful companies, but has in more recent years devoted the greater portion of his efforts to “philanthropy.”

Actually, Milken deliberately destroyed far more companies than he built during the 1980s, but it is true that his finance helped grow the media empires of both Ted Turner and Rupert Murdoch, and neither of those media empires have ever shown any inclination to expose Milken’s miscreancy. Nor has Fortune Magazine, which was one of the first to report this week that the SEC was investigating Milken, but was quick to remind its readers that Milken was a prominent “philanthropist” who had featured in a Fortune Magazine cover-story (title: “The Man Who Changed Medicine”) that trumpeted Milken’s good-deeds in the field of prostate cancer.

Ack. So it goes…

 

 

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