Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 8 of 15)


    What follows is PART 8 of a 15-PART series. The remaining installments will appear on Deep Capture in the coming days, after which point the story will be published in its entirety.

    Click here to read PART 1

    Click here to read PART 2

    Click here to read PART 3

    Click here to read PART 4

    Click here to read PART 5

    Click here to read PART 6

    Click here to read PART 7

    Where we left off, we had learned that Dendreon had come under a blistering, illegal naked short selling attack, right at the time that the FDA’s expert advisory panel had voted overwhelmingly that the company’s promising treatment for prostate cancer should be approved, and right before that treatment was to be derailed by some strange occurrences.

    We had learned further that in the days before those strange occurrences only ten hedge funds on the planet were known to possess large numbers of Dendreon put options (bets against the company), and seven of those hedge funds were tied to Michael Milken or his close associates. Also, we had learned that Michael Milken himself, through a fund called ProQuest Investments, stood to profit from the demise of Dendreon through ProQuest’s investment in Dendreon’s competitor, Novacea.

    While Milken was the principal investor and dealmaker for ProQuest, the fund was ostensibly founded by two men, Jay Moorin and Jeremy Goldberg, who had interesting backgrounds. Moorin had founded Magainin (later renamed “Genaera”), a drug company that specialized in curing cancer and other ills with all manners of potions derived from exotic beats, but over its 30 year history, ending with its closure last month, never actually produced a drug.

    Goldberg, I noted, was best known for founding a biotech company called Versicor with a man named Timothy Barberich, who was simultaneously bankrolling a casino venture with a shady businessman named Adam Kidan and an alleged Mafia bookkeeper named Anthony Moscatiello. Kidan and Moscatiello, meanwhile, wound up in a business dispute with Konstantinos “Gus” Boulis, who was subsequently murdered, execution-style.

    These two individuals – Jeremy Goldberg and Jay Moorin – were the front men for Milken’s fund.

    Now we learn more about Milken’s ProQuest Investments, and begin to describe those strange occurrences that derailed Dendreon in the spring of 2007….

    * * * * * * * *

    Adam Kidan was named as a suspect in the murder of Gus Boulis and was questioned, but never charged. Instead, he went to jail for his dealings with Jack Abramoff, the disgraced Washington lobbyist. Moscatiello, the alleged Mafia bookkeeper, was arrested and charged with the murder. When he was released on parole, he disappeared. Lately, he has been featured on the popular television program, “America’s Most Wanted.”

    Barberich, chairman of Versicor, said he hardly knew Moscatiello or Kidan, and only got involved as the chief financier of their casino because he’d seen an advertisement in a newspaper. Meanwhile, Jeremy Goldberg left Versicor and “founded” ProQuest Investments, Michael Milken’s vehicle for investing in companies that supposedly have treatments for prostate cancer.

    Milken is barred from the securities industry, so even though he seems to have been largely responsible for building ProQuest, it is not surprising that he does not appear on ProQuest’s website. Goldberg’s name isn’t listed either. And there are a few other names that disappeared from the website after people began investigating ProQuest.

    Among the missing are the names of the people who sit on ProQuest’s advisory board of directors. Thankfully, we have screenshots of the fund’s website, taken prior to the whitewashing.

    The screenshots show that at the time that Dendreon was getting mauled in 2007, ProQuest’s advisory board included the following: Jonathan Simons, president and CEO of Milken’s Prostate Cancer Foundation; Howard Soule, executive vice president of Milken’s Prostate Cancer Foundation; Stuart Holden, medical director of Milken’s Prostate Cancer Foundation; William G. Nelson, a doctor who sits on the “Therapeutic Consortium” of Milken’s Prostate Cancer Foundation; James Blair, manager of ProQuest affiliate Domain Associates and a board member of Milken’s Prostate Cancer Foundation; David B. Agus, a doctor with Milken’s Prostate Cancer Foundation; and, finally, a doctor (I’ll introduce him shortly) who was the chairman of the “Therapeutic Consortium” of Michael Milken’s Prostate Cancer Foundation.

    In other words, ProQuest Investments, which is Milken’s investment fund (though Milken doesn’t tell people that), enjoys remarkable overlap with  Milken’s “philanthropic” outfit, the Prostate Cancer Foundation.

    Which raises a question: What does the Prostate Cancer Foundation do with the money that it solicits from generous people — not just wealthy donors but also average folks who want to fight cancer and donate what they can?

    I do not mean to be dismissive of a philanthropy. I am sure there are well-meaning people who work at the Prostate Cancer Foundation. It has served as a forum for many of the world’s leading doctors to exchange information, and it has raised awareness of a terrible disease. All philanthropy, one can argue, is good. And since Milken himself is a prostate cancer survivor, one is inclined to believe that his interest in battling the disease is genuine.

    But that might be to underestimate Milken’s love of “the game” — his desire to be a player in the world. It might also be to underestimate the particular world that Milken inhabits. It is a world of people who desire money, yes, but who perhaps desire in greater measure both stature and influence. For stature and influence blind the public and soothe the conscience.

    For the miscreant, to play “the game” is fun. To play the game and cheat is more fun still. But it is perhaps also as simple as this: the miscreant desires to feel no shame. He wants to be able to say to himself, “I am important. I am prominent… .I have the approval of others.”

    Certainly, Milken has used his “philanthropy” to ingratiate himself with the establishment and the public at large. He is one of the few convicted criminals who has returned to “prominence.” So, it seems, he has gotten one over on us. He has won. But “the game” is never over.  And in the view of Deep Capture, winning matters more to Milken than battling the disease that once afflicted him.

    Yes, it’s all about “the game.”

    This might explain why Milken’s “philanthropic” outfit snubbed its nose at Dendreon, a company that did not have a cure for prostate cancer, but did boast the most promising new treatment available—a treatment that could have been safely administered to patients right away. This might explain why Milken’s Prostate Cancer Foundation instead supported Novacea, a company whose controlling shareholders were Milken’s ProQuest Investments and Domain Associates. As we will see, Novacea’s treatment was more likely to kill patients than save them, but that does not matter when it’s all about winning “the game.”

    To win the game, of course, one must have allies — preferably miscreants who know a good scheme when they see it. Perhaps that is why Perceptive Advisors, which is an affiliate of Milken crony Lindsay Rosenwald’s biotech empire, invested a large sum in Milken’s Novacea while serving as one of the seven Milken-network hedge funds that bet big against Dendreon.

    As you will recall, Perceptive Advisors didn’t just bet big, it also pounded Dendreon by exercising call options, flooding the market with millions upon millions of Dendreon shares. Simultaneously, Milken crony Steve Cohen, whose former top trader was a vice president of Lindsay Rosenwald’s Paramount Capital, flooded the market with at least 1.6 million Dendreon shares.

    But it’s not just about winning the game. It’s about the exhilaration of pushing the limits. It’s about being brazen – brazen to the extreme; brazen to point of lunacy – and seeing if you can (ha! ha! ha!) get away with it.

    Perhaps that is why Milken’s Prostate Cancer Foundation went to extraordinary lengths (delivering money, organizing conferences, dispatching prominent doctors) to promote a mostly untested prostate cancer treatment – a treatment (Abiraterone) that was ostensibly being developed by Cougar Biotechnology, the company that was controlled until recently by the above-mentioned Lindsay Rosenwald, who is not only the son-in-law of the “king of stock fraud,” but also a former vice chairman of D.H. Blair – a firm whose  president was Michael Milken’s former national sales manager; a firm that was tied to the Mafia and indicted on 173 counts of securities fraud; a firm that was best known for fraudulently pumping and dumping biotech companies that had no real medicine whatsoever.

    Yes, it’s all about “the game.”

    Perhaps this also explains the strange occurrences that began in the Spring of 2007.

    * * * * * * * *

    In the weeks after the FDA’s advisory panel meeting on March 29, 2007, there were only three financial analysts on the planet who were giving a “sell” rating to Dendreon’s stock.

    The first two you have already met. One was the song-singing Sendek of Lazard research, the outfit run by the former head of research at a subsidiary of TheStreet.com, which was co-founded by Milken crony Marty Peretz, short selling hedge funds, and Jim Cramer, the former hedge fund manager turned “journalist.”

    The second was Jonathan Aschoff, the doctor-impersonating fraud who used to work for Sturza’s Institutional Research, a firm that specialized in publishing biased, negative financial research on biotech companies for a network of short sellers that included the likes of Jim Chanos (Sturza’s current employer) and Michael Steinhardt (mentor to Chanos; son of the “biggest Mafia fence in America”; partner of Milken co-conspirator Ivan Boesky; and incubator of Jim Cramer’s hedge fund).

    The third financial analyst who was bashing Dendreon in the spring of 2007 was Maged Shenouda of UBS, the investment bank. Shenouda’s arguments against Dendreon matched almost precisely those of Aschoff and the singing Sendek, both of whom we have shown to be part of the Milken network. So it is probably significant that Shenouda’s boss, the president of UBS’s investment banking, was (until March 2007)  Ken Moelis, who had once been a trader for Michael Milken’s operation at Drexel, Burnham, Lambert. Indeed, Moelis had been one of Milken’s most trusted and favored employees.

    While this protégé of Milken was president of UBS, the company had become one of the more crooked banks in the world. According to the Department of Justice, for example, UBS “systematically and deliberately” violated U.S. law by recruiting Americans looking to evade taxes. But, of course, it was not ordinary Americans who hid their money at UBS. It was only the wealthiest of people, especially hedge fund managers, who stashed billions upon billions of dollars in secret accounts at UBS, while perhaps taking advantage of the bank’s other “services” as well.

    Was one those “services” illegal naked short selling? In 2006, the Louisiana attorney general filed court documents to compel UBS to hand over records that would help answer that question. Specifically, the attorney general suspected that UBS had, along with Refco, processed phantom stock for Rhino Advisors, the hedge fund whose manager became a fugitive from U.S. law, living in Austria, his money undoubtedly stashed in secret bank accounts, after his “unbridled” criminal naked short selling destroyed companies that had been hobbled by fraudulent “death spiral” PIPEs deals, many of which were brokered by Milken crony Carl Icahn’s Ladenburg Thalmann.

    In March of 2007, when Dendreon’s prostate cancer treatment appeared to be on the fast track to FDA approval, and a UBS research analyst was trashing Dendreon, another interesting event was unfolding. Specifically, Mitchel Guttenberg, who had sat on an elite 12-member committee that signed off on the contents of UBS’s financial research, had just been arrested by the FBI.

    Prior to joining UBS, Guttenberg had not had a distinguished career. He started out in Wisconsin, where regulators determined that he was trading without a proper license. Later, he worked at a second-tier bank called First Albany and put in time at Axiom Capital, a firm that was once censured by the NASD for publishing false financial research on biotech companies. (More recently, one of Axiom’s brokers was charged with systematically defrauding mentally handicapped elderly people).

    Moelis, the Milken protégé who was president of UBS, stacked the bank with his cronies, many of them former Milken employees, and had a propensity for hiring and promoting people who were a bit rough around the edges. For example, it would have been Moelis who promoted Guttenberg to the elite committee that signed off of UBS’s financial research.

    Soon after joining UBS’s financial research committee, according to the DOJ, Guttenberg began illegally providing inside information about the contents of soon-to-be released UBS research reports to a circle of hedge fund managers and traders. Two of the traders who profited from Guttenberg’s tips worked for a hedge fund called Chelsey Capital. Previously, the SEC had investigated Chelsey Capital and a hedge fund called GLG Partners for allegedly paying investment banks large commissions (bribes) in exchange for privileged access to initial public offerings.

    It is clear that GLG Partners (and perhaps, by extension, also Chelsey Capital) is a member of the network of hedge funds that is the subject of this story. Thanks to a lawsuit that Canadian insurer Fairfax Financial filed against SAC Capital (run by Milken crony Steve Cohen, the “most powerful trader on Wall Street”); Kynikos Associates (run by the above-mentioned Jim Chanos, who was featured in Chapter 6 of this story), and other hedge funds in their network, Deep Capture has acquired copies of emails that Jim Chanos sent to GLG Partners. While it is difficult to tell from these emails whether GLG participated in the network’s attack on Fairfax, Chanos certainly communicated with GLG about the status of that attack.

    In March, 2007, when Mitchel Guttenberg, the member of UBS’s elite 12-member financial research committee, was arrested, the SEC stated that Guttenberg was at the center of “one of the most pervasive insider trading rings since the days of [Milken co-conspirator] Ivan Boesky….” A few days later, Moelis, the Milken protege, resigned from UBS to start his own investment bank.

    A few months after that, French authorities busted another UBS insider trading ring, this one including UBS subsidiary UBS O’Conner; the above-mentioned GLG Partners; and a hedge fund called Meditor Capital. At the time, one of Meditor’s top traders was Andrew Billet, formerly of SAC Capital, the hedge fund run by Milken crony Steve Cohen, who was one of the seven “colorful” traders who held large numbers of put options in Dendreon.

    This connection would not be worth mentioning except for the fact that Steve Cohen is known to include former employees in his nationwide trading network, and in 2007, Meditor’s trading tended to run parallel to that of Cohen’s hedge funds. Indeed, Meditor’s biggest share purchases were in biotech companies – Onyx Pharmaceuticals, Vion Pharmaceuticals, Atherogenics, and Cypress Bioscience — that were also targeted by Cohen’s SAC Capital.

    Moreover, in April, 2007, right before some strange occurrences were to derail Dendreon, Meditor purchased 1.6 million shares in Novacea, the company whose controlling shareholders (Michael Milken’s ProQuest and Domain Associates) must have known, for reasons that I will describe, that they would make money on their investment in Novacea only in the event that Dendreon’s treatment for prostate cancer failed to go to market.

    Aside from Meditor Capital, there was, in the spring of 2007, only one other hedge fund that made a major investment in Milken’s Novacea – a company whose prostate cancer treatment, we will see, had no chance of reaching patients anytime soon. The second hedge fund was Perceptive Advisors, managed by an employee of Paramount Capital, whose vice president was formerly one of Steve Cohen’s top traders.

    Perceptive Advisors, we know, was one of the seven “colorful” hedge funds that held large numbers of put options in Dendreon. And Paramount Capital was owned by Lindsay Rosenwald, the Milken crony who controlled Cougar Biotechnology, another Dendreon “competitor” that claimed to have a treatment for prostate cancer, though that treatment had almost no data showing that it could be safely administered to patients.

    So we can begin to see a pattern – a pattern that is all the more interesting when you consider the strange occurrences that began in April 2007.

    * * * * * * * *

    I will get to those strange occurrences in a moment. But first let’s learn a bit more about that first UBS insider trading ring — the one that was busted in March 2007, when a UBS researcher was bashing Dendreon.

    In addition to the Chelsey traders, the ring included two other miscreants – David Glass and David Tavdy, both of whom received advance notice of the contents of UBS’s financial research. Tavdy, described as a “scrappy” Russian immigrant, was a close friend and former First Albany co-worker of Mitchel Guttenberg, the fellow who was a member of UBS’s elite financial research committee. Tavdy earned a fortune from his trading, but apparently unsatisfied, he had painted on his expensive, high-speed motor boat the name, “Enough is Never Enough.”

    Glass had previously spent most of his career at Sterling Foster, which was one of the first brokerages shut down by the FBI when the bureau began its crackdown on Wall Street outfits believed to be tied to the Mafia. Glass quit his job at Sterling Foster right before the FBI raided the firm, arresting 20 of its brokers. Later, Glass helped a close friend write the script for “Boiler Room,” the successful movie about a brokerage that specialized in ripping off investors.

    Glass was the first one busted for his role in the UBS insider trading ring. The FBI promptly strapped him with a wire and dispatched him to record a conversation with a Wall Street greaseball named Larry McKeever, who had said that he was going to expose the UBS insider trading ring to the authorities unless Glass paid him a large sum of money.

    In the course of this conversation, Glass mentioned Tavdy and Tavdy’s close friend, Mitchel Guttenberg, whom Milken crony Ken Moelis had promoted to UBS’s financial research committee, putting him in a position to illegally disclose the contents of upcoming UBS research reports.

    Specifically, Glass told McKeever that the attempted bribe wasn’t a good idea because Guttenberg and Tavdy might find out about it. Glass was especially careful to warn McKeever about Tavdy. As Glass put it, Tavdy “probably knows the name of Larry McKeever.”

    In response, McKeever said of Tavdy: “Listen, Glass, I kid you not—he’s a fucking dead man. I don’t give a fuck if he’s tied into the Russian mob or whatever. I’ll find that cocksucker, mark my words. My lips to your ears. He don’t know my name.”

    At this point, McKeever appeared to have had second thoughts about issuing threats to Tavdy, a guy who might be tied to the Russian mob.

    McKeever nervously added, “How does he know my name?”

    * * * * * * * *

    In March 2007, after the FDA advisory panel voted in favor of Provenge, the singing Sendek, the doctor-impersonating Aschoff, and the fellow from UBS’s troubled research shop were the only three financial analysts in the world who were dismissive of Dendreon’s prospects. But it is interesting to see what a determined public relations campaign can accomplish.

    Dendreon’s treatment was the first-ever vaccine for cancer. It was the first-ever promising substitute for the ravages of chemo. And it was the first-ever cancer therapy that could target and boost the immune system. Although the data suggested that it did not prevent the inevitable end in some patients, but merely forestalled it, the treatment was truly revolutionary and seemed to have the potential to save a lot of people. So one might have expected some media excitement.

    But Dendreon was a small company that did not understand how “the game” worked. The whispering hedge funds, along with their proxies — the song-singing, doctor-impersonating analysts – were more sophisticated. So the press reports on Dendreon were few in number. And most of them featured Sendek, Aschoff, or the UBS fellow voicing their party line that Provenge was “dangerous” – that the data was insufficient, that there were better drugs in the pipeline. And as the days went by we heard more and  more about this strange notion that the Provenge advisory panel had asked the “wrong question” – that the FDA might have to “change the question.”

    Dendreon’s enemies repeated their “talking points.” They stayed “on message.” They manufactured the news, and the news was that the FDA just might reject Dendreon’s application. Rarely mentioned was the fact the FDA had never in history rejected a drug for dying patients after its expert advisory panel had voted for approval.

    But despite the weird news reports, Dendreon’s stock price continued to soar.

    And so, the hedge funds continued to pile on. Call options (such as those exercised by the above-mentioned Perceptive Advisors, which was part of Milken crony Lindsay Rosenwald’s biotech trading empire) were exercised in mass. And millions upon millions of phantom shares continued to flood the market. By April 10, Forbes magazine was reporting that Dendreon, a company that then had a market cap of just under $2 billion, had become one of the top three most heavily traded stocks on Wall Street – beating out Microsoft, Cisco, and Seagate Technologies.

    On April 12, Jim Cramer tried to explain away the increase in the stock price. He told CNBC’s audience that they were witnessing a short “squeeze,” – the stock price was soaring as short sellers scrambled to buy shares to cover their positions. Cramer added that he was aware of one hedge fund manager who had failed to buy counterbalancing call options at an effective strike price. This was probably a reference to the above-mentioned Edelman. In any case, Cramer seemed to be saying that it was just a matter of time before the stock price would crash again.

    Cramer was right about that. But there was no short “squeeze” – the short sellers were not covering their positions. To the contrary, they were growing their positions — exponentially. On April 4, 2007, around 3 million Dendreon shares were sold short. The next day, the number of shares sold short quadrupled – to 13 million. And more than 10 million shares were sold short every day leading up to April 12.

    It is a safe bet that these short sellers knew that something was going to crack Dendreon’s stock price.

    And sure enough, on April 13, Dendreon witnessed the first of some singularly strange occurrences.

    * * * * * * * *

    Late that day – April 13 – a newsletter called The Cancer Letter published a presumably confidential letter that Dr. Howard Scher of the Memorial Sloan-Kettering Cancer Center had written to the Food and Drug Administration. Dr. Scher was one of the 17 doctors who had sat on the FDA’s advisory panel, and his letter — which was addressed to an FDA deputy commissioner and cc’d to then FDA Commissioner Andrew von Eschenbach and an FDA official named Richard Pazdur – argued vehemently that Dendreon’s prostate cancer treatment should not be approved.

    This was strange for numerous reasons. For one, it was unprecedented for a doctor to lobby the FDA after an advisory panel had already voted on a treatment. Doctors who are contracted by the FDA to judge a treatment for a life threatening disease voice their opinions during the advisory panel meeting. At the end of the meeting, they are invited to vote on two questions: Is the treatment safe? And, is there “substantial evidence” that the treatment might improve the health of patients? The vote is considered final. When it’s done, the doctors are expected (as we will see) to go home and keep their opinions to themselves.

    When Dendreon supporters and prostate cancer advocacy groups–including Care-To-Live, a heroic organization that has done much to publicize Dendreon’s travails–saw Scher’s letter, they asked Francesco Marincola, a doctor who had sat on the Provenge advisory panel, to write his own letter in Dendreon’s defense. Dr. Marincola declined. He said, “As you may well infer…I share many of your opinions. However, I strongly believe that my role as a member of the advisory board is to express my opinion during the meeting [and that] it would be ill advised to influence the FDA decision beyond that point.”

    Dr. Marincola added: “If it is true (which I doubt) that some other member of the board contacted the FDA afterwards, it is beyond my control. But my personal opinion is that my credibility as a member of the board will be better preserved if I give my impartial opinion at the time of the meeting and let the FDA do their work afterwards.”

    This, said Dr. Marincola, was a matter of preserving the “integrity of the process.”

    * * * * * * * *

    The second thing strange about Dr. Scher’s missive is that, within days, it ended up in the hands of The Cancer Letter, a publication whose subscribers include a significant number of Wall Street investors. FDA employees are forbidden to discuss the merits of medical products in public, and one big reason is that news of such discussions can profoundly affect stock prices.

    The publication of Scher’s letter was reminiscent of an event that had made The Cancer Letter famous in the world of biotech – an event that had established The Cancer Letter’s reputation as an organ of short selling hedge funds. That event was the FDA’s decision in 2001 to deny approval of a cancer drug that had been developed by a biotech company called ImClone.

    News of the ImClone decision was made public not by the FDA. Somebody had inside information that the FDA was going to reject ImClone’s cancer treatment, and that somebody leaked the information to The Cancer Letter, which published it with great fanfare. In the days prior to the publication, short selling in ImClone increased dramatically. Meanwhile, ImClone executives and their friends offloaded their shares.

    One of those friends was Martha Stewart, who was then known for her all-American, home lifestyle products. Stewart was accused of trading on her inside information about the FDA’s ImClone decision. Ultimately, she went to jail for obstructing the DOJ’s investigation into her actions.

    Others were more fortunate. A Congressional investigation into the ImClone affair produced phone records that showed who had called ImClone in the days before the FDA’s decision was made public by The Cancer Letter. These records show that on December 27, 2001, ImClone received phone calls from three hedge fund managers. Presumably, these three hedge fund managers had gotten wind of the imminent story in The Cancer Letter, and were calling to discuss.

    It should surprise nobody that these hedge fund managers were all members of a particularly colorful Wall Street network. One of the three hedge funds that called ImClone that day was Ziff Brothers Investments. That, remember, is the fund that incubated the trading empire of Jim Chanos, who is now under investigation for trading ahead of reports issued by financial research firm Morgan Keegan. Dirk Ziff, as you will recall, was introduced to Chanos by Michael Steinhardt (Milken crony; Boesky partner; son of “the biggest Mafia fence in America”) and by Ziff’s Harvard Professor, Marty Peretz (Steinhardt partner; Boesky crony; Milken pal).

    The second hedge fund that called ImClone that day was SAC Capital, run by Steve Cohen, the Milken crony who is “the most powerful trader on the Street.” As you will recall, Cohen is a Chanos collaborator (both received and communicated about advanced copies of the same Morgan Keegan reports, and they have frequently employed the same tactics, and the same thugs, to attack the same companies). As you will also recall, previously Cohen was the top earner at Gruntal & Company, a Mafia-linked brokerage that owed its existence to Milken’s junk bond finance. While there, he was reportedly investigated for trading on inside information provided to him by Milken’s people at Drexel Burnham.

    The third fund manager who called ImClone that day was Carl Icahn, the Milken crony who founded the options department at the Mafia-linked Gruntal & Company before becoming a billionaire by brokering “death spiral” PIPEs financing in cahoots with criminal naked short sellers, and by blackmailing companies with finance from Milken and the Mafia-connected Zev Wolfson.

    It is difficult to know whether these three fund managers acted on the secret ImClone information that The Cancer Letter made public soon after they called ImClone. We don’t know because the SEC does not require hedge funds to disclose their short positions, as they do their long holdings.

    Short positions are, after all, a big secret.

    * * * * * * * *

    We do know that in the days leading up to The Cancer Letter’s publication of Dr. Scher’s letter, short selling of Dendreon’s stock increased dramatically. Meanwhile, criminal naked short sellers continued to churn out phantom stock. SEC data shows that at least 9 million shares had failed to deliver on April 10. There were similar numbers the following day, and on the day after that, more than 10 million shares had failed to deliver. On April 10, Dendreon’s stock was trading at its high of around $25.  By April 12, the day before The Cancer Letter’s “scoop,” the stock had already nosedived to around $18.

    This trading was strange. And as mentioned, Dr. Scher’s letter was strange.

    It wasn’t just that Dr. Scher’s lobbying of the FDA was unprecedented and an affront to the “integrity” of the drug approval process. And it was not just that his letter to the FDA quickly appeared in The Cancer Letter (just as The Cancer letter had made public the FDA’s decision about ImClone). And it was not just that short selling hedge funds clearly knew that Dr. Scher’s letter was in the works.

    It was that Dr. Scher’s letter precisely echoed the party line that had been put out by the whispering hedge funds, the song-singing Sendek, the UBS researcher, and the doctor-impersonating Jonathan Aschoff.

    Like the Wall Street analysts, Dr. Scher said that Provenge had failed to meet its “primary end-points in two clinical trials” — that the data was not absolute “proof” that Provenge worked. And just as Aschoff had told journalists that it would be “dangerous” to approve Dendreon, Dr. Scher argued that the FDA would be somehow setting a dangerous precedent by approving a new standard of treatment.

    Dr. Scher’s letter was also reminiscent of that Dendreon conference call, when the singing Sendek asked, over and over, whether the advisory panel had asked the “right question” and whether the FDA might have to “change the question.” Now Dr. Scher, too, was suggesting that the advisory panel had somehow been a sham – that it had “changed the question” regarding the efficacy of Provenge. Since the panel had voted on the wrong “question,” Scher argued, the panel’s overwhelming endorsement of Provenge should be disregarded.

    It seemed that Dr. Scher, who is one of the most prominent cancer doctors in America, was parroting the medical wisdom of Wall Street goons. Either that, or the goons were parroting Dr. Scher. Whichever the case, and whatever their motivations, Wall Street miscreants and a prominent FDA-contracted doctor were now working in parallel  to quash a promising treatment for prostate cancer.

    * * * * * * * *

    Here’s another factoid about Michael Milken’s ProQuest Investments. As I mentioned, ProQuest whitewashed its website, so that it no longer identifies the directors of its advisory board. Screenshots from the past allowed me, in a previous section of this story, to tell you who most of those directors were as of Spring, 2007. But there is one ProQuest director whom I have not yet identified by name.

    This ProQuest director is a doctor. And his name is Howard Scher.

    That is correct: Dr. Howard Scher, who sat on the advisory panel that voted on the merits of Dendreon’s prostate cancer treatment, and then trashed Dendreon’s treatment in a letter to the FDA (an unprecedented lobbying effort after an advisory panel had voted), was also a director of Michael Milken’s ProQuest Investments. In fact, Dr. Scher was not just a director of ProQuest, he was also an executive of the fund, which likely means he stood to profit from its investments.

    Milken and Scher
    (l to r) Dr. David Solit, Tommy Lasorda, Dr. Howard Soule, Dr. Howard Scher and Michael Milken

    Dr. Scher was, moreover, the  chairman of the “Therapeutic Consortium” at Michael Milken’s Prostate Cancer Foundation. He also received unknown amounts of money as the lead investigator of Asentar, the prostate cancer treatment that was being developed by Novacea, whose controlling investors were Milken’s ProQuest Investments and its affiliate, Domain Associates. Meanwhile, Dr. Scher was a paid member of the advisory board of Cougar Biotechnology, the Dendreon competitor that was controlled by Milken crony Lindsay Rosenwald, formerly of the Mafia-connected pump-and-dump stock fraud shop D.H. Blair.

    It is bad enough that the world’s foremost financial criminal, Michael Milken, stood to profit from the demise of a promising prostate cancer treatment. It is disconcerting to know that Lindsay Rosenwald, a Mafia-connected Milken-crony with a record of destroying real companies and creating fake companies, is among the biggest biotech players in the nation – a player who controls 8% of the world’s pharmaceutical firms. It is unsettling to know that this crony and those seven Milken-network hedge funds with large numbers of put options were no doubt intent on seeing Dendreon fail.

    But somehow, the saddest news of all is that Dr. Scher took unprecedented steps to derail a competing treatment that could have extended the lives of a great many men. Dr. Scher is one of the most prominent physicians in America. He is considered one of the world’s foremost experts on prostate cancer. His opinions matter. His advice is heeded. It is likely that at some point Dr. Scher believed that other treatments were superior to Dendreon’s, but somewhere along the line, he seems, at least to some extent, to have let his motives become mixed in with his incentives.

    Given his connections to Milken’s ProQuest Investments, to Novacea (the company controlled by ProQuest and an affiliate) and to Dendreon’s other competitors (such as Cougar Biotechnology), Dr. Scher probably should not have sat on the FDA advisory panel that voted on whether Dendreon should be approved. He certainly should not have been lobbying the FDA. He should not have trashed Dendreon’s treatment, for as he must have known, due to these other relationships, he could no longer claim to be an objective observer.

    He had what they call…well, in more innocent times, they called it a “conflict of interest”

    * * * * * * * *

    Maybe we should not be too hard on Dr. Scher. I am reminded of a story that I once reported for Time Magazine in Asia, about a network of Mafia-connected stock brokerages that had set up shop in Bangkok, Thailand in order to avoid the FBI “Mob on Wall Street” crackdown that led to Operation Uptick in 2000. The owners of the brokerages were bad guys (there was a point where they nearly began murdering each other in the streets of Bangkok), but they had become quite prominent in some business circles. They were also fantastically generous “philanthropists.”

    The bad guys gave especially large sums of money to a priest who was famous for the wonderful work he had done to help people in Bangkok’s most dire slums. The priest was, of course, grateful for the contributions, and he used every opportunity to speak highly of his benefactors. Even when the bad guys were charged with crimes – even when they became fugitives from the law – the priest spoke quite strongly in their defense. He simply refused to acknowledge that the criminals were anything other than “prominent” businessmen and “prominent” philanthropists.

    The priest was not a bad man. He was as good as they come. But he had received so much money – and he had deployed this money to so much good purpose – that he was inclined to continue working with the criminals.

    The famous priest should have condemned the miscreants. He was an important voice of moral authority. But by the wonders of human psychology, he possibly believed, quite genuinely, that the criminals had done no wrong.  We call this phenomenon “deep capture.” The priest had been “captured” by the criminals. His judgment was clouded.

    Perhaps Dr. Scher was a priest of the medical community. Michael Milken’s Prostate Cancer Foundation had donated tens of  millions of dollars to Dr. Scher’s hospital, Memorial Sloan-Kettering (a hospital, it should be noted, by way of disclosure, that has also received significant donations from the family of Deep Capture reporter Patrick Byrne, whose cancer was successfully treated there). With support from the Prostate Cancer Foundation, Dr. Scher and Memorial Sloan have been able to continue their research into experimental treatments that perhaps will one day help patients.

    No doubt, Dr. Scher was grateful for this generosity. No doubt, he was earnest about his Milken-financed investigations and believed that he was contributing to the advancement of science. Meanwhile, Milken and his foundation had become quite “prominent” players in the fight against prostate cancer. Indeed, it is fair to say that Milken, more than anyone, had come to dominate the prostate cancer establishment. Nobody had more influence. So, in Dr. Scher’s view, it perhaps made perfect sense to collaborate with this criminal. As his collaboration grew, he perhaps became inextricably tied to the work – not just financially, but also emotionally.

    The phenomenon of “deep capture” is indeed pervasive. And it is pervasive because it can swallow anyone – even those with the best of intentions.

    That said, Dr. Scher’s letter to the FDA was not merely the work of an earnest but “captured” physician. As we will see, it was conniving. It trashed Dendreon in a manner that was patently dishonest, and exaggerated the promise of a treatment (the one under development at Milken’s Novacea) that would soon be shown to be ineffective.

    Unwittingly or not, Dr. Scher aided the machinations of the criminal Michael Milken. And as we will see, there are good reasons to suspect that those machinations were not about philanthropy or fighting cancer, or even about  investing in companies that had genuine value.

    The machinations were about destroying a good company so that Milken and a network of hedge funds could make a big bundle of money.

    * * * * * * * *

    To be continued…Click here for Chapter 9.

    If this article concerns you, and you wish to help, then:
    1) email it to a dozen friends;
    2) go here for additional suggestions: “So You Say You Want a Revolution?

    This post was written by:

    - who has written 87 posts on Deep Capture.


    Contact the author

    113 Responses to “Michael Milken, 60,000 Deaths, and the Story of Dendreon (Chapter 8 of 15)”

    1. harveydawabbitt says:

      mark this one had me on the edge of my seat.
      bravo zulu sierra hotel mark

      today i was looking at matt taibbi’s site truth /slant i think it is.
      i left a message there to see if folks there had heard of deepcapture.
      no responses yet.
      just thought i would put deepcapture.com on their site as his article is getting lots of lookie lous.

      you and yours take care

      shawn

      • mark says:

        What needs to happen is for Dendreon to file suit in this matter.If Denderon can prove negative stock manipulation and fraud against the big players the matter will hit the courts and the press.
        Mark

        • huck says:

          THEN the estates of any people that have died of pc, in the past 3 years will have a base to ground wrongful death suits against our friends. Strip out a goodly chunk of their ill gotten gains. Anything to castrate those scum.

      • Milton says:

        A great investigative story and one that needs to be told. But so poorly written that it is getting painful. There is no need to label every single person with two or three adjectives. Does Mitchell get paid by the word?!

        • MeToo says:

          The ‘bonus’ word for Chapter 8 was: crony — the author received a free beer at The Cronies Bar for each mention of the word!

          cronies and miscreants… ‘at the risk of repeating myself..’

          the core content remains critical despite being wrapped in looping strands of wet spaghetti that can only be followed visually.

          While I am being critical, I would like to also decry the unneeded personal opinions and conjecture in this chapter. The author lacks journalistic training and has placed himself into the story when it should be a primary endeavor of reporting the facts with insight regarding the inner-connections of the conspiracy network…. with the demise of real media reporting outlets, this amateur effort is quite worthy, but freelance editors are available cheap.

    2. huck says:

      Mark. I will continue to beat the drum about how the miscreants have exposed themselves to a wrongful death litigation. 60,odd thousand payouts to the unfortunate people that died, while their potential relief was withheld, for the financial gain of a pack of cesspool tongue polishers could do wonders in cleaning out that pack of vermin. Not to mention assuage in some way the emotional suffering of their loved ones.

    3. AMMASS says:

      At the end of March 2007 ,on the evening of the Day in which the Advisory Committee (AC) of the FDA voted 17-0 for Dendreon’s (DNDN) Safety and 13-4 on its Efficacy (by the way 3 of those voting negatively had huge conflicts of interest), Joel Sendek on that Evening during a Conference Call(CC) sponsored by DNDN and which included DNDN’s management ,other analysts , Shareholders of DNDN and likly the SHORTS in DNDN ,blurted out at the end of the C/C “this isn’t the way we were told things would happen,we were misled”, or words to that effect. I believe this blurted pronoucement was intended for the ears of his clients,the Shorts, so as to excuse him for being WRONG on the way things played out. All this in my humble opinion and as I recall the events that evening.
      AMMASS

    4. kddublin says:

      It feels great that this full story is finally being told. Share it with others. The more that know the story the less chance the MSM can ignore it.

      They almost succeeded in breaking the little biotech called Dendreon but they could not as Dendronians and CareToLive and friends all fought back.

      Now, through Deep Capture, the story can be told to all, in its full detail….please share it with others and post the link where possible.

    5. Anonymous says:

      Letter from the Captured…another pharma whore…

      http://advancedprostatecancer.net/?p=17

    6. sean says:

      Mark, my words, the right person is going to see this story (if they haven’t already and all hell will break loose and these miscreants will pay for all the deaths these have directly and indirectly caused. Think also FRPT!!! Their time cometh!!!

      • Fishmonger says:

        The right person …. trust me, it isn’t just one person that needs to see and understand this story. Its one hell of a lot of people. Every reader of this story should pass it on to their friends and family as well as acquaintances who may have investing experience or may have had prostate cancer or a friend or family member with it. Pass it on! Eventually enough people will see it that our own Senators will take note that we want something done…

        The SEC has failed us and we really need an act of Congress to knock out this big web.

    7. sean says:

      Slowly but surely the corruption is leaking out…

      Exclusive: Florida banking agency helped Stanford set up unregulated office to sell his phony CDs

      State aided suspect in huge swindle

      Florida regulators — over objections by the state’s top banking lawyer — gave sweeping powers to banker Allen Stanford, accused of swindling investors of $7 billion.

      By Lucy Komisar, Michael Sallah and Rob Barry
      Miami Herald, July 5, 2009

      Years before his banking empire was shut down in a massive fraud case, Allen Stanford swept into Florida with a bold plan: entice Latin Americans to pour millions into his ventures — in secrecy.

      From a bayfront office in Miami in 1998, he planned to sell investments to customers and send their money to Antigua.

      But to pull it off, he needed unprecedented help from an unlikely ally: The state of Florida would have to grant him the right to move vast amounts of money offshore — without reporting a penny to regulators.

      He got it.

      Over objections by the state’s chief banking lawyer — including concerns that Stanford was laundering money — regulators granted sweeping powers never given to a private company.

      (Read the Stanford Trust Memorandum of Agreement with Florida.)

      The new company was also allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.

      Over the next decade, the Miami office was among Stanford’s busiest in the sale of controversial investments now at the heart of the federal government’s sweeping fraud case against Stanford and his lieutenants.

      Rest of investigative work: http://thekomisarscoop.com/2009/07/exclusive-florida-banking-agency-helped-stanford-set-up-unregulated-office-to-sell-his-phony-cds/

      Or at the Miami Herald: http://www.miamiherald.com/news/florida/v-fullstory/story/1127748.html?mi_pluck_action=comment_submitted&qwxq=1228218#Comments_Container

    8. Fishmonger says:

      I’m sure the analysts are already being questioned by their own companies as to their involvement in insider trading, illegal manipulation, etc. I wouldn’t be surprised if Sendek and Aschoff are on the brink of termination and possibly even on the verge of a case to ban them from the securities industry…

      They’re going to have a rough post July 4th Monday and they deserve it!

    9. sean says:

      Mark as usual Kudos on this your latest and best part so far of the cruel saga. However you know the saying “A picture is worth a thousand words” well the picture of Miliken and the Drs. is worth over 1000 years “in jail”. Thanks so much.

    10. huck says:

      Milken is going to be in for a surprise. When a felon is convicted for a later related felony, there is no prime time in club fed extracted as “payment” for the crime.

    11. SueRae says:

      My God….this goes deeper than I even imagined. Mark, I can’t tell you grateful we are for you pulling this story together. Small investors everywhere have been screaming for someone to investigate the crooks and get the story out.

      The fact that we haven’t (at least I haven’t) heard ONE SINGLE CHALLENGE from any of the named players speaks volumes to me.

      Keep ’em coming..

    12. sam says:

      fish-speaking as a longtime soldier here, unfortunately you are wrong. The right people have seen this, they know this, they take part in this, and they do not care. The answer is in the masses. The everyday joe needs to stand up and demand change, otherwise nothing will. imo

    13. You are being too kind to Dr. Scher.

    14. Anonymous says:

      Howard R. Soule, Ph.D.

      Howard R. Soule, Ph.D. is currently Executive Vice President and Chief Science Officer at CaP CURE, The Association for Cure of Cancer of the Prostate. Dr. Soule is responsible for the coordination of science and clinical research for worldwide prostate cancer programs funded by CaP CURE. This organization has granted over 800 awards totaling more than $100 million since inception in 1993 by prostate cancer survivor and activist Michael Milken.

      http://www.usrf.org/PCSPES/soule.shtml

    15. ron doc says:

      We need to understand the TOTAL danger we face from a Captured Media, as well as our so called ‘Government watch dogs’, not only to our finances, but to our very freedom as well.

      http://www.wnd.com/index.php?fa=PAGE.view&pageId=103196

      Some have no souls who do these things. Others have no guts so they have to look the other way.

      I am glad some, like the Deep Capture crew, have the courage to speak out. God help you in bringing forth the truth!

    16. Brightsun says:

      Yahoo stats July 5, 2009 on Pfizer Inc. (PFE)
      6.75 Billion shares outstanding – short 3 % – 202.4 mil shares short. – prior month 181.5 mil short. -average 10 day volume was 45,788,600

      Reg SHO 0.5% of 6.75 billion shares outstanding = 33,375, million shares.
      Clearly the 181 mil or 202 million shares short far exceeds the Reg SHO 0.5% .
      T+3 applies but does T+13 apply? It should!

      According to NSCC, the Continuous Net Settlement System reduces the value of securities and
      payments that need to be exchanged by an average of 97 percent each day. Pg 4 (1)

      If 97 % of Pfizer’s stock settled daily by NSCC, why is Pfizer short position so high?

      If 97% of Pfizer stock volume is settled by NSCC, then Pfizer is well beyond T+13.
      Page 3 of 3
      Take the lower month 181 million x 3% not settled = FTDs of 5,430,000 daily. X 13 days is roughly70 million. So the 181 million far exceeds the “allowed” T+13. All of the 3 % would not result in FTDs, but this would make the T+ days extended even further.

      This gives shorts or whoever has “borrowed” stock $ 14.84 (current price) x short position roughly 2 billion dollars that should be labeled illegal.

      Please tell me if you agree or disagree. thanks

    17. jdevine42 says:

      Outstanding work totally believable and utterly depressiong because there is one thing that this story lacks; a mass audience. Without mass public outrage there’ll be no hearings, supenas or indictments coming from congress and nothing will change. Wont any media outlet of note put this to the public at large? O’Reily has been railing against the manipulation of the oil markets for a long time, why cant he jump on this story. It is so much juicer with all the well known names.

    18. Anonymous says:

      OREILLY, was contacted by me back in 2004 and did NADA. HE was contacted again in 2007 and did NADA. Bottom line OREILLY is part of the problem as are many others.

      • harveydawabbitt says:

        i lost count how many times i contacted o’reilly.
        that feller is nothin but hotair.

      • Anonymous says:

        Anyone that works for CNNABCCBSNBCMSNBCFOX is not your friend.

        Believe it or not, you’re better to write to the National Enquirer as they are one of the last independent newspapers. The MSM is all suspect.

        Try http://www.whatreallyhappened.com which has a huge readership and has picked up deepcapture in the past.

        wrh@whatreallyhappened.com

        • harveydawabbitt says:

          i even e-mailed and called the national enquirer.
          they told me they dont follow these types of stories.
          in my mind i was sayin BULLSH*T.

          you could just about name the place i prolly e-mailed em

    19. tom waits says:

      Mark have you interviewed Harry Markopolos yet? He said in front oCongress that the SEC and FDA were captured!

      • loquitur says:

        Here is some further intriguing dope on how Martha Stewart was
        set up for the fall, simultaneously with shares in MSO being
        pounded by The Street:

        http://baltimore.indymedia.org/newswire/display/3949/index.php

        FDA/Padzur/Bush cronies redux.

        Aside: the snapshot showing Scher has a match in one showing FDA commish
        Eschenbach together with Padzur and Milken.

        Further aside: if you are on the West Coast shopping at Safeway, they
        sure seem to be laying it on thick these day with the incessant
        begging at the cash registers for contributions to Milken’s PCF.

    20. harveydawabbitt says:

      dont this look good?
      deepcapture listed with the “big boys”
      real cool in my book

      ■Novo Nordisk’s (NVO) Victoza gets EU approval. [Reuters]

      ■Dendreon’s (DNDN) scandal is even further revealed. [DeepCapture]

      ■Even the Los Angeles Times is getting in on the cancer vaccine act. [Los Angeles Times]

    21. Anonymous says:

      Goldman has and i’m sure continues to front run trades

      Administrative Proceeding: Goldman Sachs Execution & Clearing, L.P. and SLK-Hull Derivatives LLC
      Administrative Proceeding: Goldman Sachs Execution & Clearing, L.P. and SLK-Hull Derivatives LLC. Administrative Proceeding: Goldman Sachs Execution & Clearing, L.P. and SLK-Hull Derivatives LLC. SECURITIES EXCHANGE ACT OF 1934 Release No. 59505 / March 4, 2009 ADMINISTRATIVE PROCEEDING File No. 3-13394 In the Matter of Goldman Sachs Execution & Clearing, L.P. and SLK-Hull Derivatives LLC, Respondents. Goldman Sachs Execution & Clearing, L.P. ( GSEC ) is a broker-dealer registered with the Commission pursuant to Section 15(b) of the Exchange Act. GSEC is an indirect wholly owned subsidiary of The Goldman Sachs Group, Inc. ( GS ), and a member of the American Stock Exchange ( AMEX ), the Chicago Board Options Exchange ( CBOE ) and the Philadelphia Stock Exchange ( PHLX, … Prior to January 14, 2005, GSEC was known as Spear, Leeds & Kellogg LP ( Spear Leeds ).
      Section: Litigation | Size: 101 kb | Type: pdf | Date: March 4, 2009
      http://www.sec.gov/litigation/admin/2009/34-59505.pdf

    22. john says:

      Improper Proprietary Trading by GSEC and SHD
      8. During the Relevant Period, GSEC and SHD breached their duty to refrain from dealing for
      their own accounts while in possession of executable buy and sell customer orders. Instead, GSEC
      and SHD effected improper proprietary trades that disadvantaged customer orders.
      9. On each of the Exchanges, GSEC and SHD specialists possessed or had access to
      information concerning customer orders on both sides of the market. Where there are matchable
      orders on both sides of the market, specialists are obligated to “pair off” or cross the buy and sell
      orders by executing each side of the market for identical prices and in commensurate order
      quantities. In numerous instances, however, GSEC and SHD specialists did not “pair off” or cross

    23. Anonymous says:

      0. Trading Ahead. In certain instances, GSEC and SHD specialists filled one agency order
      through a proprietary trade for their firm’s account while a matchable agency order was present on
      the opposite side of the market, thereby improperly “trading ahead” of such opposite-side
      executable agency order. The customer order that was traded ahead of was then disadvantaged
      when it was subsequently executed at a price that was inferior to the price received by the firm’s
      proprietary account. For example, if a specialist has present on his book, at the same time, a
      marketable customer order to buy five contracts of an options series and a marketable customer
      order to sell five contracts of the same options series, the specialist would be obligated to pair off
      those matchable orders. Trading ahead would occur if the specialist filled the sell order from the
      firm’s proprietary account at $5.00 per share per contract, and then subsequently executed the buy
      order at the inferior price of $5.05 per share per contract. In this example, the buy order received a
      price inferior to that to which it was entitled ($5.00) and the customer was disadvantaged by $25.00
      (5 contracts x $0.05 per share per contract x 100 shares per contract).

    24. Anonymous says:

      and what did goldman pay…. drumroll….

      C. Respondents shall, within ten days of the entry of the Order, jointly pay
      disgorgement of $6 million to the Commission. Such payment shall be: (A) made by United States
      postal money order, certified check, bank cashier’s check or bank money order; (B) made payable
      to the Securities and Exchange Commission;

    25. Anonymous says:

      Deep Capture should increase their staff and start focusing on Goldman

      10. Trading Ahead. In certain instances, GSEC and SHD specialists filled one agency order
      through a proprietary trade for their firm’s account while a matchable agency order was present on
      the opposite side of the market, thereby improperly “trading ahead” of such opposite-side
      executable agency order. The customer order that was traded ahead of was then disadvantaged
      when it was subsequently executed at a price that was inferior to the price received by the firm’s
      proprietary account. For example, if a specialist has present on his book, at the same time, a
      marketable customer order to buy five contracts of an options series and a marketable customer
      order to sell five contracts of the same options series, the specialist would be obligated to pair off
      those matchable orders. Trading ahead would occur if the specialist filled the sell order from the
      firm’s proprietary account at $5.00 per share per contract, and then subsequently executed the buy
      order at the inferior price of $5.05 per share per contract. In this example, the buy order received a
      price inferior to that to which it was entitled ($5.00) and the customer was disadvantaged by $25.00
      (5 contracts x $0.05 per share per contract x 100 shares per contract).

    26. Anonymous says:

      Patrick, please increase DC’s staff and start focusing on Goldman

    27. Anonymous says:

      Goldman has captured Washigton

    28. Anonymous says:

      Patrick & Mark are Sheep Dogs

      William J. Bennett, in a lecture to the United States Naval Academy on November 24, 1997 said: “Most of the people in our society are sheep. They are kind, gentle, productive creatures who can only hurt one another by accident.” We may well be in the most violent times in history but violence is still remarkably rare. This is because most citizens are kind, decent people who are not capable of hurting each other except by accident or under extreme provocation. They are sheep.
      Then there are the wolves and the wolves feed on the sheep without mercy. Do you believe there are wolves out there who will feed on the flock without mercy? You’d better believe it. There are evil men in this world and they are capable of evil deeds. The moment you forget that or pretend it is not so, you become a sheep. There is no safety in denial.
      Then there are sheepdogs and I’m a sheepdog. I live to protect the flock and confront the wolf. If you have no capacity for violence, then you are a healthy productive citizen, a sheep.
      If you have a capacity for violence and no empathy for your fellow citizens, then you have defined an aggressive sociopath, a wolf. But what if you have a capacity for violence and a deep love for your fellow citizens? What do you have then? A sheepdog – a warrior – someone who is walking the uncharted path – someone who can walk into the heart of darkness, into the universal human phobia, and walk out unscathed.

      • Solomon MacKay says:

        I very much admire Mr Byrne and Mr. Mitchell and understand that Patrick and Mark would like to be sheep dogs, but they remain sheep. This is so because there are bigger wolves than Milken, wolves that use men like Milken. Patrick and Mark have to know this, yet either “forget that or pretend it is not so”.

    29. Fishmonger says:

      Jim Cramer stuttered today (July 6th) and mentioned DH Blair on his television show… during the Medco interview.

      Its more evidence that these guys are really stressed out about what is unfolding right here and right now.

    30. A1 says:

      Hi,

      I’d like to know what your (Mark, Judd, or Patrick’s) opinion of Andrew Cuomo is. I emailed Patrick, who very cordially welcomed me to the rabbit hole just a few months ago, about this a week or two ago but I did not receive a response. Here’s another shot.

      I’m concerned by the fact that a large percentage of Cuomo’s contributions come from the hedge fund industry – some were made by hedge funds his office is now investigating and not charging in relation to the NY pension scandal, and some were made by funds who, by the looks of it, should be under investigation but strangely aren’t.

      Cuomo so far has accepted this cycle:

      $25,000 from Carl Icahn
      $25,000 from Jim Chanos
      $25,000 from David Einhorn
      $2,500 from Daniel Loeb
      $2,500 from Daniel Och
      $1,000 from Daniel Ziff

      These names are really just the low-hanging fruit too. Do you believe Cuomo is unaware of the misdeeds of these men, or is he part of the problem? Can you guys please contact me? Thanks

    31. A1

      Sorry for the lack of response.

      Remember, the bad guys grease palms on both sides. But yes, the list you have put together is a rogue’s gallery.

      Patrick

    32. 1045 says:

      Mark Great story! but I’ll have to play the devil’s advocate. What happens next? Will these crooks continue their crimes as usual? I applaud you for your effort. It is obvious that you are very intelligent and did a great job digging out the “dirt”. I am not as smart as you, but even I can see that despite your efforts, the only way to effect a change is to have a coordinated strategy against these criminals. You might even need to get this story to the President’s attention. How do you do that? I am not sure, but I think it needs to be done. I think you many need to form a “think tank” whose main objective is to get this story to the Highest level of the land,including the president, the FBI and the congress. Ofcourse, I recognize the danger in it, but I suppose it is no more dangerous than naming the crooks in your story. In anycase, If I can help, please let me know. I will do as suggested on this blog and pass on this story to my friends. I will also post this link on my face book page. I am sure you are doing a lot more than that to get this story to the national attention. Thanks a milion for opening my eyes. My investment strategies will certainly be affected from here on out.
      sincerely,

      Fm

      • Kilroy.Killbasher says:

        I, too, have wondered the best way to get the message to “uncaptured” enforcement and perhaps into the President’s ear as well. I believe the answer might be the U.S. Secret Service. Not only are they close to the President, the Mission Statement from their website confirms they have the responsibility. Here it is:

        “MISSION STATEMENT:
        The mission of the United States Secret Service is to safeguard the nation’s financial infrastructure and payment systems to preserve the integrity of the economy, and to protect national leaders, visiting heads of state and government, designated sites and National Special Security Events.”

        Notice that protecting the President and national leaders, etc., is mentioned secondary to safeguarding the nation’s financial infrastructure and payment systems to preserve the integrity of the economy.

        Do they have the capability of understanding it and dealing with it? I don’t know. But their Vision Statement would seem to indicate so:

        “VISION STATEMENT
        The vision of the United States Secret Service is to uphold the tradition of excellence in its investigative and protective mission through a dedicated, highly-trained, diverse, partner-oriented workforce that employs progressive technology and promotes professionalism.”

        Trying to get action from the SEC, DTCC, et al., is like walking up to the fox assigned to guard the hen house (while he’s plucking feathers from his mouth) and asking how the investigation into the recent chicken thefts is going. JMHO

        • Kilroy.Killbasher says:

          Oh, I forgot to add, apparently you can counterfeit a million dollars worth of hundred dollar bills and the Secret Service will be all over you. Yet, you can counterfeit billions of dollars of counterfeit securities (phantom shares), and they won’t blink an eye. So, perhaps, they are captured too, particularly since they are a branch of the Treasury Department.

          But, who else better to hold responsible and “put on the carpet” for negligence of duty?

    33. Oldepro says:

      Nothing less than a Pulitzer. I am physically sick after reading this. How you were able to dig this deep is beyond me. I am waiting for all the chapters to be published and then everyone I know will get a copy. I will stand on street corners and pass it out. Everyone needs to hear this story. It’s TIME we take our country back. Pulitzer for Mark, Patrick for President in 2012. I thank you brave men.

    34. Mike K says:

      This chapter hearkens back to Chapter 1, when Jim Cramer made a mistake. A big mistake. And not an honest mistake. Here is how Mark reported it:

      – This story, like too many others, begins with Jim Cramer, the CNBC personality, making “a mistake.”

      – On September 26, 2005, Cramer announced to his television audience the sad news (punctuated by funny sound effects – a clown horn, a crashing airplane) that Provenge, an experimental treatment for prostate cancer, had flopped.

      Yes, on September 26, 2005, Cramer did his best to talk investors out of investing in Dendreon. Now why would he want to do that? For many reasons as Mark has pointed out, and in this chapter we read some had to do with UBS.

      On September 20, 2005, the Dendreon Coporation sent out this press release:

      Dendreon to Webcast Presentation at UBS Global Life Sciences Conference

      SEATTLE, WA, September 20, 2005 – Dendreon Corporation (Nasdaq: DNDN) today announced that management will present at the UBS Global Life Sciences Conference at the Grand Hyatt in New York City on Tuesday, September 27 at 11:00 a.m. ET. (see http://investor.dendreon.com/releasedetail.cfm?ReleaseID=173988)

      The very night before Dendreon was to present at that UBS conference, Cramer appeared on the air at CNBC, a station UBS gives plenty of money to advertise, and Cramer lied. When Cramer wants to do his very best, that is what he does. He lies. He foments. In this case, he said Dendreon’s prostate cancer treatment failed FDA approval. He told his viewers to steer clear of it. Well, it wasn’t even up for approval back in 2005. It wasn’t that far along. It didn’t go before the FDA until May 2007. So now, here in Chapter 8, we learn a lot about UBS.

      What an amazing story this is. Cramer, Milken, Scher, ProQuest, UBS and all the others. We are really looking forward to the next chapter.

      Mark, thanks for covering this important story. We are sending it to as many folks as possible.

    35. sean says:

      1045, I am under the impression that the President and others in the DOJ have a copy of this story in full already. Thy have also seen the Jon Stewart/ Jim Cramer video. This story has taken more traction than you know! Now if and when something will be done about it is the question.

    36. sean says:

      The US treasury and FED reserve (which nothing about is is Federal or Governmant related) has give AIG 182 billion of our taxper dollars, they have done a reverse split and the SEC and regulatory agencies are still allowing these Hedge Funds to short the HECK out of it AGAIN!!Whats wrong with this picture? Only if there were a pattern? Also if this could do this to such a “Well Known” entity like AIG Who the heck is DNDN, OSTK, TASR,FRPT and so on? Our companies don’t stand a chance in hell do they?

    37. Anonymous says:

      Matt Taibbi is also a Sheep Dog.

      Today, we need more Sheep Dogs in the MSM and Government.

      George C. Marshall was a Sheep Dog!

      Three sections from Charlie Munger’s recent article in the Washington Post:

      The consensus was grounded in Secretary of State George Marshall’s concept of moral duty, supplemented by prudential considerations.

      After the failure of so much that was assumed, the public needs a restoration of confidence. And the surest way to gain the confidence of others is to deserve the confidence of others, as Marshall did when he helped cause passage of some of the best legislation ever enacted.

      With no Marshall figure, trusted by all, amid today’s legislators, perhaps the Founding Fathers can once more serve us.

    38. Anonymous says:

      ONLY THE NAIEVE believe that those in the new administration are not aware. The question is how do the masses get the minority to act? This country is replete with examples of those in the minority exacting change. All the data points and evidence in the world mean nothing if those who are responsible are complicit or negligent. Maybe AIG will be the catalyst to coerce action via the agencies. If not, then at some point history strongly supports there will be action taken. In the meantime one should do all they can to educate as many as they can.

      • harveydawabbitt says:

        anon here is a chance for all of us to act.
        there will be a mass gathering on sept 12 in D.C.
        for those who want our country back.
        your choice america

        > From Carl Swensson:
        >
        >
        > *** BREAKING NEWS*** July 6, 2009
        >
        > Following Patriot’s Heart Network’s trip to Washington DC along with American Grand Jury representatives, Dr. Penny Kelso, Mack Ellis and Carl Swensson, Chalice reports the following:
        >
        > Patriot’s Heart Network contacted Chief Magistrate Judge Royce Lamberth’s office this morning. The following information was provided:
        >
        > 1) A case number will be assigned to the American Grand Jury presentments served to the District Court on Monday July 13th, 2009. The number will be provided to Carl Swensson shortly.
        > 2) Chief Magistrate Judge, Royce Lamberth will make a decision on the American Grand Jury presentment.
        > 3) Citizens can file petitions with the court once a number is provided. Further information will be forthcoming.
        > 4) A Lawyer is needed who can instruct on the process of petition filing in the US District Court.
        >
        > Send a letter to the Judge encouraging him to act favorably on the Grand Jury Presentments….also call his office.
        >
        > United States District Court
        > for the District of Columbia
        > Clerk’s Office
        > 333 Constitution Avenue, N.W.
        > Washington, D.C. 20001
        > Chief Magistrate Judge of the U.S. District Court,
        > Royce Lamberth
        > 202-354-3380 (Chambers)

        http://patriotsforamerica.ning.com

    39. Anonymous says:

      Fwiw, Ol AIG does a one for 20 reverse split effective July 1 2009 and has a high of 22.96. Now a few trading days later the stock traded in the 13 area. Now correct me if I’m wrong but didn’t the govt take a hefy chunk of AIG and did so with tax payers money? So what’s this new admin going to do. Sit on their hands and watch those shorting using abnss run this one into the ground and while doing so cause another shot felt round the world or will they have to come up with MORE taxpayer money to stem the tide. OR How about something NOVEL. Enforce the laws, and while doing so put in a few new nuances such as pre borrow and forced buyins. Maybe those here who are front running should get the attention of the masses of what has been allowed to happen to their investment. Some might consider a 40% haircut in 4 trading days and a significant loss of x market share that has an impact on convenances something to be concerned? Then again that would take a few champions versus the many losers that represent the majority. However here is Senator Kaufman who does care and maybe someone should have him tune in on the AIG activity.

    40. mhelburn says:

      A1…
      You can get the lowdown on Cuomo at http://www.dunwalke.com.

    41. sean says:

      Anon, I don’t know if you read other posts here but I stated the same 3 or 4 post above yours regarding AIG. I have noticed that this is not the first time that you have done this. Is there a method to your madness? Please inform. Respectfully Sean.

    42. sean says:

      From an Investorvillage post. I thought that I would share it with our fellow readers.

      Msg 288476 of 288489 at 7/7/2009 10:13:45 PM by
      irishlass

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      Recs: 40 | Views: 243

      reflections on chapters 1 through 8 …
      I returned home last night from a brief vacation and sat down tonight to read Mark Mitchell’s seventh and eighth installments. While reading these last two chapters tonight, twice I literally had to put the papers down (I print them out), lie my head back, and compose myself before continuing.

      Apologies if what follows repeats anything that’s been written here over the past few days (haven’t yet had the opportunity to read many recent posts here).

      Just a few random observations I have gleaned from reading parts one through eight:

      (1) Mark Mitchell can hold his own with any investigative reporter, past or present. His research is in-depth and probing, and he condenses what is obviously months and months of it into a digestible narrative that anyone can comprehend … although I ashamedly admit that I desperately need some kind of flow chart, or Venn diagram, to keep track of the countless names, organizations and interrelationships among the myriad of criminals he is dissecting. I tend to simply recall a name as having been mentioned before, but rarely can call up in any detail that person’s relationship with others being discussed. But that is my failing, not Mitchell’s.

      (2) At first I was merely mesmerized by all that I did not know about why this company and its products/stock have been so ‘persecuted’ (vast understatement). Now, eight chapters in, I am livid, and in disbelief that such evil not only exists, but now calls many of the shots — and habitually eradicates, either literally or figuratively, those who stand in its way.

      (3) Even if one has no interest in Dendreon, the first eight installments of this exposé are the most repulsive accounts I have ever read of greed, corruption and absolute evil. People from Jim Cramer, to Ivan Boesky, to Michael Milken, to Bernie Madoff, to the Russian and Italian Mafias, and countless other ‘big money men’, are exposed for the vermin that they are. And the bottom line is always the almighty dollar. The hell with human suffering. The hell with the dignity of life. The hell with law and justice. They are just inconvenient roadblocks to the amassing of wealth and power for the privileged few who hold the high cards in the deck, thanks to their ability to scheme and manipulate. What is glaringly obvious is their abject disregard for their fellow human beings.

      (4) One of the earlier chapters included the following paragraph:

      But not long after, several men arrived at Chalem’s New Jersey mansion. The men told Chalem to kneel down on the floor. Then they fired several rounds of bullets — one bullet into Chalem’s chest, one bullet into Chalem’s forehead, one into Chalem’s face, and a number of bullets into each of Chalem’s ears. According to a man who was with Chalem just hours before his death, the murder was the work of the Russian Mafia.

      And it involved a dispute over naked short selling.

      Although that paragraph may seem to represent a singular incident, it really represents the philosophy behind the entire agenda of the criminals who are at the core of this investigation:

      The amassing of wealth and influence of these men who presume to be a self-proclaimed elite takes precedence over:

      (a) scientific advancement that improves the lot of humanity

      (b) the ability of the ‘common man’ to use the fruits of his labor to make honest, judicious investments in order to improve his lot in life

      (c) alleviating human suffering and prolonging human life

      (d) the upholding of the rule of law, and genuine justice

      (e) truth

      (5) I have been extraordinarily naïve. It appears that, unless you are betting on the same side as the ‘money makers’, you may as well stay out of the market – the movements of the stocks of selected companies have absolutely nothing to do with a company’s vision, quality or promise of excellence, if the schemers have it in their cross-hairs.

      (6) The corruption/violence/greed that runs our financial systems will be extraordinarily difficult to reverse. After all, Mark Mitchell cannot be the only person who knows what he is reporting. There must be hundreds of people involved with the banks, brokerage houses, corporations, non-profit organizations, government agencies, television productions and stations, etc. who deal with the criminal element that Mitchell has uncovered. Why are so many people keeping quiet? Why has no major media outlet connected the dots (publicly) as Mitchell has?

      (7) The evil represented by the derailing of Provenge is not a singular incident. We are simply the latest (hopefully temporary) casualty in an all-out war on the five elements I listed in (4) above.

      Talk about a David vs. Goliath scenario! We have read what happens – often gruesome, sometimes deadly — to people who cross these evil elitists.

      As I have indicated many times before, I (as are most of you) am in this for the long haul, for the simple reason that I cannot believe that truth and justice will not prevail in Dendreon’s quest to get their blockbuster product to the men who so desperately need it.

      My fervent hope is that these vermin will be exposed and punished to the degree that they have inflicted punishment (physical, emotional and financial) on millions of others. Yet I find myself shamefully believing that, in America 2009 where corruption runs so deep, that may not be possible. So I find myself (even more shamefully) hoping that we find ourselves standing on the same side as the manipulators – i.e., that they will ‘allow’ this product to garner FDA approval, and will move on to prey on some other company/sector. I banish that idea each time it creeps into my thought process, but it’s hard to put it to rest. L

      God bless Mark Mitchell.

      God bless CareToLive.

      God bless all men who are suffering the ravages of this dread disease, those who will contract it in the future, and those who have already lost the battle.

      And may His will include profound punishment for those who place ill-gotten personal prosperity above the welfare of their fellow man.

      ~ joanie

    43. Jim Hall says:

      Starting to look like Milken and his cronies better hope the government gets to them before the any of the angry masses do…

    44. Anonymous says:

      Sean: Not the same anon identifying what is taking place with AIG as the world turns. And is there a method to my madness. Yes, all this discussion is not going to stop anything unless action is taken. A blowup in AIG would create havoc. BUT what I didn’t suggest in that last post is that could it be possible ol AIG did the reverse split to get a higher price to ALLOW those vulnerable to drive it down lower to get themselves out. After all it was trading in the low 1’s before the reverse split lifted it to the 22.96. AIG derivative losses are still huge. And the many involved simply can’t unwind without causing the company to fail. Yet here we are taxpayers supporting AIG to the tune of how many BILLIONS. Only to now watch the thugs drive the equity down again as the enforcement is blind/deaf/and dumb or COMPLICIT? Apathy abounds in this country. Sarah Palin was correct in making that statement. The majority on this board do not fall into that cattegory. Yet the next step beyond NOT being apathetic is ACTION. We aren’t there yet. However if the masses get a handle on what is going on with AIG, I submit we will see some action. HMMM to the chagrin of those who are complicit. Keep banging them Sean and others but a few CHAMPIONS are going to produce much more than 1000 who simply want to discuss the problem. WHERE ARE THE CHAMPIONS? KAUFMAN is ONE. JUDD/MARK/PATRICK, put the info in the hands of the champions and as you do get the masses involved.

    45. Paul says:

      The Swiss government is about to commit an act of war against the USA

      http://news.yahoo.com/s/ap/20090708/ap_on_bi_ge/eu_switzerland_ubs_secrets;_ylt=Al0MOJKaem.Cf068dqKdtSJllpd4;_ylu=X3oDMTNhbGduYjNoBGFzc2V0Ay9hcC8yMDA5MDcwOC9hcF9vbl9iaV9nZS9ldV9zd2l0emVybGFuZF91YnNfc2VjcmV0cwRjcG9zAzUEcG9zAzUEc2VjA3luX3RvcF9zdG9yaWVzBHNsawNzd2lzc3JlYWR5dG8-

      Thye did this with Marc Rich – Now they are going to protect Michael Milken and his band of merry criminals.

      UBS and other Swiss companies should be kicked out of this country. We the taxpayers are forced to bail out Swiss banks that got their dicks caught in AIG – and then the Swiss prepare a safe haven for the American criminals that buried our economy.

      This truly is war.

    46. sean says:

      Anon, 2 things 1) When you use Sarah Palin as any kind of reference that says what I need to know about you. 2)There is something about your posting style that is very suspicious, almost as if you were sent here to infiltrate and change the discourse. I hope I’m wrong but I don’t think so. Your comment about Goldman Sachs the other day was just one example. Apathy???. I have been here in this fight way longer than you have been here posting your links and will be here long after you’re called elsewhere. You subtle hint about me being complicit says a lot, you know the saying “The pot calling the kettle black” I have been onto you from day one. We’ll see who is here at the end of the day. I think the “Complicit” won’t be. Just watch. This only gets better and I hope that I am wrong about you..but if I’m not then let the chips fall where they may. Good day to you sir And now back on topic.

    47. Paul says:

      Mark Mitchell

      If you have significant information about how these predators used UBS and Swiss banking secrecy laws to destroy 2000 american companies and destroy the fabric of the US banking system I would encourage you to file a brief with the US Court in Miami.

      Some commentators are already saying that the UBS issues will all be settled out of court and that it is just about money. What a lie. There is now a judge in Miami that has these issues right in front of him.

      You have shown tremedous courage to tell this story. Please make sure to get your story into the right hands using the correct procedures so that the judge in Miami can properly understand the damage Swiss bank theft has done to the USA.

      Paul

    48. Anonymous says:

      Sean, if you don’t put your name in, the system uses anonymous. They’re not all the same person.

    49. sean says:

      If so, my apologies for my accusation. I thought it was all the same person(s)

    50. NOYBIZNIZ says:

      Sean, it is amazing to me how much time and energy you spend critiquing other people’s comments here. If you want to be a moderator, start your own blog….

      And you need to check your partisanship at the door…. whether you like it or not, both of the major parties have brought us to the point where this country now finds itself….

    51. sean says:

      NOYBIZNIZ, this is NO BUSINESS OF YOURS. It is between myself and Anon and we will handle it without your input!!Thank you and good day!!!

    52. Anonymous says:

      Sean.. No one was saying YOU were apathetic. And I used Sarah Palins words simply because she recently said them. The fact is the majoirty of Americans have are apathetic. The fact is if someone is identifying a crime and does NOT stop it they are either dumb or complicit. How else does one explain the stock action in an overstock or many others that have been victimized by ABNSS. So you are VERY wrong re this ANON who is NOT the same as another ANON. I am a long time supporter of BOBO, PATRICK and the great journalists on this site. I didn’t post the AIG to distract but to clearly identify that here is an example of ABNSS that is going on right before our eyes. It’s not past tense as with Dendreon and many others. IT is NOW. Yet where are the regulators. Should they be acting. ABSOLUTELY. Should every tax payer care. Absolutely! Yet the silence is deafening. So if I upset you I apologize but please do NOT get your exercisse from jumping to conclusions. The post was presented to alert many to what is happening re AIG…NOW… and to also bottom line it. Talk gets one nada. ACTION is what is needed! And there are plenty that can get involved if we FORCE them to do so. Be well.

    53. NOYBIZNIZ says:

      Sean,

      When you continually question the motivations of posters, chide people for merely expressing their opinions, or criticize people for sharing information that you deem “off-topic” in an online, public forum, you make it everyone’s business…. (especially since the alias “Anonymous” could be more than one person). And, since you have also previously done this to me specifically, you have therefore made it my business.

      I do appreciate some of the information that you have shared in this forum and I do think that you are helping our common cause. I encourage you to continue sharing that valuable information here. However, please remove your emotional attachments to politicians and ideologies and stop attacking anyone who dares to criticize those whom you support (i.e. Obama) and anyone who supports those whom you oppose…. (for example, your comment above attacking a poster for merely agreeing with a minor point made by Sarah Palin…. “When you use Sarah Palin as any kind of reference that says what I need to know about you.” was pretty juvenile and wholly unnecessary)….

      Again, check your partisanship at the door…. this is not a Right/Left or a Dem/Rep issue.

    54. Anonymous says:

      Patrick, Mark or Judd,

      Please tone down sean. He continues to cause major board distraction by attacking posters. I have pointed this out before. Although he tries to moderate, I find him more of a board distraction and bully. Many here add substance and direction to this fiasco but having a menace attacking others posts and ideas (whether sean) feels applies or is important is becoming a problem.
      sean, I am another anon, not the one you just attacked in case you are wondering.

    55. sean says:

      Anon 2, It will take a lot more than you to quiet me down. I mistook Anon 1 for your trash and multiple alias’ that you have used on this board and have apologized for that error already.
      Nobiz there is no partisanship on my part because I belong to neither party. Just can’t stand to see and read the crap that is posted about “this” new president, seems like a bit of racism to me and that is what is helping to divide this country today!! There was never any agenda for me about any political party. That was your imagination running wild. Please reread what you thoughtI said and what “In fact I said” OK!!! Peace Sean.

    56. sean says:

      Back on topic..

      Senators push SEC to rein in naked short sellingFont size: A | A | A1:37 PM ET 7/8/09 | Marketwatch
      WASHINGTON (MarketWatch) – A senator with close ties to the White House and hands-on experience in stock trading is leading the push to have the Securities and Exchange Commission take action against naked short selling, an abuse that he and other lawmakers argue was a key contributor to the financial crisis.

      “If the SEC doesn’t move because they can’t get three votes, I will have to do something,” said Sen. Ted Kaufman, D-Del., in an interview with MarketWatch. “It is pretty clear that there are people in the marketplace driving down stocks in an abusive manner and something should be done about that.”

      Kaufman, a long-time top aide to Vice President Joe Biden and a prominent figure in the Obama-Biden transition to the White House, replaced Biden in the senate when the Delaware lawmaker became vice president. Unlike most senators, Kaufman, who has an MBA from the Wharton School at the University of Pennsylvania, has experience with short selling investments and is familiar with a wide variety of securities trading strategies.

      Kaufman and other lawmakers want SEC to launch a pilot program to study whether a pre-borrow requirement would end the problem of naked short selling. Kaufman blames naked short sellers for expediting the downfall of Bear Stearns and Lehman Brothers.

      With a pre-borrow requirement an institution would be required to arrange formally to borrow shares, or “pre-borrow” before engaging in a short sale. In an emergency action last year, the SEC temporarily required hedge funds and other short-selling institutions to pre-borrow shares.

      Naked short selling is the practice of selling a stock short without first borrowing the security or ensuring that the security can be borrowed as is done in a conventional short sale.

      Without a pre-borrow requirement it is generally enough for a broker to determine that it has a reasonable basis to deliver the securities when an investor seeks to borrow shares for a short sale.

      Kaufman says his staffers are in discussions with the SEC on the pre-borrow issue, but he would like to see action. He indicated that if the agency doesn’t take action he may consider introducing legislation on Capitol Hill that would require the agency to consider a pilot program on the issue. Kaufman also said he could consider seeking to have that provision attached to broader bank regulatory reform legislation that is expected to be introduced in the fall.

      Kaufman and three other lawmakers on June 24 sent a letter to SEC Chairwoman Mary Schapiro seeking to have the commission establish a pilot program to study the pre-borrow requirement.

      An SEC official declined to comment on the letter.

      He argued that the SEC may be apprehensive about taking action against short-sellers, in part, because there haven’t been major problems lately. But he warns agency officials that there are legions of hedge funds with capital ready to take action should another concentrated downturn take place.

      “If someone has made a lot of money in a particular endeavor, he will take that opportunity to do it again in the future,” Kaufman said.

      Uptick

      Separately, under pressure from lawmakers and financial institutions, the SEC in April approved the release of five different proposals for reinstating the up-tick rule, a provision that would limit short selling.

      The five SEC proposals, which were put out for comment vary from reinstating an old rule to creating a new rule that would only apply in severe market conditions. The SEC expects to adopt one or more up-tick rules by the end of summer.

      The uptick rule, which was removed in 2007 after 70 years, allowed short sales only if the preceding sale boosted a company’s stock price by at least a penny. The uptick rule was designed to make sure short sellers couldn’t dominate trading in a stock to drive its price lower.

      Kaufman said he supported bringing back the uptick rule or a variation of it known as a “bid test,” which allows short sales only after a potential buyer bid at least a penny more than the company’s stock price. He would like to see a bid test combined with another SEC proposal that would ban short selling in a particular stock for the remainder of the day if its share-price dips 10% or more. However, Kaufman argued that 10% is likely too large a drop.

      “If it dips 10% that’s way too much,” Kaufman said.

      • huck says:

        Sean. Forget about the pissing contest. OK. That said, Sen.Kaufman is the best bet available to force our friends into sing sing. He isn’t even running for re election. Perfect candidate to aid in cleaning up the fraud wall street has become. It seems that a required contractual pre borrow is all that is needed. After all, if anyone selling actually had the right to sell, then everything would be legal.

    57. Anonymous says:

      sean,
      Just another Brotha with a chip on his shoulder spewing the race card? Idiots come in all political parties, shapes and colors including black. When you are flat broke, starving and on a waiting list dying just remember how lucky you are. Oh yeah, no more meds to skip.
      The miscreants have the pharmaceutical companies by the low ones.

    58. Anonymous says:

      Sean. you reacted to the name Sarah Palin. Don’t know why? It had nothing to do with Politics. It did have to do with truth. I could have said WILLIAM X who has also said the same thing re Apathy. Fact is the past admin failed us as did the one before that one and the one before that one. Unfortunately here and now this admin is failing us. Until those who are our leaders do engage those who are in place whose charter is to protect investors the reality is nothing is going to change. The question for all of us who KNOW that the system is inept/corrupt is how to fix it? It is very clear after some 5 years that writing about it and informing others is NOT working. IF it were then the liars/cheats/thieves could NOT be attacking AIG right in front of our eyes. And laughing as they do so. The fact they are able to do so strongly suggests COMPLICITY on those who are supposed to be vigilant. The reality is that we taxpayers are footing that bill and there should be OUTRAGE across the country. DOWN 10 POINTS i.e 45% in 5 trading days. And apprx 1 BILLION in market cap. Where is the outrage. Where are the watchdogs. If I can see it then others have to see it. AND THAT strongly suggests complicity on the part of MSM and those regulators in place. That would include govt for they do have theirs in place to watchdog AIG. On an aside I have NO idea who the other anon is but this anon is PRO DEEP CAPTURE/PRO BOBO and supports your efforts. Be well

    59. sean says:

      Anon 1 point taken and explained like a sensible individual. Anon 2/Jonas. “I’ll be your Huckleberry” As of now you are ignored because I don’t want to degrade this forum. We’ll meet elsewhere and settle this O.K. Here IP addresses are’nt hard to locate. LOL!!!

    60. harveydawabbitt says:

      is chapter 9 up yet?
      i feel like a kid on christmas eve waiting for ch 9

      just a side note…
      sean i took your post as a veiled threat.

      “We’ll meet elsewhere and settle this O.K.”

      NOY GOOD AND NOT WELCOME HERE.

    61. sean says:

      Harvey, non of your business, unless you are another of Jonas’ alias if so, take it anyway you want. just take it!!! And as others may state I am probably more welcome than you. Peace!!

    62. Anonymous says:

      Sean..thanks for the post from Sen Kaufman. He’s a champion. Hopefully some will feed him the info needed to coerce the inept and complicit to do their jobs. Without a doubt Denderon was blatant and obvious. No question about it. Yet so was BSC and LEH and both of them contributed to the cause. Yet here we are today and where are the perp walks. This recent attack on AIG is not to be taken lightly for if it collapses then as the saying goes, we haven’t seen anything yet. Hopefully Sen Kaufman and his supporters can get the needed action before we have another debacle that affects all of us. I’m a firm believer in Pro active versus Reactive.

    63. sean says:

      Anon 1 my pleasure, more to come I’m sure and again my humble apologies for the earlier misunderstanding. I have learned alot that I did not know before today thanks to you.

    64. Anonymous says:

      Sean. No apology needed. We are both trying to inform and fight the good fight. I’m hopeful that this tide will turn before we are exposed to another wave of attacks. I’d submit that there are those who DO know where AIG is expsosed still and what they are wrapped around re derivatives. That is probably why we are seeing the pullback in the indices so they can get many out who were caught short in this recent rally. Do NOT forget that way back in SEPT when they came with that SECOND ban on NAKED SHORT SELLING it was done after MS was screaming there would be blood on the hands of others if they did NOT act. Unfortunately the ban was put in place and then LIFTED. WHY? Because the ban was killing those caught short and they needed to give them relief or more than MADOFF would have failed. As a result we saw Merills losses increase and another wave of selling to get those exposed out at lower prices. Here and now I suspect similar is going on and AIG has alot to do with this. Yet, they must be careful for they were caught with LEH and that house of cards nearly busted the system. So while we can discuss the fabulous work that MARK and JUDD are doing. One must not neglect what is going on in front of our eyes for the battleground can shit quickly and we can be left fighting a small fire when a conglaration is about to occur. Have a great one. I’m working my network very hard to put pressure on those who can exact change. Kaufman is one of them. And that Jerk SHELBY and his ilk are not!

    65. sean says:

      They are still jumping ship. Wonder where she will end up landing..Devoise and Plimpton(sp) maybe?? Citadel hedge Fund?

      Lori Richards, Director of the Office of Compliance Inspections and Examinations, to Leave SEC
      Lori Richards, Director of the Office of Compliance Inspections and Examinations, to Leave SEC
      FOR IMMEDIATE RELEASE
      2009-153
      Washington, D.C., July 8, 2009 — The Securities and Exchange Commission announced today that Lori A. Richards, Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE), plans to leave the agency after more than two decades of government service.

      Ms. Richards has been the Director of OCIE since it was created by Chairman Arthur Levitt in May 1995. As its Director, Ms. Richards managed the SEC’s nationwide examination oversight programs for investment advisers, hedge fund managers, mutual funds, broker-dealers, clearing agencies, transfer agents, trading markets, self-regulatory organizations and credit rating agencies. She spearheaded numerous examination initiatives, including targeted examination sweeps focused on emerging compliance risks, as well as routine, cause, and other examination reviews of industry firms for compliance with the law.

      Ms. Richards created a risk assessment function and program in OCIE, and led efforts to enhance the surveillance and oversight of SEC-registered firms. To foster stronger compliance in the securities industry, under her leadership OCIE created the CCOutreach program and issued ComplianceAlerts and numerous public reports describing compliance practices in the securities industry. She upgraded training for the SEC’s examiners and helped to improve the use of technology in the SEC’s oversight of the securities industry.

      During her tenure, she helped the agency identify and address a wide range of compliance issues, including abusive trading by exchange specialists, shortcomings in credit rating agencies practices and disclosures, conflicts of interest by pension consultants, asset valuation problems, insider trading, sales of securities to seniors at “free lunch” seminars, soft dollars, gifts, gratuities and other undisclosed business arrangements, mutual funds’ payments for “shelf space” and many more issues.

      Prior to becoming the Director of OCIE, Ms. Richards was Executive Assistant and Senior Adviser to Chairman Arthur Levitt on policy and legal matters affecting the SEC. Prior to that, she was Associate Regional Administrator for Enforcement in the SEC’s Los Angeles Regional Office, and held other positions in the SEC’s Enforcement Program in Los Angeles from 1985 through 1994.

      “Lori is known widely for her passionate and tireless service to the agency,” SEC Chairman Mary Schapiro said. “I’ve had the honor and privilege of knowing and working with Lori for many years, and have always appreciated her dedication, leadership and integrity. I respect her decision to leave the SEC and am grateful for her many years of public service.”

      Ms. Richards said, “I’m honored to have been part of the SEC team, and to have had the opportunity to work for American investors. I’m enormously proud of the dedication and professionalism of the men and women in the SEC’s examination program across the country, and of the important work we did together. After 14 years leading the SEC’s exam corps and more than two decades at the SEC, I’ve decided to take on new challenges.”

      Ms. Richards received Presidential Rank Award for Distinguished Service in 2001 (the highest civilian award in the federal government), and the Presidential Rank Award for Meritorious Service in 1997. She received the SEC’s Distinguished Service Award in 2008 (the SEC’s highest award), and the Irving Pollack Award in 1992. She has a J.D. from Washington College of Law, and a B.A. in Political Science from Northern Illinois University.

      OCIE Associate Director-Chief Counsel John Walsh will serve as Acting Director of OCIE when Ms. Richards steps down on August 7. Mr. Walsh is a 20-year veteran of the SEC, including service in the Office of General Counsel, the Division of Enforcement, and as Special Counsel to Chairman Arthur Levitt. He has been a member of OCIE’s staff since its creation in 1995.

      # # #

      http://www.sec.gov/news/press/2009/2009-153.htm

    66. sean says:

      Here is some very welcomed press.. This is bound to make some of our very own readers cringe!!LOL

      News for ‘OSTK’ – Overstock.com Comments on DeepCapture.com Serialized Article: ‘Michael Milken, 60,000 Deaths, and the Story of Dendreon’ –Journalist and CEO Roles Clarified
      SALT LAKE CITY, July 8, 2009 /PRNewswire-FirstCall via COMTEX/ — Overstock.com, Inc. (Nasdaq: OSTK) today commented on a recent series of article installments appearing on DeepCapture.com, an investigative journalism web publication co-founded by Patrick Byrne, Chairman and CEO of Overstock.com.

      The serialized article was written by Mark Mitchell, formerly an editorial page writer for the Wall Street Journal, a correspondent for the Far Eastern Economic Review, chief business correspondent for Time magazine in Asia, and assistant managing editor of the Columbia Journalism Review. The article investigates the Food and Drug Administration’s actions regarding a prostate cancer vaccine, and actions taken by a group of short-selling hedge fund managers and Wall Street figures with ties to organized crime, 1980’s convicted stock-manipulator Michael Milken, and TV’s host of Mad Money, Jim Cramer.

      “I strongly favor Mark’s efforts in bringing this story to light,” Byrne said, “but I think it best to clarify that my second career as one of DeepCapture.com’s journalists is separate and apart from my role as Chairman and CEO of Overstock.com.”

      The article, entitled Michael Milken, 60,000 Deaths and the Story of Dendreon, centers on the travails of the biotech company, Dendreon, which was attacked by Wall Street operators right at the time when it seemed that the company’s promising treatment for prostate cancer would receive FDA approval. Ultimately, the treatment was derailed by an unprecedented lobbying effort, causing Dendron’s stock to tumble.

      The DeepCapture.com website notes that one of its purposes “is to expose Wall Street money managers who engage in illegal naked short selling, stock manipulation, and the deliberate destruction of public companies.” The site also states that though DeepCapture.com “was initially funded by Patrick Byrne, CEO of Overstock.com . . . it is not part of Overstock.”

      Jonathan Johnson, President of Overstock.com, welcomed the clarification, but went on to note that “Shareholders of Overstock.com and officers and shareholders of public companies throughout the United States are tracking the Mitchell article installments with great interest. There can be little doubt this nation is in an unprecedented time of financial hardship, and disclosures of this type are useful to help us understand the times we are in.”

      For more than four years Overstock.com has been at the forefront of the fight against Wall Street theft of American savings via rigged IPO processes, naked short selling and other settlement failures, coordinated bear raids, and regulatory capture. Naked short selling, a practice recently identified as accelerating the financial downfall of some of Wall Street’s largest companies, including Bear Stearns, Lehman Brothers, and AIG, is one of the most hotly debated financial regulatory topics in Washington D.C., where pressure is mounting on the SEC to step up enforcement efforts and further tighten loose short-selling rules that allow the manipulative practice to persist.

    67. Jim Hall says:

      Shelby is a vile creep who must have been praying for the financials to crash irrevocably…

    68. H says:

      I have posted this a long time ago on IV.

      What did Dr. Scher have in Mind During the Advisory Committee Voting?

      Please check page 386 of the AdCom’s Transcript (URL: http://www.fda.gov/ohrms/dockets/ac/07/transcripts/2007-4291T1.pdf )

      This page is the transcript of the actual VOTING

      QUOTE:

      “DR. SCHER: I think we are really
      poised at the beginning of what will be
      hopefully an outstanding era of
      immunotherapy. I think there is sufficient
      evidence demonstrated which justifies the
      definitive study, and obviously there are
      investors in that who concurred, but I think
      it does not meet the — as the question was
      phrased, to establish the efficacy. I think
      this is still an open question…”

      Read this carefully!

      What does the good doctor have in mind during the VOTING … read carefully … …. …. INVESTORS???!?!??!?

      RE-QUOTE:
      “DR. SCHER: I think we are really
      poised at the beginning of what will be
      hopefully an outstanding era of
      immunotherapy. I think there is sufficient
      evidence demonstrated which justifies the
      definitive study, and obviously there are
      investors in that who concurred, but I think
      it does not meet the — as the question was
      phrased, to establish the efficacy. I think
      this is still an open question…”

      So what was on Dr. Scher’s mind when VOTING at the AdCom?

      One may then speculate what was his motivation when writing the letter that was “leaked” to the Cancerous Letter …. was it the Science? the Patients? … no no no … it was INVE$TOR$

    69. Anonymous says:

      A programmer at Goldman Sachs released source code that proves they look at pending trades, then adjust their own trades automatically to profit accordingly.

      http://market-ticker.org/authors/2-Karl-Denninger

    70. Anonymous says:

      More on GS. You can even download GS’s source code yourself.

      http://cryptogon.com/?p=9745

    71. Anonymous says:

      c r y p t o g o n . c o m / ?p=9712

      remove spaces put in as the deepcapture system is censoring.

    72. sean says:

      Back on topic for a moment, does anyone here realize how shrewd a move it was to put out a p.r. of this magnitude today right after Kaufman threatened the SEC? THIS IS HUGE!! I see one poster still trying to guide the discourse away from Miliken and his cronies and from this huge News release and toward Goldman Sachs. Well if anyone is interested as an off topic you can look at this Website goldmansachs666.com for all of Goldmans shenigans. But back to this last check move by Dr. Byrne. I think the stage has been set for a showdown. They (the miscreants) can’t hide from this now “IT’s OUT IN THE OPEN” They have been called out and have to answer to their critics. This is going to get even better in a hurry RIGHT NOW!!!!

    73. sean says:

      Anon1, if you were a congressman and you saw what was hhappening to AIG (being shorted to death again) after giving away 180 billion of taxpayers money would you have a b.f. and call the shorters to task and demand that they leave this now goverment entity alone or face the wrath of CONGRESS? What gives here? Are our regulatory agencies corrupt,captured and impotent against Manipulative shorters or what? I think we know they answer but I would love to see someone pose that question to someone like Elijah Cummings, Kaufman or Dennis Kucinich!!

    74. milkman says:

      i do hope you go further into the “mistaken” efficacy question. there was no mistake in that…someone deliberately tried to sneak that in there knowing almost NO drug (unless it was an absolute cure) could get a “yes” for “establish efficacy” according to the FDA’s definition of that term. it was no surprise that when the briefing docs for the AC meeting came out the day before, that the stock tanked. the people against provenge thought they had it in the bag…

    75. Kilroy.Killbasher says:

      BTW, why aren’t you people taking advantage of the Deep Capture Forum (regular message boards)?

    76. Cistercian says:

      Excellent series.I want to thank you for your hard work.I think it is time for everyone’s eyes to be opened to how incredibly corrupt wall st is.Naked shorting, Goldman’s robot, etc.
      These criminals are ruining the standard of living of the entire planet.I hope this story gets the ball rolling, as there appears to be virtually no limit to the power crazed idiots avarice.
      You would think the FBI and Military Intelligence would clean this up, if for no other reason than the clear and present danger these activities pose for the security of the United States.I hope investigations are in progress that will effect real change in the Markets behavior.Otherwise, it might be impossible to overstate the financial and social doom that is to come.

      You guys are brave…keep up the good work!

    77. sean says:

      Kilroy, to me its easier to post and follow here. Plus I have made some friends here that won’t venture over to”The Forum” for many reasons.(LOL) What did you think about Overstock’s P.R. today? You think Miliken and his boys are regrouping now that they have been officially outed?

    78. iStandUp says:

      Here is a link to the Overstock.com PR yesterday (07-08-2009) Sean mentioned above – Thanks Sean:

      http://sev.prnewswire.com/retail/20090708/LA4372608072009-1.html

    79. Anonymous says:

      Sean. Re AIG. Well there it is this am at 10.73 after one of the firms gives it a downgrade: GS. NOW that takes hubris.

      Re congressman etc, it just reminds me of the movie 3 DAYS OF THE CONDOR with Robert Redford where Redford at some point realizes that the those he thought to be good guys were in fact BAD GUYS. Bobo atated recently in one of his posts that this demise was INTENTIONAL. So if one accepts that then it’s easy to understand why those who could do something are NOT doing anything.

      I am a strong believer that at some point the masses will become enraged. A champion will rise up and inform them. When that happens it will not be pretty for those who mislead/and failed to do their jobs. HISTORY is repelte with examples of what occurs when the masses experience outrage. This time will be no different. It is only WHEN that fulcurm point is hit and what the final straw is that breaks that camels back.

      In the meantime, the article re overstook was a good one. The article showing the rats continue to jump ship. Yet what I look for is that statement that comes out of no where that reveals changes. Have a great day and NOW AIG is at 10:37.

    80. sean says:

      Anon 1 AIG down 21% to $10.00 This is so sad. Our economy is being naked Shorted/Shorted to death and our regulators allow it to happen. You were right. It HAS been time for us to stand up and do something!1Thanks Patrick, Mark Judd and Deepcapture. Let these miscreants burn in HELL!!!

    81. sean says:

      Sorry Anon1 I wrote my lasst post before reading your (lol) You know what they say about “Great Minds”(LOL) Peace S.

    82. Anonymous says:

      Sean. RE AIG: Keep in mind HOW MUCH we have put up to bail out this company due to the nefarious behavior that were involved re leverage thruout the world. Then consider the percentage the USA TAXPAYER now has in this company. Add to that there are govt regulators close at hand and monitoring what the company is implementing. Yet here we are with a reverse split that the govt had to know about and also is watching the stock be taken down dramatically in days. As I suggested yesterday this type of action can only occur if it is ALLOWED. I’m sure there are those who are deep into the six degrees of everything that understand why this stock has been allowed to be taken down. Yet those who think that talking about the problem/writing about the problem is going to solve the problem are abit naive. Yet every taxpayer should be up in arms. Every media station should have this as a number one subject. Something like. AIG does a reverse split and the stock tumbles 50% in 6 trading days causing a loss of market cap to the investors or which the taxpayer is one. Yet SILENCE..except hearing GS thinks AIG is crap. SMILE

      Have a good one. But keep in mind these clowns sat on their hands as they took down Bear Stearns. These same clowns got stupid with LEH. And if there is some nefarious types out there to crash the software side then Ol AIG could find itself in deep doo doo and that would result in a horendous result to the financials and markets. So YOU..someone needs to get some champion involved. I’m certain there are those here who do have the stroke. The question is why isn’t it being applied? I guess nearly destroying the lives of how many millions isn’t enough? Shameful.

    83. Sonia says:

      You mentioned UBS. We no longer have an account with these …*!!#’s. I am 74 and my husband is 81. They sold us over $14K of Fannie Mae preferred stock three months before it crashed; when we heard bad things about it on TV and the stock was dropping like a rock we called UBS for advice; the broker said, “I asked my desk and they say do nothing, it’s volatile.” We took his advice – and finally sold for 3c on the dollar. They charged us over $320 commission to sell us that garbage. If you do business with UBS, beware!!!

    84. You could definitely see your expertise within the paintings you write. The arena hopes for even more passionate writers like you who are not afraid to mention how they believe. All the time follow your heart.

    85. Sun says:

      I wonder to what enxtet psychology is over-rated an an explanation of performance. My reasoning is this: what is generally regarded as psychological effects on a share price is probably more rightly the result of inherent uncertainty. After all, if you could be sure that investors were behaving irrationally, then it would be easy to make a call.So, in Nokia’s case, the benefit of hindsight tells us that investors over-reacted to the news over a longer timeframe. But things are never clearcut. In the case of Eastman Kodak, for example, Bill Miller was holding all the way down to almost zero. Investors were, in fact, under-reacting to news over a period of many years.The fact that it’s usually difficult to decide whether investors are over or under-reacting suggests to me that’s it’s usually not psychology that’s the problem, but the inherent problem of predicting the future.Mark.

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