1167: Nine Dash Line

Adam Curry & John C. Dvorak

3h 0m
August 25th, 2019
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Executive Producers: Sir Euchre of Sandy Ridge, Sir Onymous of Dogpatch and Lower Slobbovia, Sir Luke of the Northern Denver, Ihor Marusyk, Anonymous

Associate Executive Producers: Lady Butters of Naragansett Bay, Sir Richard of the Ludwigs, Sir David Fugazzotto, Baron of KC, Craig Lawton, Christopher Blanco, Matthew Barr

Cover Artist: Darren O'Neill

Chapters

0:00
Start of Show
Woodstock
1:39
Jordan Peterson Deepfake Generator Shuts Down
Woodstock
7:57
Adam's Dinner with Sir David Fugazzotto
Woodstock
11:25
Amazon Rainforest Fires
Woodstock
27:20
Danish Member of Parliament Ida Auken's Message to Trump
Woodstock
32:45
France's Tax on Digital Services
Woodstock
36:58
Allen Frances on CNN: "Lumping the Mentally Ill With Trump is a Terrible Insult to the Terribly Ill"
Woodstock
43:12
Ben Shapiro: "I Have Schizophrenia"
Woodstock
46:12
Overstock CEO Patrick Byrne
Woodstock
1:04:18
Credits
Woodstock
1:47:23
Hong Kong Protestor's Message to Trump
Woodstock
1:48:53
Trump Orders US Businesses to Leave China
Woodstock
1:55:58
China
Woodstock
2:10:46
Italy's Political Crisis
Woodstock
2:13:07
Brexit
Woodstock
2:13:45
Brexit Day Beach Party in Beverwijk, The Netherlands
Woodstock
2:14:21
Over 100 Lung Illness Reports and a Death Potentially Linked to Vaping
Woodstock
2:22:31
Donations
Woodstock
2:30:44
Birthdays & Title Changes
Woodstock
2:32:31
Meetups
Woodstock
2:37:22
NBC News: 'Americans Will Soon Need Real ID to Fly'
Woodstock
2:44:42
NBC News: 'After School Nazi Salute Video, More Racist Videos Emerge'
Woodstock
2:48:53
John's Glitching Internet Connection
Woodstock
2:51:23
US Food and Drug Administration to Allow Over-The-Counter Sales of Hearing Aids
Woodstock
2:54:33
End of Show
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TODAY
Dinner with Sir Dave, Dame Melody and Lady Isabella Fugazzotto
John's new spam filter
No Agendroid App Update
Hi Adam, hopefully you have not gotten inundated with too
many cranky emails, but my No Agendroid app has been crashing since last
Thursday due to a glitch in the RSS description for episode 1164. I mean
Russian cybertrolls.
The glitches are now fixed, but due to draconian measures
taken by Google I cannot upload a new version to the Play Store without
rewriting a significant portion of the app.
I have instead made the app available for free on my own website directly so
listeners can still get the app:
http://www.noagendroid.com
I'm working on a brand new version and hope to have it back
up on the app store by the end of the year. I've removed the broken
version from the Google Play Store so there won't be any new downloaders
getting the broken app, but if you are getting people complaining maybe you
want to mention it on the next episode.
Thanks again for such a great show, we couldn't navigate
this TDS Clown World without you guys!
ITM,
Rick
G7
France's Emmanuel Macron Expounds as the World Burns - The Atlantic
Sat, 24 Aug 2019 04:36
The French president has an answer for every problem, but is anyone listening?
Rachel Donadio Aug 22, 2019 Pool / ReutersIt was a perfect late-summer evening when President Emmanuel Macron'--tanned and super-energized in a dark-blue suit and crisp white shirt'--held forth before the Elys(C)e press corps on matters of international import. Posh Paris was largely out of town. Nearby, boulangeries, shops, and the French National Assembly were still closed for the August holiday. Tumbleweeds practically blew down the Boulevard Saint-Germain, its caf(C)s filled with tourists and Instagram influencers.
But Macron had a message to deliver: I'm the last man standing, defender of multilateralism, ice-cool head in a hot and ever warming world.
It wasn't a new message from him, but one that he felt bears repeating. On Tuesday, Macron met with Russian President Vladimir Putin. Today, he met with British Prime Minister Boris Johnson'--perfidious Albion incarnate'--and the two clashed over Brexit; he will also meet separately with the Indian leader Narendra Modi and Greece's Prime Minister Kyriakos Mitsotakis. Then this weekend, Macron will host the G7 summit in Biarritz, at the bend in the Atlantic coast where France meets Spain. A 19th-century seaside resort at the end of the season is a good setting for a relationship in distress. Or many relationships in distress'--the European Union, the transatlantic order, the global order.
''We are experiencing an absolutely historic period in our international order,'' Macron said yesterday. There is, he said, a ''very profound crisis of representative democracy'' in Europe. There's also a crisis of climate change, biodiversity, technology, and migration, to say nothing of ''a crisis of inequality, which is the crisis of contemporary capitalism.'' The global order is shifting and the world risks a ''bipolarization between the United States and China,'' Macron said. ''The risk is a loss of sovereignty'' in which other countries would become ''vassals'' of the two new powers. ''I don't want that for Europe or for France,'' he said.
Macron was just getting warmed up'--he followed 30 minutes of remarks with a two-hour question-and-answer session. But the more he spoke, the more he expounded so articulately on every question thrown his way, the more he asserted French and European power, the more it seemed the moment might be passing him by. Macron could look at a burning building and see it as an excellent opportunity to better understand the role of oxygen in combustion. He examines the flames, he describes them well, but is it in his power to put them out?
Read: Macron and Salvini'--two leaders, two competing visions for Europe
There were his dealings with Trump, who earlier that day had called off a planned visit to Denmark apparently because it wouldn't entertain the idea of selling Greenland to the United States. It was ''very simple,'' Macron said: Anything Trump pledged as a campaign promise is non-negotiable'--the U.S. pulling out of the Iran deal and the Paris climate accords'--but it's still possible to ''convince him'' and ''do real things'' on other issues, such as Syria. When Trump slowed down a bit after announcing the U.S. would withdraw immediately from Syria, ''I think it was our exchanges that let him stay,'' Macron said.
Then it was on to Russia, and the importance of keeping Russia in the conversation (on Iran, Syria) and closer to Europe, and eventually back in the G8; Russia was kicked out after invading Crimea in 2014, but Macron didn't spell out what the conditions would be for its return. Putin, Macron seemed to suggest, basically needed some back-slapping. After the Cold War, Russia needed to find a new enemy, an external conflict, but really, Macron said, they should lay off on the ''cyberaggression.'' ''The Russian people live like a great power and a great European power,'' Macron said. But Russia's population is ''declining and getting old, so it's a country that has to choose a destiny.''
Then it was on to why India needs to be involved in fighting climate change, how artificial intelligence is the future, why Iran needs to stay in the nuclear accord, how the French police handled the ''yellow vest'' protests, the importance of economic development in Africa, how climate change threatens biodiversity'--and lots and lots about le num(C)rique, or technology, which seems to be French shorthand for It's Google's world, we just live in it. Macron is keen on Europe taxing Google, Apple, Facebook, and Amazon, which operate out of Europe via structures that largely allow them to avoid paying local taxes.
In all, Macron gave a command performance. All of Macron's performances are command performances. He is nothing if not a gifted orator, with a brilliant command of policy details, an awareness of the historical moment, Europe's dark past, what's at stake. He is right. He is always right. He wants to remind you that he is always right. He seems to be saying: The world may be on fire, but don't worry; I'm here. He's a rational man, but these are irrational times. When world leaders meet in Biarritz this weekend to grapple with a new world order, will they listen to him? Will anyone?
We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.
Rachel Donadio is a Paris-based staff writer at
The Atlantic, covering politics and culture across Europe.
U.S. Launches Probe of French Digital Tax - WSJ
Sun, 25 Aug 2019 12:32
U.S. trade officials are launching a probe of France's planned tax on digital services, kicking off a spat with Paris as well as a global fight over how to tax the growing internet economy.
U.S. Trade Representative Robert Lighthizer said Wednesday his office would launch a probe of the digital services tax, or DST, under the same broad law the Trump administration relied on for its trade conflict with China.
''The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,'' Mr. Lighthizer said in a statement. ''The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.''
The French proposal, likely the first in a wave of proposed digital-services taxes to take effect in Europe, will apply a 3% tax on revenue that companies like Alphabet Inc.'s Google or Amazon.com Inc. reap in France from such activities as undertaking targeted advertising or running a digital marketplace.
France's Senate is expected to vote Thursday on the final text of the bill, marking the final step before the law is promulgated. France's Finance Ministry didn't reply to a request for comment late Wednesday about the U.S. investigation.
Officials and business leaders in Washington have argued that the tax unfairly targets American companies and could lead to double taxation and multiple new overlapping tax regimes.
The French tax and others like it have spurred a Paris-based group of developed nations to seek a new set of rules for how nations should divide up taxing rights. Those negotiations are ongoing, and France has decided to implement its unilateral tax in the meantime.
France has portrayed its tax as a way of keeping up pressure to reach a multilateral solution at the Organization for Economic Cooperation and Development. French officials credit the digital-tax proposal as helping push the U.S. to the international negotiating table, potentially heading off similar levies in other countries such as Spain and the U.K. Paris officials have also pledged to repeal the national tax once there is a global agreement on how to tax the digital economy.
Yet the Trump administration has repeatedly shown it won't shy away from taking its own unilateral actions when threatened with what it sees as unfair economic conditions. U.S. officials have expressed impatience with achieving consensus in multilateral forums such as the OECD and World Trade Organization.
Silicon Valley-based firms will be hit by the tax because it applies to companies with more than '‚¬750 million ($844 million) in annual global revenue, including at least '‚¬25 million in France.
''France's new digital services tax disproportionately affects innovative American companies while carving out French competitors,'' said the Washington-based National Foreign Trade Council, which represents businesses. ''The design of this new tax suggest it was tailored specifically to impose a financial burden on successful U.S. companies.''
Google and Facebook Inc. said when the tax was formally proposed that they pay all the taxes they owe in every country where they operate. A Google spokeswoman said the company pays the ''vast majority of its corporate income tax'' in the U.S. A Facebook spokesman said the company backs the OECD talks and pointed to a change it made in 2017 to book some ad revenue in countries where it operates.
Until the U.S. probe began, multilateral tax discussions in Washington had typically fallen under the Treasury Department, with little public intervention from other agencies or Mr. Trump.
Wednesday's announcement could change that, in some sense connecting the tax talks with other trade fights. Mr. Trump in the past has linked disparate trade and economic disputes when confronting other countries, in part to increase leverage.
The face-off with France comes as Mr. Lighthizer's office is seeking to negotiate a trade agreement with Europe, and French officials have opposed U.S. calls to include agriculture in the talks. At the same time, Mr. Trump is presiding over a trade case that could penalize U.S. auto imports from the European Union or other economies.
Key U.S. lawmakers on trade-focused committees oppose Mr. Trump's threatened tariffs on imported cars, but many support a push to include agriculture in talks with Europe. U.S. lawmakers from both parties back an investigation into the French tax.
''The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost U.S. jobs and harm American workers,'' said both the top Republican and top Democrat of the Senate Finance Committee, Sen. Chuck Grassley (R., Iowa) and Ron Wyden (D., Ore.), respectively, in a joint statement. ''The United States would not need to pursue this path if other countries would abandon these unilateral actions and focus their energies on the multilateral process that is underway at the Organisation for Economic Cooperation and Development.''
'-- Richard Rubin and Sam Schechner contributed to this article.
Write to William Mauldin at william.mauldin@wsj.com
Green New Deal
Fires in Brazil
Sun, 25 Aug 2019 15:03
Editor's Note: This story was updated on 22 August 2019 to clarify our data source.
In the Amazon rainforest, fire season has arrived. The Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA's Aqua satellite captured these images of several fires burning in the states of Rond´nia, Amazonas, Par, and Mato Grosso on August 11 and August 13, 2019.
In the Amazon region, fires are rare for much of the year because wet weather prevents them from starting and spreading. However, in July and August, activity typically increases due to the arrival of the dry season. Many people use fire to maintain farmland and pastures or to clear land for other purposes. Typically, activity peaks in early September and mostly stops by November.
As of August 16, 2019, an analysis of NASA satellite data indicated that total fire activity across the Amazon basin this year has been close to the average in comparison to the past 15 years. (The Amazon spreads across Brazil, Peru, Colombia, and parts of other countries.) Though activity appears to be above average in the states of Amazonas and Rond´nia, it has so far appeared below average in Mato Grosso and Par, according to estimates from the Global Fire Emissions Database, a research project that compiles and analyzes NASA data. (Note that while the chart label says 2016, the 2019 data is listed on all of the plots as a green line. Roll your cursor over the green 2019 block below the plot to isolate the 2019 numbers.)
NASA Earth Observatory images by Lauren Dauphin, using MODIS data from NASA EOSDIS/LANCE and GIBS/Worldview and VIIRS data from NASA EOSDIS/LANCE and GIBS/Worldview, and the Suomi National Polar-orbiting Partnership. Caption by Adam Voiland.
Forecast - Global Fire Emissions Database
Sun, 25 Aug 2019 15:04
Amazon RegionThe fire season in the southern Amazon runs from June to November, with peak burning activity in September along the eastern and southern Amazon forest frontiers, a swath sometimes referred to as the "arc of deforestation". Year-to-year variability in fires is strongly linked to climate anomalies, and both the El Ni±o Southern Oscillation in the Pacific Ocean and Atlantic Multi-decadal Oscillation influence drought conditions and the risk of fires across the southern Amazon.
2019 Fire Season Updates:August 24th, 2019Figure: Cumulative active fire detections through 8/22/2019 from MODIS and VIIRS confirm that 2019 is the highest fire year since 2012 (the start of the VIIRS record) across the seven states that comprise the Brazilian Amazon. In addition, fires in 2019 are more intense than previous years, measured in terms of fire radiative power, consistent with the observed increase in deforestation2019 Fire Season Forecast:To follow the evolution of the current fire season for the 10 forecast regions (6 states in the Brazilian Amazon, 3 regions in Bolivia, and Peru), click the radio dials showing the predicted fire season severity for 2019 or scroll down for more information. Figures are updated daily, based on active fire detections from the MODIS sensors on NASA's Terra and Aqua satellites.
Sea surface temperatures (SSTs) in the tropical Pacific Ocean and North Atlantic Ocean during early half of year 2019 were higher than the mean values during the 2001-2015 period of satellite fire observations. By combining the SSTs in both oceans, we projected a high fire risk for almost all regions (except for Santa Cruz) in the Amazon during the 2019 dry season. Amazonas and Par have the highest risk according to our forecast. For more information on the 2019 Amazon fire forecast, please see the fire forecast page (available in English, Spanish, and Portuguese).
Estimated fire emissions are based on the historic relationship between active fire detections and GFED fire emissions for each region (see GFED Data for more information). Estimated fire emissions for 2016+ are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Acre, BrazilCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.73)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Amazonas, BrazilCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.68)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
El Beni, BoliviaCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.82)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Maranh£o, BrazilCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.61)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Mato Grosso, BrazilCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.85)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Pando, BoliviaCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.79)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Par, BrazilCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 ( r2 = 0.48 )*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
PeruCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.80)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Rond´nia, BrazilCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.83)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
Santa Cruz, BoliviaCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.83)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
TotalsCumulative Monthly Fire Counts Last Updated: August 24th, 2019Click on any entry in a chart's legend to hide it from the chart. The chart will rescale accordingly. Hide all past years to allow for a better view of the current fire season. *2016+ fire counts are based on latest release of MODIS L2 Fire Product.
Annual Emissions Estimates Last Updated: August 24th, 20192016+ emissions estimates are based on the linear relationship between fire counts and GFED emissions from 2003-2015 (r2 = 0.83)*2016+ estimates are preliminary, and should be interpreted with caution. The historic relationship between fire detections and emissions does not account for potential differences in fire types and climate conditions in the current year, variability that is considered using additional data on burned area and climate in GFED.
2015 Fire SeasonIndonesian fire season progressionLast and final update: November 16, 2015.
Heavy rains have been reported in Kalimantan starting October 26 and since then the fire season has been coming to an end. There are still fires burning but nothing compared to those that burned earlier in the season.
This figure shows how the current fire season progressed in relation to previous ones (2003-2014). On October 21 this year passed 2006, which was the highest fire year in the MODIS satellite era, 2000 onwards. The main fire season is August through October when the southern part of Indonesia experiences its dry season. However, in some years including 2014 the fire season in the northern part of Sumatra is prominent as well, burning in February and March.
Emissions estimatesWe expect that the GFED estimate for the 2015 fires will be about 1.75 billion metric ton of CO2 equivalents, with substantial uncertainty.
Above the greenhouse gas emissions from Indonesian fires are plotted according to GFED for 1997-2014 with estimates for 2015 based on active fires. These are converted to emissions based on a relation between the two, established using data from previous years, see the figure and text below for more information. The numbers on the right indicate fossil fuel CO2 emissions for various countries for 2013 derived from the EDGAR database.
In general, fire CO2 emissions are compensated for by regrowing vegetation after a fire and should not be compared to fossil fuel emissions, but that is not the case when forests are burned to make way for other land uses or when peat is burned. That is exactly what happens with the vast majority of the fires in Indonesia and these fires are thus a net source of CO2 as well as other greenhouse gases.
Conversion of active fires to emissions
This graph shows how we derive the 2015 estimates. The grey dots indicate the total annual active fire observations in Indonesia on the horizontal axis and the corresponding GFED estimates are on the vertical axis with the years 2006 and 2014 labeled. Each grey dot represents one year between 2003 and 2014. The relation is not perfect and adds some uncertainty to those that are in these estimates already. The non-linearity is probably related to smoke obscuration of active fires in high fire years.
Note: we have adjusted the trendline describing the relation between active fire detections and emissions on October 20 to better represent the high fire years, especially 2006. This led to a small increase in emissions compared to the relation used before October 20.
Daily emissions
Using the conversion from active fires to emissions we can calculate daily emissions which is shown above. This has generated a lot of media interest after WRI showed that on many days the rate exeeds that of fossil fuel emissions in the US (roughly 15 million ton CO2 per day). Keep in mind though that these fires do not burn continuously at this rate: on a global annual scale they are far less important for climate change than other sources of greenhouse gases.
A few things to consider:
These estimates contain a substantial amount of uncertainty related to the complex fire situation in Indonesia. We would very much welcome opportunities to lower uncertainties which is poorly supported by the regular national agencies. Top-down studies using atmospheric observation provide some confidence in the emission estimates provide here, see for example Aouizerats et al. (2014) and Van der Werf et al. (2009) GFED starts in 1997, there is information on earlier years thanks to work of, amongst others, Wooster et al. (2012) and Field et al. (2009). That work supports the tight link between (El Nino related) drought and fires. However, El Nino is not the root cause: the work of Field shows that without humans these extreme fire seasons would not exist. In addition to greenhouse gas emissions from fires, drainage of peatlands also leads to CO2 emissions from decomposition. The emissions are not as visible as those from fires but may be of similar magnitude according to the work of Hooijer et al. (2010), although not as variable from year to year. For more information please contact Guido van der Werf
Webcam S£o Paulo panorama, S£o Paulo, Brazil - Online Live Cam
Sun, 25 Aug 2019 15:30
S£o PauloIn our live stream camera there is the beautiful Brazilian bustling city of S£o Paulo, the vibrant metropolis among picturesque rain forests. S£o Paulo, which perfectly demonstrates a webcam online, known in Brazil for its Museum of Modern Art (MAC), and the Pacaembu Stadium gained worldwide fame thanks to the fact that Pele -''king of football'' often played here. Also, S£o Paulo has an interesting ''Butantan'' snake reserve.Being in S£o Paulo, which live stream is clearly visible in our webcam , start the walk from the central square of the city - Pra§a da S(C). Take a look at the Government House - Palacio dos Bandeirantes.
Visit Ibirapuera Park with amazing water channels and scenic lakes. Here you can relax in the shade of the trees or work out on the sports fields. There are such interesting monuments as the honor Obelisk of the revolution of 1932 and the monument of Bandeiras.Traveling in S£o Paulo, whose panorama is perfectly visible in our online live camera, take a look at the popular worldwide area of Liberdade with the world of Japanese culture and traditions. Here you can buy many amazing Japanese products. Walk along the main street of this unique area - Rua Galv£o Bueno. You can taste the delights of Japanese cuisine in restaurants located near the Rua Thomaz Gonzaga Square.
At the corner of Rua Galv£o Bueno and Rua S£o Joaquim streets there is the Japanese Immigration Museum with a splendid garden on the roof. You will be lucky, if you can see the interesting Canon Ceremony, which takes place every month in the Buddhist Busingi Temple.In Sao Paulo, with our live cam , there is one of the best showrooms - the State Pinakothek branch (Pinacoteca do Estado de S£o Paulo) with the works of Brazilian modernists Tarsila do Amaral, Anita Malfatti, Candido Portinari.In S£o Paulo, which panorama is perfectly visible online there is the old historic district with the Cathedral in the center.
stream in collaboration with climaaovivo
Report a mistake !
<iframe width="720" height="410" style="border:0" webkitallowfullscreen="true" scrolling="no" mozallowfullscreen="true" allowfullscreen="true" src="https://balticlivecam.com/cameras/brazil/sao-paulo/sao-paulo-panorama/?embed"></iframe><div>Broadcast is powered by <a href="https://balticlivecam.com/cameras/brazil/sao-paulo/sao-paulo-panorama/">Baltic Live Cam</a></div>The commercial center of the city is located in the districts of Itaim and Brooklyn.
Visit the Museum of Painting; State Art Gallery; Ipiranga Museum, founded by Emperor Pedro I; City Museum of Fine Arts with the works of Bosch, Rembrandt, Modigliani, Van Gogh, Toulouse-Lautrec, Vlaminck, Picasso, Leger.If you are a fan of nightlife, you'll love the clubs in Vila Madalena, Inheiros, Vila Olimpia, Mame and Itaim. Popular bars and discos: Bambº, Cantoda Ema and LovE.You can enjoy Brazilian rhythms at the Bourbon Street Music Club, the Urbano Club and Amarcenaria.
S£o Paulo, the center of which you see in the online webcam, is part of the Serra do Mar mountain system. The Tiete River flows through the city.
ClimateS£o Paulo has a humid subtropical climate. Summer is from December to February, when the air warms up to +30 C and above. It rains often. Winter begins in June and ends in August. The temperature during this period is about +18 C. Weather forecast in S£o Paulo for 7 days is available on our website online.
Watch other interesting Baltic Live Cam live streams from Brazil - the Santos beach, the center of Cascavel, the panorama of the city of Recife, the Brava beach in Itaja­, the beach of the city of Balneario-Camborio.
Any Collusion? Patrick Byrne
Deep capture wall street
Fri, 23 Aug 2019 15:55
1 The Columbia School of Journalism is our nation's finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession's gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark. In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, ''Chasing this will take you down a rabbit hole with no bottom.'' For months he pursued his story against pressure and threats he once described as, ''something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.'' His expos(C) reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea. By Patrick M. Byrne, Deep Capture Reporter May 4, 2008 The Story of Deep Capture By Mark Mitchell, with reporting by the Deep Capture Team Introduction - by Mark Mitchell I began working on a version of this story in January 2006, while serving as an editor for the Columbia Journalism Review, a publication tasked with upholding the standards of the American media. In November 2006, a hedge fund that was at the center of the scandal I was investigating offered the Columbia Journalism Review a great deal of money. Shortly before CJR accepted the money, I left my job, so I do not know if my editors, whom I believe to be honest people, would have allowed me to persevere. But I have no doubt that the hedge fund's ''beneficence'' was aimed at preventing the publication of stories like this one. And it might well have succeeded if Patrick Byrne had not approached me with an idea. Why not combine forces and spearhead a whole new approach to investigative journalism? Most media content is produced by rumpled journalists (i.e., people like me), working alone under tight constraints. Deep Capture could be something different - a power team circumventing the traditional media and pushing limits to uncover the truth. When I entered the picture, this team had already established that a small number of law-breaking hedge funds had put the American financial system at risk of collapse. Indeed, the hedge funds are employing the same tactics that contributed to the stock market crash of 1929 and the Great Depression that followed. If you want to understand the current turmoil in our financial markets, you could do no better than to read the material in Deep Capture: The Analysis. The lengthy (40,000 word) story that follows should help you to understand how - and why '-- Patrick came to embark on this project. I am the author of the story, and attest to its accuracy, but it benefits substantially from the work of the Deep Capture team: freelance researchers, bloggers, gonzo computer hackers, economists, and even a one-time foreign intelligence agent. Some mainstream journalists will not like this story. They will perhaps disapprove of our methods or decry the advent of vigilante journalism. But most of all, they will not like this story because it is largely about
2 them - a tale of reporters who seek to be players, but instead become pawns - a tale of prominent journalists who help cover up a massive financial crime while toadying to some of Wall Street's slimiest operators. * * * * * * * * And it all starts when Patrick Byrne gets a phone call from the Easter Bunny. Really, that's what the guy calls himself - the Easter Bunny - and he talks like the Bee Gees on fast forward, a nasally frantic falsetto, on and on about some kind of conspiracy involving big time Wall Street operators, the Mafia, and a bunch of famous journalists. Somebody's got to stop these people, the Bunny says, or the American financial system is going to come crashing to its knees. Also, the bad guys might put a bullet between the Easter Bunny's ears. Now, Patrick Byrne is just a CEO in Utah '-- he sells toasters. He doesn't see what this has to do with him, and the Easter Bunny seems pretty weird, so he says, uh-huh, uh-huh, okey-dokey, and thinks maybe he'll hang up the phone and go for a pastrami sandwich. But the Easter Bunny persists. He says it's a conspiracy, the biggest financial heist in history'...look, he says, don't believe it, but he's going to make some predictions''and Patrick can see for himself whether they come true'... * * * * * * * * August 12, 2005'...the proudest day of Patrick Byrne's life. Some months have past since the Easter Bunny got in touch, and now Patrick is on a conference call with 500 blue chip investors and a few journalists. He tells his telephone audience that he's been talking to this fellow named Bob (which is another Easter Bunny alias), and Bob seems like he lines his hat with tinfoil, he really does, but he's laid out this scheme, he's made some predictions'...so everybody please download Patrick's computer generated slide show and follow along from home. The first slide reads, '•The Miscreants' Ball.'– Patrick says the miscreants are selling billions of dollars of stock that simply does not exist - phantom stock. They have destroyed hundreds of public companies for profit. Some journalists, meanwhile, are '•crooked.'– They're '•lickspittles.'– They are famous journalists and they cover up the miscreants' crimes. They attack all who oppose them. One reporter has been terrorizing a little old lady in Vegas, purported to be the Easter Bunny's mother. Another reporter, she's French '-- she's been telling people that Patrick is running some kind of criminal cabal out of a gay bathhouse in San Francisco. And that's not all, follow along please with the slides '-- they show how the miscreants and the journalists have ties to government agencies and private investigators, maybe the Mafia, and also an arms dealer, an undercover mole, a corrupt law firm, and Eliot Spitzer. There's mention, too, of a '•master criminal from the 1980s'– '-- call him '•the Sith Lord,'– like in Star Wars - he might be orchestrating all this, and Patrick can't just sit on his hands, he's not cut out for it, it's his black Irish temper, so he's going to say to the Sith Lord, to the miscreants, to the journalists: '•Did I stutter? Did I stutter, or did I say I was going to take this fight to you? '•Well, now you know what I mean.'– * * * * * * * * Patrick is the CEO of Overstock.com and, truth be told, his company sells more than just toasters. It is a discount retail outlet that sells all sorts of stuff - one of the fastest growing companies on the Web and a company that seemed, at least for a while, like it might become a serious competitor to Amazon. But in
3 the time since the '•Miscreants' Ball'– presentation, Patrick has been better known for his fight against Wall Street - and for embracing something called the Market Reform Movement. The Market Reform Movement is an uprising born of a new era - when you don't have to be entirely normal to make a positive difference in the world. It is a loose coalition of eloquent ranters and the ingeniously unhinged - internet lurkers, lonely muckrakers, and apocalyptic visionaries. They battled in obscurity for years before Patrick lent a sympathetic ear to the Easter Bunny, who was among the movement's chief agitators. Note: Deep Capture has met the Easter Bunny (who also uses the alias Bob O'Brien) on several occasions. We think he's brilliant, and consider him part of our team, but we maintain a pledge never to ask for his real name because he fears for his safety. Shortly after the Easter Bunny's initial call to Patrick, a clique of journalists with close ties to the miscreants begin a two-year campaign to unmask him. Throughout, they suggest that the Easter Bunny is somehow suspicious - a criminal, maybe. Then, finally, in September 2005, The New York Post publishes the sinister, hot-off-the-presses news that the Easter Bunny is, in fact, a used medical equipment salesman named Phil. Whatever. The Bunny and his fellow town criers have what is surely the world's largest database of Wall Street malfeasance. Patrick examines their data with an open mind. He lends some structure to their efforts. He funds an expanded investigation. And gradually, he comes to see, clear as day - there is a crime. It is a financial heist of monstrous proportions, and Patrick believes it threatens the stability of the American financial system. He decides to fight the criminals. And then, something amazing happens: the Market Reform Movement goes mainstream. Members of Congress, brave individuals inside the Securities and Exchange Commission, the U.S. Chamber of Commerce, famous trial lawyers, respected economists and recovering stock brokers all reach the same conclusion: hundreds of companies have been victimized by the very crimes that Patrick laid out in his '•Miscreants' Ball'– presentation - the ones that the Easter Bunny and his band of blogging oddballs have been describing for years. * * * * * * * * The crimes are the work of Wall Street hedge fund managers and brokers who engage in a common trading strategy known as short-selling. A short sale is a way of making money when the price of a stock goes down. You borrow shares from someone else and immediately sell them off. If the price drops, you buy the shares back and return them to the original owner, pocketing the difference. If a company goes out of business, short-sellers hit the jackpot. This is perfectly legal and unobjectionable. But some short-sellers do not play by the rules. A small group of powerful hedge fund managers stop at nothing to annihilate the companies they sell short. Their tactics include: blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft. Their most egregious trick is to sell '•phantom stock.'– By exploiting a glitch in Wall Street's computerized trading system, and a loophole in federal regulations, some hedge funds sell virtually unlimited amounts of stock that they have not yet borrowed or purchased. This is often referred to as '•naked short selling.'– Hedge funds use this tactic to flood the market with supply and drive down prices - which is blatantly illegal. Patrick has written a blog explaining how this works in laymen's terms. An economist has written a detailed history of '•failures to deliver'– (i.e. stock sold and not delivered, because it is phantom stock) for Regulation magazine, published by the Cato Institute. A former SEC Chairman has spoken extensively
4 against the problem. Many other researchers, several professors, a former SEC economist, and a former deputy secretary of commerce have also written papers on the subject. If you are interested in the mechanics of the crime, read some of those papers here, here, here, here, here, and here. But it is enough to know that by the time Patrick gives his '•Miscreants' Ball'– presentation, the Securities and Exchange Commission has published a list of more than 300 companies whose stock has been sold but never delivered in excessive quantities. In other words, a significant fraction of the stock sold in more than 300 companies is phantom stock. If you think you own shares in one of these companies, the chances are that a broker has sold you air to satisfy a crooked hedge fund client. The computer might say that you own stock, but in reality, you do not. In addition to the 300-plus companies on the SEC's list, as many as 1,000 companies have already been wiped off the map by illegal short-selling, according to some experts. Short-sellers' collusive behavior and dubious tactics might have contributed to the demise in March, 2008, of Bear Stearns, America's fifth-largest investment bank. The Chairman of the SEC recently told the U.S. Senate that the SEC is investigating precisely this possibility. The consensus among economists is that if the Federal Reserve had not intervened, the fall of Bear Stearns would have triggered the collapse of the American financial system. Similarly collusive '•bear raids'– contributed to the great crash of 1929. SEC officials fail to prosecute the criminals even as they suggest that miscreant short-sellers have put the American financial system at morbid risk. Clearly, this is a scandal of epic proportions. Which raises the question: Where the hell is our media? * * * * * * * * February 27, 2006'... Herb Greenberg is leaning forward on his stool. His arms are flapping and his eyes are popping. His face has gone hot-purple, stark against the red-blue television glow. It is six months since Patrick's now-legendary '•Miscreants' Ball'– presentation, and, Herb, the famous journalist, is live on CNBC. He is pretty sure there is a conspiracy. It is a conspiracy to get Herb. Yes, '•What's really going on is there's a conspiracy. There's another conspiracy, there is a conspiracy-the real conspiracy, if there is a conspiracy, is a conspiracy'...it's aaaall tied to the same thing, this whoooole concept of trying to make sure, make it so this guy [Herb] can't do his job anymore.'– Sitting next to Herb, nodding in agreement, is Jim Cramer, host of '•Mad Money.'– This program is all that keeps CNBC out of the ratings quicksand, and it is easy to understand its appeal. Cramer is manifestly chimpanzee-like in both comportment and worldview''a fully arresting specimen of unsated mammalian appetition''a self-styled '•journalist'– who grunts and growls and snorts and says funny things like '•Booyah!'– while jumping up and down, smashing chairs, and telling people how to make shitloads of money gambling on the markets. Good TV! It is impossible to overstate the effect that these characters have had on our public discourse. It is not just that they have propagated a style of '•journalism'– that sees short-term stock flipping (rather than long-term investment) as the holiest of all business endeavors. It is that close associates of Herb and Cramer have seized control of a vast swath of the American financial media. Indeed, if you have seen a negative story about a public company in recent years, the odds are greater than even that it was written by a friend-of- Cramer. Many of Cramer's friends are former employees of TheStreet.com, a financial news website substantially owned by Cramer. They have included the editor and top columnists for The Wall Street Journal '•Money
5 & Investing'– section, top business writers for The New York Times, reporters at Fortune magazine and BusinessWeek, the editor of The New York Post business page, the editor of MSN Money, and others. Herb, a CNBC commentator and a star columnist for MarketWatch.com, was among the founding editors of TheStreet.com - '•Murderers Row,'– they called themselves. I have analyzed well over a thousand stories written by this clique of journalists. The vast majority of them were sourced from a small group of short-sellers who are also friends of Cramer. Other popular sources for this group of journalists include convicted felons, mobsters, dubious private investigators, crooked lawyers, hired stock bashers, and gun-toting goons - most of whom are tied to the Cramer constellation of short-sellers. Some of the stories written by these reporters are accurate enough. But many are not. The journalists misconstrue data with seemingly purposeful intent. They exaggerate and obfuscate. They publish innuendo or merely repeat, Deus Optimus Maximus, the words of their hedge fund and criminal friends.A single negative story by one of these reporter-thugs can send a company's stock tumbling by more than 50% '-- pure profit for their hedge fund sources, who of course sell the company short (often right before the articles are published). Meanwhile, an overwhelming majority of the companies targeted by these journalists will also be the victims of phantom stock selling and other shenanigans. The journalists do not mention this in their stories, and in fact go out of their way to deny that phantom stock exists. Anyone who says otherwise is subjected to a vicious media smear. So it was that Patrick's '•Miscreants' Ball'– presentation provoked a barrage of media coverage. Setting the tone was a next-day story in The New York Post business section, written by Roddy Boyd and edited by Dan Colarusso, formerly of TheStreet.com. The story was accompanied by a large photograph that showed Patrick in a tight t-shirt, arms spread, slightly bug-eyed. Hovering over his head, there was a big, multicolored flying saucer. Patrick Byrne '•is not currently under any psychiatric care,'– reported the Post, '•and [a company spokesman confirmed] he was sober when he gave the presentation.'– * * * * * * * * Patrick is unfazed. He works tirelessly, criss-crossing the nation, gathering evidence - telling all who will listen that the hobgoblins of finance and their snickering note-takers are destroying companies and putting the American financial system at risk. But these miscreants''they control the airwaves, they've seized control of the whole gosh darn media machine and the message they keep on delivering, unchallenged, over and over, is that Patrick Byrne is an incontrovertible psychopath. They say he's a wacko. They say he's a liar, too. And a creep. A menace. A crook, even! They says his company is the next Enron. Hell, they say, he's got a nudie bar dancer running the place! A nudie bar dancer? Yes, that's what some journalists say. The story first appears in November, 2005, on a blog authored by Jeff Matthews, a former writer for TheStreet.com. Patrick has to go to great lengths to demonstrate that the story is false - that his vice president of marketing is not and never was a stripper.
6 This, he says, is not to disparage the profession''he's friends with a few '•wigglers'– and they're all finer human beings than certain New York hedge fund managers and financial journalists. Which, by February 2006, seems to me an awful lot like wisdom - a view supported, anyway, not only by the noble spirit and perspicacity of your average wiggler, but also by the spectacle that is unfolding live on CNBC. Herb the famous journalist is yammering about a conspiracy - a conspiracy to get Herb. He is angry. He is perhaps also scared. He is downright hysterical because the government is investigating. This investigation will soon be derailed - the victim of cowardice and strange events - but for now, in February 2006, the Securities and Exchange Commission would like to know whether a financial research shop called Gradient Analytics conspired with short-selling hedge fund managers, including a man named David Rocker, to disseminate false information about public companies as part of a scheme to manipulate stock prices. The investigators believe that Jim Cramer and Herb are central to this conspiracy and have issued them both with subpoenas. TheStreet.com got a subpoena, too. Herb thinks this is an outrage-a conspiracy to destroy Herb. He says he has no special relationship with Rocker or Gradient. Cramer says he's never heard of Gradient and he's met Rocker only once - in a grocery store. So Herb and Cramer have commandeered the CNBC television network. For several days, the endless lead-ins: Coming Up Next: We'll hear from Herb! Coming Up Next: Herb and Cramer tell the world that Patrick Byrne and his band of blogging freaks orchestrated the '•whoooole'– thing - the whole government investigation. Patrick Byrne is rich. He's suspicious. He's a menace. He orchestrated the '•whoooole'– investigation to silence the free press - the free press as epitomized by Herb and Cramer. Coming Up Next: It's an outrage! Coming Up Next: It's a conspiracy! Coming Up Next: More on this conspiracy. * * * * * * * * Cramer, who is a sociopath, owns TheStreet.com with Marty Peretz, who is an aristocrat. Peretz is also the former editor of the New Republic magazine. He dabbles in high finance and Harvard professing, which has resulted in his entrusting a large portion of his family fortune to a close-knit group of hedge fund managers, several of whom were his students. For example, Cramer was his student. Then Cramer was destitute. He lived in a car with a loaded gun hidden under the seat. Eventually, though, Peretz gave Cramer some money to start a hedge fund, which Cramer managed with celebrated ruthlessness until he resolved to seek spiritual enlightenment as a TV news host. Cramer had originally planned to run his hedge fund out of the offices of Ivan Boesky. Shortly before he was to move in, however, the feds busted Boesky for insider trading, making him one of the most famous criminals of the 1980s. (This is not necessarily to suggest that Boesky is the '•Sith Lord'– mentioned in Patrick's '•Miscreants Ball'– presentation. Some people have wagered that Patrick was referring to Michael Milken, a business colleague of Boesky known as the '•junk bond king,'– who also went to prison in the 1980s. Patrick has since modified the analogy, saying that the crime has multiple masterminds - '•like Al Qaeda'–). When Boesky went to prison, Cramer worked instead with hedge fund manager Michael Steinhardt. The media portrays Steinhardt as a financial wizard, a deep thinker and an all-around swell guy. The truth is, he's a thug who perfected the concept of trading on privileged information, and pounded it into the heads of his employees. '•What's your edge!?'– he'd shout, pacing his trading room floor. '•What's your fucking edge!?'– After one of Steinhardt's tirades, a top employee (and the godfather to Steinhardt's children) had a heart attack. It is said that Steinhardt showed no remorse.
7 Indeed, Steinhardt has one of the most fearsome reputations on Wall Street. Which is perhaps unsurprising given that Steinhardt's father, Sol '•Red'– Steinhardt, was a mobster once described by a Manhattan district attorney as the biggest Mafia fence in America. Steinhardt Sr. worked for the Genovese organized crime family, with goons like Meyer Lansky and Vinnie '•Blue Eyes'– Alo, before he was sentenced to a number of years in Sing-Sing prison. By Steinhardt Jr.'s own account, the principal partners in his first hedge fund were the Genovese Mafia, Ivan Boesky, Marty Peretz (the aristocrat who funded Cramer), and a man named Marc Rich. Rich is closely connected to Ronald Greenwald, described in the authoritative book Red Mafiya as the man who, along with the Genovese family, brought the Russian Mob to America. In 1983, Rich was indicted for trading illegally with Iran while Islamic revolutionaries were holding the American embassy hostage in Tehran. Along with his associate, '•Pinky'– Green, he fled to Switzerland. In 2001, Steinhardt, a big-time operator in Democratic circles, convinced Bill Clinton to give Rich a scandalous presidential pardon, but Rich remains in Switzerland to avoid paying his tax bill. In the early 1990s, Steinhardt shut down his hedge fund after he was implicated in a scheme to corner the U.S. treasuries market - a horrendous infraction with serious implications for the U.S. economy. So this is a rough crowd. Says one Wall Street trader: '•It was the day the bad guys came to town '-- when Steinhardt and his people arrived.'– One of Steinhardt's people is Jim Cramer. Another is Cramer's wife, who was known as the '•Trading Goddess'– when she worked as Steinhardt's head trader. Maria Bartiromo, a CNBC anchor known as the '•Money Honey,'– is married to the top partner in Steinhardt's newest hedge fund. (A former employee of Cramer's hedge fund has written that Cramer often fed tips to the Money Honey, trading ahead of her stories, and it is rumored that she recruited him to CNBC.) And then there is David Rocker, the short-selling hedge fund manager believed to be scheming, along with Cramer and Herb, with Gradient Analytics, the financial research shop under SEC investigation in 2006. Cramer says he's met Rocker only once - apparently while squeezing the grapefruit at some grocery store. But the truth is, Cramer knows Rocker well. Rocker is a former employee of Steinhardt's hedge fund. He worked there at the same time as the Trading Goddess. And, until recently, Rocker was the largest outside shareholder in Cramer's website, TheStreet.com. Cramer sometimes quotes the hedge fund manager on his television show, and once interviewed him live. Rocker is also a regular writer for TheStreet.com, where he bashes stocks that Cramer subsequently also bashes in multiple stories on both the website and CNBC. In February 2006, the SEC is investigating Gradient Analytics for disseminating false information about public companies. The agency has affidavits from former employees who say that Gradient's '•independent research'– is produced by recent University of Arizona graduates who know little to nothing about finance and essentially take dictation from hedge fund managers, including David Rocker. One of these employees says that Herb conspired with Rocker to hold his negative stories (premised on Gradient's false information) until Rocker could establish short positions. This is called front-running - a jailable offense. It is reasonable to suspect that Rocker had similar relationships with TheStreet.com (of which he has owned a substantial portion) and other media. Not long before Cramer announced his SEC subpoenas, Rocker sold all of his shares in TheStreet.com. Cramer sold around $2 million of his own shares. If Cramer knew about the SEC investigation before he
8 sold his shares, which was almost certainly the case, he was trading on insider information - another jailable offense. But Cramer don't know nothin' about nothin'. And Herb thinks the SEC investigation is an outrage. So Herb and Cramer have commandeered CNBC. They are live on CNBC. Herb has jabbered something about a conspiracy - a conspiracy to get Herb. And now Cramer is going to show us something. He's pulled out a big, red magic marker. Veins are popping, rope-like, from his bald cranium. And he's snarling. Cramer is actually snarling while he uses the big red magic marker to scribble something on a piece of paper. He holds the paper up to the camera. It's'...it's his government subpoena'...Cramer has vandalized his government subpoena! On live TV'... in big red letters'... It says, '•BULL!'– * * * * * * * * Nobody in the media seems bothered by this. To the contrary, the Media Mob rises to Cramer and Herb's defense. For example, Joe Nocera of The New York Times, who is an old friend of Herb, writes a column attributing the SEC investigation to Patrick Byrne's '•Campaign of Menace.'– Wall Street Journal columnist Jesse Eisinger, formerly of TheStreet.com, writes that the SEC investigation violates freedom of speech. He says that Patrick's theories about short-seller crimes make '•'–Da Vinci Code'– look like '•Where's Waldo?'– Other journalists - along with the Society of Professional Journalists (SPJ) and the Society of Business Editors and Writers (SABEW) '-- dutifully line up behind the Journal, the Times, and CNBC. Meanwhile, these journalists continue to use Gradient and Rocker as sources in negative articles. MSN Money's stock rating feature, which gives '•buy'– and '•sell'– recommendations to the website's readers, is based entirely on Gradient's analysis. CNBC's stock picking tool also comes from Gradient. This is pretty appalling given that the journalists have good reason to believe that Gradient produces bogus research. They know that its supposedly '•independent'– financial researchers are kids who take dictation for Rocker. And they know that Herb and Gradient have been accused of committing serious crimes. They know because they have the affidavits from Gradient's former employees. A few other key facts, known to many journalists, but so far unreported: ‚· Cramer claims never to have heard of Gradient, but a former Gradient employee says that Cramer's colleague, Becky Quick, has confirmed in emails and on the phone that '•Cramer loves Gradient's research,'– and that he has requested their research on specific stocks. ‚· Herb claims to have no special relationship with Gradient, but he had access to its computer system and regularly logged in. ‚· Herb's research assistant, Brian Harris, spent a significant amount of time working out of Gradient's office. (Herb claims that Harris was trying out for a job there).
9 ‚· A guy named Jon Markman was for some time running a hedge fund out of Gradient's back office. So-called '•independent'– research shops aren't supposed to run hedge funds. If Markman was trading in advance of Gradient's research and Herb's stories, as the firm's former employees claim he was, this is yet another jailable offense. ‚· Markman is one of Herb's close friends. He was, along with Herb, a top editor of TheStreet.com. After that, and prior to starting a dodgy hedge fund in Gradient's back office, Markman was the managing editor of MSNMoney.com (which explains why MSN Money continues to use Gradient's research). And maybe Herb, Markman, Eisinger, Nocera, Cramer and all the other journalists who think Gradient is a credible source''and who call Patrick Byrne a wacko, a Waldo and a menace''can tell us why at least one Gradient manager has used multiple aliases and IDs to hide his activities. * * * * * * * * There was a time, before Rocker and Gradient came along, that Patrick Byrne was a darling of the financial press. In 2002, Fortune magazine called him '•The Renaissance Man of E-commerce'•. The article noted that Patrick is an admired prot(C)g(C) of celebrity investor Warren Buffett. It added that Patrick has a black belt in tae kwon do, '•has bicycled across the U.S. three times, studied moral philosophy at Cambridge as a Marshall fellow, and briefly pursued a career in boxing. Byrne also speaks Mandarin-not to mention four other foreign languages-and translated Lao Tse's Way of Virtue'...He has a nearly photographic memory [and can study] a deck of cards for a couple of minutes [and] recite them back, one by one'...six months later.'– Byrne also survived a three-year '•bout with seminoma, a cancer that reduced his 6-foot-5-inch frame from 240 pounds to 164'...[and left] his body scarred with the marks of 20 surgeries.'– There were no short-sellers behind the Fortune story, but short-sellers do often pump stocks up before they trash them. If they take their short positions at a peak price, they make more money on the way down. This might explain why, in December 2003, Cramer couldn't say enough good things about Patrick and Overstock. '•We really like this guy,'– Cramer said on Kudlow & Cramer, the CNBC show he was then hosting. Yes, Cramer was very impressed by Overstock's growth. He said it was a really great company. He said he was gonna go to Overstock.com and buy Mrs. Cramer a Christmas present. Soon after, David Rocker took his initial short position in Overstock. The first sign that this might affect the media coverage of the company came in January 2004, when Patrick was invited to appear again on Kudlow & Cramer. Only a few weeks had passed since Cramer's initial extolments, but now the mood was entirely different. Now Cramer and his co-host, Larry Kudlow, seemed to be casting aspersions on Patrick's character. In his quarterly earnings statement Patrick had cited Overstock's gross profits, which had increased nicely. There was nothing at all unusual about this - Patrick also cited net profits and many other figures - but Kudlow and Cramer hinted that it was somehow suspicious, that maybe mentioning gross profits was a slippery thing to do, and maybe Patrick was trying to overstate his success. '•You talk about something called gross profits,'– said Kudlow, '•Why are you - is this a confusion thing, an ambiguity thing, or what point were you trying to make?'– Yeah, said Cramer, '•You don't need to'....You don't need to - I know that you don't regard that as spin. But'...'– Patrick was visibly baffled. '•Gross profit is an accounting term,'– he said. '•It's an accounting term'...on an income statement'...I described each line on the income statement'...'–
10 * * * * * * * * '•You saw what just happened, didn't you? It was a set-up. This is what these guys do - they try to make CEOs look like they're cooking the books. It's pure smear. They take their cues from short-sellers. Watch out, these people don't mess around. They're dirty players.'– It's a Wall Street broker on the phone, and Patrick has just left the studio where he was blindsided by Kudlow and Cramer. He still doesn't know anything about the Wall Street cabal, but it was a strange interview, and he's had some other warnings. Like just recently, he got two calls, from two different hedge fund managers. The hedge fund managers told Patrick that one of their brokers, a guy who handles short-sellers' orders for Bear Stearns, a major investment bank, had sold 300,000 shares in Overstock that he didn't have - phantom shares. The broker registered the sale on his computer - which created a sort of I.O.U. - but he had no intention of finding real shares to buy or borrow and then deliver to the purchaser.To justify this action - and perhaps to put some additional downward pressure on the stock - the broker circulated a rumor that Patrick was using some kind of offshore synthetic instrument to sell his stock while hiding this from the public. This was completely false. In January 2004, Patrick doesn't know it yet, but short-sellers are preparing to take down Overstock. Soon, the company will come under attack from multiple directions. Millions of phantom Overstock shares will be sold into the market. And the media - led by Cramer, Herb and affiliated journalists, will orchestrate an unprecedented smear, all the while insisting that phantom stock is not a problem. * * * * * * * * On January 23, 2004, just a few days after Patrick hears about the sale of 300,000 non-existent Overstock shares, Carol Remond, a reporter for Dow Jones Newswires, publishes a story about a recent decision of the National Association of Securities Dealers (NASD). Members of the self-regulating body (later renamed the Financial Industry Regulatory Association) have long had to abide by the requirement that they deliver the stock they have sold within three days. It is not just a NASD rule - it's U.S. law. But some brokers have bypassed this rule by selling, and never delivering, phantom stock through foreign brokerages that do not belong to the NASD. Now the NASD has announced that it will try to close this loophole. Preventing traders from breaking the law seems hardly controversial, but Remond, the French-Canadian reporter who will later try to establish that Patrick is running a criminal enterprise out of a gay bathhouse (she will also later get a government subpoena along with Herb and Cramer) apparently thinks the NASD should keep out of the way. '•Taking most market participants by surprise,'– she writes, '•the National Association of Securities Dealers has drastically tightened its rules governing short-selling'– by closing the loophole allowing sales of phantom stock. The '•market participants'– think - and Remond agrees - that this is no good because '•it's impossible to borrow the shares of'...overvalued development stage companies.'– So Remond - siding with her sources - thinks that if it is impossible to borrow shares of a company, hedge funds should nonetheless be able to sell, sell, sell. Create unlimited amounts of illegal phantom stock to drive down prices and never deliver it. This is Remond's standard position: if a company is deemed '•overvalued'– by short-sellers, then the short-sellers should be allowed to destroy it. This position is shared by every journalist affiliated with Cramer, David Rocker, and a crew of dirty players. How dirty? W ell, the only '•market participant'– named in Carol's story is Pacific International, a brokerage in Canada. As Remond surely knows, more than 15 American criminal indictments have targeted Pacific International clients. It is widely suspected as a favored broker for sellers of phantom shares. Five of the indictments mention Pacific International as a conduit for money laundering and stock fraud.
11 In one court case, Sasha Angus, the director of enforcement for the British Columbia Securities Commission, describes this scene: '•Jean Claude Hauchecorne, one of the top revenue producers at Pacific International, was summoned to New York'...Phil Abramo and Phil Gurian, entered the room with two other men. These men were armed'... '....Abramo and Gurian were apparently high-ranking members of the Mafia.'– On that day, Abramo and Gurian, of the Gambino crime family, threatened to kill Hauchecorne because he had funneled money to a stock promoter linked to the rival Bonanno and Genovese Mafia clans. According to Carol, Pacific International is a credible source - just your average '•market participant.'– Most of the Cramer crowd of journalists would agree. * * * * * * * * Fortunately, there is a wild-eyed guy in Massachusetts named Dave Patch. Dave is an engineer. He spends his days building parts for jet airplanes. At night, though, he is a revolutionary firebrand, churning out searing entries on his blog, which is called InvestigateTheSec.com, and firing off cantankerous letters to government officials and mainstream journalists about the problem of phantom stock. In September 2006, SEC Director of Trading and Markets James Brigagliano referred to Dave Patch and his fellow crusaders as '•bozos.'– For years prior, the SEC said that there was very little phantom stock in the system. Then, one day, it said there was so much phantom stock in the system that it couldn't force the sellers to deliver real stock because it would cause '•excessive volatility'– - a euphemism for '•total market chaos.'– A couple of years ago, Dave began invoking the Freedom of Information Act to compile reams of trading data. This data, combined with research published by the securities industry itself, suggests that there is now around $12 billion of phantom stock in just one corner of the system. There is an unknown amount - perhaps $100 - $150 billion - in a part of the system that is not monitored by any regulatory body. Just as a spill of $1,000 of radioactive waste costs much more than $1,000 to clean up, a certain dynamic of the stock market (named, '•short squeezes'–) means that to clean up $100 billion of phantom shares would cost much more than $100 billion: it could easily cost over $1 trillion. Dave puts this information on his blog. He receives back-up from a crew of anti-phantom stock fanatics who live on the internet. Meanwhile, the Easter Bunny takes on the role of chief PR man, publishing his own fiery - and often hilarious - blog, which he calls TheSanityCheck.com. One day, the Easter Bunny calls Patrick Byrne, who launches an unprecedented public campaign against phantom stock sellers and the journalists who support them. Then, on March 26, 2008, as the markets are melting down, the SEC invites Dave Patch to brief the agency on the phantom stock problem. The Counsel to the Inspector General of the SEC writes a letter to investors who have complained about naked short-selling. It says that the SEC Inspector General has '•met with Mr. David Patch'...at which time he gave us an extensive briefing on this topic. We understand the seriousness of the concerns about naked short selling and have begun looking into potential audit issues related to this matter.'– Says a former SEC attorney: '•It wasn't until Dave Patch started firing off FOIA requests that anyone started taking this seriously.'– * * * * * * * *
12 In mid-April, 2004, millions of shares of Overstock.com have been sold and never delivered - phantom stock. FOIA data later proves this. But in April 2004, Patrick doesn't yet know Dave Patch or the Easter Bunny. He doesn't know anything about phantom stock. Nor does he know that a clique of journalists protect the hedge funds that sell phantom stock - and that these same journalists will stop at nothing to smear the targets of their short-selling friends. So Patrick makes the mistake of appearing again on Kudlow & Cramer. '•But once again, once again, you are confusing the heck out of me and everybody else with your arguments about gross,'– says Kudlow. '•I'm not really sure why you continue to do this and what it is you're trying to hide.'– Gross profits again? Patrick can't believe it. '•No good deed goes unpunished,'– he says. '•I've tried to explain the economics of our business. I wrote a three-page letter this time. Last quarter, I wrote a 12- page letter. Maybe it is confusing. I thought I'm trying to do a good thing.'– '•But what is it that you're hiding on this?'...Are you trying to say to us you're not making as much in sales revenue or that you will have a better future? I mean, it's utterly confusing to me.'– '•Well,'– says Patrick, '•first of all, I'm all about GAAP.'– [GAAP stands for Generally Accepted Accounting Principles--the accounting system that is..."generally accepted."] '•So,'– says Kudlow, '•if you say GAAP profit''GAAP gross profit is up 83 percent, isn't that misleading, this idea of GAAP gross profit?'– '•Larry, that's'...'– '•Quick answer.'– '•'...That's'...'– '•Quick answer.'– '•Quick answer is that's a silly question. GAAP has a concept called revenue, a concept called gross profit, a concept called net profit. Those are GAAP''a basic accounting course teaches that.'– '•I don't understand it. I don't understand it. Anyway, thank you for coming back.'– * * * * * * * * While CNBC's top television personalities are suggesting that it is some kind of crime for Patrick to cite a standard accounting term, a man named Amr Ibrahim Elgindy is attempting to board an airplane in Islip, New York, using a fake ID with the name Manny Velasco. In his possession are four cell phones, a suitcase full of cash, and $40,000 worth of jewelry. Elgindy would normally be carrying his .380 colt handgun, but he's left that at home. Too risky carrying it in airports - especially when you're fleeing the country. Elgindy is hoping to get to Lebanon, where his remaining assets are stashed, but today he isn't going anywhere. The woman at the counter has looked at him askance. She has looked at his ID, and looked again, and now she's disappeared behind a curtain. She calls the cops, and before long they are hauling Elgindy away as he cries and pleads and says, '•No really, I'm Manny Velasco - Elgindy is just some guy I met in New York!'–
13 Amr Elgindy got his start working for Blinder, Robinson, nicknamed '•blind '—em, rob '—em,'– a Mafia-linked brokerage whose founder, a gold-chain and diamond-crusted-pinky-ring wearing goon named Meyer Blinder, eventually went to prison for securities fraud. Amr, who also goes by the names Anthony Elgindy and Anthony Pacific, later set up his own operation, establishing himself as one of Wall Street's most flamboyant short-sellers - and a favored source to one segment of the financial media. The FBI began investigating Elgindy after receiving a tip from a Solomon Smith Barney broker who said that on September 10, 2001 (that is, the day before the terror attacks on the World Trade Center), Elgindy had placed a call to Smith Barney instructing them to liquidate his kids' trust funds. He also said, '•Tomorrow the Dow is going to drop to 3,000 points.'– (It was at 9,600 at the time.) The government spends months investigating whether Elgindy has connections to terrorists and advance knowledge of 9- 11. Ultimately, prosecutors indict him for the more demonstrable crimes of racketeering, conspiracy and securities fraud. (He gets 9 years for those crimes, and another 2 years for trying to flee the country.) Elgindy's many offenses include bribing an FBI agent to provide him with information on agency investigations of public companies (the agent also gave Elgindy information on an on-going 9-11 investigation: Elgindy's own), manipulative short-selling, and extortion. If the companies paid Elgindy off, he'd agree to stop disseminating false information about them. A lot of people lost money on stocks that Elgindy attacked, and many of those people began investigating him long before the FBI did, often posting their findings on the internet. Gary Dobry, for example, is a Chicago boxer, artist and street busker who spent the better part of a year writing long screeds about Elgindy's crimes. He also created pretty good acrylic Epaintings of Elgindy, and sold them at art shows. Dobry's obsession with Elgindy ended when he received death threats, and somebody threw a pair of garden shears through the window of his boxing gym (this, we will see, is a standard threat from mobsters in the securities business). But Deep Capture has recruited other Elgindy foes to its team. One of them is a former businessman whose company was destroyed by Elgindy, and who has made it his life's mission to expose short-sellers' crimes. The businessman prefers to remain anonymous because he fears a Mafia hit, but he's accomplished a great deal. For example, he traveled, undercover, to Costa Rica to meet Jonathan Curshen, a former trader for the Mafia-infested Pacific International and current proprietor of Red Sea Management, an offshore money laundering outfit. On multiple occasions, Curshen admitted to our undercover vigilante that he sells phantom stock '-- and threatened to kill anyone who revealed this. Curshen also described a special debit card that cannot be traced to its user. This, he suggested, could be used to pay off government officials and journalists. But the undercover businessman's biggest coup was in gaining membership to an online short-selling discussion board that Elgindy ran before he went to prison. Seeing that Elgindy was openly discussing crimes on the site, the businessman began taking screenshots of every page, so that his garage is now piled high with boxes of transcripts (which Deep Capture has scanned and stored somewhere safe). In these transcripts, Elgindy and other short sellers make hundreds of references to certain journalists - most of them friends-of-Cramer. The reporters frequently mentioned include Herb Greenberg and David Kansas, both then editors of TheStreet.com (Kansas later becomes editor of The Wall Street Journal '•Money & Investing'– section), Carol Remond, and Dave Evans, a reporter for Bloomberg News. (When Federal agents raided Elgindy's office, they found 2,000 hours worth of recorded phone conversations. According to a source knowledgeable about the investigation, '•Herb Greenberg and Jim Cramer are all over those tapes.'–)
14 Here's one fairly typical comment, from a hedge fund manager on Elgindy's online discussion board: '•maybe when thestreet.com folds, we can hire Herb to work exclusively for us.'– At another point, a hedge fund manager calling himself '•Peter'– says: '•Dave Evans gave us SPBR for free- been very profitable.'– A key member of this online community is Dan Loeb, a hedge fund manager who uses the screen name '•Mr. Pink'– (a reference to a criminal character in the Quentin Tarantino film Reservoir Dogs). Mr. Pink says, '•Dave Evans is a Made Man.'– * * * * * * * * The short-sellers on Elgindy's website talk a lot of nonsense (at one point they debate whether Elgindy and Dave Evans '•swapped spit,'– or merely engaged in a '•loogie spitting'– contest), so it's possible that they are merely boasting about paying off journalists. But the comments on Elgindy's website were so numerous that one can't help but suspect that the relationships between these journalists and the short- sellers was beyond normal. At a minimum, the reporters must have known that hedge funds were trading ahead of their stories. The reporters should also have known that Elgindy's information was suspect - and that his target companies were often victims of short-seller crimes. Data obtained under the Freedom of Information Act shows that massive amounts of phantom stock were sold in the companies that Elgindy and his cohort shorted. As Carol Remond and others surely knew, Elgindy was also among the dubious clients of Pacific International, the Canadian brokerage that has catered to Wall Street operators connected to the Genovese crime family. '•Let's remember,'– says one member of Elgindy's website, '•because of CANADA we can NAKED SHORT!'– Elgindy also brags on his website of having supplied the SEC and other government agencies with negative information. The SEC, especially, would helpfully open investigations into the companies targeted by Elgindy, precipitating huge declines in their stocks. One former SEC official interviewed by Deep Capture admits to having worked often with Elgindy. '•I'd send his information up my up-line,'– he says. '•My superiors would tell me to open an investigation.'– In most cases, the SEC never filed charges against the targeted companies. But the investigations left the companies' stock and reputations in tatters. Contributing to this, Herb and the rest of the Media Mob would write multiple negative stories about the companies Elgindy shorted. '•These were good companies. A lot of them were pharmaceutical companies that had made important medical advances,'– says the former SEC investigator. '•Elgindy hurt them badly. He stopped new cures. And the SEC helped. The media helped.'– Elgindy is in jail, but the short-sellers who were members of his website, and who joined him in his '•bear raids'– on innocent companies, are still in business. One of them is John Fiero, who went by the screen name of '•Bond,'– and whom the NASD fined $1 million for selling phantom stock in companies that had the misfortune of being underwritten by Hanover Sterling, a brokerage that has been linked to the Genovese Mafia clan. Fiero has yet to pay that fine. Quite to the contrary, a member of Elgindy's website wrote at one point that the NASD had given Fiero an office and a set of trading computers '-- inside the NASD's headquarters. If this was true, the NASD was either deeply corrupted, or it was using Fiero as an informant in ongoing investigations of phantom stock trading.
15 And then there is Dan Loeb, a.k.a. Mr. Pink. Loeb is a short-seller best known for hurling vitriol at his '•enemies,'– and for maintaining a high profile relationship with Fab 5 Freddy, the gangsta rapper. He is also very much a part of the Cramer constellation of hedge funds. And give him this: he stands by his boys. Once, a respected hedge fund manager named Kenneth Griffin hired someone away from a hedge fund run by Loeb's crony David Einhorn, who is also a friend of Cramer. In an email, Mr. Pink accused Griffin of running a '•gulag,'– and wrote: '•Let me be clear that'...should you attempt to hire people from [my friends], I will consider it an'...act of war.'– Now, with Elgindy in prison, Mr. Pink's friends are at '•war'– with Patrick Byrne and Overstock.com. The generals in this war are David Einhorn, David Rocker, and the Media Mob led by Herb and Jim Cramer (who met Rocker once, in a grocery store). * * * * * * * * Cramer has a shtick whereby he brags about the crimes he has committed, perhaps so that he can later claim that his openness suggests a certain innocence. That might be why, in a semi-private discussion on his website, Cramer advocates breaking the law to drive down stock prices. '•Maybe you need $10 million capital to knock [a stock] down,'– he says. '•It's a fun game and it's a lucrative game'...By the way, no one else in the world would ever admit that, but I don't care'...That's right, and you can say that here, and I'm not gonna say it on TV'...it's really important to use a lot of your firepower to knock that [stock] down'... Now, you can't foment. That's a violation of'...You can't create yourself an impression that a stock's down. But you do it anyway cause the SEC doesn't understand it'...This is just actually blatantly illegal'....But I think it's really important to foment'...You get [the CNBC reporter]'...talking about it as if there's something wrong [with the stock]. Then you would call the [Wall Street] Journal and you get the bozo reporter'...if you're not doing it, maybe you shouldn't be in the game.'– * * * * * * * * Nobody understands '•the game'– and '•bozo reporters'– better than David Rocker. He is one of the most popular sources ever to use the business media to his advantage. His information has appeared with near-constant regularity on CNBC and TheStreet.com, and he has been a favored source for Cramer's friends at The Wall Street Journal, Fortune magazine, and MSN Money. Herb Greenberg has written negatively about nearly every company that Rocker has sold short, usually repeating Rocker's analysis verbatim. The information in these stories is often bogus. Much of it has come from Gradient Analytics, the financial research shop that the SEC has subpoenaed, along with Herb, Cramer and Carol Remond, in 2006. In addition to the three affidavits that the SEC received, several other former Gradient employees are willing to testify that the place is staffed by kids who take dictation from Rocker or other hedge fund managers, and then produce phony negative research designed to cause stock prices to collapse. Rocker routinely takes this '•independent research'– to the SEC, suggesting that his target companies are committing accounting fraud - that they're the next Enrons. The Rocker constellation of hedge funds is pretty tight with the SEC - much as Elgindy was. The government agency will investigate just about any company named by these people. In return, Rocker has employed at least one high-level SEC employee who investigated his target companies. No doubt, others wonder whether they, too, might get lucrative jobs.
16 Some of the companies that the SEC investigates at the behest of these hedge funds have actually done something wrong. But often, the SEC eventually has to announce that the companies are beyond reproach. That, however, can take several years, by which time, news of the investigations - dutifully circulated by the Media Mob - will have inflicted mortal damage on these companies' stock prices and business operations. Around the same time that these SEC investigations begin, and usually right after a friend-of-Cramer publishes a negative article, a slippery law firm will file a class action lawsuit alleging that the target company has defrauded its investors. The law firm that has been most often responsible for these suits - the firm that has sued almost every company shorted by the Rocker constellation of hedge funds - is Milberg Weiss. This same law firm was on close terms with Amr Elgindy and his government cronies. '•FBI and SEC will be here soon,'– Elgindy said to a hedge fund manager on his website, '•as will class [action] Milberg Weiss guy.'– Patrick Byrne warned people about this firm in his '•Miscreants' Ball'– presentation. The Media Mob ridiculed him. Less than a year later, Milberg Weiss was indicted and its founding partner was sentenced to prison for racketeering, mail fraud and bribery. The firm paid off its plaintiffs to induce them to sue companies targeted by affiliated hedge funds. According to court documents, Milberg Weiss instructed people to buy stock in target companies, '•anticipating that the securities would decline in value, in order to position themselves to be named plaintiffs in securities fraud class actions and to obtain kickback payments.'– Anticipating that the securities would decline. How in the world could they have known that the securities would lose value? Well, soon after the phony plaintiffs bought shares in a company, somebody would flood the market with massive amounts of phantom stock. And while Milberg was preparing its law suits, Gradient and similar outfits would release bogus financial research. Indeed, a Gradient employee time sheet obtained by Deep Capture has a line-item tagged '•Milberg Weiss'– - suggesting that Gradient's employees were concomitantly working for the crooked law firm. With phantom stock flooding the system, and the SEC preparing to investigate, and dubious financial research shops releasing bogus information, the Media Mob would attack with biased, negative stories. As the stock plummeted, Milberg filed its pre-fabricated lawsuits (inserting the media stories as evidence) alleging that the target company had ripped off its investors by causing its own stock prices to plummet. The lawsuits, of course, caused the stock prices to plummet even more, at which point the Media Mob would write more stories blaming the companies for their falling stock price. The Media Mob avoids questions about Milberg's dubious practices - and certainly never reports on them. And, in February 2006, when Gradient comes under investigation, the journalists go berserk. The investigation is a violation of free speech, they say - and the '•whoooole'– thing was orchestrated by Patrick Byrne and the Easter Bunny. * * * * * * * * Back in April 2004, while Elgindy was posing as Manny Velasco, and Cramer's television partner was grilling Patrick on gross profits, and phantom stock was flooding the market, and a pack of journalists affiliated with Cramer and Gradient Analytics were attacking every company that Rocker shorted - when all of this was happening, the Easter Bunny thought, gee, there might be a pattern. He first gained notoriety among the Media Mob by starting a blog that chronicled the travails of a little mortgage lender in Kansas City, MO called NovaStar Financial. There is no particular reason why anyone would be interested in this obscure company, but it had been given national exposure by a certain segment of the financial press. On April 12, 2004, The Wall Street Journal '•Money & Investing'– section (edited by David Kansas, formerly of TheStreet.com) published a
17 negative article by Jonathan Weil (who later went to work for a financial research shop that caters to short-sellers and law firms that file class action lawsuits). The Journal, depending on information from hedge funds linked to Cramer, suggested that NovaStar had licensing problems in multiple states, when it did not. During that month, Herb also attacked NovaStar in more than a dozen separate stories - many of them containing false information. His analysis appeared on MarketWatch.com, CNBC and MSN Money. TheStreet.com followed suit. NovaStar's stock plunged by more than 30%, and on April 15, crooked law firm Milberg Weiss, with amazing alacrity and foresight, filed a class action lawsuit (using the Journal article as its principal evidence) alleging that NovaStar's '•investors'– had been grievously harmed by the falling share price. The next day, the SEC, no doubt at the behest of short-sellers, opened an investigation of NovaStar, inflicting yet more damage. In the midst of all this, the Easter Bunny sent Herb a detailed analysis that showed that Herb had completely misread an important line on NFI's financial statement. Herb blithely responded with, '•You're free to interpret the data any way you want'– - which is his standard answer. Now, it is fair to say that in 2008 subprime mortgages have become a risky business. But that is different from saying, in 2004, that a specific mortgage company has done something wrong. Even as NovaStar continued to post strong profits well into 2006, short-seller games - including the sale of phantom shares '-- kept the stock price in the mud. SEC data obtained under the Freedom of Information Act shows that millions of shares of NovaStar had been sold but not delivered on April 11, 2004 - the day before the Journal article. The number of phantom NovaStar shares in the system increased steadily over the next three years. Today, the stock price is too low even to trade on NASDAQ. It has been reduced to the pink sheets - reserved for penny stocks. The SEC's investigation of NovaStar remains open, but as of early 2008, it had yet to announce an investigation into hedge funds that trade phantom stock. As of April 2008, Herb was still covering NovaStar. Lately, he'd been dancing on its grave. * * * * * * * * Not long before NovaStar came under attack, Michael Milken, the '•junk bond king,'– appeared in the offices of Allied Capital, a DC-based financial company that shares certain financial characteristics with NovaStar. There, he told an Allied executive, '•You know, I already am quite a large shareholder of your stock - but my name will never show up on any list you'll see.'– This may have been a reference to a practice called '•parking stock'– (owning stock but '•parking'– it in the accounts of friends with whom one has made under-the-table arrangements), a practice that figured in the high-count indictment that sent Milken, along with Boesky, to prison in the 1980s. Milken returned on several occasions and seemed intent on ferreting out every detail of Allied's business. Then, the interrogations came to an abrupt end. A couple of months later, Cramer's friend David Einhorn was at a hedge fund luncheon. Sitting next to him was corporate raider Carl Icahn. Halfway through the meal, Einhorn stood up and told the hedge funds assembled in the room, '•Allied Capital is going to zero!'–
18 On April 26, 2004, Dan Loeb (a.k.a. Mr. Pink, the guy who once promised to go to '•war'– for Einhorn) posted a comment on a Yahoo message board, saying: '•ALD [Allied] turd getting flushed, swirling down the toilet.'– At the same time, reports on Allied's supposed misdeeds, created by the Kroll Investigative Agency and a politically connected Texas businessman named Jim Brickman, were delivered to the SEC and the Department of Justice, which began investigations. These inquisitions became so onerous that Allied had to create what one employee calls the '•Department of Investigations'– just to satisfy the government requests that poured in, year-after-year. The Kroll Investigative Agency seems to have developed a unit tasked specifically with manufacturing dirt on companies shorted by the Cramer constellation of hedge funds. Einhorn and his cronies commissioned the report that was submitted to the DOJ, and it should be unsurprising that most of its allegations were groundless. After four years of ongoing investigations, and countless media stories alleging wrongdoing, charges have been brought against one person - an ex-employee of a company that represents less than 5% of Allied's portfolio of investments. Meanwhile, the SEC and DOJ have yet to investigate claims that Allied is the victim of illegal phantom stock selling. So Deep Capture has done it's own investigation. This took all of five minutes - the time we needed to write and send a Freedom of Information Act request to the SEC. The SEC wrote us back, providing data showing that there have at times been 3.5 million phantom Allied shares. That is, somebody had sold at least 3.5 million shares that were never delivered because the shares did not exist. And again, that number represents phantom shares in just one corner of the system. The number of phantom shares in the rest of the system is thought by most observers to be many times greater. However, the SEC refuses to release data about the number of phantom shares in other layers of the system. In fact, Patrick, Dave Patch and others have suggested that the SEC might not even know. In any case, the SEC has the power to prosecute the sellers of phantom stock, but it has so far refused to do so. * * * * * * * * And what if Overstock, Allied Capital, and NovaStar were not the only victims. Suppose there were a clique of hedge funds and reporters who descended upon hundreds of public companies, mocking and harassing them, driving their CEOs to conniptions or barricaded silence. Suppose further that billions of dollars worth of phantom stock in these companies had been sold into the market. Suppose we know this because people like the Easter Bunny and Dave Patch have devoted large chunks of their lives to exposing the crime. But we also know it because Leslie Boni, a resident economist at the SEC has published a seminal report, '•Strategic Failures to Deliver,'– which identifies phantom stock as a major problem. We know it because former Undersecretary of Commerce Robert Shapiro has done his own study, concluding that naked short sellers have vaporized as many as 1,000 companies. And we know it because in January 2005, the SEC begins publishing a list of more than 300 companies whose stock has been sold, but never delivered, in excessive quantities. There is some initial muttering about the phantom stock being the result of '•clerical errors,'– - maybe the real stock is sitting under a mattress somewhere, or the dog ate it - but this is so much gobbledygook, as evidenced by the huge amount of undelivered stock and the SEC's later admissions that phantom stock is a '•serious problem.'–
19 We also know from Leslie Boni's statistical analysis that high volumes of phantom stock are concentrated in very specific companies. We know from our own analysis that there is a wildly high probability that those same stocks have been targeted by Milberg Weiss lawsuits and in hatchet jobs by the Media Mob. The stock-eating dog must have friendly relations with Herb, Carol Remond, Jim Cramer and their friends. Peter Chepucavage, the SEC attorney who drafted the so-called Reg SHO rule requiring the SEC to begin listing victimized companies, has told us that its enactment was preceded by an unprecedented lobbying effort spearheaded by Wall Street. The result, he says, is watered down enforcement. While the SEC listed the victim companies, for example, it stipulated no way of helping them - which is like publishing the names of rape victims while refusing to prosecute rapists. (Indeed, the stock prices of many of the companies on the list dropped significantly in the days after the list first appeared.) But, anyway, there it is: a list, supplied by the SEC '-- unequivocal evidence that hundreds of companies are victimized by a stark financial crime. Now, suppose that one CEO fights back. He fights back because of what short-sellers' illegal tactics are doing to the shareholders of his and other companies, and also, because he is worried that the creation of phantom stock will have systemic implications. Maybe this CEO gives a presentation titled '•The Miscreants' Ball,'– identifying a group of journalists who are the eager stooges of rule-bending hedge funds. Maybe, for a while, government investigators begin to take an interest in some of the CEO's allegations - and maybe important politicians, economists and even a few objective journalists began shaking their heads and saying things like, Holy bejeezers, Byrne and that Easter Bunny character are right. Not in every respect, maybe, but clear as day: this is one of history's great financial heists. Well, in this case, the journalist-stooges might become somewhat agitated. Suppose they set out to defend themselves and their Wall Street friends-to disparage the CEO and others who question the tactics of some short-sellers and their value as media sources.This, one can imagine, is a battle that the journalists are keen to win. Maybe some, like Herb, go more or less bonkers. And for others, perhaps, there are few limits inviolable''no filth unbearable. Imagine that. What would happen then? * * * * * * * * What?'... '•Ehhhhhhhh.'– Roddy Boyd, The New York Post, has just had an idea. It's a hunch. Yeah, he's Roddy-Boyd-The-Post, and now he's, '•ehhhhh,'– sticking his head in a garbage can. Yeah, his head is in the garbage can, and he's just hypothesizing here, but he's pretty sure, pretty sure, '•ehhhhh'– those are used - '•yeah, they're used condoms.'– And twenty of them! It is January 2006, five months after Patrick Byrne filed a lawsuit against David Rocker and Gradient Analytics and then held a famous conference call putting Rocker at the center of a massive financial crime dubbed '•The Miscreants' Ball.'– Heaps of evidence implicating these people - affidavits, testimony from victim companies, the SEC's data - has been given to the media, but now Roddy-Boyd-The-Post is, '•ehhhhh,'– doing a favor for Gradient Analytics.
20 A couple of days ago, Donn Vickery, Gradient's managing partner, called Roddy, who takes his marching orders from Post business editor Dan Colarusso, formerly of TheStreet.com. What Vickery needed was this: There had been a couple of private investigators parked outside of Gradient. They'd been eyeballing the place, talking to employees. Maybe Roddy could snoop around, see what he could find out. So Roddy begins working the phones. He is, '•Ehhhhh'... Roddy-Boyd-the-Post, here, investigating the aggressive tactics used by Patrick Byrne and Overstock's private investigators.'– Patrick has not sent any PIs to talk to Gradient's employees. The investigators (eminently polite, according to some Gradient employees) are working for another company, a Canadian pharmaceutical manufacturer called Biovail. Biovail is later sued by the SEC for inflating its numbers, and perhaps it did something wrong, but there is no question that Gradient has published research about the company that is blatantly false. There is, indeed, enough of this misinformation to fill an encyclopedia, but as a very typical example, consider that Gradient claimed in a report that Biovail's growth '•slowed dramatically'– at a time when it had increased by more than 35%. (Really, this is a standard Gradient '•mistake.'–) Gradient is working on the Biovail case with a group of hedge fund managers, including David Rocker. Among other tricks, people working for these hedge funds have paid doctors to get them to say that Biovail bribed them to prescribe one of its drugs. These questionable bribery charges have instigated a federal investigation into Biovail and quotes from the doctors (who admit that they were paid by hedge funds to say they were bribed by Biovail) have appeared in a Wall Street Journal '•Money & Investing'– section story titled, '•Biovail is Paying Doctors Prescribing New Heart Drug,'– and in a story in Barron's magazine, written by Bill Alpert, a close friend of Herb. (While Roddy is doing a favor for Gradient, the SEC has just subpoenaed Herb as part of its investigation into Gradient, and Alpert has just written, bizarrely, that he wishes he could get a subpoena, too, because he quoted those paid-off doctors and getting a subpoena is '•terrific publicity.'–) Roddy knows about the bribed doctors and he knows about Gradient's phony research. He knows about short-seller tactics, including the use of phantom stock. But Roddy isn't interested in all of that. Instead, he's doing a favor for Gradient. And now he's got his head in a garbage can. The garbage can is outside the home of Jerry Treppel, a Banc of America analyst whom Biovail accuses of helping disseminate Gradient's false research with the hedge funds that are accused of driving down Biovail's stock price. Roddy-Boyd-The-Post has figured out that, '•ehhhhh,'– Treppel is more than fifty years old. Treppel is also a financial analyst who has been married for a long time. He is more than fifty years old. A financial analyst. Married. '•Ehhhhhhhh.'– ''Twenty condoms!?'' '•This ain't Jerry Treppel's garbage.'– That's when I knew I was on to something,'– Roddy-Boyd-The-Post later tells me, '•A fifty year old married financial analyst couldn't, ehhhhhh - you know, he couldn't be getting that much action. That's how I knew that Biovail's investigators must've stole the garbage and replaced it with someone else's garbage. They
21 were looking for stuff about Gradient. I figured it out - you know, ehhhhh, I did some real enterprise [investigative] work here. I busted them, man. Nobody helped me.'– Yes, as a favor to Gradient and its hedge fund clients, Roddy figured it all out. Then he filed the big news. '•TRASH STALKERS,'– read the headline. '•Biovail's investigators'... repeatedly took the trash of former Banc of America Securities analyst Jerry Treppel'...'– * * * * * * * * So now we have Roddy with his head in a garbage can, and Herb on CNBC saying there's a conspiracy to get Herb, and Cramer vandalizing his government subpoena, and Herb's friend Joe Nocera writing about '•Overstock's Campaign of Menace'– in The New York Times, and Cramer's former employee Jesse Eisinger comparing Patrick to '•Where's Waldo'– in The Wall Street Journal, and Herb's friend Bill Alpert saying he'd like to get a subpoena, too - for publicity. But that's not all '-- we also have a very peculiar former BusinessWeek reporter named Gary Weiss firing off friendly emails to a crooked mortgage broker and financial flimflammer who is so unambiguously bad that he sent his father to an early grave. Deep Capture has come to possess a great number of emails between various journalists and miscreants. In one, the former BusinessWeek reporter brags to the crooked mortgage broker of influencing the contents of Nocera's '•Campaign of Menace'– article in The New York Times. '•This is totally my doing,'– Gary writes. '•Yuk. Yuk. Yuk.'– In another email, Gary recounts his successful campaign to keep a reporter named Liz Moyer from getting a job at BusinessWeek because she has written favorably of companies victimized by short- sellers. Moyer, who is now with Forbes, is one of the few journalists who have accurately described the phantom share problem. Gary left BusinessWeek in 2004 under circumstances that remain a closely guarded secret. From January 2006 until today, his primary occupation has been to author a blog devoted entirely to badmouthing Patrick Byrne and pooh-poohing the notion that phantom stock is a problem. His arguments are not so much arguments as personal attacks. Anybody who utters the words '•phantom stock'– is a '•crackpot'– or a member of the '•Baloney Brigade.'– Gary regularly suggests, meanwhile, that Overstock is some kind of fraud. He provides not a single scrap of evidence for this, but instead makes vague accusations and then instructs anyone wanting details to visit another blog - this one authored by Sam Antar, former chief financial officer of a family-owned electronics firm called Crazy Eddie. In the 1980s, Crazy Eddie ('–Our prices are'.....INSAAAAANE'–) perpetrated a $145 million swindle involving receipt skimming, bogus inventory and international money laundering. When Sam was busted, he ratted out his two cousins in return for a reduced sentence of six months house arrest. According to a recent court case, Sam has funneled at least $250,000 to Barry Minkow, who is also a criminal. Minkow served seven years in prison for his role in ZZZZ Best, a fraudulent carpet cleaning company that cost investors $100 million. Minkow now runs an outfit called the Fraud Discovery Institute out of the Community Bible Church in San Diego, where he is a preacher. In one of the financial world's great ironies, The Fraud Discovery Institute specializes in identifying companies that have supposedly cooked their books - though no reputable investigator has ever concurred with any of its analysis. Both Sam and Minkow hold themselves out as reformed criminals who can shed light on corporate crime. But it is clear they have merely found a new scam: publishing false information for short-sellers. Utah
22 Attorney General Mark Shurtleff, who has had dealings with Sam, has written a public letter warning investors that, '•in light of Mr. Antar's background as a convicted white collar criminal, we believe that the public should carefully scrutinize and objectively examine any public statements that Mr. Antar makes.'– Invariably, Sam and Minkow attack the same companies as the Cramer constellation of hedge funds, and, unsurprisingly, that is where they derive at least part of their income. Court documents show that Minkow has received at least $10,000 from Whitney Tilson, a friend of Cramer who has shorted companies along with David Einhorn, for whom Dan Loeb, a.k.a. Mr. Pink, vowed to go '•to war.'– Mr. Pink, meanwhile, contracts with an outfit called Magic Consulting - owned by convicted stock manipulator Michelle McDonough (formerly Michelle Sarian). McDonough's job is to coordinate a stable of internet stock message board posters and complicit journalists who bash stocks shorted by Loeb and his friends. McDonough was herself a fairly prolific message board basher, prior to going to prison in 2000. One message board poster in McDonough's stable is the crooked mortgage broker and financial flimflammer who is frantically emailing back and forth with former BusinessWeek reporter Gary Weiss in the winter of 2006, soon after Gary established his blog devoted to bashing Patrick Byrne and denying that phantom stock is a problem. The flimflammer is named Floyd Schneider '-- a former employee of Amr Elgindy, the gun-toting goon, a.k.a. Manny Velasco, who plotted short strategies with Mr. Pink before instructing his Smith Barney broker to liquidate his kids' trust funds on the day before 9/11, causing him to get caught in a giant stock manipulation scheme. Floyd has a long history of credit card fraud and stealing money from customers, and once he even filched $20,000 from his own uncle. On his death bed, Floyd's father said to several associates: '•My son - he is a liar and crook. Floyd is the reason that I am dying.'– Floyd has posted tens of thousands of messages smearing Patrick Byrne, Overstock, and many other companies''all, coincidentally, swimming in phantom stock. Meanwhile Sam Antar of Crazy Eddie, who is delivering large sums of money to convicted fraudster Barry Minkow (paid, in part, by Whitney Tilson, colleague of Mr. Pink and Cramer) has posted thousands of his own false and defamatory statements about Overstock, both on message boards and on his blog. A number of journalists are on strangely good terms with these crooks. Fortune magazine, for example, has written a positive profile of Sam Antar. Roddy-Boyd-The-Post has written an email to a known conman in which he refers to Michelle McDonough as '•our mutual best friend.'– But few journalists are closer to this cast of swindlers than Gary Weiss, the former BusinessWeek reporter. And who, exactly, is this Gary Weiss character? Well, this is where the story gets really weird. * * * * * * * * Gary Weiss is a journalist best known for penning the 1996 BusinessWeek cover story, '•The Mob on Wall Street,'– which documented Mafia involvement in stock brokerages, including Hanover Sterling, run by the Genovese clan. In 2003, he published a book, '•Born to Steal,'– which tells the story of Louis Pasciuto, a Genovese-linked criminal who worked for Hanover. Pasciuto cooperated extensively with Gary, so it is fair to say that the two are friendly. When Pasciuto was later sentenced to prison, Gary wrote an article in his defense.
23 Now, remember, Hanover Sterling, Pasciuto's employer, was at the center of one the biggest phantom- stock selling scandals of all time. The NASD eventually fined John Fiero (a.k.a. Bond '-- a member, along with Mr. Pink, of Amr Elgindy's online short-selling discussion group) for naked shorting Hanover stocks in cahoots with several mobsters from the Gambino crime family. Their phantom stock selling destroyed a number of companies, and put Hanover out of business, probably with the acquiescence of Hanover's Genovese handlers. The naked shorting also destroyed Adler Coleman, then one of Wall Street's largest clearing firms. That was in 1995 '-- one year before publication of '•The Mob on W all Street'– '-- but Gary's story makes no mention of phantom stock or illegal naked short selling. Indeed, Gary paints Fiero as the victim of Mafia harassment. Since 1995, one of Gary's most important sources has been Manuel Asensio, a short-seller who for many years was a hero to a certain clan of journalists. Several reporters, including Gary, have written worshipful profiles of Asensio, heralding his supposed expertise at identifying overvalued public companies. None of these stories allude to Asensio's mysterious past, which seems to have included stints at a number of dubious brokerages. In 2000, the NASD fined Asensio for failing to make an '•affirmative determination'– that stock could be borrowed before he sold it. (In other words, he sold phantom stock). In 2006, Asensio was barred from associating with any NASD member (think of the securities industry's equivalent of Hannibal Lecter in straitjacket and mask) after he failed to respond to charges that he published false information in financial research reports. Before that, he worked extensively with Mike Wilkins, a short-seller and part-time screenwriter of Hollywood B-movies. A fellow named Ed Manfredonia, who was the primary source for a story Gary wrote about corruption on the American Stock Exchange - the longest investigative report ever published by BusinessWeek''says he was sitting in Gary's office when the BusinessWeek reporter received a fax from Wilkins' hedge fund containing negative information about a company called Hemispherx BioPharma. Manfredonia says he told Gary that he had information from Asensio's clearing firm, Spear Leads & Kellogg, that Asensio had sold 300,000 phantom shares in Hemispherx. But Gary ignored this information and wrote a negative story about the company, helping its stock to plunge by more than 50% '-- pure profit for Wilkins and Asensio. Now, Ed is quite the character. A former stock broker who has been living on welfare for years, he says he's been unable to get a job ever since making allegations that major players on the American Stock Exchange were committing all sorts of heinous acts - like smuggling cocaine from Columbia, and laundering money for Imelda Marcos. Ed is a compact man and his eyes bulge behind Coke-bottle eyeglasses. He once came to my office at the Columbia Journalism Review and spent three straight hours delineating the '•crimes'– of Gary Weiss. During these three hours, I uttered maybe a couple dozen words. When I left the room to get a glass of water or use the restroom, Ed just kept right on talking. He has filed countless lawsuits (which he writes himself) against Gary and others, and spent a considerable amount of time following Gary around, asking why Gary lied in his stories. In January 2005, BusinessWeek filed a restraining order against Ed. But Ed is, in certain respects, credible. A New York district attorney's office once wired him as part of a large-scale investigation into some of the very allegations that he leveled against the American Stock Exchange. In a story titled, '•Offering Credence to the Crank,'– Gary wrote that, '•In talking to his friends, current and former Amex officials and traders, I kept hearing the same thing: Ed gets too excited, but he is telling the truth.'– I think Gary was right to use Ed as a source (he's certainly an improvement over the cast of crooks with whom Gary is currently collaborating) and it wasn't very nice of him to call Ed a '•crank.'– Ed is different, a
24 bit stressed-out perhaps, but he's obviously had an inside look at corruption on Wall Street. Some of his information is solid. For example, his claims that Asensio sold phantom stock in Hemispherx BioPharma were later repeated in a report by expert court witness Robert Lowry, who spent 23 years in the SEC's division of market regulation. There is also this: In 1999, somebody entered the New Jersey mansion of Albert Alain Chalem, told him to kneel on his marble floor, and shot him in the head. The killers fired several more bullets into Chalem's face, and then, in a manner less gruesome, killed his companion, Maier Lehmann. Chalem and Lehmann were involved in various pump and dump schemes, but they were also short- sellers and to a certain group of journalists, popular sources of negative information about public companies. (One gets a sense of the sorts of people to whom some journalists turn for information). Chalem and Lehmann were also heavily involved in the production of phantom stock. At the time of the murders, Ed offered to introduce Gary to Chalem's bodyguard, who had good information that the killings were the work of the Russian Mob. Chalem had lost a bundle of money through a brokerage that was controlled by the Russians, and on the night before his murder, he and his bodyguard had met and argued with some Russian thugs. Threats were exchanged. Deep Capture has looked into Ed's story - and it checks out. There is every reason to suspect that the Russians (and, by extension, the Genovese crime family) were involved in the murders of Al Chalem and Meier Lehmann. But Gary would not meet with the bodyguard. Indeed, the BusinessWeek reporter was adamant - he would not talk to anyone who intended to accuse the Russians of committing this, or any other crime. Nor would he mention Chalem and Lehmann's involvement in selling phantom stock. Instead, he wrote a story suggesting that Chalem and Lehmann died because they were pumping stocks with members of the Gambino crime family. As Gary knew, the Gambinos were at the time in a bitter feud with the Genovese and their Russian allies. (Gambino mobsters, remember, had threatened to murder the top revenue earner at Carol Remond's source, Pacific International, because he had funneled a large amount of money to a Genovese-linked stock promoter). So it was no small decision to ignore information that the Russians had ordered the murders. Ed suggests that Gary pinned the murders on the Gambinos because he was trying to get movie producers interested in his book, and movie producers find the Italian Mob more compelling than the Russians. Either that, or Gary's favorite sources had a beef with the Gambinos. In an email to me, Gary's source Manuel Asensio wrote, '•I don't know anything at all about Al Chalem and Meier Lehmann. I don't know who they are and have never read or heard anything about them, or spoke to anyone, including Gary, about it.'– In another email, he said he has never talked to Gary about the Mafia, he has never read Gary's articles about the Mob on Wall Street, and he has no interest in the subject. I called Asensio to ask about a lawsuit that had claimed that he had previously worked for First Hanover, a Mob-linked brokerage run by a guy who later became a crack addict and a homeless person. I also wanted to know about Asensio's experience in selling phantom stock. He said he never worked for First Hanover. He said there is nothing wrong with selling phantom stock - it should be legal. He listened as I described some of the information I had gathered for this story. And then he offered to put me on his payroll.
25 * * * * * * * * So, in November 2006, I was working on this story at the Columbia Journalism Review, and I had two large diagrams on the wall above my desk. One of these diagrams showed the multiple links between hedge fund manager William Ackman, a friend of Cramer who was funded by the aristocrat Marty Peretz, and Gene Philips, a real estate magnate who was arrested in 2000 along with around 150 stock brokers from the five New York Mafia families - the largest securities fraud bust in history. (Philips was later acquitted). The other diagram had, written on the top, inside a box, the name of a hedge fund: Kingsford Capital. This hedge fund, I had learned, specialized in short-selling and was managed by Mike Wilkins, the Hollywood screenwriter who had extensively collaborated with Manuel Asensio. So '•Asensio'– and '•Wilkins'– were written on the diagram. I had also learned that another manager of Kingsford Capital was Cory Johnson, who, along with Herb and Jim Cramer, was one of TheStreet.com's founding editors - a member of '•Murderers' Row.'– (Johnson had previously earned his financial creds as the editor of a hip-hop basketball magazine.) At the time, Kingsford was also paying consulting fees to Justin Hibbard, who had just left his job at BusinessWeek. Since Kingsford and Asensio were favored sources of that other former BusinessWeek reporter, Gary Weiss (whose only employment at the time was writing a blog smearing Patrick Byrne and denying the existence of phantom stock), I had put his name on the diagram, too. And finally, I had noted on the diagram that several companies shorted by Kingsford Capital and Asensio happened to have been victimized by phantom stock. So there they were - these diagrams. And then, one day in November 2006, there was a man. He walked into the offices of the Columbia Journalism Review, strolled up to my desk, glanced at the diagrams, and smiled. Then he went into our conference room with an editor of the Columbia Journalism Review. After a short time, the editor invited me into the conference room to meet this man. The man was very cordial. He smiled and presented me with his business card. The card said, '•Mike Wilkins, Kingsford Capital.'– Mr. Wilkins had a proposal for the Columbia Journalism Review. And this proposal involved a large sum of money. * * * * * * * * Meet Judd Bagley, crack technologist and Deep Capture investigator. He's at his desk, which is half- covered with a tangled mess of wires and hard drives''his hands are up in the air, fingers fluttering like the wings of a hummingbird, and he's in the midst of a gorgeously long sentence that begins with something about Spartan war tactics, then segues into thoughts on Tennessee Williams and the origins of the marble in the Parthenon, and now seems finally to be ending with a lengthy explication of his '•methods'– for exposing the obsessions and transgressions of a former BusinessWeek reporter named Gary Weiss. '•'...and using my methods,'– he concludes with an adjustment of his spectacles, '•I've been able to deduce that Gary Weiss is'...'–
26 ..that Gary Weiss is, in essence, a charlatan and a scoundrel. It is owing to Judd's work that we know, without a shadow of doubt, that the hedge fund manager who calls himself Mr. Pink pays Gary's friend, the flimflammer Floyd Schneider, through his intermediary Michelle McDonough, a convicted stock manipulator formerly known as Michelle Sarian. Hedge funds affiliated with Mr. Pink, meanwhile, are paying convicted fraudster Barry Minkow, who is receiving large wads of money from the crook Sam Antar, who spends most of his time working with Gary to smear Patrick Byrne and Overstock. In appreciation of Judd's efforts in delineating these connections, Sam Antar the Crook has issued some nasty threats, at one point posting the names of Judd's two young daughters on the internet. So, right''these (along with Manuel Asensio and Kingsford Capital) are Gary Weiss's friends. He's probably been working with at least some of them since 1995, when he published '•The Mob on Wall Street'– and another story, '•The Secret World of Short-Sellers.'– In the latter story, Gary provided a sympathetic account of a short-seller who wasn't named, but whom we know to be Asensio. The short- seller is painted as something of a hero for attacking a small oil company called Solv-Ex. As Gary knew (because he mentioned it in passing in '•The Mob on Wall Street'–), Solv-ex had alleged at the time that a group of Mafia-linked investors were playing games with its stock. This was never proven. But a federal grand jury later looked into suspicious short-selling of Solv-ex, and the company sued Asensio, along with Michelle Sarian (a.k.a. Michelle McDonough) and Deutsche Bank's Morgen Grenfell Asset Management. (Separately, Peter Young, a Morgen Grenfell fund manager who had set up secret accounts to invest in the oil company, was prosecuted in England. Peter showed up in court wearing a floral dress, bright red lipstick, and high heels - and then plead insanity). In any case, we know that Michelle Sarian (a.k.a. Michelle McDonough) is now helping Mr. Pink pay Gary's friend, Floyd the Flimflammer, to smear public companies on the internet. And thanks to Judd's methods (pure genius, these methods) we have concrete proof that Gary has himself used a variety of fake names to post thousands of messages on internet stock discussion boards, such as Yahoo! The messages either defame people who believe that phantom stock is a problem, or contain negative information about companies shorted by Mr. Pink and other hedge funds affiliated with the Cramer constellation. And, really, Gary's efforts go way beyond the call of duty. By tracking the IP footprints left by Gary's computer, Judd has been able to observe the former BusinessWeek reporter posting, non-stop, for stretches of 24 hours and longer, his writing becoming more and more garbled as time goes by. Gary also spends time on Amazon.com, writing anonymous reviews of his own books. As soon as this habit was exposed on Judd's blog, Antisocialmedia.net, Gary scrambled to erase the reviews, but we preserved a few nice examples. Here is Gary's review of Gary's book about the Mob on Wall Street: '•Why? BECAUSE YOU CAN'T PUT IT DOWN!!!!! I took this book to the beach during the July 4th weekend and made the mistake of starting to read it in the afternoon. There I was as the sun was setting at 8, and I was still reading it. Everyone was gone and I was squinting as the sun went down. That's how electrifying this book is.'– Man, that's a good book. * * * * * * * * For further insight into the character and tactics of Gary Weiss, consider the story of how Gary plotted to destroy a fellow journalist named Ian Williams, a reporter for The Nation who was president of the United
27 Nations Correspondents Association (UNCA). Apparently, Gary's wife wanted a position in the UNCA that was held by Williams' wife, a BBC World Service journalist and a native of Uzbekistan. So Gary tried to drive Mrs. Williams out of the country by accusing her of lying in order to get a U.S. visa. Gary's allegations proved absolutely false. Instead, it emerged that Gary's wife, a citizen of India, had herself forged a bunch of documents to secure UN press credentials. For example, as part of her application, Mrs. Weiss submitted multiple stories that she had purportedly written for The Pioneer, an Indian newspaper, and a letter confirming her appointment to that newspaper, signed by the Pioneer's editor. The stories were fakes ''later proven to have been photo-shopped on a computer '-- and the Pioneer's editor, Chandan Mitra, stated that Gary's wife had '•never been engaged by The Pioneer for any purpose.'– He added that the signature on the letter was '•an outright forgery'–. The UN revoked Mrs. Weiss's credentials and escorted her from UN premises under armed guard. Days later, Gary was on Amazon, anonymously trashing Ian Williams' books. Then he founded '•Mediacrity,'– a blog supposedly devoted to media criticism, but actually focused, at least initially, on heckling Ian Williams and circulating unfounded rumors about Williams' wife. * * * * * * * * It would be possible to dismiss Gary as a marginal creep. But his strange views on phantom stock are widely cited. Herb Greenberg and other journalists regularly promote his blog. Meanwhile, Gary and his crook friends do more than post lies on blogs and internet message boards. They have also seized control of Wikipedia - one of the most important (though certainly not accurate) sources of information on the internet. That's right, Gary W eiss was until recently the sole (anonymous) author of multiple Wikipedia pages, including the blatantly distorted entries on naked short selling (phantom stock), Overstock, and Patrick Byrne. (Gary Weiss is, of course, also the author of the glowing Wikipedia page on Gary Weiss.) And though W ikipedia claims that it can be edited by anyone, the truth is that until this scandal broke, the pages authored by Gary Weiss were given special protection. Nobody other than Gary Weiss could touch them. Judd put together proof of what Gary was doing, and submitted it for review to a high-ranking Wikipedia administrator known only by the screen name, '•SlimVirgin.'– Rather than examine this evidence, SlimVirgin immediately forwarded it to Gary Weiss. One of Judd's '•methods'– allowed him to determine this immediately. Judd also quickly learned that Gary's privileged status on Wikipedia was, in fact, the result of SlimVirgin's interventions. For months, anytime a user attempted to edit a page controlled by Gary, SlimVirgin would step in and restore Gary's preferred version. Wikipedia allows its administrators to remain anonymous, and they would if it weren't for clever internet sleuth Daniel Brandt. Brandt unmasked the man who edited the Wikipedia entry of one-time government official John Seigenthaler to suggest that Seigenthaler had a role in the assassinations of both JFK and RFK. Brandt also revealed that a Wikipedia administrator who had claimed to be a professor of theology with two doctorates was, in fact, a 24-year-old college drop-out. These two incidents became the basis for critiques of Wikipedia in the New Yorker and other mainstream media. For his third act, Brandt discovered that SlimVirgin's true identity is one Linda Mack, a woman who was suspected of working as a British intelligence agent. It turns out that Linda Mack also studied philosophy with Patrick Byrne at Cambridge University, where, for a time, they had a close if somewhat odd relationship. Patrick wrote a public letter describing this relationship. The letter has literary merit. Check it out here.
28 Meanwhile, John Cooley, a former correspondent for ABC News, wrote a public letter describing how Mack had once worked as a research assistant for ABC. His former boss, Pierre Salinger, fired SlimVirgin when he began to suspect that she was spying on ABC for MI5, the British intelligence agency. Soon after Cooley sent this letter, I interviewed a man named Edwin Bollier, who was once accused of supplying the suitcase bomb that blew up Pan Am Flight 103 over Lockerbie, Scotland, in 1988. SlimVirgin's boyfriend was on that plane, so that could explain her interest. But Boiller says that SlimVirgin once showed up in his office and identified herself as an agent for MI5. When Judd reveals that Gary Weiss is the anonymous editor who has conspired with the supposed one- time MI5 agent called SlimVirgin to hijack the Wikipedia pages on phantom stock, Wikipedia founder Jimbo Wales and SlimVirgin dismiss it all as '•conspiracy theory.'– W ales announces that Gary Weiss has nothing to do with those pages. Gary himself flat out denies that he has ever edited a Wikipedia page. When Judd continues to present his evidence, and persists in making this an issue, Wikipedia administrators begin to debate an Orwellian '•Bad Sites'– policy which would prohibit a certain website from being mentioned on Wikipedia. This online debate generates more words than are contained in the New Testament (literally, Judd has done a comparison) and is focused entirely on Judd's blog, Antisocialmedia.net, as the one '•Bad Site.'– Things get really strange when Wikipedia's administrators decide that their discussion about this '•Bad Site'– must continue without mention of the site itself. So now, websites advertising child pornography and other evils are regularly mentioned on Wikipedia, but a single utterance of '•Antisocialmedia.net'–, a blog devoted largely to describing the strange attempts of Gary Weiss and SlimVirgin to whitewash the problem of phantom stock, is enough to have an administrator removed from his position and banned forever from Wikipedia. Then Wikipedia takes the unprecedented step of blocking the IP addresses of Overstock and 1,000 homes in Judd's neighborhood in Traverse Mountain, Utah. One should not underestimate the significance of this: Judd and his neighbors, and the employees of Patrick Byrne's Overstock.com, become the only people on the planet who cannot access the Wikipedia edit function. The Register, an internet publication (something like a British version of Wired Magazine), does a story about this, titled, '•Wikipedia Black Helicopters Circle Utah's Traverse Mountain.'– Meanwhile, Jimbo Wales and SlimVirgin continue to vehemently deny that Gary Weiss has anything to do with the '•Naked short selling'– Wikipedia entry. But then several of Wales's contributions to a very small and private email list are leaked to Judd. One of these - a September, 2007 email from Wales '-- alluding to Mantanmoreland, the on-line alias of the author of the Wikipedia '•Naked short selling'– entry - reads as follows: From: jwales@wikia.com (Jimbo Wales) I just want to go on record as saying that I believe the reason for this is that Mantanmoreland is in fact Gary Weiss. When Wikipedia administrators see this, they rise up against Wales. For months, Wales and SlimVirgin have been assuring them that Gary is not the editor of the entries on naked short selling - that Judd isn't credible, that he's a conspiracy nut and author of the world's only '•Bad Site.'– Now, here is clear evidence that Wales and SlimVirgin had duped the other administrators. Meanwhile, dozens of Wikipedia users submit amazingly detailed and academic studies (one employs phraseology to demonstrate language-use similarities between Gary and his on-line aliases) that help prove that Gary Weiss is indeed the anonymous, conflict-laden editor who controls, with the support of
29 SlimVirgin, every Wikipedia entry having to do with naked short selling, phantom stock, Patrick Byrne, Overstock.com, and Gary Weiss himself. Wales dissembles, saying that '•believing'– that Gary Weiss is Mantanmoreland is '•not the same as knowing for sure.'– But as the scandal spins out of control, more evidence emerges of coordinated distortion of Wikipedia pages. It appears, for example, that W ales wangled changes to the entry on a Canadian newscaster in exchange for sex. And The Register reveals that a cabal of Wikipedia administrators have hijacked the entry for a religious cult leader, Prem Rawat, who refers to himself as the '•Lord of the Universe.'– Then Jeff Merkey, a former top scientist at software development company Novell, writes Wales an email that says, '•I just sent ***ALL*** of your emails to the associated press, exposing your lies and deceit.'– The Associated Press, in turn, reports that Wales gave special protection to the Wikipedia article on Jeff Merkey in exchange for a substantial donation to the Wikimedia Foundation. As of April, 2008, a veritable revolution is underway at Wikipedia. Its administrators are demanding explanations-especially about Wales' relationship with Gary Weiss and SlimVirgin. The Wikipedia founder, backed into a corner, has become ever more defensive, though he is agreeing to look into the Gary Weiss allegations. '•I support that this investigation continue,'– Wales writes on a message board, '•and request that it be done in a kind, thoughtful, loving way.'– * * * * * * * * The importance of Wikipedia entries should not be underestimated. If you do a Google search for '•naked short selling,'– the all-important number-one result is the Wikipedia entry that says in no uncertain terms that phantom stock does not exist. Did Jimbo Wales give special protection to Gary Weiss and SlimVirgin, allowing them to hijack this and other Wikipedia pages? It is perhaps too early to say for sure, but it is worth understanding a little bit about Jimbo Wales' prior career. To summarize: Before founding Wikipedia, Wales owned a soft core porn site. Before founding a soft core porn site, Wales was a key player in the precise area of the Chicago options market where naked short sales are often negotiated. For a good explanation of how phantom stock is created in league with options market makers in Chicago, read this paper. * * * * * * * * It is also important to recognize the role of The Depository Trust and Clearing Corporation (DTCC), an organization headquartered in New York City. DTCC is where stock trades are processed '-- more than $1.5 quadrillion worth of them every year. That's 30 times larger than the entire gross product of the entire planet. According to the Wikipedia entry on the DTCC, authored largely by Gary Weiss, the DTCC '•streamlines processes that are critical to the safety and soundness of the world's capital markets.'– Indeed, the DTCC is one of the world's most important financial institutions. But what the Wikipedia entry does not mention is that the DTCC is also among the least transparent organizations on earth. No joke: America's founding fathers would take up arms if they knew that anything like the DTCC could exist in this country. There are funds exceeding 30 times global output flowing through a sealed black box that is not understood even by the SEC officials who are supposed to regulate it.
30 One former SEC official describes his colleagues visiting the DTCC and asking, '•So, what is it you guys do here, again?'– A former DTCC employee confirms that the SEC would occasionally send junior people, and summarizes their oversight as follows: '•The SEC staffers would say, '—What do you do?' and '—How do you do it?' After we would explain to the SEC folks what the DTCC did, the SEC people would say, '—OK, are you doing it?''– These meetings would occur about once per year, and take no more than two or three hours. That was the oversight provided by regulators to the sealed black box corporation through which 30 times the economic output of the entire world flows. Because the DTCC processes every short sale, it knows which brokers have hedge fund clients that are selling stock and not delivering it. The organization also knows precisely how much phantom stock is circulating in at least one part of the system (additional phantom stock is created outside the DTCC, or '•ex-clearing'–). Yet, perhaps because it is '•user owned'– - that is, it is owned and operated by the very Wall Street brokerages that sell the phantom stock - the DTCC refuses to release any information. Meanwhile, the organization leads an energetic public relations campaign denying that phantom stock is a problem. It sics lawyers and a pit bull flack named Stuart Z. Goldstein on journalists who attempt to report on the subject. The few journalists who have managed to secure an interview with a DTCC official describe having to pass through a security cordon of machine-gun wielding guards, X-ray machines, and written questionnaires. Yet, oddly, one journalist might have been given open access not only to the DTCC's premises, but also to its computer system. Judd Bagley says this journalist is none other than'...Gary Weiss.That is correct: Judd Bagley's '•methods'– show that Gary Weiss-liar, message board maniac, Wikipedia hijacker, forger, fraud, and friend of crooks - has used a computer inside the DTCC's offices to post on the internet. If so, this would suggest that Gary is a cog in the DTCC's public relations machine. Which, along with his close allegiance to Manuel Asensio, Kingsford Capital, and an array of convicted felons, might explain his intransigent and equivocating blog-rants identifying all critics of naked short selling as wackos and worse. When I asked Gary about this, he had a nervous breakdown. Really, I've never heard anybody (except, perhaps, Herb) blow their top in quite this manner. Not only did Gary deny working for the DTCC, but he launched, totally unprompted, into a lengthy tirade, saying nobody has evidence, and he's never talked to the DTCC's public relations chief-or he has talked to him, but only about that nut Patrick Byrne-and he's never set foot in the DTCC, nobody has seen him in there, or maybe somebody has seen him, but if they saw him, it was only because he was going in there to use an ATM machine-yeah, an ATM machine, maybe he went into the DTCC building to use an ATM machine or something. Yeah, an ATM machine'....or something. * * * * * * * * But back in the summer of 2004, Patrick Byrne doesn't know Judd Bagley or Gary Weiss, he hasn't yet been contacted by the Easter Bunny, and he certainly doesn't know anything about a coordinated effort to pollute America's public discourse. All he knows, really, is that he's become the target of some hedge fund guy named David Rocker. During a visit he and a colleague make to a Minneapolis-based money manager, the money manager asks Patrick who is shorting his stock. '•I hear some guy named Rocker has it in for me,'– Patrick says.
31 The money manager goes ash white, and tells Patrick about a colleague at Piper Jaffray who once had a '•buy'– rating on a stock that Rocker had shorted. Rocker called the analyst and said, '•You don't understand. I will have you killed, I will have you killed, if you do not take your '—buy' rating off this stock.'– Clearly it was hyperbole, but even in the context of Wall Street Speak, it was over the line. An executive in Piper Jaffray's research department used a speaker phone to call Rocker and demand an apology. Another hedge fund manager says to Patrick: '•Do you know who Rocker is? Do you know who you are locking horns with?'– When Patrick says he does not, the hedge fund manager says, '•You better look into who Rocker is connected to.'– So Patrick starts calling around in the New York hedge fund community. The story he is given is, '•Rocker is Mob. Or at least, he spent the last 20 years on Wall Street insinuating to people that he is Mob.'– Now, again, let us be clear that the stories people tell on Wall Street sometimes carry a whiff of hyperbole. We mean here only to convey the sorts of tales that are very regularly told about David Rocker. We are not asserting that Rocker is in the Mafia.Young men like to act like rock stars. Maybe David Rocker is just an older guy who saw too many episodes of the Sopranos, and goes around acting like he is Mob. That's probably it. * * * * * * * * On July 18, 2004, Cramer (probably right after sniffing melons with Rocker in the grocery store) went on CNBC to serve as proxy for Rocker's opinions. He said, '•David Rocker, who says that he would - that you chose not to take his call on the conference call, so I'll ask the question he wanted to ask, which is [Cramer picks up a piece of paper and quotes Rocker directly]: `Is there a business model that works here? With all the excitement regarding better sales, the net net is that revenues have tripled from last year's second quarter, yet operating losses have doubled.' That doesn't seem to be good.'– Nobody prohibited Rocker from asking his question on the Overstock conference call. And the truth is, in the summer of 2004, Overstock had tripled its revenues, while spending a total of only $70 million. At a similar point in its development, Amazon had burned through $3.5 billion. Rocker had a right to his opinion, but it was the media's job to present the other side of the story. It's called '•balance.'– Instead, Rocker's stable of journalists lined up behind him. First, TheStreet.com gave Rocker a column in which he presented his biased interpretation of Overstock's prospects. Then, Cramer wrote his own column, mimicking Rocker's views, on TheStreet.com. Other reporters for the website followed suit. And by August, 2004, Patrick was getting calls from a number of journalists affiliated with Cramer who all repeated the same questions, always premised on the same misinformation, supplied to them by Rocker and Gradient Analytics, the firm that is employing Herb's friend from TheStreet.com to run a dodgy hedge fund out of its back office - the firm that had at least one manager with strange habits regarding aliases and ID's. One reporter who called with Gradient's information was Karen Richardson of The Wall Street Journal. She had been working in New York for only a few weeks, after a long stint in Asia, so she was probably unaware that her boss, David Kansas, formerly of TheStreet.com and now editor of the Journal's '•Money & Investing'– section, had a strangely cozy relationship with David Rocker and Gradient. Halfway through the interview, Patrick interrupted the reporter. '•Karen,'– he said, '•you don't really understand what you are asking, do you?'–
32 '•No,'– she admitted, '•not really.'– '•Let me guess, Dave Kansas gave you these questions.'– '•Yes,'– she giggled, '•Just twenty minutes ago.'– When, in August 2004, Richardson's story appeared in The Wall Street Journal, it noted that '•analysts have been comparing Overstock's lack of earnings against Byrne's rosy projections'...earlier Byrne had forecast revenue of $2 billion by 2006.'– Patrick had made that '•rosy projection'– on Overstock's most recent quarterly conference call - the one from which Rocker had supposedly been barred. On that conference call, Rocker's minion, Carr Bettis of Gradient Analytics, had the following exchange with Patrick: Bettis:'...looking at the $2 billion sales mark'... Patrick:'...that is, if we're at $2 billion, I can tell you what my income is going to be'... Bettis:'...$2 billion, I think, is the mark you guys have set'... Patrick'...the question is, even if we do get to $2 billion , three years out the decision will then be what - what do you want us to do four years out. It's going to change what I tell you if you want us to do $4 billion four years out.. .. Bettis:'...Do you think you can do $4 billion?'...That's great'... you fire away. Patrick:'...Ok, I think we're on different wavelengths. Gradient went ahead and told The W all Street Journal that Patrick was making '•rosy predictions'– of $2 billion. As the damage from the story spread, Patrick wrote to Richardson, wondering whether her source '•might not be entirely trustworthy on every matter.'– Richardson replied that she had contacted her sources again and they had confirmed the $2 billion number.'–This is what the analysts said,'– she wrote, '•according to their notes, anyway.'– She added: '•I hope this doesn't keep you awake at night!'– * * * * * * * * Keep him awake at night!? Well, it did of course. Especially when more reporters called with lists of questions supplied to them by Rocker and Gradient. And these reporters-they were different from the others. They were exceedingly smug. They sneered. They snarled. They were altogether exasperating, like Soviet interrogators, weirdly oblivious to all expurgatory evidence, completely unmoving, always waving those gosh-darn-friggin'-half-witted-imperious-little denunciations '-- Do you deny that you are an American spy? What, he dares to deny it? Ah-ha! Proof that the American spy is hiding something! ''over and over until, finally, Patrick came to that brittle point of utter torment when it was, God forgive, time to stand up and pimp-slap these people. That's when the Easter Bunny called. * * * * * * * *
33 It was in October 2004, and the Easter Bunny sounded like a wack-job, he really did, but he made some predictions. He said that Gradient would continue to publish outrageous information at Rocker's behest. He said the same information that had ended up in The Wall Street Journal, would soon get into the hands of specific reporters at Fortune, Forbes, MarketWatch.com, Barron's magazine, and TheStreet.com - all of whom would call in the coming weeks. And he said that Overstock would soon become the target of a nonsensical federal investigation. The Easter Bunny also laid out the mechanics of something called '•naked short selling.'– He predicted that Overstock would suddenly be listed, without its authorization, on a bunch of foreign stock exchanges- making it easier for hedge funds to sell phantom stock. And he predicted that Overstock would appear on the SEC's Reg SHO list of victim companies, scheduled to appear for the first time in January, 2005. Over the next two weeks, Patrick received calls from precisely the predicted journalists at Forbes magazine, Barron's, The Wall Street Journal, The New York Post, and Fortune magazine - all of them reading the same list of questions supplied to them by Gradient. (To her great credit, the Forbes reporter spent a week investigating Gradient's information, and determined it lacked credibility; the other journalists merely transcribed the information into their stories.) Within a few weeks, the Federal Trade Commission in San Francisco began a bizarre investigation into Overstock that went nowhere. Within a couple of months, Overstock had mysteriously appeared on exchanges in Stuttgart, Munich, Frankfurt, Berlin, and Australia. And come January, the company was indeed on the SEC's victim list (along with three other companies that Rocker had just hammered in a column for Barron's magazine). '•The power of any theory is its ability to make predictions,'– Patrick later says in his '•Miscreants' Ball'– presentation. '•It doesn't matter how wacky a theory sounds, if it makes predictions that are confirmed, you've got to pay attention to it.'– * * * * * * * * The day after the Miscreants' Ball presentation, there is a photo in The New York Post showing Patrick with a flying saucer over his head. A clique of journalists with ties to short-sellers write multiple stories that are no less flattering. They all say that phantom stock is not a real problem. Only bad CEOs of bad companies complain about short-sellers. Only crazy people believe that hedge funds sell phantom stock. * * * * * * * * Four days before wacky-Patty's '•Miscreants' Ball'– presentation, officials arrived at an elegant apartment building in the heart of the embassy quarter in Vienna, Austria. It had taken two years, but they had finally located Thomas Badian, a hedge fund manager who fled the United States after criminal charges were filed against him in New York. Federal prosecutors place Badian at the center of a scheme to sell massive amounts of phantom stock while trying to destroy a Pennsylvania-based software developer called Sedona. Their case describes Badian at one point standing on his office desk and ordering his traders to sell Sedona's stock with '•unbridled aggression'– - even though they had not borrowed or purchased any stock to sell. When the stock price collapsed, he said '•good job,'– and instructed the traders to be '•merciless'– about selling fake stock on the following day. While Badian was living life as a fugitive, a big, swaggering Texan named John O'Quinn was preparing cases on behalf of more than a dozen companies that had been similarly victimized. O'Quinn is one of the lawyers who took on the big tobacco companies - and won. He is a billionaire several times over. He's not in this for the money. He's battling the phantom stock problem because he thinks it's the biggest scandal going. He tells his clients that they don't have to pay him if they don't win their cases.
34 At the time of Patrick's '•Miscreants' Ball'– presentation, O'Quinn has learned that Badian conducted his phantom stock trades through a brokerage called Refco. The lawyer says that he has identified more than fifty companies that have been driven into the ground by Badian and other hedge funds who sold phantom stock through this brokerage. Indeed, on Refco's last balance sheet, filed with the SEC in May 2005, there is a line item, '•securities sold, not yet purchased.'– The declared value of those securities is $10.5 billion, and it is safe to assume that a large chunk of that stock was never delivered. On October 10, 2005, news emerges that Refco has fraudulently hidden $430 million in bad debt. Much of this debt, it turns out, relates to Refco's relationship with Badian, the phantom stock seller, and an Austrian bank called Bawag. The scandal leads to Refco's demise''the largest brokerage collapse in history. So selling phantom stock is implicated in one of Wall Street's greatest-ever cataclysms. And where is the media? * * * * * * * * While officials are closing in on Badian, the people who control the financial media (i.e., the friends-of- Cramer) are hunting down the Easter Bunny.Yes, one of America's biggest brokerages is about to collapse after being implicated in massive phantom stock selling scheme, and if you believe a former deputy secretary of commerce, naked short sellers have annihilated perhaps as many as 1,000 companies - but rather than write about this scandal, our leading financial journalists are engaged in an increasingly hysterical - and illegal '-- effort to unmask and discredit an obscure blogger who calls himself the Easter Bunny. First, there are stories by Herb Greenberg, Carol Remond and The Wall Street Journal '•Money & Investing'– section '-- all of which suggest that the Bunny is somehow suspicious. Perhaps it is no coincidence that Carol's story appears right after a Congressional hearing at which Senator Bob Bennett described the case of a small company called Global Links. As an experiment, the owner of that company bought up 100% of its shares. This should have made it impossible for anyone to trade the stock, but the next day 37 million shares of Global Links were sold into the market. Of course, none of that phantom stock was ever delivered - because it didn't exist. But some influential journalists insist that there's no such thing as phantom stock, they say the Bunny and Patrick are crazy, and just a few days before Patrick's '•Miscreants Ball'– presentation, while the authorities are closing in on a fugitive phantom-stock seller who helped bring about the collapse of a giant brokerage, Jesse Eisinger, formerly of Cramer's website, TheStreet.com, and now star columnist for The Wall Street Journal, is in Las Vegas, notebook in hand, sniffing after the Easter Bunny. He's going to stop at nothing to prove that the Bunny is untrustworthy. Only a villain would say that phantom stock is a problem. The Easter Bunny is, of course, loving this. He mocks Eisinger at every step. '•Jesse'...Stay away from the girls at the Cheetah,'– the Bunny writes on his blog, TheSanityCheck.com. '•I know you will be expensing a fact finding trip there, if you have any sense.'– The Bunny has registered his blog using the address of the Cheetah, a Las Vegas strip club. (Topless servers, internet servers - get it? Bunny humor.) The strippers have no information about the Bunny, so the reporter gets help from criminals who work for his hedge fund sources. The criminals illegally steal the phone and banking records of the National Coalition Against Naked Short Selling, a little lobbying outfit founded by the Easter Bunny. When Jesse starts calling everybody listed in the phone records, the Easter Bunny asks The Wall Street Journal if it is concerned that its reporter (or at least that reporter's source) has committed a felony. The Journal responds indifferently.
35 Meanwhile, the stolen phone records take Eisinger to the home of a little old lady whom he suspects to be the Easter Bunny's mother. The little old lady gets scared and calls security. A guard issues Eisinger with a citation and as he hauls Eisinger off the little old lady's property, the reporter kicks and screams: '•You can't do this! Don't you know my fucking name? I'm Jesse Eisinger. I work for The Wall Street Journal!'– The Easter Bunny is one of the blogosphere's finest (and funniest) writers. But after Eisinger's arrest, and then Roddy-Boyd-The-Post's big garbage story, the Bunny makes a cartoon. It summarizes what we know so far about the mentality of our most powerful financial journalists. BAD GOOD
36 GOOD GOOD * * * * * * * * After the Journal's editors take Eisinger off the Bunny story, it is handed to Carol Remond of Dow Jones Newswires. Carol spends a few weeks trying to prove that the Easter Bunny is a paid stock promoter or some other force for evil, but unable to do so, she gives the story to Roddy-Boyd-The-Post who begins telling people he knows the Easter Bunny's identity because the Bunny's voice matches that of someone he heard on a conference call. When the Easter Bunny points out that, unlike the Bunny, the person on the conference call sounds like a chain-smoker in his late 40s, Roddy-Boyd-The-Post posits that the Bunny has been using real-time voice altering technology. Then Roddy writes his big story - to be surpassed only by his garbage story five months later - that the Easter Bunny is, in fact, a used equipment salesman named Phil. Remond's Bunny work is at least a step above her earlier effort to describe a Mafia-infested brokerage in Canada as a legitimate '•market participant.'– It also beats her madcap scramble to prove that Patrick Byrne was running a criminal operation out of a gay bathhouse. '•I'm going to shred this guy to bits,'– she declared to a former SEC lawyer, and then ran around asking people whether they knew anything about a financial swindle Patrick was conducting with a cabal of gays in San Francisco. Patrick admits some responsibility for Carol's confusion. Suspecting that Rocker was obtaining privileged information about Patrick and Overstock, but not sure how, Patrick created two controlled leaks: one was
37 that he was gay, one was that he used cocaine. Neither story was true, but if somebody were to believe these tales, that would be OK with Patrick. Meanwhile, he'd be able to map where information was leaking, depending on which story reached David Rocker. A few days later, somebody had delivered the gay news to Carol Remond, who in the course of trying to '•rip Patrick to shreds,'– allowed the story to metastasize into something about a cabal and a bathhouse. Patrick caught the mole, or the person he strongly suspects of being a mole, and was provided evidence that she co-owned two shell corporations under a different name with another Overstock employee. The shell corporations had no discernable business other than owning one cell phone. It appeared to those around the mole that her assignment was to figure out who Patrick knew at the Motley Fool, an internet financial news publication that had yet to be infiltrated by Rocker, and was thus the only publication still giving favorable coverage to Overstock. Patrick confronted the suspected mole, who denied having ever heard of that other Overstock employee or having any shell corporations. He pointed out that the other employee's file showed that she, specifically, had arranged for him to be hired, that they lived in the same apartment building, and that in fact, they lived next door to each other. At that point she remembered that she knew him, but denied having any dealings with him. Patrick pointed out that she co-owned two shell companies with him. At that point she remembered that she owned two shell companies with him. At that point Patrick fired her. The alleged mole now works for the governor of Utah. Soon after she left, a journalist at the Motley Fool began trashing Overstock - with help from David Rocker. * * * * * * * * November 2005'....So three months have passed since Patrick sued David Rocker and placed him at the center of a financial scheme dubbed '•The Miscreants' Ball.'– And now, Bethany McLean of Fortune magazine has published a story called '•Phantom Menace,'– which ridicules Patrick for suspecting short- sellers of using dubious tactics. The day '•Phantom Menace'– hits the newsstands, a pastor at a Catholic church in Canada receives a package with the return address, '•P. Fate.'– Inside, there is a letter concerning Prem Watsa, the CEO of Fairfax Financial, a reputable financial services company in Canada. The letter reads: Dear Father, The attached documents are being sent to you out of my concern for the Church's finances. I am extremely sensitive to this as a result of losing a dear friend, Father Richard Bourgeois, an enlightened Benedictine Priest formally of the Collegio D'Anselmo, which as you may know is the Cardinal College of the Vatican. On September 4, 1999 the fugitive Marty Frankel, who perpetrated a massive fraud on the Catholic Church, was arrested at the Hotel Prem in Germany. Interestingly, a review of your most recent, ''Talk in the Pews'' shows Mr. [Prem Watsa] as the Chairman of the investment committee of the church. More interesting are the similarities in the facial features between Mr. Marty Frankel and Mr. Prem Watsa. While these coincidences are surprising, they do not compare to the similarities between the massive money-laundering schemes perpetrated by Marty Frankel and the massively convoluted paper shuffle created by Mr. Watsa through his public vehicle Fairfax Financial Holdings Ltd'...the pattern of activities of Mr. Prem are too similar to the course of conduct of Marty Frankel to be overlooked by a person such as yourself, who is responsible ultimately for the funds of the congregation. Be aware Father, be skeptical and ask Mr. Watsa to make confession. God Bless, P. Fate.
38 Attached to this note is a 30 page document entitled '•Marty Frankel: Sex, Greed and the $200 Million Fraud,'– which provides information about Frankel's exploitation of the Catholic Church, and a vivid description of his adventures in sadomasochistic and group sex. Mr. Watsa is an honest CEO. He is often referred to as '•the Warren Buffett of Canada.'– He has absolutely nothing to do with a sadomasochistic church scammer named Marty Frankel. But Mr. Watsa, his family and friends will receive many more notes in the weeks to come. They will also be harassed, threatened and followed by goons in black vans. At one point, Mr. Watsa's secretary will receive a letter signed by '•Dick Tracy,'– accusing her of being involved in a financial crime. The general counsel of a Fairfax subsidiary will receive a similar letter reading, '•I am reading about you in the Lawer [sic] News and am stunned by the fact that you are posing next to the largest nose I have ever seen. Being so close to such a nose, one would think the sense of smell would rub off on you. In particular can you smell the very serious negative issues that are facing runoff for Fairfax.'– All of this is the work of a man named Spyro Contogouris. This fellow's business card identifies him as working for an outfit called '•MI4 Reconnaissance.'– Sometimes, he holds himself out as an FBI agent. Other times, he claims to have connections to government officials at the highest level. In a note to Fairfax's former chief financial officer, Contogouris writes: '•Take just a minute, sit back and try to view what the world will look like for Fairfax and its former officers three years from now given the current level of regulatory scrutiny. I can help'...'– In another note, Contogouris promises to '•bring a former Special Agent of the Secret Service and FBI'...uniquely qualified to communicate to you a depiction of how the government works'...'– When the former CFO agrees to meet, Contogouris changes his name to Martin Gardener, explaining, '•I do not stay in hotels under any Christian name when meeting insiders at companies. You can use your imagination why. Clearly it leaves my options open in telling my story in the event I am ever subpoenaed. Capisce?'– Contogouris is a con artist who later goes to jail for ripping off a Greek shipping magnate. Prior to his imprisonment, he serves as a favored source to Bethany McLean, author of '•Phantom Menace,'– Roddy- Boyd-The-Post, Carol Remond, and Herb Greenberg - all of whom write negatively about Fairfax. Cramer, TheStreet.com, and The Wall Street Journal's '•Money & Investing'– section, edited by Dave Kansas, formerly of TheStreet.com, also publish negative stories that mimic Contogouris's '•analysis.'– Contogouris's business card may read '•MI4 Reconnaissance,'– but it should be no surprise that he is, in fact, employed by a hedge fund that is linked to David Rocker and Mr. Pink, both of whom are short- selling Fairfax stock. The hedge fund that employs Contogouris is run by a former employee of a man named Steve Cohen, who is also shorting Fairfax stock. Cohen has achieved fame for keeping a $12 million stuffed shark in his living room. He is also the most powerful individual player on Wall Street. His trades account for more than 3% percent of daily volume on the New York Stock exchange. In 2003, these high-powered hedge fund managers launched what they called '•The Fairfax Project'– - a plan to destroy Fairfax Financial. The hedge funds, working with MI4 Reconnaissance, have provided information to the SEC and the Department of Justice, which launched investigations that have so far gone nowhere. Meanwhile, Fairfax has received a listing, without its authorization, on the Berlin Stock Exchange-making it easier for hedge funds to sell phantom stock.The company has appeared on the Reg SHO list of companies victimized by phantom stock almost every day since the list began publishing in 2005.
39 And on the same day that Mr. Watsa's pastor receives that bizarre letter from MI4 Reconnaissance - the day that Bethany McLean publishes '•Phantom Menace,'– which ridicules Patrick Byrne for saying that some short-sellers use dirty tricks - on that day, hundreds of millions of dollars worth of stock in both Fairfax Financial and Overstock had been sold into the market and never delivered. A simple Freedom of Information Act request to the SEC confirms this. * * * * * * * * Bethany McLean is one of America's most respected financial journalists. She is famous for being the first reporter to raise concerns about Enron, the energy company that later proved to have orchestrated a large accounting fraud. She has authored a best-selling book about the scandal called '•The Smartest Guys in the Room,'– which was made into a documentary movie with funding from Mark Cuban, the owner of the Dallas Mavericks basketball team. Bethany deserves credit for her work on Enron. But it is worth noting that the primary source for her stories was Jim Chanos, who owns a hedge fund that is aptly named Kynikos ('–Cynicism,'– in Greek). Chanos was funded by Dirk Ziff, a billionaire heir to the Ziff-Davis publishing empire (and one time guitarist for Carly Simon), at the recommendation of Marty Peretz, Cramer's partner in TheStreet.com. The cynical hedge fund manager regularly shorts the same companies as Rocker and other members of the Cramer constellation of hedge funds. It is also worth noting that in Enron's dying days, a massive amount of its stock was sold into the market and never delivered. Certainly, some of Enron's executives were crooks, but this was a multi-billion dollar company - a key market participant with thousands of employees and some of corporate America's most valuable assets. Would the company have gone under if hedge funds hadn't saturated the market with phantom stock in order to drive the stock to zero? No one will ever know. And the SEC has pointedly refused to release any information on naked shorting in Enron stock. Either way, the hedge funds' success with Enron does not excuse their other activities. This crowd has attacked dozens of companies - polluting the media with misleading negative information, employing criminals to harass CEOs, orchestrating SEC investigations, bribing witnesses, and filing phony lawsuits. Almost always, these companies appear on the SEC's list of phantom stock victims. Often, these companies have done no wrong, but always the hedge funds label them as frauds - '•the next Enrons!'– Journalists swallow this information as if it were the elixir of everlasting life. In the seven years since Enron, Bethany McLean has yet to write a story that was not sourced from the Cramer constellation of hedge fund managers and crooks. Even in the face of the most glaring evidence that the hedge funds are wrong - even when she knows full well that her sources are using dubious tactics and employing criminals - she simply will not contradict these people. As a result, a number of her stories are gross distortions. For example, in March 2007, she writes a story about Fairfax Financial. In this story, she mentions that Spyro Contogouris has been arrested, and notes that Fairfax has accused him of working for a cabal of hedge funds engaged in dirty tricks. But she offers little information about Contogouris's tactics (one of which, by the way, was to create a website that falsely compared Fairfax to Enron and advertised a copy of Bethany's book). Instead, Bethany's story describes Contogouris as an '•independent research analyst'– who '•proved himself'– on an earlier project involving an unnamed stamp company's '•Ponzi scheme.'– (The stamp company is called the Escala Group. This was a big target of Kingsford Capital, the hedge fund that offered a large sum of money to the Columbia Journalism Review after it discovered that I was working on this story).
40 Bethany's story quotes an analyst who has concluded that Contogouris's claims are bogus - that Fairfax's financial statements are '•not unusual'– and certainly not portending the '•next Enron.'– She notes that even Contogouris admits that he '•couldn't connect all the dots.'– But, amazingly, she proceeds to give credence to this criminal's analysis, and his completely unfounded claim that Fairfax is the '•greatest known insurance fraud of the 21st century.'– In an attempt to bolster this claim, Bethany refers to the work of a firm called Institutional Credit Partners, which apparently also suspects wrongdoing at Fairfax. The reporter presents this firm as completely independent - a disinterested source who objectively confirms the claims of Contogouris. She writes that '•ICP executives provided Fortune with access to unedited research because they are deeply disturbed by the possibility that legitimate research may be being [sic] suppressed.'– What she did not mention is that ICP's director had just bailed Contogouris out of prison. This hardly constitutes objectivity, and Bethany knew it, because as she wrote her story, she had, quite literally sitting on her desk, a copy of Contogouris's bail documents. Finally, Bethany also makes a vague reference in her story to a real FBI agent whom she suggests has his eye on Fairfax, when the truth is that he has been looking into other issues, such as the criminal behavior of Spyro Contogouris, whom he subsequently arrests. There is '•the distinct possibility that Watsa and his company are not, in fact, victims,'– Bethany writes. '•After the last round of corporate scandals [read: Enron], regulators and the public cried out for more hardheaded analysis. Where were the skeptics, they asked? Now, just a few years later, there are skeptics aplenty about Fairfax, and they have taken their suspicions to regulators, rating agencies and others.'– The '•others'– being a clique of compliant but powerful journalists like Bethany McLean. The '•skeptics'– being a small group of hedge funds and criminals who have captured America's most important institutions. * * * * * * * * It is tempting to catalogue each of the many falsehoods that these journalists have entered into the public discourse, but that is perhaps a job for the lawyers. Permit me, though, to provide a couple more examples of the deceit that has been foisted upon us by Fortune magazine's most prominent reporter and her dubious sources. In May 2005, Bethany published a story in which she compared MBIA, the bond insurer, to Enron. Today, this company has run into some difficulty owing to the subprime mortgage crisis, but the company is certainly no Enron. It retains its AAA rating from Moody's and Standard & Poor's, and none of the issues raised in Bethany's story have proven to be germane. Which shouldn't surprise. The story served primarily to air the opinions of a single short-seller, William Ackman, who is a friend-of-Cramer - a fellow Harvard graduate who was attacking MBIA along with David Einhorn (Mr. Pink's war ally) and Whitney Tilson (financer, along with the crook Sam Antar, of convicted felon Barry Minkow). Ackman has also worked closely on various deals with Gene Philips, an old Boesky crony who was arrested in 2000, along with 100 stock brokers from the five New York Mafia families. Bethany knows that Ackman is not an objective observer, so she supports her assumptions about MBIA with information from several analysts whom she describes as '•independent'–. For example, she quotes Sean Egan, the manager of a small credit rating agency that holds itself out as an alternative to the gold standards, Moody's and Standard & Poor's, and apparently believes that MBIA deserves less than a AAA rating. Bethany portrays this guy as credible, while failing to mention that Egan is paid by short-selling
41 hedge funds, and refuses to meet anybody in a real office. Instead, he meets reporters and arranges secret document drop-offs in the Philadelphia train station. The other '•independent'– analysis in the story comes from Glass, Lewis, a firm that specializes in producing negative research for hedge funds (and that now employs Jonathan Weil, the Journal reporter who wrote the falsehood-laden story about NovaStar; Weil has also been credited with '•breaking'– the Enron story along with Bethany). Meanwhile, another source for the MBIA story-a source who was positive on the company''says that Ackman heavily pressured him to change his views. Then Bethany intentionally twisted the source's words to suit her purposes. In an email, the source says: '•Bethany McLean cited me inaccurately (in several respects).'– * * * * * * * * Shortly before Bethany's MBIA story came out, New York's then-Attorney General Eliot Spitzer was obligated (because of the sheer volume of evidence) to investigate Bethany's source, William Ackman, for stock manipulation and publishing false information. But characteristically, Spitzer quickly dropped that investigation. Then he did a complete 180, and began investigating MBIA. That investigation went nowhere. But then Spitzer became governor of New York. Before the FBI caught Spitzer with a hooker while investigating allegations of money laundering and bribery, the governor continued to push for legislation that would have done damage to MBIA's stock price. As Kimberly Strassel bravely wrote on The Wall Street Journal editorial page (which operates independently of the captured '•Money & Investing'– section), '•Mr. Spitzer's main offense as a prosecutor is that he violated the basic rules of fairness and due process: Innocent until proven guilty; the right to your day in court. The Spitzer method was to target public companies and officials, leak allegations and out-of- context emails to a compliant press, watch the stock price fall'...Most of Mr. Spitzer's high-profile charges have gone up in smoke'...The press was foursquare behind Mr. Spitzer in all these cases, and in a better world they'd share some of his humiliation.'– The italics are mine. If it all sounds familiar, it will not surprise to learn that Eliot Spitzer is Cramer's best friend. They were college roommates. Cramer's constellation of hedge funds were Spitzer's biggest campaign donors, and the Cramer clique of journalists were the very journalists who were '•four square behind Mr. Spitzer.'– And Spitzer didn't just attack public companies so that his short-selling friends could make more money. He also manufactured the '•independent research'– racket. As attorney general, he sued the big Wall Street banks for publishing financial research that supposedly overstated companies' prospects. This opened the doors for the '•independents'– - like Sam Antar, Spyro Contogouris, Barry Minkow, the folks at Gradient Analytics, and others who make their living harassing public companies and understating their prospects for short-selling clients. Spitzer was the most aggressive attorney general Wall Street has ever known. But perhaps in deference to Cramer and his friends, he almost never went after hedge funds. Indeed, one of the only hedge funds he ever prosecuted was Millennium Partners, founded by Israel Englander and John Mulheren, who died of a heart attack in 2003. Englander and Mulheren were not friends of Cramer. To the contrary, Mulheren was once arrested while driving to the home of Cramer's friend, Ivan Boesky, with a trunk full of high-powered weaponry. As is recounted in Den of Thieves (the classic account of Mike Milken, Ivan Boesky, and Carl Icahn), when faced with prosecution, Boesky ratted out everyone who had done business with him (and even wore a wire on Milken), in return for a lighter sentence. Mulheren's involvement was minimal, but he was among
42 those ratted out. So one day Mulheren snapped, and drove to Boesky's house, planning to assassinate him. In an ugly world, Boesky or his friends would seek revenge by trying to kill Mulheren and Englander. Kill them, or call in the Attorney General and the Media Mob. * * * * * * * * It is said that Bethany McLean has a system with gentlemen of a certain age. She has Midwestern looks, but a voice like red velvet ''.and she stops at nothing for a peak behind the kimono. Downright cozy with Wall Street, a real life Media Mata Hari, she has beguiled many a CEO into giving her information that ended up in her stories - and also in the hands of her short-selling friends. In October, 2005, she attended, uninvited, a Saturday lecture Patrick Byrne gave at the Columbia Business School, and asked him to a nearby restaurant. Later that day and several times the next, she left messages on the voicemail of a friend of Patrick's in the mistaken belief that it was Patrick's phone. That friend says, '•She left Patrick her home and cell numbers and asked him to come over to her place for a drink, '—even around midnight would be fine.''– Patrick accepted an offer to meet her in a darkened bar under her apartment, where she mentioned, '•I was briefly married, getting divorced.'– Patrick, who had been warned of Bethany's system, declined her invitation to come by again, or call her at home. It was hard to believe that she would be so bold considering that she had previously published a story about Overstock, noting that '•skeptics abound.'– Those '•skeptics'– again. The skeptics, of course, were Rocker and the scoundrels at Gradient Analytics, then called Camelback Research Alliance. They suggested that Overstock's growth paled in comparison to Amazon's - neglecting again to note that Amazon had burned through $3.5 billion at the same stage of development. There is no evidence that Bethany did anything in this story other than regurgitate the misleading analysis of Rocker and Gradient - while portraying them as two separate entities in order to show that skeptics '•abound.'– As if to more forcefully demonstrate her allegiance to these '•miscreants,'– Bethany had published another hatchet job for them - right after Patrick's '•Miscreants' Ball'– presentation. Patrick told the world that Gradient and Rocker were at the center of a massive financial crime, and a few days later, he opened Fortune magazine and saw the story - an attack on video game maker Take-two Interactive, quoting (as if they were offering analysis independent of each other) David Rocker and Gradient Analytics. Then, in November 2005, shortly after Patrick did not call her at home (not even before midnight) Bethany published '•Phantom Menace.'– Rather than describe in detail the allegations that Patrick had leveled in his '•Miscreants Ball'– conference call, Bethany quoted Mark Cuban, the guy who financed her Enron documentary. She wrote: '•As Mark Cuban, the billionaire investor, later wrote on his blog, '—Never before in the history of Wall Street has a single conference call mentioned the following topics: miscreants, an unnamed Sith Lord he hopes the feds will bury under prison, gay bathhouses, whether he is gay, does cocaine, both or neither, and an obligatory '—not that there is anything wrong with that,' phone taps, phone lines misdirected to Mexico, arrested reporters, payoffs, conspiracies, crooks, egomaniacs, fools, paranoia, which newspapers are shills and for who, payoffs, money laundering, his Irish temper, false identities, threats, intimidation, and private investigators. All in 61 minutes.'–
43 In addition to making it seem as if Patrick's words had been blurted out by a sufferer of Tourette's syndrome, Bethany went to lengths to ensure readers that Rocker had taken a '•routine position'– in Overstock. She noted that Gradient had published negative information about Overstock and argued (again without mentioning Gradient's connection to Rocker, or alluding to any alternative point of view) that this information had merit. Moreover, she described the Easter Bunny as a wacky conspiracy theorist, suggested that phantom stock was not a real problem, and said that Patrick's behavior was so '•over the top'– that he should be fired from Overstock. Before she wrote this story, Bethany had three affidavits from former Gradient employees alleging that Gradient was in the business of producing false information for Rocker. One of those affidavits stated plainly that Gradient had colluded with at least one famous journalist''Herb Greenberg, a friend of Bethany''to illegally front-run media stories. When Patrick asked if she had bothered to read these affidavits, Bethany said she didn't see any reason why she should do so. '•It would just open up a whole can of worms,'– she told him, '•and I'd have to get into whether they were telling the truth, or were just disgruntled ex-employees. I don't want to get into that.'– Patrick then sent an email to Bethany, asking again whether she was going to write her story without reading those affidavits. Bethany now claimed to have read them, but said she wasn't going to mention them - again, because she didn't know if the former employees were disgruntled. She made no attempt to interview the employees or do any other reporting that would establish their credibility or lack thereof, so Patrick again inquired as to her unique understanding of what it meant to be a journalist. Bethany's emailed reply revealed the depths of her cynicism - the extent to which she views herself not as a detached and unbiased journalist, but rather as a battle-scarred warrior for the pillaging hedge funds that made her career. She said she'd stick with her sources. She said she'd do this because, '•History is written by the victors.'– * * * * * * * * There was one accurate paragraph in Bethany's '•Phantom Menace'– story. It described some comments that Patrick made to Bethany and Gradient. '•In the fall of 2004, I wrote a FORTUNE story title '•Is Overstock the Next Amazon?'– After the piece came out, Byrne sent me an e-mail saying '•Fair. And balanced.'– Two days later he wrote another e-mail: '—I actually thought it was crap'...So why exactly did you become a reporter? Giving Goldman traders blowjobs didn't work out?' Around the same time, after Gradient released another report questioning board members' independence, Byrne wrote to [Gradient's Donn Vickery]: '•Donn, you make a living toadying to bully hedge funds'...you deserve to be whipped, f-d, and driven from the land.'– Patrick responds, '•I agree that the comments were a little salty. But Bethany knew that the email to Gradient had nothing to do with their '—questioning a board members' independence.' I sent it because Gradient was derisive and personally disrespectful, over the telephone and then in print, to Gordon Macklin, a board member and a 78 year-old lifelong friend. This was crystal clear in my email, but Bethany's strategically placed ellipsis obscured it.'–
44 Here's Patrick's email to Vickery, in full: '•Donn - You make a living toadying to bully hedge funds. In this role you insulted Mr. Macklin, a friend, a lifelong mentor, and a decent and wonderful man. You deserve to be whipped, fucked, and driven from the land. Little punctilious submissive rejoinders such as your letter cannot change this or recalibrate our relationship on other terms.'– * * * * * * * * Two weeks after Fortune magazine suggested that Patrick was nuts, the North American Securities Administrators Association (NASAA) held a conference on naked short selling. During the conference, Susan Trimbath, a former employee of that Big Black Box known as the Depository Trust and Clearing Corporation, provided a detailed description of how the DTCC aids the sale of phantom stock. Other panelists, including Peter Chepucavage, the author of the SEC's Reg SHO rule on naked short selling, stated that phantom stock is a huge problem that the SEC is failing to control. The host of the conference was Ralph Lambiase, president of the NASAA and director of securities enforcement for the state of Connecticut, where many hedge funds are based. In a letter to Dave Patch, the engineer and blogger-revolutionary, Lambiase announced that he was setting up a multi-state task force to probe phantom stock sellers and the DTCC. Dave noted the letter and covered the conference on his blog. The Wall Street Journal, by contrast, did not cover the conference. Instead, while the panelists were describing one of history's biggest financial crimes, the Journal published a front page story commiserating with the wife of Amr Elgindy, a.k.a. Manny Valasco, the Mob-linked phantom stock seller who'd been indicted for stock manipulation and bribing FBI agents, and who got caught when he gave his Smith Barney broker an order to liquidate his childrens' trust funds on the day before 9-11. Elgindy was about to be sentenced, and the Journal was begging for leniency. It glossed over the details of Elgindy's crimes, and instead described how Mrs. Elgindy cried when agents raided their home, and how Mrs. Elgindy was sad because the paint on her $4 million mansion was pealing. '•She has battled with the government over money,'– the Journal reported. Then this: '•All the while, she has struggled with her own terrors [which] more than once have woken her up in the night.'– And this: '•Mrs. Elgindy says she doesn't know what she will do if her husband receives a lengthy sentence. '—He was the first person who gave me the courage and strength to question what I had been taught,' she says.'– And finally: '•The situation has been particularly tough for their youngest son, Samy. On a recent family visit to the New York jail, Samy sat on his father's lap and told him, '—Daddy, if I could stay here with you, I would.''– * * * * * * * * A few weeks later, Elgindy appears in court for sentencing. It is noticed that he is missing one finger. He is asked about it, and claims it happened in a beach barbequing accident. The prosecutor points out that he has been under house arrest. Elgindy changes his story, maintaining that it was a home accident. However, sources familiar with the investigation inform Deep Capture that they believe Russian mobsters did it as a warning not to talk while he was in prison. One even maintains, '•The Russians went to his house and forced Elgindy to saw off his own finger, to help him better remember the experience. They also told him that if he talked they would skin [a member of Elgindy's family] alive.'–
45 While Elgindy is sawing, a church pastor named Jeff Matthews is writing on his blog that Overstock's vice president of marketing works in a nudie bar. In addition to his church duties, Matthews is a former writer for TheStreet.com and a hedge fund manager who once worked for David Rocker. He claims to be writing '•without having a dog in this fight'– even though he owns '•puts'– in Overstock - which is another way to bet that the stock price is going to fall. As a mob of journalist-thugs try to confirm that Overstock is run by a stripper (the story is false, like most everything else written about Overstock) Patrick gives up on the mainstream media and appears on a radio program broadcast by the Christian Financial Radio Network - motto: '•prosperity for God's people.'– This outfit manages to air a mostly accurate story about phantom stock. By contrast, shortly after pastor Matthews says Overstock is run by a nudie bar dancer, and now four months after Patrick's Miscreants Ball presentation, and a few weeks after the sad-story about Elgindy's wife, The Wall Street Journal publishes a highly positive profile of David Rocker. The author is Karen Richardson, the journalist who hoped Patrick wouldn't '•lose any sleep'– over the bold lies of Rocker's minions at Gradient. Richardson praises Rocker for his '•aggressiveness and nose for troubled companies.'– She says we should take pity on Rocker because, notwithstanding his 50% return for the year, it is really tough to be short-seller. '•We don't get any respect. We're the Roger Dangerfield of the investment community,'– Richardson quotes Rocker as saying. The reporter does not describe Rocker's tactics. She does not note that Rocker's minions have previously fed her false information. And amidst all her assurances that short-sellers are good for the market, she does not once mention the words '•phantom stock'– or '•naked short selling.'– Meanwhile, Patrick has bought 50,000 shares of Overstock and made a simple request - that real stock be delivered. After weeks of equivocation, a broker at Wells Fargo writes Patrick an email. '•It would seem that [Lehman Brothers, the Wall Street brokerage] did not have the shares when they sold them to us'...Since Overstock is a '—hot' [i.e. manipulated] stock they are finding it just about impossible to find shares to borrow or buy'...Talking with my traders they feel that'...no one seems to have enough of the shares to deliver.'– So, it seems, Patrick has bought 50,000 shares of air - phantom stock. * * * * * * * * Around this time, Rocker sells his shares in TheStreet.com. A month later Cramer sells a bunch of his own shares. Then it is announced that the SEC is investigating Gradient, and has issued subpoenas to Herb, Cramer, Carol Remond, and TheStreet.com. Our '•financial media'– goes ballistic. Cramer scribbles '•Bull!'– on his subpoena. Herb commandeers CNBC to holler about a conspiracy to get Herb. Jesse Eisinger, Herb's former co-worker at TheStreet.com, who has spent the months since his foiled Bunny hunt writing hatchet jobs for David Rocker, now writes in The Wall Street Journal that the SEC is violating the First Amendment right to free speech by investigating a research shop and giving a subpoena to Herb. The New York Times' top business columnist, Joe Nocera, who is one of Herb's oldest friends, writes that Patrick is '•loony beyond belief.'– As evidence for this, Nocera quotes Roddy-Boyd-The-Post as saying that Patrick is, in essence, loony beyond belief. Following these leading lights, other journalists write similar stories. Not one of these journalists interview Gradient's former employees, or seriously investigate Patrick's allegations.
46 In the midst of all this, the San Francisco-based investigator who had issued the subpoenas (with the approval of the SEC's D.C.-based head of enforcement, Linda Thompson) is summoned back to Washington to meet with the SEC chairman. The investigator, Mark Fickes, is a slight, bespectacled man - but he has an iron will. He argues that Gradient is worthy of investigation - and the journalists are central to his case. Ultimately, though, the SEC caves under the media pressure. It announces that it is not going to enforce the journalists' subpoenas (and ultimately drops its investigation of Gradient). Herb breathes a brief sigh of relief, and then he takes the offensive. He calls my editor and demands that the Columbia Journalism Review stop work on this story. Indeed, he practically has a nervous breakdown on the phone, pleading his innocence and saying no editor could possibly allow a story like this to happen.Then Joe Nocera calls my editor - just to say that he has it on authority that Herb is innocent. After that, Fortune magazine's Carol Loomis, the grand dame of financial journalism, starts making calls to the Columbia Journalism School, asking questions about this story. (Recently, I asked Loomis whether she was trying to have the story killed. First, she said she couldn't remember the circumstances - maybe she was calling on behalf of someone else. The next day, she told me that she remembered that she had heard that Columbia University was going to kill the story and her '•journalistic instincts'– led her to investigate). With Herb, Nocera, and Carol Loomis making calls, the lawyers at The Wall Street Journal forbid its employees from speaking to me (so much for freedom of speech). I send a list of questions to CNBC about Herb, Cramer, their connections to hedge funds, the network's unbalanced coverage of phantom stock, the SEC investigation, and Patrick Byrne. A public relations man rushes to my office and says, '•now let's talk about this, maybe there is something we can do about this'...Can we just hold off on this story for a while?'– Just a '•short while,'– he says '-- he needs some time, but he'll get answers to my questions, he promises. A few days later, he says, '•sorry,'– he couldn't get answers to the questions because he was on vacation. After that, he can't get answers because Cramer is busy. Then it's Friday, and it's hard to get answers on Fridays. After that, he's been ill, then he's on another vacation, then he's still trying to find the information. But he promises'' he's going to get me the answers really soon. That was two years ago. I'm still waiting for the answers. * * * * * * * * As the media whines about the SEC's investigation of Gradient being a violation of the First Amendment right to free speech, Rod Young, CEO of a telecom company called Eagletech, argues that the SEC has violated Fifth Amendment property rights by '•grandfathering'– the undelivered stock of all the companies on the SEC's Reg SHO victim list. At this point, phantom stock is '•pervasive'– or '•under control'– depending on which SEC official is speaking. Either way, the agency has listed more than 300 companies whose stock has been sold and not delivered in excessive quantities. And to add insult to injury, it has '•grandfathered'– much of that stock, saying that anything sold before January 2005 doesn't have to be delivered - ever. The SEC says it is allowing this phantom stock to remain in the system because forcing delivery of real stock would cause '•excessive volatility from large preexisting open positions.'– So on the one hand, the official policy of the SEC is that it has naked short selling under control. On the other hand, it seems to believe there is so much phantom stock in the system that there would be market chaos if it were to actually do something about it. This seems pretty outrageous to the 300-plus CEOs currently affected (not to mention the 1,000-plus CEOs whose companies might already have been obliterated), so in February 2006, Rod Young writes an open letter to the SEC.
47 In this letter, he describes how Solomon Smith Barney arranged a so-called private placement in public equity (PIPE) to invest in his company. PIPEs, sometimes referred to as '•toxic financing,'– have been a key weapon of hedge funds and brokers wishing to illegally naked short companies out of existence. Sometimes companies hard up for cash have sold discounted shares (PIPEs) to unscrupulous hedge funds. The hedge funds know that news of the fire sale will cause the stock price to drop. So they naked short the stock in the knowledge that the PIPE will deliver them shares with which to cover, creating virtually guaranteed profit. Under certain conditions, this act (which is illegal) can cause a company to go into a '•death spiral'– and collapse. In a February 2007 story, '•Sewer Pipes,'– Nathan Vardi of Forbes magazine provides details of the Genovese Mafia family's involvement in PIPES. Thomas Badian, the fugitive in Austria, gave toxic financing to companies he naked shorted through Refco. Solv-ex, the company Gary Weiss highlights in his first big story, '•The Secret World of Short- Sellers,'– might have received toxic financing from Mafia-connected investors. And now, Rod Young of Eagletech is describing in an open letter to investors how his own company fell prey to a similar, Mafia- led scheme. He notes that ten days after Solomon Smith Barney brokered Eagletech's toxic financing, Amr Elgindy '•and his short-selling cartel appeared on chat boards claiming that Eagletech was a scam.'– He adds that FBI agents later explained to him that a New Jersey labor racketeering investigation had revealed that Eagletech's first investment banker was selling phantom stock through a mobster from the Colombo crime family (which, according to multiple federal cases, usually does its illegal stock trading in league with Genovese and Russian mobsters). Then, in August 2004, at an Eagletech luncheon, an agent from a different federal agency showed up unannounced, looking for information on Jonathan Curshen, the same money launderer who was cased in Costa Rica by Deep Capture's operative. In his open letter, Young writes that, in a perfect world, the SEC would face '•a silent lynch mob of aggrieved shareholders, the 13 State Securities Regulators (who unlike fed regulators are taking an interest in phantom stock)'...CEOs of other victim companies, the media, congressional staff assistants, and our rock star advocates Byrne, Burrell, Patch, O'Brien (with or without the rabbit suit) Faulk, DeWayne, and Ferrara.'– The '•rock stars,'– with the exception of Patrick Byrne, are all bloggers and stock message board aficionados. They are now the only '•media'– covering the phantom stock problem with any degree of seriousness. Only one journalist shows up at Young's meeting with the SEC. His name is Hugo Cancio, and he is a documentary film maker for a new company, Fuego Entertainment, which so far has made one film '-- about Cancio's father, a Cuban musician. Fuego Entertainment, meanwhile, has announced that it also has an agreement to distribute '•Dr. Joe Vitale's Revolutionary Sugarless Margarita Mix, Fit-a-Rita.'– * * * * * * * * The crusading bloggers''or '•pajamahadeen,'– as they are sometimes called''have worked hard to get the mainstream media interested in the phantom share problem. In April 2005, the Easter Bunny even scored an invitation to have lunch at the Forbes mansion with a group of Forbes journalists and Kip Forbes himself. The Easter Bunny and the journalists spoke for an hour in a living room. At first things did not go smoothly. The Bunny got lost in the twists and turns of hiding in South America with a backpack to avoid getting whacked, and people began rolling their eyes.
48 But then everybody moved to a private dining area. The Forbes journalists were open-minded. They were not hostile. At the end, Kip Forbes held up a 1987 Forbes magazine that had a cover story about naked short selling. A year later, Forbes begins running a series of stories highlighting the travails of companies victimized by phantom stock. Correspondent Nathan Vardi gets the Mafia angle. And other stories are written by Liz Moyer, whom Gary Weiss (friend of crooks, hijacker of Wikipedia, liar) had prevented from getting a job at BusinessWeek. * * * * * * * * While the Bunny was soliciting Forbes, Gayle Essary was cheering on NBC's '•Dateline'– program, which was rumored to have plans for a big expose on phantom stock. Essary, who has since passed away, was the son of an evangelical preacher who spent his formative years traveling to ministries throughout Texas. He retained in his own language a bit of the doomsday flourish, and in 2004, this short, slightly rotund man, who wore square eyeglasses and frumpy suits, launched a news service, FinancialWire, which for a while offered general business information, but was soon occupied almost entirely in churning out regular dispatches on '•Stockgate: The Biggest Financial Scandal in History.'– In June 2004, Mark Faulk, a song-writer and playwright, broke the news of the Dateline story on his blog, '•The Faulking Truth.'– Gayle followed up with one of his first stories on FinancialWire. StockGate: Dateline Could Blow Lid Off 'Stockgate,'— says Website. '•FinancialWire learned several months ago that '—Dateline,' the investigatory TV program aired by General Electric's (NYSE: GE) NBC unit, has been preparing a blockbuster expose of '—Stockgate,' the term coined by FinancialWire to encompass the massive naked shorting scandal, that could cause the entire financial community to implode'...'– In April 2005, while the Bunny was addressing Forbes, Gayle was still waiting for that Dateline story, and FinancialWire was still churning out the headlines: StockGate: 5 Days To Dateline'... StockGate: 4 Days to Dateline'... StockGate: 3 Days to Dateline'... StockGate: 2 Days to Dateline'... Then, on April 12, this story: StockGate: Dateline NBC Cancelled'... '•No one is talking, but Dateline is reportedly blaming the Pope's death, the Prince Ranier death, and the Prince Charles Wedding and other events as causing the delay. However, a desk person at the network revealed that the story is actually being replaced by an Al Roker interview with Ruben Studdard of American Idol fame'...'– * * * * * * * *
49 FinancialWire speculated that the Depository Trust and Clearing Corporation might have quashed the Dateline story, and Gayle had good reason for his suspicions. The Big Black Box of Wall Street had recently unleashed its imperious public relations machine on Euromoney, a prestigious European publication, which had published a powerful story on naked short selling. (Unlike the captured American financial media, European publications have provided extensive coverage of the phantom stock problem). '•We will not accept silently this type of sloppy, one-sided journalism whether in print or broadcast,'– DTCC first deputy general counsel Larry Thompson wrote in a letter to Euromoney. The word '•broadcast'– could only have been a reference to the impending Dateline story. Meanwhile, the Big Black Box had turned its sites even on Gayle's little news service. In April, 2005, DTCC officials demanded that the publishers of Investors Business Daily remove FinacialWire from IBD's news feed, which had delivered Gayle's stories to Yahoo! News and other internet outlets. FinancialWire hired an attorney and celebrated the event in a headline. StockGate: Dateline NBC Cancelled and Attorney Accuses DTCC of Cheap Thuggery '•Is it possible that now, NBC has also fallen victim to a halt-the-media conspiracy that has outgrown even Financial Wire?'– But one of the best measures of any DTCC public relations campaign is Carol Remond. Whenever the DTCC faces bad news, the Dow Jones reporter can be depended upon to rush to its defense. That is why, in April 2005, as the Easter Bunny was lobbying Forbes, and Euromoney and Dateline were preparing to run exposes on naked short selling, Carol published a story noting that Patrick Byrne had become a '•crusader and benefactor of conspiracy buffs'– who believe W all Street firms are illegally selling phantom stock. Carol suggested that it was somehow suspicious of Patrick to publish an ad in the Washington Post encouraging the government to take action against phantom stock sellers. She said it was strange that Utah Senator Bob Bennett had taken an interest in the issue - that it must be because Patrick had contributed to Republican political causes. On the day of that story hundreds of millions of dollars worth of Overstock shares that had been sold into the market remained undelivered. Several dozen other Utah companies were on the SEC's list of companies victimized by phantom stock. Also on that day, the Washington Legal Foundation, a prestigious legal advocacy group, published its own ad in The New York Times. It ridiculed the SEC for pursuing Martha Stewart for insider trading while failing to investigate '•truly serious allegations of stock manipulation by plaintiffs' class action attorneys and short sellers.'– The prestigious lawyers said that the criminals have '•behind-the-scenes contacts'– with '•friendly media'...'– And, it added, '•it's all being done right under the noses of SEC regulators.'– * * * * * * * * Over the next couple of months, Congressmen on both sides of the aisle sent letters to the SEC and the DTCC inquiring about the failure to stop illegal naked short selling. In June, 2005, William Donaldson resigned as chairman of the SEC, and the word from inside the agency was that he was actually fired when he began talking about addressing the problem of phantom stock.
50 This was shortly after Donaldson confirmed for the first time the existence of a Presidential working group '•to address market issues for private pools of capital'– (the '•pools'– being hedge funds). The pajamahadeen quickly discovered that the committees of this group were stacked with Cramer-connected short-sellers, including Jim Chanos, of Cynicism (Kynikos) Capital. Carol Remond and other journalists, of course, picked up on none of this. So the pajamahadeen took matters into their own hands. They held protests in Washington and New York. '•National Counterfeit Conspiracy Days,'– they called them. There weren't a whole lot of people at these protests, but they stood tall '-- on Capitol Hill, then at Times Square, and finally in front of the offices of the DTCC - hollering into loud speakers and waving banners. '•I paid for real shares BUTT'...,'– read one banner. '•The government knows but is covering it up,'– read another. One protestor had a bare bottom ('–naked shorts'– - get it?). Another was wearing a purple business suit, and it wasn't a costume. The mainstream media didn't cover the protests but Hugo, of Fit-a-Rita Margarita, was there. He was making a documentary. * * * * * * * * So in the absence of honest media, these are the people left to fight the fight. And Patrick embraces them. He recognizes that they are underdogs. He knows that he'll be ridiculed. But he embraces them anyway. He does it because he knows they are right. His conviction only grows in the month before his '•Miscreants' Ball'– conference call. That's when his investigation reveals that Kevin Ingram, a convicted arms dealer, is mixed up in these events. A former trader at Goldman Sachs and Deutsche Bank, Ingram left to form his own dot-com in the late 1990's, got short of cash, and went to Miami to deal arms. He made a deal to sell Stinger missiles to Pakistani Inter- Services Intelligence agents (even promising to work on obtaining a nuclear trigger), but they proved to be undercover FBI agents.Ingram got nabbed while boarding a chartered Lear jet bound for Europe with a million dollars in a duffel bag. He did a stint in federal penitentiary, then went to work on anonymous internet message boards, where the stocks he bashed mirrored the positions of Rocker - and of Herb, Bethany McLean, Jon Markman, The New York Post, Cramer, Gary Weiss, Floyd the Flimflammer, Carol Remond, TheStreet.com, and the Journal's '•Money & Investing'– section. At the same time that he learns of Ingram's involvement, Patrick discovers the mole in Overstock. With Rocker putting out feelers for other Overstock employees who might be willing to spy for him, Patrick asks Stormy Simon, his vice president of marketing, to meet the hedge fund manager and '•show some leg.'– Stormy quickly gets a phone call from Rocker (which she plays on her office speaker phone, with Patrick, an attorney, and a recently retired US Army Colonel present as witnesses). Rocker is very excited, and presents ways in which he and Stormy can exchange information. He insists she come immediately to seem him, and tells her that he has ways he can '•protect her.'– When she hesitates, he becomes adamant. Meanwhile, Patrick comes to suspect that the Kroll investigative agency has him under surveillance. Kroll employs former agents from the FBI and other federal agencies to dig up dirt for clients - and seems to have a special unit that serves hedge funds linked to Jules Kroll's Rye, New York neighbor, David Einhorn. To determine whether he is under investigation, Patrick goes to Kroll's offices and asks if he can hire them. He figures if they are investigating him then they will neither take him as a client, nor tell him that they will not take him as a client (because if they tell him they will not take him as a client, they'll know that he will know that they must be surveilling him already). Sure enough they hem and haw and make a lot of excuses why it might take some time to file the paperwork.
51 Meanwhile, an independent security consultant tells Patrick that Kroll is preparing a report that a hedge fund is going to deliver to the Department of Justice. The private eye says that this report will accuse Patrick of funding international terrorism. It remains unclear whether the private eye's bizarre information is accurate - but by this stage, anything seems possible. * * * * * * * * In any case, a small group of hedge funds are illegally destroying public companies with the help of convicted felons, mobsters, and captured regulators - and the only journalist on the case is Hugo of Fita- a-Rita Margarita. Hugo, and NBC's Dateline. That's right, Dateline is back on the case. FinancialWire announces the news. StockGate: Travesty of Our Time: Naked Short Selling Finally to be Exposed on Dateline NBC? Then, on July 29, 2005 the day does come. After nearly two years of investigation, Dateline airs its expose on phantom stock. Gayle, the Easter Bunny, and the rest of the pajamahadeen sit in front of their televisions in states of pure excitement. Then Gayle's story on FinancialWire: StockGate: Dateline Finally Aired. Yawn. '•The now infamous and previously postponed General Electric (NYSE: GE) Dateline NBC expose aired Sunday night to cacophony of yawns and disbelief'... '•Leading up to the program, the producers refused to respond to questions about whether the program had been interfered with in the postponement and reediting process. There was no mention at all, for example, of the Depository Trust and Clearing Corp.'– Indeed, Dateline's '•expose,'– which was supposed to be an hour long, had been reduced to a ten-minute non-story of the form, '•Some say this is happening, others deny it, and all we can say is, '—Be careful out there.''– * * * * * * * * A few days later, Patrick gives his '•Miscreants' Ball'– presentation. Immediately afterwards, he appears on a CNBC program hosted by Ron Insana, who was the producer of the Dateline program. Patrick says that as many as 150 to 230 million shares remain failed-to-deliver each day on NASDAQ and the New York Stock Exchange. Insana begins aggressively to cast doubts''the standard CNBC formula of attack journalism. Then Patrick becomes the first person ever to flip this formula on its head.He becomes an attack guest. He says, '•Now you worked on this for two years, Ron. And people expected a lot, and I have to say the piece you did, I thought, was rather anodyne.'– Insana appears taken aback. '•Well,'– he says, '•you know, listen, we're all subject to criticism and we're all subject to he limitations of the medium in which we work'...This story is not an easy one to tell, by the way, on television, if you want to get into the rigors and all the details of how a naked short-selling scheme is undertaken. When you see the allegations '...they have included that individuals from Middle East entities, offshore companies, the Mob, and a whole host of other people have been involved in this'...despite everybody's expectations of an expose like that, you've got to be able to prove it before you say it on TV.'–
52 Days later, at a Connecticut country club, hedge fund manager William Ackman - who was funded by the aristocrat Peretz and is connected to Gene Philips, who was rounded up with 120 mobsters in history's biggest securities bust, is overheard talking about the '•Miscreants' Ball'– presentation and allegations of short-seller crimes. '•The game is over,'– Ackman says. '•This is all going to get shut down.'– * * * * * * * * March 14, 2006'....Six months after the '•Miscreants' Ball'– presentation, The Wall Street Journal is comparing Patrick to '•Where's Waldo,'– and Jeffery Thorp of hedge fund Langley Partners has just agreed to pay an $8 million settlement to the SEC after he was found to have provided fraudulent death-spiral financing to 22 companies. As is typical in such cases, Thorp sold massive levels of phantom stock, making a net profit by intentionally destroying the companies he had financed. Thorp is the son of Edward Thorp, who teamed up in the 1960s with a Genovese family mobster, Manny Kimmel, to develop a system for cheating Las Vegas gambling dens. Thorp Sr. authored a seminal book, '•Beat the Dealer,'– which outlines a method for counting cards in blackjack, and went on to run a successful hedge fund called Princeton-Newport. The younger Thorp followed his father into the hedge fund business, collaborating with the Mob-linked Amr Elgindy, who is now serving an 11-year prison sentence. A few days after Thorp agrees to his fine (a rare enforcement action), the SEC files a lawsuit against several Refco brokers who helped the fugitive Thomas Badian sell phantom stock.The Thorp case is covered sporadically by the newswires - though with rare mention of phantom stock. The Philadelphia Inquirer runs a story describing Badian and Refco's role in naked short selling. Some months earlier, Time magazine ran a fine story describing Refco's role in selling phantom stock. But from the financial media proper, there is quite literally not a word. Barron's magazine, for example, has yet to mention phantom stock or naked short selling. Perhaps more amazingly, it has failed to publish a single story about the collapse of Refco. Barron's is Wall Street's publication of record. It is read by everybody who matters in the financial world. But a giant brokerage implodes in one of the financial industry's greatest-ever fiascos - and Barron's runs not a single story. It's as if it never happened. * * * * * * * * But America's leading financial journalists have been busy. In January 2006, just days after The Wall Street Journal's glowing profile of David Rocker, Tim Mullaney of BusinessWeek emails Patrick with a list of '•Just admit it - you slit your girlfriend's throat'– style questions provided to him by David Rocker. There are plenty of misinformed inquiries into Overstock's financial condition (and a snide reference to the '•non- existent illicit'– past of Overstock's VP of marketing, who is now known never to have been an exotic dancer), but Mullaney dismisses all evidence of illegal short-selling tactics. He asks whether Patrick has '•ever sought care or diagnosis for any mental incapacity.'– It is pretty clear this reporter isn't going to write a balanced story, so Patrick posts answers to Mullaney's questions on the internet. This is the first time that a CEO has ever done such a thing - and it is about time. Why not, for once, even the playing field? But Mullaney will have none of it. He goes into a mad rage, calling Overstock and telling a receptionist that posting answers to his questions is unacceptable and that Patrick will regret it. He calls the receptionist a '•bitch'– and employs the c-word. To
53 BusinessWeek's credit, the magazine's ombudsman/ethicist interviews the receptionist, pulls Mullaney off the story, and mails a written apology, which now hangs on Patrick's office wall. Then the news hits that the SEC is investigating Gradient. Herb and Cramer and all their friends flood the media with stories suggesting that this is a violation of free speech - that Rocker is a hero, a market vigilante who helps journalists uncover bad companies, that Patrick is a nut and short-sellers are good for the market. None of these stories, of course, note that phantom stock is illegal or allude to other short- seller shenanigans. At the beginning of March, 2006, right after Herb has a nervous breakdown about the conspiracy to get Herb, Patrick gets on CNBC. He tries to tell his side of the story, but he's shouted down by announcer Becky Quick, who previously worked as Cramer's producer. She simply won't let Patrick speak, so with the cameras running, Patrick holds up a handwritten sign. It says, '•TheSanityCheck.com'– - the Easter Bunny's website. A couple days later, Patrick is back on Christian Financial Radio News - '•Prosperity for God's People'– - where he at least is allowed to speak uninterrupted. * * * * * * * * Later that week, The Wall Street Journal's Karen Richardson, author of the glowing profile of David Rocker, is at the bar of the Mandarin Oriental Hotel in New York, nervously picking at a bowl of peanuts and attempting to convince Patrick that she is not, in fact, a '•quisling.'– Really, she says, she is different from the other reporters, she'd like to write a nice profile, multidimensional, get to know the real Patrick-for the front page, like the piece on Warren Buffett. And, ha ha ha, about Patrick's battle with Wall Street'...she hardly pays attention to it. This follows two earlier incidents with reporters working for Dave Kansas, formerly of TheStreet.com, then editor of the Journal's '•Money & Investing'– section. The first occurred a year earlier when Justin Lahart, formerly of TheStreet.com, did an interview with Patrick, and then claimed that his tape recorder had broken. Patrick posted a blog noting that this was a common strategy - and, indeed, Warren Buffett had just complained about another Wall Street Journal reporter who had written a false story after claiming that his '•taping equipment wasn't working.'– Lahart ran his negative story, but it read as if it had been sanitized by a lawyer. Then, in the Summer of 2005, Jesse Eisinger, formerly of TheStreet.com, and then the '•Money & Investing'– section's top columnist, appeared unannounced at a conference where Patrick was speaking. Patrick sent out word that he would agree to be interviewed, but only if Eisinger used a tape recorder. The reporter stated that he did not have a tape recorder. Patrick sent a friend to Radio Shack to buy one. In the interview, the reporter bragged about having the Easter Bunny's phone and banking records. But he seemed nonplussed about having his conversation committed to tape, and did not write a story. Patrick knows that Dave Kansas has sent Richardson on this latest mission. He listens patiently while Richardson picks at her peanuts and promises to be fair. Then he says '•goodbye'– and rushes back to his room to compose an email which is commendable for the fluency of its melancholy prose. It says: '•Someone could write that Byrne is a porcupine molester who snorts coke out of the navels of underage Thai hookers chained to tree stumps, and it would be more balanced than what The Wall Street Journal will write'...'– * * * * * * * *
54 Patrick told Richardson that he would not cooperate with any reporter working in league with Dave Kansas and David Rocker. But Richardson, apparently intent on doing her '•nice'– profile, was soon calling everybody Patrick has known, including a doctor at a hospital where Patrick was treated for cancer. In yet another brush with a felony by a member of Dave Kansas's staff, the reporter lied in an effort to gain access to Patrick's medical records. A hospital administrator was concerned enough to send Patrick an email. '•Dear Mr. Byrne,'– it read, '•As you probably know, I called your assistant, Pat, this morning in response to several (7) calls that'...our chairman of the Department of Medicine received from Karen Richardson'...She said'...she has been working with you on this story and has several ways to reach you. She gave me your office number and said your assistant was Pat. She also gave me your cell phone number. The implication being that this was for a story/profile about you that was being done with your consent and cooperation'...'– * * * * * * * * So now Richardson is trying to commit a felony, and the Journal's Jesses Eisinger, who stole the Easter Bunny's phone records, has just compared Patrick to '•Where's Waldo,'– and Herb is hollering about a conspiracy to get Herb, and Herb's friend at The New York Times is writing that Patrick is '•loony beyond belief,'– and Cramer is vandalizing his government subpoena and continuing to bash companies shorted by Rocker, and convicted criminals affiliated with Mr. Pink and other friends-of-Cramer are smearing Patrick on the internet, and Spyro of MI4 Reconnaissance is still executing all sorts of schemes to terrorize the folks at Fairfax Financial, and Eagletech's CEO has sent an open letter to the SEC about mobsters trying to take down his company, and the son of a Mafia-connected blackjack card counter has just been shown to have sold millions of dollars in phantom stock, and a BusinessWeek reporter working with Rocker has recently called an Overstock receptionist a '•c&nt,'– and Roddy-Boyd-the-Post has been sticking his head in the garbage as a favor to Gradient Analytics'...'... And that's not all. Roddy-Boyd-The-Post has also just called Patrick a liar because Roddy asked how much cash Overstock had, and Patrick told him how much cash Overstock had. (Really, it is that bizarre. Listen to the voice mail.) Patrick posts this voice mail on the internet, and a few hours later, Roddy-Boyd-the-Post calls back and issues an '•apology'– that is meant in fact to reinforce his earlier assertion. He says, '•I want to, ehhhhh, personally and professionally apologize for calling you ehhhhh'...FUCKING LIAR.'– This seems in contrast to Roddy's assertion to me that '•the problem with Patrick Byrne is that he's a boy scout. I mean, he might be right, but why does he have to be such a boy scout. Yeah, ehhhhh, that's the problem. Byrne's a boyscout.'– But never mind. At the same time that Roddy-Boyd-the-Post is calling Patrick a '•fucking liar,'– he is sending email messages to Floyd the Flimflammer saying he needs '•dirt'– on Take-two Interactive, another company that Rocker has shorted - a company that has also been bashed by Cramer, Herb, and Bethany McLean, all the while appearing on the SEC's list of companies victimized by phantom stock sellers. And while all this is happening, Gary Weiss, the creepy former BusinessWeek reporter who has hijacked Wikipedia with a one-time MI5 agent, is orchestrating another one of his smears. In an email to Floyd the Flimflammer, he notes that I am working on this story. He writes, '•this guy [at the Columbia Journalism Review] really has me (and others of us a lot more than me) worried.'–
55 Then Gary emails Floyd asking for some dirt on Susanne Trimbath, the former DTCC employee who has described how the Big Black Box facilitates phantom stock sales. Just 24 hours after Gary asks for dirt on Susanne Trimbath, the DTCC issues a press release trashing Susanne Trimbath. The Big Black Box admits that Trimbath was a mid-level manager at the DTCC, but tries, in a perfectly mealy-mouthed way, to suggest that she had no knowledge of one of the DTCC's principal functions - processing short-sales. Was Gary on the phone with the DTCC, helping its PR goon craft this smear? Maybe he was just looking for an ATM machine. * * * * * * * * There are a few journalists whom we have not yet mentioned. One is Chris Byron, a columnist for The New York Post. Byron has insisted that phantom stock is not a problem. He has accused Patrick of being a conspiracy theorist. And he has written a column, '•Gagging the Market,'– in which he argues that Amr Elgindy's prosecution for bribing FBI officials and manipulating stocks is a threat to the free speech of short-sellers and their media allies. In April 2006, while the Media Mob is at the height of its anti-Patrick Byrne hysterics, Byron publishes a story alleging that a '•CIA front operation continues to funnel agency money into penny stock and micro- cap companies in Wall Street's murkiest back alleys.'– The only source Byron names in his story is the '•tireless complainant,'– Tony Ryals. Tony Ryals lives in a hut in Guatemala. On most mornings, he walks to a nearby internet caf(C) and begins writing - sometimes for stretches of more than 24 hours. He has, indeed, become one of the most widely published human beings on the planet. It seems almost impossible to achieve such prolificacy - thousands of long-winded screeds, most of them posted on Indymedia, a collection of websites that publish anything by anybody. The vast majority of Ryal's rants concern Patrick Byrne. Depending on his mood, he writes that Patrick is linked to stock frauds, boiler room operations, the death of Vince Foster, Skull & Bones, Osama bin Laden, or the Israeli government. '•To see my latest,'– Ryals says in a recent message board post, '•You can google '—israeli prime minister ehud olmert stock fraud orthodox jews gay prostitutes.''– * * * * * * * * At the end of April 2006, the Media Mob gathers for the annual conference of the Society of American Business Editors and Writers (SABEW). In response to the accusations leveled by the Easter Bunny and Patrick Byrne, the journalists hold a panel titled '•High-Tech McCarthyism?: Dealing with Today's New Business Journalist Bashers.'– The panel is chaired by Herb, Herb's friend Joe Nocera, and Dan Colarusso, who worked with Herb at TheStreet.com before he became Roddy Boyd's boss at The New York Post. A Deep Capture team member infiltrates this meeting, and gets it all on tape. The journalists are furious that we have this tape, and it is easy to understand their concern. It couldn't do a much better job of exposing the arrogance and willful obstinacy of the nation's most '•prominent'– financial journalists.
56 Colarusso sets the tone. Referring to Patrick and the Easter Bunny, he says, '•The more they attack us, you know, we have barrels of ink and stacks of money, and all the resources in the world at our disposal, legal, and via our media, to crush them'...'– Sounds like an objective journalist to me. Then Herb says, '•When it comes to naked shorting, it's not my issue'...It doesn't relate to what I do, what Joe does, what Carol Remond does, even what Cramer does.'– And Joe Nocera says '•naked short selling'...makes my eyes glaze over'...So I asked Patrick Byrne exactly this question'...I said, '—Well why do you'...why are you in this naked shorting fight since it's not really what you are litigating?' And he said, '—Well, it's like supporting education; it's a good thing to do.'– At this, there is uproarious laughter from the journalists in the room. It should be said that most of the journalists in the room are Herb's friends. Dave Kansas, formerly of TheStreet.com, is there. So is Dave Evans, the Bloomberg reporter who, along with Herb and Kansas, worked closely with the online short- seller group led by Amr Elgindy, who is now in prison. So these journalists - these creeps who think it is hilarious that Patrick has embraced what he believes to be a good cause - are by no means typical journalists. They just happen to be the journalists who control the financial media. '•So,'– continues Nocera, The New York Times' top business columnist, '•it's hard to take [Patrick] seriously on that issue when you hear him say something like that. Having said that, you know, I think it probably would be worth somebody's time to say, Is there something to naked shorting or not? What is naked shorting? What does it mean? What is the problem here? But, you know, life's too short. I don't want to do it.'– At this, the journalists in the room laugh even harder. * * * * * * * * A few weeks later, SABEW elects Dave Kansas as its president and Joe Nocera writes a column describing Patrick as a '•conspiracy-mongering trash-taking lawsuit-filing chief executive.'– He writes, '•What is naked short selling? So glad you asked'...except for a few fellow-traveling websites, where Mr. Byrne is viewed as a heroic figure, most people who understand the issue or have looked into it think it's pretty bogus.'– Perhaps life really was too short, and Nocera couldn't be bothered to look into the issue. That would be the kind assessment - certainly better that the possibility that he is a prostrated scrivener for hedge fund managers who would like the world to think that phantom stock is a non-issue. Fortunately, there is one journalist who is doing some real reporting. His name is Gary Matsumoto, and he's one of America's best investigative reporters, famous for breaking the news that thousands of young American soldiers have been used as unknowing guinea pigs in government medical experiments. Previously, Matsumoto was with NBC and Fox News, and now, in June 2006, he is working for the Bloomberg business news television network. He meets me at a Thai restaurant on New York's Upper West Side. By this time, Matsumoto is convinced that Patrick is right - phantom stock is an epic scandal. He thinks for a moment about the difficulties he's faced in reporting this story. He reckons with the prospect of going up against conventional wisdom and the mainstream financial media's most powerful journalists.
57 Then he leans back in his chair, resigned, and says: '•Shit.'– '•Shit,'– he says, '•I just want to do the right thing.'– * * * * * * * * During this week '-- the week in which Nocera calls Patrick a '•conspiracy-mongering, trash-talking lawsuit-filing chief executive'– '-- the law firm Milberg Weiss is indicted for bribing witnesses in phony class action lawsuits against public companies. Remember, according to the DOJ's indictment, Milberg told its bribed witnesses to buy stocks, knowing that their prices would decline. Many of those stocks were Rocker shorts. Most of them were sold, and never delivered, in massive quantities. And nearly all of them were the subjects of negative media stories, released at around the same time as the phony lawsuits. Nocera's friend, Herb, has written negatively about almost every Rocker short-his stories always coming out around the same time as the Milberg Weiss lawsuits, the massive phantom stock selling, the release of false information by questionable research shops like Gradient, and the execution of an array of other dirty tricks. None of Herb's friends mention the indictment of Milberg Weiss. Instead, they continue to serve the interests of Rocker and associated hedge funds. All of Herb's stories still come from these people. Cramer is still bashing stocks shorted by them. TheStreet.com is still publishing stories for them, as is The Wall Street Journal '•Money & Investing'– section, and MSN Money. And also this week, Carol Remond is busy circulating another rumor about Patrick. She has called former SEC lawyers and several others with information - given to her by people working for her hedge fund friends - that Patrick is using off-shore accounts to secretly sell shares in Overstock. This, like every other rumor Carol has pursued with rabid enthusiasm, is entirely, 100% false. Roddy-Boyd-the-Post, meanwhile, is working with the criminal Spyro Contogouris, along with a group of hedge fund managers, including Rocker, to take down Fairfax Financial. He leaves a voicemail message with Fairfax, telling its CFO, '•You've got some explaining to do, pal.'– Then he writes a false story accusing the company of accounting shenanigans. A source at the Post tells Deep Capture that the paper decided not to put Roddy's Fairfax stories on the internet because they would not stand up against foreign libel laws (which are stricter than those in the U.S.). Soon after Roddy's stories appear, Contogouris sends more threatening emails to Fairfax employees, and arranges a secret meeting with a former Fairfax CFO, saying he can arrange immunity from government prosecution. (Helpfully, Roddy-Boyd-The-Post later publishes a story claiming that '•forensic accountant'– Contogouris '•was actually working for the Federal Bureau of Investigation'–- and that an FBI spokesperson has confirmed this. The FBI announces that this is completely false, which makes sense considering that the FBI will later put Contogouris in jail). And also this week in June 2006, Gary Weiss has just been exposed as the specially protected, anonymous editor of the Wikipedia entries on '•Naked short selling,'– '•Patrick M. Byrne,'– '•Overstock.com,'– '•Depository Trust & Clearing Corporation,'– and '•Gary Weiss.'– But Gary denies having ever touched Wikipedia. So Judd Bagley publishes additional information proving that multiple Wikipedia accounts are attached to Gary's IP address. Gary's online alias responds that if somebody edited Wikipedia using his IP address, it might have been his visiting uncle.Then Judd releases information proving that Gary, hoping to cover up his activities, has begun editing Wikipedia using yet another phony identity (or '•sockpuppet,'– in Wikipedia parlance).
58 Gary's sockpuppet responds to this by saying that the other sockpuppet belongs to his nephew. Gary adds that he had no idea that his nephew shared his interest in naked short selling. Yes, he was really surprised to learn that his nephew edited the Wikipedia entries on naked short selling. But it wasn't Gary. Gary never edits Wikipedia. * * * * * * * * Something else happens in June 2006: a former SEC investigating attorney named Gary Aguirre writes an 18-page letter to Congress. If the contents of this letter are accurate - as they are later proven to be - this is the biggest scandal in the SEC's seventy-plus years of operation. Aguirre writes, '•I believe our capital markets face growing risk from lightly or unregulated hedge funds just as our markets did in the 1920s from unregulated pools of money - then called syndicates, trusts or pools. Those unregulated pools were instrumental in delivering the 1929 Crash. '...There is growing evidence that today's pools-hedge funds-have advanced and refined the practice of manipulating and cheating other market participants.'– Aguirre then describes an investigation that he led at the SEC. '•The investigation was two-pronged,'– he writes. The first prong concerned allegations that the head of a major investment bank provided an illegal inside tip to a large hedge fund. '•The second prong of the investigation'...market manipulation'...involved two classes of suspected violations: wash sales and naked shorts.'– That is, this investigator was investigating phantom stock sales by hedge funds. He writes, '•Some of my colleagues believed [the naked short] prong held a greater potential to severely injure the financial markets.'– Unfortunately, Aguirre continues, this investigation was '•stopped in its tracks'– because the investment banker in the insider trading prong had '•political connections.'– In later media stories, it is revealed that the investment banker was John Mack, head of Morgan Stanley. The hedge fund that Aguirre was investigating was called Pequot Capital. In the summer of 2005, Aguirre's supervisor wrote that '•Gary has an unmatched dedication to this case (often working well beyond normal work hours) and his efforts have uncovered evidence of potential insider trading and possible manipulative trading by the fund and its principals.'– On August 21, 2005, the SEC approved Aguirre's merit-pay increase based on his work on this investigation. But when it came time to issue subpoenas, the supervisor told Aguirre to lay off because Mack's attorneys had '•juice.'– When Aguirre pressed the issue, he was shut out of meetings where the case was discussed by high-level SEC officials and lawyers for the accused. Then, just two weeks after receiving his merit pay increase, Aguirre was fired. Meanwhile, one of Aguirre's supervisors, Paul Berger, then the SEC's associate director of enforcement, was expressing interest in getting a new job - at Debevoise & Plimpton, the law firm that was representing John Mack. This is not at all unusual. SEC staff regularly seek jobs with the very people whom they are supposed to be investigating. After a lengthy inquiry, the U.S. Senate Judiciary Committee has ruled that everything in Aguirre's letter was true. It says that Pequot was selling phantom stock and that it is '•deeply troubled'– by the SEC's failure to properly investigate Aguirre's allegations. '•At worst'– the Senate Committee says, '•the picture is colored with overtones of a possible cover-up.'–
59 * * * * * * * * The Aguirre scandal leads to the resignations, in August 2007, of the SEC's inspector general, its chief economist, and two of its five commissioners.So it is interesting to review the Media Mob's initial response to Aguirre. On June 28, 2006, the Senate held hearings on hedge funds at which Aguirre was the star witness. In a hallway outside the hearings, a group of journalists gathered to plot ways to smear Aguirre and also fight critics of David Rocker and other short-sellers. Roddy-Boyd-The-Post was there, his baggy pants failing to conceal the entirety of his ass. Mop-haired Jesse Eisinger, the Journal's Easter Bunny hunter, also participated in this conversation, as did Bill Alpert, the Barron's magazine reporter and friend-of-Herb who had written that he wished he could have a government subpoena for '•publicity.'– Nearby, Karen Hinton, Gradient Analytics public relations consultant, was working her Blackberry, updating Gradient's Donn Vickery on the proceedings. That morning, Dave Kansas' Wall Street Journal '•Money & Investing'– section had already published a front page interview that was flattering to John Mack, the Morgan Stanley CEO at the center of the Aguirre scandal. '•`Old Macky's Back' at Morgan,'– it read. '•In an interview Monday'... Mr. Mack reviewed highlights of the past year, offering thoughts along the way on his nickname '•Mack the Knife,'– and why he once rented a shark suit to sing a karaoke version of the song.'– The Dave Kansas '•Money & Investing'– section asked Mack the hardball question, '•What do you consider your biggest accomplishment?'– But there was not one question about Gary Aguirre, phantom stock, or the SEC's stymied investigation into Mack and Pequot Capital. That afternoon, Eisinger went on CNBC to slag Aguirre and defend short-sellers. A few days later, Bill Alpert wrote in Barron's that '•the cloud that's fallen over [Pequot] seems to contain little substance.'– Meanwhile, Gary Weiss, wrote on his blog that Aguirre's allegations were '•flimsy.'– By contrast, Gretchen Morgenson of The New York Times took Aguirre's allegations seriously. Long before the Senate concluded that Aguirre had exposed the biggest scandal in SEC history, Morgenson published multiple stories demonstrating Aguirre's credibility. As Morgenson prepared these stories, the Media Mob attempted to destroy her. Roddy-Boyd-the-Post called me at the Columbia Journalism Review. He said, '•ehhhhh,'– he had a hot tip for me. Yeah, there was a guy on Wall Street - he had some good dirt. This guy on Wall Street could tell me that Gretchen Morgenson fabricated the story that won her a Pulitzer Prize a few years ago. And maybe, if I wanted to take a break from this short-seller story, Roddy could, '•ehhhhh,'– you know, hook me up with this guy. It could make my career - a big story proving that Pulitzer-prize winning Morgenson is a fraud. Nice try, Roddy. * * * * * * * * On September 15, 2006, the SEC holds a roundtable to discuss phantom stock and Regulation SHO, the law that is supposed to prevent it. Given the Gary Aguirre scandal, one might expect the SEC to give closer scrutiny to this issue. And maybe a few reporters would come to ask the tough questions.
60 Instead, the panelists all present the party line that short-selling is good for the market, that the law is working, that phantom stock is only a small problem - never mind that list of 300-plus victim companies. There is one journalist at this event. His name is Floyd Norris, and he's an old friend of Herb and the chief financial correspondent for The New York Times. Floyd has been an ardent critic of Patrick and those who decry phantom stock. (One wonders how Floyd and Nocera interact with Morgenson in the Times newsroom.) Today Floyd is in the back of the room, looking bloated and pale, like a green grape. He seems to have ignored every word said by the panelists. But now his jowls are quivering as he snarls into the phone. Is he phoning in a story-perhaps an account of the SEC's refusal to prosecute a massive financial crime? No, Floyd is confirming a prescription. Meanwhile, James Brigagliano, director of the SEC's division of trading and markets, is standing on the side of the proceedings, laughing. '•Gee,'– he says to a colleague. '•I thought the anti-naked short-selling bozos like Dave Patch would be here.'– '•Oh we were there,'– Patch later writes on his blog, '•You just didn't see us.'– * * * * * * * * Patch also notes that while the SEC was calling him a bozo, billions of dollars worth of phantom stock was floating around the system. He gives the example of Escala, a company that auctions postage stamps and other collectibles. In May, Kingsford Capital and the criminal Spyro Contogouris of MI4 Reconnaissance convinced the Spanish constabulary to raid the offices of Afinsa, a Madrid-based company that owns a majority stake in Escala. Spyro and Kingsford (which, remember, I was investigating when its manager offered a large sum of money to the Columbia Journalism Review) accuses Afinsa of operating a pyramid scheme because it sells stamps as investments. A journalist working with Kingsford has also circulated rumors that the collectibles company is smuggling cocaine through the port of Cartagena. By now, the reader should be able to assess the validity of these rumors. Either way, at the moment that Brigagliano called Patch a '•bozo,'– 3.5 million phantom shares of Escala had been sold into the market, but had not been delivered to their presumed owners. Meanwhile, a Toronto brokerage called Research Capital had just sent a letter to the SEC complaining that it had, despite 42 separate attempts, failed to gain delivery of a large number of Overstock shares that it had purchased months previously. The '•bozos'– rightly suspect that Research Capital has purchased phantom stock. * * * * * * * * A week later, I'm at a party on a large balcony overlooking the Manhattan skyline. Spotlights criss-cross the black night; the perimeter is patrolled by giant men with shaved heads and earpieces in their ears. Everywhere there are beautiful women, Armani suits, and the accents of Staten Island. Attending this party are the most powerful players in the so called '•stock loan'– business. These are the brokers responsible for borrowing (or failing to borrow) the stock that traders sell in order to create short positions. It is a close-knit community of mostly Italian Americans who have controlled this corner of the
61 market for decades. The Russians are moving into the hedge fund and brokerage business, but the Italians still control stock loan. The Johnny Walker is flowing, and the guys from Staten Island talk openly. '•Yeah there's naked shorting. It happens all the time,'– says one. '•Who's going to stop it? You?'– This party, though, is a grand opening for a company that is betting that the days of naked short selling are coming to an end. The company specializes in locating and borrowing real stock for traders who want to go straight - who don't want to break the law by selling phantom shares. Everybody is here because the owner of this new company is a friend - one of the family. But there's some anger. The owner has sided with Patrick Byrne because he will profit if Patrick's crusade against illegal naked shorting is successful, but his friends, who are still selling stock that doesn't exist, stand to lose money in equal measure. On the balcony, I hear this comment: '•What's he doing with that guy Byrne?'...What do you think? Is it over for us?'– And later: '•Hey, Lou, I sent you an email!'– And Lou says: '•What are ya doin' sending emails? You can get indicted for emails'....'– * * * * * * * * But as of September, 2006, short-sellers are still getting a free ride. Certainly, the SEC's investigation into Gradient is not going well. As we know, the lead investigator in the case - the man who issued subpoenas to Herb, Cramer and Carol Remond - was brought back to Washington and reprimanded. In June, another investigator on the case was hired away by Kroll, the private-eye outfit with close ties to Cramer's friend, David Einhorn. Disgust and low-morale has crippled the SEC's San Francisco office, where the investigation was hatched. On October 6, 2006, The New York Times publishes an op-ed that sings the praises of short-sellers. Echoing the party line of our favorite financial journalists, the author of this op-ed, Richard Sauer, writes that the '•first line of defense'– against corporate frauds '•has not been the S.E.C., which acts slowly when it acts at all, but rather the much disdained short seller. By putting their money where their mouths are, short sellers are the only market participants with an incentive to deflate bubbles and inject pessimistic information into the market.'– Richard Sauer is a former administrator in the SEC's enforcement division. And during his tenure he did not act at all '•slowly.'– To the contrary, he was quick to launch many investigations - into companies shorted by David Rocker. Indeed, he seems to have spent most of his career sniffing down trails laid by Rocker and affiliated hedge funds.Unsurprisingly, many of Sauer's investigations at the SEC led nowhere. The bio at the bottom of Sauer's op-ed notes that just '•this week,'– he has '•joined the management of a short-biased hedge fund'...'– Days later the '•bozo'– pajamahadeen discover and reveal that the '•short biased hedge fund'– is the one run by - you guessed it '-- David Rocker. The SEC is full of employees waiting for high-paying hedge fund jobs. This might explain its reticence to prosecute hedge funds for selling phantom stock. It might also explain why, a few months before Sauer joined Rocker Partners, the SEC backed off its investigation of Rocker's minions at Gradient Analytics, and opened an investigation into '-- you guessed it '-- Overstock.com.
62 Rocker, of course, instigated this investigation. Patrick says he '•welcomes'– it. Indeed, he goes on the radio and says that he is ready to meet the SEC in any court in the land - and put the SEC on trial.The miscreants say this is another example of Patrick being '•Whacky Patty.'– Others say that Patrick has exposed the '•deep capture'– of America's regulatory bodies. * * * * * * * * One day in the Fall of 2006, Senator Orrin Hatch called Patrick to his home. He does that sometimes - they take walks together, discuss politics and the state of the nation. But this time, the senator wanted to talk about something else. When Patrick entered the building, the senator pulled him into a corner of the lobby. '•I am going to tell you something,'– he said. '•But I cannot tell you more than this. You are up against some really nasty, vicious people. They will not hesitate to kill you.'– The senator took a deep breath and continued. '•I want you to do something for me. I want you, the next chance you get, to go on TV or radio and say the following. Say that if anything happens to you, Orrin Hatch says that he's never going to rest until the United States government has gotten the people who did it. Now I'm not kidding, Patrick, I want you to do that tomorrow if you can.'– The senator repeated this several times. And he made Patrick repeat it back to him. * * * * * * * * A couple of days later, Mike Wilkins from Kingsford Capital appeared in my office. This was one of the hedge funds at the center of the scandal that I was investigating - a hedge fund that Wilkins managed along with Herb's friend, Cory Johnson, who was a founding editor of TheStreet.com '-- a hedge fund whose principals had collaborated with Manuel Asensio and the creepy former BusinessWeek journalist, Gary Weiss, to malign companies that were the victims of phantom stock selling '-- a hedge fund that was now attacking the same small stamp company as Spyro Contogouris, the proprietor of MI4 Reconnaissance also known as '•Martin Gardner,'– '•P. Fate,'– and '•Dick Tracy.'– This was early November 2006, a couple weeks before Spyro went to jail for ripping off a Greek shipping magnate. The Columbia Journalism Review was in serious financial trouble. Wilkins of Kingsford Capital offered to make that trouble go away. I can only assume that he intended to make this story go away, too. * * * * * * * * The editors of the Columbia Journalism Review are honest people who did, after all, let me work on this story for nine months. I resigned from my job days after Kingsford appeared in my office, before I could raise a fuss, so the editors were perhaps unaware that this hedge fund was engaged in a cover-up. That said, Kingsford must be pleased with my successor - who is now called '•The Kingsford Capital Fellow.'– CJR's '•Kingsford Capital Fellow'– has been remarkably favorable towards short-selling hedge funds and their friends. He has written an article sympathetic to Jim Cramer and recently, he slammed the CBS News program, 60 Minutes, for running a story pointing out that Gradient Analytics is a tool of market-manipulating hedge funds.
63 The Kingsford Capital fellow, Dean Starkman, argues that since Biovail, the company highlighted in the 60 Minutes segment, has since been sued by the SEC, this proves that '•Gradient was right.'–Meanwhile, says the Kingsford Capital Fellow, short-sellers are '•a vital counterpoint to the Wall Street hype machine'– and helpful sources to financial journalists. This is standard party line. If a target company is ill, the short-sellers are '•right'– - vital, even. Never mind if the short-sellers are all the while publishing false research, churning out phantom stock, working with the Mob, spreading malicious rumors, hiring criminals, bribing doctors, using false identities, colluding with journalists to front-run false media stories, giving kick-backs to witnesses in bogus legal cases - and now, funneling large amounts of cash to the one publication that was going to suggest that some of this might be illegal. * * * * * * * * A few weeks after I left CJR, a pair of metal garment shears were thrown through the window of a restaurant owned by a woman who is very close to Patrick. Earlier, somebody broke in to the restaurant, messed things up a bit, and stole nothing. It seemed as if somebody had been monitoring the restaurant's phone and heard that the alarm would be left off that night. Around the same time, Patrick's lady friend learned that copies of her cell phone bill were being sent to an address that was not hers. A Deep Capture investigator checked out that address and discovered that it belonged to a Russian man named Semyon Faivinov. Further investigation revealed that the man's son, Elliot Faivinov, worked as a vice president for Goldman Sachs Execution and Clearing (formerly Spear, Leeds & Kellogg). A few months later, the New York Stock Exchange and the SEC implicated Goldman Sachs Execution and Clearing in a massive phantom stock scheme (Goldman paid a $2 million fine). Previously, Spear, Leeds, & Kellogg had been accused of catering to known phantom stock sellers, including Kingsford Capital collaborator Manuel Asensio. I called Faivinov and asked him why he had the phone records of Patrick's lady friend. He said, '•That wasn't me'...I'm not the right person to ask about that.'– When Patrick called him (with me on the line), Faivinov said '•I am aware of who you [Patrick] are,'– but denied having the phone bills. Goldman subsequently did its own investigation. One of its PR men told me that Goldman had concluded that Faivinov did nothing wrong and '•has no idea who Patrick Byrne is.'–A few days later, the PR man changed course and said that Goldman was going to '•explore this matter further.'– * * * * * * * * In January, 2007, Patrick accepted an invitation to meet an offshore investor in a greasy spoon diner in Long Island. They had never met, but over the previous year the man had fed Patrick bits and pieces of information about the workings of the phantom stock scam, and the hope was that he might have something more to say in person. But that day at the diner, all he had was a message. '•I'll make this quick,'– he said, with two other witnesses present. '•I have a message for you from Russia. The message is, '—We are about to kill you. We are about to kill you.' Patrick, they are going to kill you. If you do not stop this crusade, they will kill you. Normally they'd have already hurt someone close to you as a warning, but you're so weird, they don't know how you'd react.'–
64 In a later phone conversation with an associate of Patrick's the man described how he received this message. He said he returned home one night and his wife told him there was a package on his desk. '•And there was a beautiful little box, and inside was a matryoshka.'– Matryoshkas are those lacquered Russian dolls - the kind with multiple dolls of decreasing size inside of them. '•And I opened up the last matryoshka,'– said the man, '•and inside is an `F' with a cross on it '-- which is from Felix.'– That's Felix Sater, a Russian immigrant described in a federal complaint as an '•unindicted co-conspirator'– in a money laundering and stock fraud ring involving organized crime figures from four Mafia families. The New York Times has reported that Sater was once also '•embroiled in a plan to buy anti-aircraft missiles on the black market '... in either Russia or Afghanistan'....'– Apparently, Sater offered to buy the missiles from Osama Bin Laden in exchange for amnesty in his Mafia fraud case. Also, according to the Times, Sater once '•grabbed a large margarita glass, smashed it on the bar and plunged the stem into the right side of [a] broker's face. The man suffered nerve damage and required 110 stitches to close the laceration on his face.'– Sater seems to have been involved in the feud that raged between the Gambino and Genovese crime families in the mid-to-late 1990s. A soldier in the Gambino family once tried to extort money from Sater, and Sater got a Genovese soldier to intervene on his behalf. This is the same feud that embroiled Carol Remond's source, Pacific International, and the two stock promoters who were murdered in 1999. It is the same feud that possibly inspired a cast of criminals, some linked to the Genovese (and by extension, the Russians) to develop relationships with that peculiar BusinessWeek reporter, Gary Weiss, who wrote stories pinning various crimes on the Gambinos. Gary Weiss, a demonstrable liar and creep whose only job for the past two years has been to author a blog devoted to badmouthing Patrick Byrne and denying that phantom stock is a problem - a former BusinessWeek reporter whom Judd Bagley has shown to have posted on the Internet from within the Black-Box DTCC, a reporter who is a close friend of known crooks, and who controls several phantom stock-related Wikipedia entries with the support of a one-time British intelligence agent who calls herself SlimVirgin - this unconscionably bizarre character has defended Felix Sater on his blog. He wrote, '•Sater has every right to turn his life around, as apparently he has done. Good for him.'– In January 2007, Sater was turning his life around by putting a note in a Russian matryoshka doll. Apparently, Sater had discovered that the man in the greasy-spoon diner had been in contact with Patrick. So Sater sent a message in a doll. Then he delivered a verbal message. '•He said, tell [Patrick] if he doesn't'....we're going to fucking take it private,'– the man from the diner says. '•You know, they're not going to mess about with this.'– '•These things don't happen anymore to me,'– the man continues. '•I mean, I've been out of that world for a dozen years or more. These'....there are defined signals here that lead me to believe they [the Mob] have been disturbed. The only way they coulda been disturbed is if they own Rocker or if he is using them for leverage.'– * * * * * * * * The month that followed was perhaps the lowest point in Patrick's life. Overstock's operations had been going through a rough patch for a year. As Patrick put it, '•In five years we grew from $2 million to $800 million on a shoestring, and in 2006 the shoestring broke.'– Patrick struggled to fix the company, but intrigues swirled around him, and he now had armed security details following those close to him. One of Overstock's board members, meanwhile, had just left the company after trying to get Patrick fired over
65 Patrick's crusade against Wall Street. Two other board members - including, even, Patrick's father - had already resigned, citing similar reasons. All this hassle and grief - and for what? It seemed like Patrick's crusade wasn't making much progress. Indeed, it suffered one of its worst blows in February, 2007, when the Utah legislature voted to repeal a law making it illegal to sell phantom stock in Utah-based companies. This had been an effort to bypass the SEC, which was doing nothing to enforce federal laws. The previous May, the Utah law had been passed almost unanimously - and in the face of considerable pressure. At one point, Utah State Senator Curt Bramble received a call from Morgan Stanley's general counsel, who yelled into the phone with such vengeful fury that Bramble slammed the phone on his desk and left the room. The state governor, meanwhile, was holed up in his mansion, taking similar abuse from the SEC's general counsel and a cast of seething lawyers representing the securities industry. For a while, Bramble and the governor vowed not to cave in to the pressure. But that was before state legislators were treated to the most elaborate lobbying campaign ever to hit Salt Lake City. First, the governor agreed to delay implementation of the law for a year, to see whether the SEC would begin enforcing its own laws against selling phantom stock.Then, suddenly, Bramble, who'd been the law's most fervent supporter, jumped ranks. In February, he led the state legislature in overturning it in a late- night action that bypassed all the normal committee processes. The Securities Industry and Financial Markets Association had hired a lobbyist specialized in greasing the machine for the local real estate industry. Bramble is a tax accountant with a small accounting firm. In the months leading up to February 2007, when the Utah legislature made one of its most dramatic reversals ever, Bramble's firm received a considerable amount of new business from the local real estate industry. That lobbyist did a really good job. * * * * * * * * A lot of people bowed out of the fight, but Patrick did not relent. In answer to the threat from the Russians, Patrick asked for a week '•to think about things.'– During the week, the man from the diner called to ask one of Patrick's colleagues, '•Is it going to take Byrne having a gun in his mouth before he backs down?'– At the end of the week, Patrick received a phone call: '•The Russians want to know your answer.'– Patrick said he needed just another few days to think. Two days later, he filed a $3.5 billion lawsuit against the entire brokerage industry, which he accused of helping hedge funds sell phantom stock. Patrick received one last email from the Russians' intermediary: '•Nice raise. LOL.'– Meanwhile, he continued to hammer Herb, Cramer, Eisinger, Nocera and the other journalists who refused to acknowledge phantom stock and short-seller crimes. He got his message out any way he could - rallying the pajamahadeen, meeting U.S. senators, posting missives on stock message boards. He was sustained by the knowledge that he had some supporters. There were the Easter Bunny and the other oddballs. But there were also some mainstream journalists. Liz Moyer of Forbes magazine had written a number of stories highlighting the plight of companies victimized by phantom stock. Charles
66 Gasparino, a CNBC anchor, had called Patrick a '•hero'– for bringing this issue to the forefront. (For that, it is said that Gasparino drew a lot of flak from the powers-that-be at CNBC). There had also been some victories. Like that time that Patrick called Senator Richard Shelby (R - Alabama) a '•gangster.'– It was in October 2006, and Shelby, the chairman of the Senate banking committee, was spending a lot of time on television defending hedge funds accused of selling phantom stock. When the Senate held hearings on hedge funds, Shelby stacked the panel with friends of David Rocker. So Patrick went on a radio program and called Shelby a '•gangster.'– Shelby invited Patrick to meet him on Capitol Hill. Patrick made the trip. He waited in an ornate conference room for an hour. Then Shelby entered. The Senator referred to himself in the third person: '•The Chairman of this Committee believes that you are trespassing on matters that are under his jurisdiction.'– Then he just sat there and stared Patrick down. It was as if'...well, it was as if Shelby were a gangster. So Patrick said good bye, and went on another radio program. This time he called United States Senator Shelby '•an ignorant cracker.'– That was fun. So Patrick had these memories to sustain him. * * * * * * * * Then, in March 2007, Patrick got a break. Gary Matsumoto of Bloomberg Television did '•the right thing.'– He ran his expose on naked short selling. The half-hour piece was a year in the making, and the DTCC's lawyers bombarded Bloomberg with threats aimed at killing it. For a while, it seemed as if the documentary might not happen at all. Then for many months it was on-again off-again. But at the end of January, 2007, at cocktail party in Washington, D.C., Patrick was introduced to Michael Bloomberg, the mayor of New York and founder of the Bloomberg news service. When Patrick suggested that Bloomberg look into the documentary, the mayor stiffened, pulled out an index card, and wrote down the details. A week later, the documentary was again given the green light. The General Counsel of the DTCC was threatening the General Counsel of Bloomberg until just a few hours before it ran. So it happened - the first major news story about the phantom stock problem. And, really - the documentary says pretty much all you need to know. It has been nominated for an Emmy for Long Form Investigative Journalism. Watch it here. The same month, Dave Kansas, formerly of TheStreet.com, left the Journal's Money & Investing Section. Jesse Eisinger, formerly of TheStreet.com, also left the Journal. Perhaps as a result, in June 2007, the '•Money & Investing'– section was able to publish a tepid story, '•Blame the `Stock Vault''– about phantom stock and the DTCC. '•There is no dispute that illegal naked shorting happens,'– the Journal reported. A month later, the American Stock Exchange levied a big fine on a trader named Scott Arenstein and his brother, Brian, for selling massive levels of phantom stock in several companies - including Overstock.
67 So even Carol Remond had to admit that phantom stock exists. But she did her best to soften the news. '•Turns out that one guy did, in fact, illegally trade shares in [Overstock],'– Carol wrote on the Dow Jones newswire. '•[But the] improper trading doesn't come close to amount to [sic] the massive conspiracy alleged by Overstock.'– * * * * * * * * The other journalists '-- Herb, Nocera, Floyd Norris, Gary Weiss, Roddy Boyd, Bethany McLean, Barron's magazine - continue to ignore phantom stock while toadying to miscreant hedge funds and their criminal associates. In March 2007, right at the time of the Bloomberg expose, Nocera writes that '•most people on Wall Street, or most regulators, for that matter, don't believe that there is much naked short selling going on.'– Gary Weiss, with characteristic understatement, writes on his blog that Nocera's article is '•a seminal piece that will be cited by market scholars for years to come.'– Meanwhile, Nocera is nominated for a Pulitzer prize for columns including '•Campaign of Menace,'– in which he ridicules Patrick for his stance on naked short selling. And in the year that follows, these journalists grow only more energized, viciously attacking anybody who even mentions the words '•naked short selling'– or '•phantom stock.'– For example, in January 2008, Citigroup analyst Heather Hunt writes in a report that she believes that naked short selling might be depressing the stock price of MBIA, the company that Spitzer investigated and Bethany McLean maligned with help from William Ackman. Floyd Norris, the green grape at The New York Times, writes a column dismissing Hunt. Gary Weiss smears Hunt, too, writing that '•all the naked shorting conspiracy theories and scare-mongering, promulgated by Byrne'...and a motley assortment of internet crackpots-and now a Citigroup analyst-are sheer hooey.'– Herb, who has recently written about a lunch he had with the crooks Sam Antar and Barry Minkow, also jumps on Hunt. In his column, Herb thanks Whitney Tilson (the Cramer friend who is shorting MBIA with Ackman, and who recently paid $10,000 to the criminal Barry Minkow) for notifying him that Heather Hunt had committed the atrocity of mentioning '•naked short selling.'– '•Earth to Heather,'– Herb writes. '•Watch out for UFOs.'– * * * * * * * * Days later, something very remarkable happens. For years, the SEC has insisted, along with a crew of quisling journalists, that phantom stock isn't much of a problem. Commissioner Annette Nazareth famously declared that the only people who care about phantom stock are CEOs of failing companies. The SEC's director of markets and trading referred to Dave Patch and his blogging cohorts as '•bozos.'– But something remarkable happens. On March 4, 2008, Christopher Cox, Chairman of the SEC, gives a talk at an open meeting of SEC officials. During this talk, for the first time, he lays it all out - the precise dimensions of the phantom stock problem. He says, '•today's elaborate system of electronic net settlement [read: DTCC] has enabled a particularly pernicious form of fraud called naked short selling'... Illegal naked short selling is an especially serious threat to smaller public companies, whose relatively thin market capitalizations can be more easily manipulated. And in the same way, it threatens the savings and investments of many retail investors in these smaller companies. There are many legitimate reasons that a trade might fail to settle, but the extreme abuses that are reflected in securities being chronically listed on Reg SHO's Threshold Security
68 List for months and years at a time is ample evidence that there is also fraud in the market that needs to be arrested. Periodically there are reports that following a legitimate purchase of 100% of the outstanding shares of a microcap company, millions of phantom shares continue to be traded by naked short sellers'...'– That, folks, is precisely what the Easter Bunny and Patrick Byrne and all the other '•bozos'– and '•crackpots'– and UFO-ducking freaks have been saying all along. * * * * * * * * Less than a week later, short sellers come close to toppling the American financial system. They do this by taking down Bear Stearns, the country's fifth largest investment bank. On March 10, 2008, Bear's chief executive, Alan Schwartz, says that the firm's '•balance sheet, liquidity and capital remain strong.'– But a small group of hedge funds circulate rumors that Bear Stearns is in crisis. At the same time, they pull their money out of the bank in order to create a crisis. Days later the stock is plummeting and money is exiting the bank at such an accelerated rate that it appears that it might have to declare bankruptcy - which would send shockwaves through the entire financial system.To prevent this, the Federal Reserve, for the first time since the Great Depression, invokes a law allowing it to lend money to banks. JP Morgan, a rival bank, steps in to swallow Bear Stearns' mangled remains. Perhaps to distance himself from the scandal, Jim Cramer goes on CNBC to decry the antics of short- sellers. He says, '•a bunch of hedge funds come in to do a gang tackle'...is that capitalism? I don't regard that as capitalism. I regard it as the destruction of capitalism'– The SEC, meanwhile, launches an investigation into hedge funds who may have coordinated the attack on Bear Stearns. SEC Chairman Christopher Cox tells Congress (just a couple of days after the Inspector General's meeting with '•bozo'– Dave Patch) that he is '•very aggressively'– pursuing '•the market manipulation and the kinds of illegal naked short selling that have been very publicly alleged in this case.'– In other words, the chairman of the SEC tells the Senate that it is investigating the possibility that phantom stock contributed to the demise of Bear Stearns and the near collapse of the US financial system. But this does not deter short-sellers from launching a similar attack on Lehman Brothers, an investment bank that is even larger than Bear Stearns. Richard Fuld, Lehman's chairman, tells lawyers and the SEC that he has information proving that hedge funds orchestrated the demise of Bear Stearns - and that they have similar intentions for his bank. And so, on April 2, 2008, Herb is on CNBC, along with CNBC reporter Charles Gasparino, who has called Patrick a '•hero,'– and Dennis Kneale, the managing editor of Forbes magazine, one of the few news organizations to report accurately on the phantom stock problem.This is two weeks before Herb announces that he is leaving journalism to found an '•independent'– financial research shop that will cater to short-sellers. Herb is live on CNBC. His arms are flapping and his eyes are popping. Herb is doing all he can to defend the short-sellers. He is saying that Bear Stearns and Lehman got what they deserved - only bad companies blame short-sellers. But it is clear that Gasparino and Kneale might finally have had enough of Herb.
69 Kneale says, '•Herb, you know short-sellers better than almost anyone here, you know their secret handshakes, you go to their club meetings'...'– And Gasparino says, '•If you look at the way Bear Stearns imploded'...it didn't go down in a couple of months, it went down in a week. And if you look at what happened, it's clients, which were hedge funds - these are the people that'...trade with the firm. They precipitously started pulling cash while - while they were going short'...'– Herb bounces in his seat: '•But, but, but'...'– '•Herb let me finish,'– says Gasparino. '•That was a precipitous demise'...and let me say one other thing, it could be completely legal, short-sellers are good for the market in many cases, but this was a run on the bank'...and would you concede''on the Monday before the whole thing blew up, Bear Stearns wasn't illiquid at that point?'– '•Did the short sellers cause there to be crisis of confidence issue?'– Herb asks, incredulously. '•Yes they did,'– says Gasparino. '•They did'– '•How do you know!?'– Herb shouts. '•How do you know!? How do you know!!?'– '•I'm going to tell you,'– says Gasparino. '•How do you know!? How do you know!!'–. '•I'm going to tell you.'– '•How do you know!!?'– '•I'm going to tell you. I'm going to tell you. I'm going to tell you. I'm going to tell you'....'– * * * * * * * * THE END At least, we wish that were the end. But the SEC has yet to actually prosecute a hedge fund for illegal short-selling. Hedge funds continue to use dirty tricks to take down public companies. They might have brought our financial system to the brink of collapse. And Charlie Gasparino was cut off before he could tell Herb how he knows.
'Ball of Collusion' Book Excerpt: Democrats Are the True Election Meddlers | National Review
Fri, 23 Aug 2019 04:14
President Barack Obama and Hillary Clinton at a campaign rally in Philadelphia, Pa., November 7, 2016. (Brian Snyder/Reuters) They have tried to influence elections in Russia and Israel, and have sought the Russians' help to get elected here.Editor's note: Andrew C. McCarthy's new book is Ball of Collusion: The Plot to Rig an Election and Destroy a Presidency. This is the second in a series of excerpts.
'T he 1980s are now calling to ask for their foreign policy back.''
Thus spoke President Barack Obama just a couple of weeks before Election Day 2012. With the race still thought to be tight, he had come to the candidates' final debate loaded for bear. Earlier in the campaign, his Republican rival, former Massachusetts governor Mitt Romney, had had the temerity to pronounce that Russia was, ''without question, our number-one geopolitical foe.'' The incumbent president regarded this as an absurd anachronism. So that night, he brought the snark. Hadn't anyone informed Romney that ''the Cold War's been over for 20 years''?
Obama tut-tutted that this Republican nostalgia for the foreign policy of the 1980s was of a piece with the GOP's desire to revive the ''social policy of the 1950s and the economic policies of the 1920s.'' Yes, that was your Democratic-party standard-bearer, what seems like only yesterday. No longer was this the party of Harry Truman and Jack Kennedy. To Obama-era Democrats, arguing that Russia was a real threat, that it longed for a return to Soviet hegemony, was akin to calling for the return of Jim Crow and the adoption of protectionist practices that helped ignite the Great Depression.
But then Hillary Clinton lost the 2016 election, and Democrats decided they'd best return that call from the 1980s after all. It turns out Russia '-- the Russia against whose serial aggressions Obama took little meaningful action throughout his eight years in office '-- really is our Numero Uno geopolitical foe. Turns out the Cold War isn't ''so last century.'' Since November 8, 2016, in ever-evolving Democratic dogma, Russia has gone from a quaint obsession of neocon warmongers to an existential threat on the order of Climate Change!
As is generally the case, neither extreme of political posturing has been accurate. Romney was right that Putin's Russia is a significant rival on the world stage. Whether it is ''number one'' on the tally sheet is debatable. To figure that out, we'd have to make judgment calls about all the threats we face '-- immediate versus long-term, forcible versus other forms of aggression, ideological versus transactional, and so on. No need to dawdle over that. It suffices to say that the Russian regime is a serious adversary. It has a formidable nuclear arsenal, as well as highly capable military and intelligence forces. Its default posture is anti-American (though it is biddable). It cooperates effectively with other anti-American regimes and factions. Its veto power in the United Nations Security Council complicates our government's capacity to act in American interests. It has a Soviet iciness about the use of terrorism and forges alliances with terrorists in the pursuit of its interests. The regime is ruthless in its determination to remain in power, it has revanchist ambitions, and it is shrewd in testing the West's resolve '-- or lack of same '-- to respond to incremental aggressions that implicate NATO and other commitments.
At the same time, Putin's Russia is not the Soviet Union. The Cold War really is over. We are not in a bipolar global order, rivaled by a tyrannical Soviet empire. Modern Russia is a fading country. Its first-rate weaponry, armed forces, and intelligence agencies scarcely obscure its third-rate economy, declining population, pervasive societal dysfunction (high levels of drunkenness, disease, and unemployment), and lowering life expectancy. Behind the fa§ade of democratic elections and constitutional restraints, Russia has less a principled system of government than a marriage of rulers, oligarchs, and organized crime. To endure, Vladimir Putin's regime must terrorize the Russian people. Nevertheless, it is a pale imitation of the brutal Soviet behemoth that imploded nearly 30 years ago when the Berlin Wall fell, the Iron Curtain lifted, and tens of millions of enslaved subjects broke free.
Does Russia have the wherewithal to ''interfere in our elections,'' as the media-Democrat trope puts it? If by ''interference'' '-- or its frequently invoked synonym, ''meddling'' '-- we refer to the ability to inject propaganda and attempt to influence the campaign debate, then of course it can interfere. And it does. That is what capable governments do to other countries. It is not only what the Soviet Union always did, and what Putin's Russia does throughout the West and in other parts of the world of consequence to Russian interests; it is what our own government does.
The United States is among the most active participants in the election-interference game. ''We've been doing this kind of thing since the C.I.A. was created in 1947,'' Loch K. Johnson, an acclaimed scholar of U.S. intelligence, told the New York Times in 2018. ''We've used posters, pamphlets, mailers, banners '-- you name it. We've planted false information in foreign newspapers. We've used what the British call 'King George's cavalry': suitcases of cash.''
Democrats, moreover, conveniently forget that they've historically welcomed such mischief-making. As historian Steven F. Hayward recounts, President Jimmy Carter used such emissaries as billionaire industrialist Armand Hammer and National Security Advisor Zbigniew Brzezinski to seek Soviet accommodations that could help in the 1980 campaign against Ronald Reagan. This mirrored the tactics of the 1976 campaign, during which Democratic eminence Averell Harriman conveyed to the Soviet foreign ministry that Carter was anxious to negotiate and would be more agreeable to deal with than then-President Gerald Ford.
By the 1984 campaign, it was the renowned ''Lion of the Senate,'' Ted Kennedy, pleading with Soviet leader Yuri Andropov for help in the Democrats' futile effort to stop the Reagan landslide. The Hoover Institution's Peter Robinson, a Reagan speechwriter, provided details of the unabashed quid pro quo, outlined in a 1983 KGB memorandum. Through his confidant, former California Democratic senator John Tunney, Kennedy told Andropov, ''The only real potential threats to Reagan are problems of war and peace and Soviet''American relations . . . These issues . . . will without a doubt become the most important of the election campaign.''
Kennedy offered to visit Andropov in Moscow to provide Soviet officials with pointers on the challenges of nuclear disarmament ''so they may be better prepared and more convincing during appearances in the USA.'' Having thus offered to update their propaganda, Kennedy further proposed arranging to have television networks give Andropov air time for ''a direct appeal . . . to the American people.'' Tunney went on to advise the Russians that, while his friend wanted to run for president in 1988, ''Kennedy does not discount that during the 1984 campaign, the Democratic Party may officially turn to him to lead the fight against Republicans and elect their candidate president.''
Now that's some collusion right there.
There is nothing unusual about it, though. President Bill Clinton labored to ensure that Russia's reformer president (and Putin patron) Boris Yeltsin would not be defeated by a Soviet-style Communist in 1996. President Obama sedulously worked against Israeli prime minister Benjamin Netanyahu, first attempting to force progressives into his right-leaning governing coalition, then dedicating U.S. taxpayer funds to a failed effort to defeat Netanyahu in 2015. Nothing new there: Clinton had unsuccessfully tried to defeat Netanyahu nearly 20 years earlier, later telling Israeli television, ''I tried to do it in a way that didn't overtly involve me.''
As these things go, it would have been shocking if Moscow had not attempted to meddle in our 2016 election. Putting aside the Russians' general penchant for anti-American mischief-making, in 2011 Putin had publicly blamed then''Secretary of State Hillary Clinton for inciting unrest following Russia's typically rigged parliamentary elections. So, the 2016 campaign was not just business as usual. There was an element of score-settling. And Putin being a canny strongman, the point was to sow discord and make life difficult for what he fully expected would be the new Clinton administration.
There are good reasons to doubt the sincerity of assurances by Kremlin-tied operatives that Putin wanted Trump to win. Russia's modus operandi in the West is to agitate minority factions it believes are going to lose '-- whether it would prefer to see them to win or not. That is how Moscow promotes strife and makes it more difficult for the incumbent government to pursue its interests. But even if we accept at face value Russian assertions that Putin wanted Trump to win, there is no reason to think Putin believed Trump would win.
Nobody did. Not even Donald Trump himself.
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Rosie memos on Twitter: "Brilliant connect by @777nidnups Strzok's wife works at SEC, in 2018 they announced an investigation into Overstock... corporate espionage at its finest. https://t.co/szDDwQpBIe" / Twitter
Fri, 23 Aug 2019 04:19
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Brace for Re-entry | Deep Capture
Sat, 24 Aug 2019 19:49
In the years surrounding the 2008 financial crisis, this small site you are visiting had quite a following. As is noted in the header, in 2008-2009 it won various internet awards for being the best place to come for business investigative journalism and to read about corruption within the USA (at time when the public paid much attention to such subjects). For the shortest explanation of what my principal claims regarding Wall Street were, watch this 3 minute video of clips from those years. Or see either this 1.5 page summary, or this 40 minute presentation (keeping in remember that they were from September 2007, a full year before the crisis). Yet given the heartbreaking understanding our nation came to have concerning Wall Street over the course of 2008-2010, I felt less and less of a need to keep at it, and over the years my activities here dwindled to a close.
This summer I came forward regarding my involvement in a series of events that occurred in 2015-2016. I did so by organizing a panel of journalists whom I know and trusted from across a panel of news organizations with whom I had previously worked. All were from organizations to the Left of Fox. Also invited was Sara Carter of Fox: she was also the only one with whom I had not previously worked (though we had shaken hands once a decade ago), but she had earned her seat there, I felt. In late July Sara wrote a blog that got attention. As the message began bubbling up, it was misunderstood (and perhaps spun). A couple weeks ago David Asman caught me with a question in an interview, news spread of my response, I tried to address it in a release that would end my need to talk about the subject, but that was like trying to put out a fire by pouring kerosene on it.
That's the proximate cause, but the truth is for about a year I have understood that either certain things were going to eat their way to me, or I was likely going to have to expose them. I used the year to make as robust as possible the firm I was running. Given that Tuesday marked our 20th anniversary, and given that the aforementioned news is bubbling into the mainstream, for the best of the firm it seemed like quite a sound time that I step down and get far away.
It is not my intent to write here articlesinvestigating or exposing things. There is nothing for me to investigate aboutwhat happened. I know what happened, or at least my little corner of whathappened. And in general, I would prefer to leave it to federal authorities toreveal what happened. However, there are suddenly a lot of press that wish totalk to me, and I have spent the day thinking about how this is going to work.
I am reminded of a lesson I learned from my mitzvah with Wall Street in 2005-2008. Whenthat started, I thought the world worked like it did for Julia Roberts in The Pelican Brief. Julia susses out the scheme, it gets published,all the forces of Right & Good swoop in and arrest the bad guys, and it wrapsup in five reels. What I learned from my One Man Occupy Wall Street experience,however, is that the way the world really works when a scandal is exposed isthat the power structure reveals itself in response, trying to squelch thetruth. In those 2005-2008 years, even a simple message like, ''Slop in our stocksettlement system is dangerous, hedge funds are manipulating markets with it,the SEC is too close to Wall Street to reign them in, and it is all going tocrack'' was distorted, ridiculed, and buried. In the process, those forces laidthemselves bare (as browsing around old DeepCapture articles will confirm). Ittook the crisis of 2008 to break their hold on the truth, at which point anumber of stories mentioned my vindication, but then something of a Cone ofSilence descended on all that I had said and done regarding Wall Street.
More journalists have called me today than any day in my lifetime. It is not feasible for me to communicate with each. Also, the same power structure that sought to bury the truth about Wall Street in 2005-2008, will react badly to much of what I believe is going to be exposed in the months ahead. As a result, I have decided to reactivate this old site, not to break a lot of new things, but simply to communicate with the world (including the press that is contacting me) in a transparent, controlled way. In the process, I will be deconstructing the writing and thinking of the people who write about me: my experience is that this bring discipline and honesty to such relationships.
There will likely be a lot of new people coming here. It has been a busy week, and I am a bit tired to write a terribly coherent orientation to this site. I will manage that someday soon. In the meantime, this weekend I will work on a careful statement of the information that yesterday I rushed through in three different interviews. That will save the overhead of having to have a lot of similar conversations. And it will make it difficult for anyone to twist what I say. I will also research to see if any technology has become available to do something that, until recently, I was doing inside our firm: letting the many aggregate their curiosity into distinct, ranked questions that I answered from highest (crowd-ranked) priority down. That way, we (you readers and I) can have a conversation with as little distortion as possible, and include in our conversations those journalists who add value to the discussion.
Judge Chutkan covered up Butina's role in Uranium One -brassballs.blog
Sat, 24 Aug 2019 22:17
Convicted Russian Spy Mariia Butina plead guilty to being a spy in exchange for immunity in her role as a money launderer and FBI informant in the Uranium One fiasco.
It ended up with the U.S. selling 25 per of its uranium to Russia and billions of dollars paid in bribes.
Butina doctored up documents to make bribes paid to Vadim Mikerin look like legitimate business expenses. Mikerin plead guilty to money laundering in one of the four Uranium One cases.
The source of Butina's involvement in Uranium One is William Campbell. He ratted out Butina as an employee of Tenex, the Russian owned uranium company.
https://www.scribd.com/document/411948886/Mariia-Butina-works-for-Russian-uranium-company-Tenex
Campbell was a:
lobbyist for the Russian owned company Tenex
an employee of Transport Logistics, the company with a monopoly on moving uranium in and out of the U.S.
and an FBI informant since 2009
Here is how Butina would cover the bribery scheme.
She would take a $100,000 bribe and break in down into odd lot payments of $28,395, $42,994, and $26,611. Who would notice the bribes?
Except the numbers were bigger.
The FBI only admitted finding $2,126,622 in bribes. The Uranium One cases dealt with $150 billion of uranium contained in 20,000 nuclear war heads.
https://www.justice.gov/opa/pr/russian-nuclear-energy-official-pleads-guilty-money-laundering-conspiracy-involving
Mikerin demanded half the money.
Who got the rest?
The only way the FBI could have known the details of the bribes was to have an informant.
That informant was Butina.
The source of Butina's involved in money laundering is public record.
It is in Wiliam Campbell's federal case to recover $760,000 from Mikerin and Transport Logistics International (TLI), their employer.
When one attempts up Document 124 highlighted in blue above, here is the summary:
''You do not have permission to access this document''.
Defense attorneys have the immunity deal. They refuse to release it.
The Judge has it too. And Prosecutor Liu. They never want it disclosed.
The ''Judicial Conference Policy'' is public record. It is a way the federal judiciary makes law without a vote of Congress.
If Judge Chutkan's citation was valid, where is it? What date, page, court citation or reference?
It is omitted.
Intentionally.
Time for another impeachment of another federal judge?
Judge Tonya Chutkan (above)
Prosecutor Jessie Liu (above). President Donald J. Trump wanted her to replace Rod Rosenstein as Assistant Attorney General.
According to the Federal Bureau of Prisons, Butina is no longer in their custody.
How did she end up in a 32-cell prison in Oklahoma?
How come the Sheriff there refuses to confirm her whereabouts?
Where is Butina?
Maria Butina Archives - The Clinton Foundation Timeline
Sat, 24 Aug 2019 22:20
August 23, 2019 '' Details behind Patrick Byrne's allegations of FBI/DOJ ''political espionage'' Former CEO Patrick Byrne has given four primary interviews where he outlines his knowledge of a 2015 and 2016 political espionage operation being run by the FBI.
Fox News, MacCallum '' Fox Business #1 '' Fox Business #2 '' CNN, Cuomo
(Credit: Conservative Treehouse)
After a review of the interviews, and extracting specific points therein, here's an overview.
The substance of Mr. Byrne's claims does seem to align with what we already know about the DOJ and FBI activity during the 2016 election cycle, including the FBI operations.
First, Patrick Byrne claims he has spoken to the DOJ on April 5th, 2019, and again on April 30th, 2019. Mr. Byrne states he told the DOJ all of the information he was aware of during those two interviews covering approximately seven hours of questioning.
The current public statements Mr. Byrne is making are not with the approval of the DOJ or any investigators therein. His decision to go public with this information comes as a result of conversations with a life-long mentor and confidant, Warren Buffett. Mr. Byrne states he has known Warren Buffett since Byrne was a teenager and Mr. Buffett was in his mid-forties.
According to his CNN interview Byrne talked to Buffett in about how he could be a witness in the DOJ investigation authorized by Attorney General Bill Barr and being conducted by U.S. Attorney John Durham. After listening to the details, Buffett recommended Mr. Byrne go public with the story.
However, in order to go public Byrne would need to separate himself from his role as CEO of Overstock, the company Byrne founded. Mr. Byrne resigned yesterday, August 22nd.
Byrne explains he told Buffett about his April conversations with the DOJ and Buffett said it didn't matter'... Byrne still needed to go public with the story. It sounds like there are several motives for going public; perhaps one is personal safety.
To verify his April DOJ discussion, Byrne points to two references:
'...First, the movement of Maria Butina from harsh isolation in prison on May 9th, ten days after he delivered his testimony to the DOJ. According to Byrne Ms. Butina was moved to a very different White Collar facility based on his information.
'...The second reference point Byrne highlights is the May 13th DOJ appointment of John Durham to look into the origination of the Russia investigation events. Byrne says this too was a direct result of his two DOJ sessions April 5th and 30th.
If Byrne is accurate; and if his claims of him personally being an operative of the FBI with instructions to engage Ms. Butina inside the political espionage events structured by corrupt FBI officials are genuine; it would appear Special Counsel Robert Mueller facilitated throwing a bag over Ms Butina in an effort to keep the corrupt FBI intelligence operation hidden from the public. This would explain the Mueller demand for strict solitary isolation and confinement. (The reports are indeed troubling)
Again, if Byrne is correct, it would appear that extremely significant and exculpatory Brady material -evidence that could easily prove an entrapment defense- was intentionally withheld from Ms. Butina's defense team. Alarmingly this points to ongoing corrupt officials that still remain inside the current DOJ. Ms. Butina was collateral damage.
View on Scribd
A review of the time-frame details provided by Patrick Byrne in the four interviews shows his story told four times is consistent each time.
Here's a brief review of the consistencies aspect:
After a cursory meeting in/around July 2015, Byrne claims in the period of September to December 2015 he reported contact with Russian national Ms. Maria Butina to the FBI as a precaution related to his security clearance.
Byrne claims he was asked to participate in an FBI intelligence operation and to introduce, and/or facilitate the introduction of, Ms. Butina to the campaigns of Marco Rubio, Ted Cruz and Donald Trump.
In December of 2015 Mr. Byrne became suspicious of the FBI motives because he warned FBI officials of a potential that his efforts, his reputation and those who trust him, may result in Butina gaining entry into campaign confidences. The FBI agents told Byrne that was exactly the intent; people high up in the FBI wanted Ms. Butina to gain deep access into the Trump campaign. Mr. Byrne became suspicious of a corrupt political motive, but didn't say anything at the time.
Additionally Byrne's assistance was requested for an investigation of a high-level government official, he later named as Hillary Clinton.
[
Sidebar: It's noteworthy that during these FBI engagements Byrne was never requested to facilitate Ms. Butina into the Bernie Sanders campaign. The inference in that omission is the Dem primary was rigged, and the riggers saw no value wasting time on Bernie]
In/around Feb or March 2016 Byrne was told to focus Ms. Butina's attention to the campaign of Donald Trump and to diminish any attention toward Rubio or Cruz.
The assistance of the investigation of the federal official (Hillary Clinton) ended in late June and early July of 2016. Immediately thereafter Ms. Clinton was publicly -and unusually- cleared by FBI Director James Comey on July 5th, 2016.
In/around this same June & July time-frame (2016), FBI agents requested Mr. Byrne to focus on developing a closer romantic relationship with Ms. Butina and to use his influence to target her to closer proximity with the Trump family and Trump campaign.
It was within these June and July 2016 engagements where FBI agents were apologetic about the requests and specifically mentioned their instructions were coming from three principle FBI officials Byrne described as ''X, Y and Z''. Later Byrne identified FBI Director James Comey as ''Z''.
In the Fox MacCallum interview Byrne named James Comey, Andrew McCabe, Bill Priestap, John Carlin (DOJ-NSD) and Peter Strzok. Mr. Byrne said the specific instructions were coming to the agents from Special Agent Peter Strzok as he relayed the requests of those above him [X, Y and Z (Comey)].
This FBI contact structure highlights an arms-length operation; perhaps intentionally constructed to create plausible deniability for those above the directly instructing agents.
In essence, these rank-and-file FBI agents were asking Patrick Byrne to be a civilian handler of a Russian national, and instructing him to carry out a covert counterintelligence operation. The FBI agents were apologetic about asking a civilian to take on such a role.
Maria Butina (Credit: Anton Novoderezhkin/ Zuma Press)
'... Ms. Maria Butina is described as a young Russian idealist, who had strong connections to high powered Russian oligarchs.
The purpose of Butina coming to the U.S., as explained by Byrne, was for her to engage with influential Americans for contacts that could provide geopolitical value to the oligarchs.
Patrick Byrne was seen as important to Ms. Butina due to his connections to the emerging financial structures of crypto-currency and block-chain. Byrne is a libertarian who believes in small government, and is somewhat of a disruptor in the business world. Ms. Butina wanted to introduce Byrne to her friends in Russia.
While it was not outlined in any of the four interviews, alternative currency options to the U.S. dollar have been an ongoing effort of Russian interests for a while. Russia considers global trade attached to the dollar as geopolitical problem; and they have been working for years on alternative currencies for trade (and their own wealth) that can avoid U.S. sanctions and the reach of the U.S. treasury.
'... As a Russian national with specific Russian interests that are not in alignment with U.S. national interests, Maria Butina would be defined by the U.S. intelligence community as an 'agent of a foreign power'. Her status would mean unrestricted monitoring by the U.S. intelligence community would be entirely legal.
However, because of this 'foreign agent' status Ms. Butina could also be valuable as a virus to infect anyone the U.S. intelligence apparatus would wish to target domestically. This motive appears to be the reason for the FBI to tell Mr. Byrne where to send Ms. Butina.
Conducting FISA-702(16)(17) database searches and surveillance on U.S. persons who would meet with Butina would be justifiable and legal.
Extended contact with any U.S. person could likely lead to a Title-1 surveillance warrant through the FISA court. However, even without the warrant, 702 searches would be valid just from brief contact.
As we have shown FISA-702(''16'' to-from) and (''17'' about) queries were off the charts during the time-frame of November 2015 through May 2016. Per the FISA audit conducted by NSA Director Admiral Mike Rogers, after the flags noted by the database compliance officer, 85% of the search returns were unauthorized and unmasked.
The time-frames here are too coincidental to be accidental. [Judge Collyer Report]
(Read more: Conservative Treehouse, 8/22/2019)
April 5th & 30th, 2019 '' Overstock CEO, Patrick Byrne, delivers emails and text messages to the DOJ, regarding origins of Russia investigation and FBI operation into Clinton Patrick Byrne (Credit: public domain)
''Overstock CEO Patrick Byrne delivered to the Department of Justice a number of documents, including emails and text messages, in April, regarding both the origins of the Russian investigation, and an FBI operation into Hillary Clinton with which he was personally involved during the first months of 2016, according to a U.S. official who spoke to SaraACarter.com.
Byrne has also confirmed the account.
Byrne claims the documents, which have not been made public and are currently under investigation by the DOJ, are allegedly communications he had with the FBI concerning both the Clinton investigation and the origins of the Russian investigation. SaraACarter.com did not review the documents, which are now under review by law enforcement.
He approached the DOJ and met with lawyers on April 5th and 30th. The first meeting was without counsel in Washington D.C. A source directly familiar with the interviews confirmed Byrne's account of the meetings.
DOJ officials said they could not comment on Byrne's allegations.
''I gave to the DOJ documents concerning both the origin of the Russian probe and the probe into Hillary Clinton, both of which I was involved in, and both of which turned out to be less about law enforcement than they were about political espionage,'' Byrne told SaraACarter.com Monday.
He noted that the communications will prove that the FBI also had an operation into Clinton Foundation that he was directly involved in.
''This is going to become the greatest political scandal in US history,'' he said.
''If we survive it, and if Rule of Law returns to America, it will be due to one man: Bill Barr.''
Several weeks ago, FBI officials told SaraACarter.com that they declined to comment on Byrne's allegations.
Byrne said the investigation into Clinton was one of the main reasons he came forward. This reporter first published Byrne's story about his relationship with now convicted Russian gun right's activist Maria Butina. She pleaded guilty in 2018 for failing to register as a foreign agent in the U.S. and is now serving out her sentence, which ends in October.
Byrne's claims regarding the Clinton Foundation investigation are not without parallel. According to numerous officials the FBI had an ongoing investigation. Whistleblower and former government informant William Campbell was interviewed in 2018, by bureau agents from the Little Rock, Arkansas' field office. According to Campbell, who first spoke to this reporter in 2017, he was asked by FBI agents whether donations to the Clintons charitable organization from Russia were used to influence U.S. nuclear policy during the Obama Administration. Specifically, he was asked about the sale of 20 percent of Uranium One.
As also reported in 2018, by John Solomon with The Hill, the ''agents questioned him extensively about claims the Russians made to him that they had routed millions of dollars to an American lobbying firm in 2010 and 2011 with the expectation it would be used to help President Clinton's charitable global initiative while major uranium decisions were pending before Hillary Clinton's State Department.''
Byrne, told SaraACarter.com that the FBI was also investigating Clinton's charitable organizations in the first half of 2016, and that he was directly involved in one of the operations being conducted by the FBI. He did not give details regarding the operation saying but said it directly dealt with Clinton and whether or not there was pay for play.
On Monday, Byrne appeared on Fox Business Network with David Asman, revealing his claims about the Clinton investigation.
''I ended up in the center of the Russian and the Clinton investigations,'' said Byrne.
''I have all the answers. I have been sitting on them waiting for America to get there. Last summer I figured out'... what they all are is all about political espionage. It had nothing to do with law enforcement, it was all political espionage. Here's the bottom line. There is a deep state like a submarine lurking just beneath the waves of the periscope depth watching our shipping lanes. And a nuclear icebreaker called the USS Bill Barr has snuck up on them and is about to ram midship.''
''That's about to happen and I think we're about to see the biggest scandal in American history as a result. But it was all political. Everything you think you know about Russia and Clinton investigations is a lie,'' Byrne told Atman.
''It's all a cover-up. It was all political espionage.''
Connecticut attorney John Durham, who has been appointed by Justice Department investigator Attorney General William Barr is probing the FBI's handling of the investigation into Russia probe, and according to several sources is investigating the full extent of Byrne's claims and the documentation he provided in April. (Credit: Zero Hedge, 8/12/2019)
(11) Tom Fitton on Twitter: "Wray FBI wants to stall until well after next presidential election before completing release of emails/texts between corrupt FBI officials Peter Strzok and Lisa Page. 26 months for 13,000 pages!? @RealDonaldTrump should order
Sun, 25 Aug 2019 15:00
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Epstein
Epstein Partied With Chris Cuomo & Others At David Koch's House, After Release From Prison
Sat, 24 Aug 2019 04:53
Is this why CNN's Chris Cuomo said ''who cares'' about who was ''better friends'' with Jeffrey Epstein?
According to reports, the pedophile billionaire was invited to a party at David Koch's house in September, 2010 '' just months after Epstein had been released from prison.
Why would David Koch invite somebody who had been accused of multiple sex crimes involving young girls to his party?
According to The Daily Mail:
Jeffrey Epstein hobnobbed with high-profile guests from the worlds of politics, banking, Hollywood and philanthropy at a Hamptons party just two months after his release by the state of Florida for soliciting a minor.
Photos from a 2010 dinner party at the home of David and Julia Koch obtained by DailyMail.com show Epstein as he chats with guests after a screening of Wall Street: Money Never Sleeps.
Among those guests were two men who currently serve in President Trump's cabinet and his most trusted legal adviser.
Steve Mnuchin and his then-wife Heather, Rudy Giuliani and his then-wife Judith and Wilbur Ross all attended the screening and dinner that followed at the Koch's.
Well, David Koch IS in Jeffrey Epstein's black book'...Including his home number'...https://t.co/747PycLMvW
'-- random facts girl. (@soychicka) July 22, 2019The Wall Street Journal wrote about those who attended the event a few days later, and in the piece noted that Giuliani 'walked out of the theater around the same time as Jeffrey Epstein, leading one observer to remark on the ''beautifully done meeting of the prosecutor and the felon.'''
The party that night was also attended by designers Tory Burch and Tamara Mellon, billionaires Henry Kravis and Steve Schwarzman and publicist Peggy Siegal.
She has admitted to helping Epstein out, and in an interview with The New York Times said: 'I was a kind of plugged-in girl around town who knew a lot of people. And I think that's what he wanted from me, a kind of social goings-on about New York.'
Siegal also said in that interview that she was not paid by Epstein and he did not go to parties, choosing to skip them after screenings.
That was not the case at this party however, where he was seen in deep conversation with close friend Jonathan Farkas in one photo, and in another seemed to be standing next to one of his former female employees.
The Journal story asked guests about the criminal elements of the Wall Street sequel at the party, prompting one individual to note: 'You know, you have to be a little careful what you say and ask here, because there are a lot of guys in the room who spent some time in prison, too.'
Informationliberation.com reports: Here's how Page Six reported it in 2010:
Why would David Koch invite Epstein to this party two months after he was released from prison for soliciting a minor and accused of a multitude of sex crimes involving young girls?
As noted above, his name shows up in Epstein's little black book:
How much partying did he and Epstein do together?
One has to wonder if Koch's relationship with Epstein is the real reason he and his brother are such loyal servants of the powers that be.
Was Aaron Swartz Killed By An MIT Satanic Child Porn Ring?
Sat, 24 Aug 2019 04:54
Let us start by dismissing the prosecution's ludicrous charge that any programmer as talented as Aaron Swartz would dedicate his life to stealing an archive that dispenses its academic papers for a few dollars apiece to the public or for free to students under department accounts. MIT professors, who are so full of themselves, are the only ones who might take seriously such a fool's errand as a worthy objective for the brilliant and rebellious Swartz or the law suit as the cause of his so-called ''suicidal depression.'' The mass media have been fed, and eagerly swallowed, the unpalatable lies hurled against a courageous young man whose guilt lies solely in his disgust at the online filth from ''respectable'' Internet paragons who have deviously corrupted the morals of his generation. America's leading center for computer science has unleashed a campaign of slander against Swartz, who cannot defend himself through the media or in the docket now that he is dead.
My personal regret is that he had to act alone without the guidance and support of those faraway people including myself who have been fighting against the same vile pedophile elite. In American society where tens of thousands of children disappear every year without any serious investigation or public concern, the young man assumed the burden of justice on his own and paid the ultimate price for it. Using the JSTOR issue as a mere cover for his covert investigation into MIT wrongdoing was an immature tactic, which now undercuts his reputation postmortem.
As a traditional journalist and editor, I have never before supported Anonymous and their hacking activity, but the untimely death of Swartz changes the rules of engagement. Striking at the nerve center of the military-corporate-pharmaco-porno complex is an ethical duty not a crime, one of few available means to defend constitutional law. To the morally reprobate professors and administrators at the Massachusetts Institute of Technology, I say unequivocally: You have started a war that will end when you fall on your swords.
The Culprit is MIT not Swartz No, it is not Aaron Swartz who should be on trial but that lofty institution of hired learning, MIT, which is responsible for the heinous crimes that led to his death. The risks taken on by Swartz, which so have threatened MIT, can be understood only through the issue of child porn as orchestrated and produced by its acclaimed professors and distributed to their wealthy and powerful sponsors. The MIT cyber-pimps cater to a clientele that includes the highest echelon of the State Department, major corporations, intelligence agencies, the military brass, and the White House.
Every element in the Swartz case indicates that he died in a heroic attempt to expose the perversion that has corrupted the hearts and minds of the global elite, a heinous and often murderous vice that traumatizes innocent children and threatens every family on this planet.
This exposition of the facts is a torturous path that leads from the hallowed ivy halls in Boston to the outskirts of Phnom Penh, where a world-famous professor arranged underage sexual services for visiting dignitaries and sent encrypted child porn via satellite to illicit databases on the MIT campus.
Nicholas Negroponte, you have no place to hide in Southeast Asia or Africa, not any longer. You are under watch and will be relentlessly tracked down, not just for child porn and pimping children but now as an accomplice to murder. Your only way out is to turn over the video files along with the entire list of names, and you had better do it sooner than later because the powerful pedophiles on that list are going to silence you to cover their own tracks.
A Telltale Security Tape The security video that triggered hacker Aaron Swartz's indictment, to the contrary, exposes the criminal activities of his adversaries at MIT in the events that led to his death by hanging.
Some highlights from that video clip include:
- his slim physique, a waist size of no more than 30 inches, a short length that makes it practically impossible to hang himself with a belt, as reported by the Brooklyn police.
- a bicycle helmet held up to cover his face, meaning Swartz was cognizant of the surveillance camera inside the computer-routing and wiring closet on the MIT campus. On an earlier entry into the closet he was videotaped without the helmet and must have noticed the hidden camera at that time.
- the steel rack stacked with routers and at least one server into which he had plugged a laptop for a download, which required an extraordinary amount of time, indicating that the content was high-quality video and not documents.
- his trespass was a physical ''break in'' or walk in, which indicates the targeted server could be accessed only via a dedicated line and not with a hack. A dedicated line indicates the transfer of illegal content to strong encryption.
MIT Has No Proprietary Right to JSTOR
The videotape of Swartz's download led to the MIT complaint that spurred a federal prosecutor in Boston to indict him for pirating online journals distributed by JSTOR, a subscription-based electronic archive of scholarly papers. The charges are patently absurd.
Why would a so-called notorious hacker bother with redistributing journal articles that can be purchased at nominal cost or gained for free by students with a department account?
Unlike the Wikileaks trove of diplomatic cables, none of the papers are classified or contain state secrets.
Why didn't he simply hack into the main JSTOR archive, whose files are accessible in bulk online from dozens of universities?
Swartz was a research fellow with the Safra Center for Ethics at Harvard, which also has an institutional account with JSTOR. Given his street cred and past associations, he could have easily found a webmaster with the password to the JSTOR server.
How can MIT, which is not the owner of the allegedly accessed material, file theft charges against him?
The JSTOR archive is not owned or based at MIT, as media reports suggest, but is registered at the Network Connections server farm in Herndon, Maryland. JSTOR is under the control of a nonprofit organization called ITHAKA, whose board of directors includes top university administrators and the W.W. Norton book publisher. The trespass (into a tiny closet) was done at MIT, but ITHAKA, the party with proprietary rights over the JSTOR intellectual property, does not appear as the chief plaintiff. (Analogy: Whenever a car is stolen from a parking lot, the car owner and not the car hop is supposed to file charges against the thief.)
MIT obviously has something to hide.
When Internet Vigilantism Becomes Necessary The mass media attributes the alleged ''suicide'' by short belt to ''depression'' without conducting any investigation into why Swartz might have been depressed. Article after article also describes him as a ''co-founder of reddit'', as if he was one of the principle partners who owned the bulletin board, which was later sold to Conde Nast and operated by its subsidiary Wired magazine. His employee stock option in the company is a normal practice in the tech start-up field.
Swartz complained about relocating to the San Francisco offices of Wired for a routine job that he dreaded. There was obviously more to his bleak mood at the corporate-run reddit. Since he was not estranged from his parents and had an intelligent and attractive girlfriend, his foul mood seems to have arisen from professional concerns.
What would a decent family-oriented youth find so disturbing about working at corporate-controlled reddit? The bulletin board had gained profitable notoriety for its sub-edit groups that promoted discussion and images on underage sex, snuff porn, violent rape of adolescent girls, incest and abusive language. The crudest reddit posts came from the Internet's most disgusting troll, Violentacrez, who was later exposed as then 49-year-old Texas-based programmer Michael Brutsch, a former soldier with a wife and children.
Whenever a person of sound mind and intact morality tries to go against the child-porn rings that are hiding in plain sight on the Web, he or she learns hard lessons fast. The child-porn pimps are well-organized, highly maneuverable into new websites, massively funded and deeply connected to regulators and law enforcement. These demented monsters are capable of making vicious threats and meting out brutal revenge against their critics. Invariably, the child-porn providers get away to start up again. Only insignificant subscribers are ever arrested in FBI and police round-ups, indicating higher-up protection for the pedophile crime bosses.
Pedophiles at MIT Media Lab The road from Boston ends outside Phnom Penh. From 2003 till 2009, I worked on-and-off in Cambodia with an international team of anti-pedophilia activists, who were volunteers and all of them fathers. The team came to Cambodia following up on a slew of leads, including photos of naked infants taken by Newsweek Tokyo bureau chief Bernard Krisher on display at the Foreign Correspondents Club of Hong Kong, a den of pedophiles connected with the Jimmy Savile case. Former British Governor of Hong Kong, Chris Patton is now widely suspected as a high-level protector of the satanic BBC rapist and his old-boy circle. The FCCHK canceled a rented room for an anti-pedophile seminar for which I was one of the invited speakers.
Lionized by CNN and TIME, Krisher is the publisher of the English-language Cambodia Daily, whose staff was hostile to our presence in Phnom Penh. Earlier, I had known of Krisher's visits to North Korea, supposedly to provide food relief, when in fact he was visiting orphanages in the secretive dictatorship to select children for overseas ''education''. In that same period, from the late 1980s throughout the 1990s, ''Chinese'' orphans were arriving at Boys Town in Nebraska, which became entangled in a scandal involving Senate pages supplied for underage sex services.
Foreign NGOs, including ''child-protection'' groups, were rabidly opposed to our team's direct-action methods, which included supplying night-vision videocams to the Cambodian police for nighttime stakeouts outside the premises of known child-sex brothels. Anyone who thinks that habitual pedophiles can be stopped with billboards and television commercials has not a clue. On several occasions, I came close to fist fights to prevent foreign men from taking the motorcycle ride to the countryside outside Phnom Penh, where Vietnamese girls as young as 7 were being dolled up with make-up and offered to the highest bidder.
When two of our team members, Caucasian fellows, tried to walk up a road that led to an orphanage ''helped'' by Krisher (according to staff pocketed the donations), they were blocked by Cambodian policemen wielding submachine guns. We then met with American-educated parliamentarians, who supported our campaign but said our effort was near hopeless since Southeast Asian refugee children are preyed upon back in the USA, where law enforcement was supposedly less corrupt than in Cambodia.
A Royal Decree After several foreign pedophiles were arrested and convicted on the basis of videotape evidence, the foreign community in Cambodia turned against our team in rage. Alarmed, diplomats at the embassies of the United States, Britain, France, Australia, New Zealand and Japan launched investigations against our team members on any minor charge they could dig up in their home countries.
Meanwhile, the pedophile community was panicked because some of their members agreed to have a beer with our teammates to discuss the impact of the arrests. One employee of an NGO was murdered, and the blame was pinned on our resident team member, who later was brutally injured and nearly killed in a staged accident. The local politicians were starting to worry about the war inside the expat community.
Then, finally, the big break came, like the first storm that ends a dry season. Queen Monica, the wife of the late King Sihanouk, put the troubled orphanage under her royal protection. The Cambodian police shut down the orphanage's satellite-link tower, which was being used to uplink child-porn videos and connect American pedophiles to their little sweethearts.
The teachers told me that computers and satellite communication system were installed and maintained by Nicholas Negroponte, the founder of the MIT Media Lab. ''Nick was a frequent visitor and one of the orphanage sponsors who arranged the weekend pajama parties in the city whenever foreign VIPs arrived,'' a teacher told me. ''Since he gave us the computer equipment, our staff was in no position to say no. The average age of the abused orphans was 10 years old.''
Following the royal intervention, Bernie Krisher flew into Thailand to attend the opening of another orphanage, where he got a tap on the shoulder from the national chief of police. He was told to leave on the next plane out of Cambodia. Professor Emeritus Negroponte, however, continues his duplicitous role in Asia and Africa due to his connections in the Ivy League and his wealthy donors. He lives on embezzled money and borrowed time. He's due for permanent retirement.
One Laptop, One Child Abuse The ''One Laptop per Child'' project was initiated by the MIT Media Lab founder, who is the brother of former UN ambassador and intelligence official John Negroponte. The Zionist brothers have family origins in the Jewish community of Greece.
A quick look at MIT Media Lab reveals some questionable characters at the helm.
- Negroponte's major promoter and sidekick has been Steward Brand, who evolved from being a back-to-nature founder of the Whole Earth Catalog to a raving advocate of ''nuclear power, genetic modification and geoengineering''. (Let's hope he relocates to Fukushima where he can personally enjoy all three wondrous advances.)
- Walter Bender, founder of Sugar Labs, which developed the One Laptop per Child project's XO-1 Children's Machine, the communication tool of choice for pedophiles to communicate with their little brown lovers.
- Frank Moss, who was trained at the Technion Institute in Haifa, a center for the Israeli Defense Force's cyberwarfare R&D projects. The Media Lab itself is heavily involved in military-related projects with the US Air Force, the Space and Naval Warfare Systems Center, the Army Research Office and Google, which is a high-tech contractor in artificial intelligence for DARPA.
- Joi Ito, who once ran a nightclub in Roppongi, Tokyo's drug-peddling and prostitution district run by a yakuza boss whose interest lies in Caucasian models performing coprophilia and bondage, increasingly favorite video themes besides child porn among the American university technocrati. Since he never earned a higher degree, Ito's main qualification is apparently his status as godson of Timothy Leary. For those who were/are too stoned to comprehend political reality, Leary began his drug experimentation as a psychologist for the MK-ULTRA mind-control program and became a proselytizer of hallucinogens under a CIA psy-op campaign to disable the antiwar movement.
MIT Media Lab is yet another spin-off from the all-powerful MK-ULTRA and DARPA. No wonder it's been producing child porn and involved in overseas pedophilia. The One Laptop program is a clever vehicle to provide early sex education to children across impoverished Asia and Africa who have yet to reach pubescence.
A Disturbing Pattern As in the campaign of character assassination that led to the downfall of Eliot Spitzer, the assault on Aaron Swartz is another example of a crusading American Jewish individual being persecuted, punished and likely executed by their Zionist ''brethren''. Swartz's death by hanging is a microcosm of the sort of brutal mafia enforcement within the Jewish ''community'', which unfortunately has gone nearly unreported in the Zionist-controlled media.
Swartz was a research fellow at the Edmond J. Safra Center for Ethics, which is based at Harvard and in Israel. This much-needed program was organized by Lily Safra, the plucky spouse of a Syrian Jewish banker who died in a mysterious arson on his mansion in Monaco. The Brazilian-born widow later survived her own ordeal of false accusations of murder from a transsexual novelist, writing apparently on behalf of the actual perpetrators.
Edmond Safra was a banker for the Aleppo Jewish community, which over the millennia has been renowned for scholarship and good relations with Muslim and Christian neighbors. The Aleppo synagogue, until its destruction by Arab rioters enraged at the declaration of Israeli statehood in 1949, was the center of traditionalist Sephardic moral resistance to the secular, authoritarian and Eurocentric Zionists led by the Rothschild clan.
The Zionist killing of dissenting Jews was a policy of the Haganah militia. The newborn Israeli state, under President Yitzak Ben-Zvi, a leader of the Rothschild-backed Haganah, ordered the extrajudicial execution of outspoken Dutch Jewish activist Jacob de Haan, who proposed that Jews should support a non-religious state of Palestine shared with Arabs, instead of endorsing the bigotry of a separatist entity. The Israeli propagandists have since vilified the victim's anti-Zionist views as arising from a homosexual attraction to Arab men. How low into the gutter can they stoop?
To conduct ethnological studies on Near Eastern Jews with the aim of gaining their submission to Zionist authority, Ben-Zvi ordered the Aleppo community, which was one of the longest established Jewish cultural centers, to surrender its Aleppo Codex, the most accurate manuscript of the Hebrew Bible. Despite opposition from the scholars of Aleppo, the Codex was delivered to Tel Aviv. The teachings of Moses, known as the Torah, were missing, however, and probably for good reason.
The Aleppo Torah is critically important to the traditionalists because the Mosaic perspective affirms the God-ordained role of the Jews as a stateless people guided by prophets and not subjects of worldly rulers, especially their own. Obviously, the Syrian Jewish scholars were worried about the possibility of an alteration of the text to support the statehood claims of modern Zionism. The fact that the ancient city of Aleppo is now being leveled to the ground is no fluke of history, it is the inevitable consequence of the systematic destruction of the Mideast by Zionist ambitions.
There is a moral parallel between the resistance of the Aleppo scholars with the life and death of Aaron Swartz, a young American Jew who dared to stand against the degraded and dumbed-down mass culture of corporate-controlled Internet, which should have been a realm of free inquiry and serious thinking. It is recurrent tragedy that the Jewish people so rarely stand by their prophets and instead bow down before tycoons and tyrants. Then and now, from the Egyptian tribulations to the destruction of the peaceful Sephardic Jewish communities and today's fabrications from MIT, truth is being trampled on while decadence, deceit and corruption thrive.
In Memory of Sean Parlaman One does not have to be a Jewish scapegoat to suffer character assassination and false charges. Another young American, Sean Parlaman, who ''fell'' from a high-rise window in Pattaya, Thailand, in 2002, was the leading anti-pedophile activist of his generation. Like Swartz, he was falsely accused by his foes, in his case with the preposterous charge of engaging in sex with an underage police informer he had met in a jail cell. Soon thereafter, the notoriously corrupt Pattaya police came to serve him with an arrest warrant, and it was they who reported that he had leapt out a window to his death.
While facing death threats and vilification from the entrenched foreign pedophile network in Thailand (his Wikipedia biography is pure slander written by the perverts), Parlaman started investigating child-trafficking across the Burma border. Along that militarized frontier, the Mossad and CIA under the cover of refugee aid programs have continuously smuggled in weapons and explosives, used for killing civilians in Myanmar, in exchange for opium and children. It is an injustice indeed that Sean did not live to see the 2009 police arrest of the politically connected second-generation Baptist missionary Robert Moss, aka Bobby Morse, on charges of sex with preteen tribal girls. At least, Parlaman is vindicated.
The pedophiles have been able to abduct, abuse and sometimes murder children across Southeast Asia because of protection from U.S. embassies in the region. The unofficial but widely recognized dean of the criminalized diplomats is Ralph ''Skip'' Boyce, former ambassador to Jakarta and later to Bangkok. It was during his tenure in Thailand that Negroponte and Krisher set up shop in neighboring Cambodia. It was earlier during his years in Indonesia that the skeletal remains of more 50 boys were discovered inside a cave in Bali. Anti-pedophile activist call him Ralphie Boyz. This sorry excuse for an ambassador later left diplomatic service to head Boeing in Southeast Asia, a region known for kickbacks in military and civilian aircraft sales.
Once upon a time a dedicated American activist in Thailand and now a bright kid on the East Coast, it is always the decent idealists who die too young, their legacy disparaged. Even though the culprits find shelter behind the ivory tower of MIT or the protective gates of a permissive State Department, the pedophiles will be brought to justice, one way or the other. For the children to live, the predators must be destroyed.
Yoichi Shimatsu, former editor of the Japan Times Weekly, is a science journalist based in Hong Kong.
Jeffrey Epstein taken off suicide watch after examination by 'doctoral-level psychologist,' DOJ says | Fox News
Sat, 24 Aug 2019 19:38
Disgraced financier Jeffrey Epstein was taken off suicide watch after being examined by a ''doctoral-level psychologist'' days before he hanged himself in his prison cell, according to the Justice Department.
The disclosure was made in a letter addressed Thursday to House Judiciary Committee Chairman Jerry Nadler, D-N.Y., and ranking member Doug Collins, R-Ga. The letter was obtained by Fox News on Friday.
FRANCE TO INVESTIGATE RAPE CHARGES LINKED TO JEFFREY EPSTEIN CASE
''The Department can confirm that Mr. Epstein was placed on suicide watch in July,'' Justice Department official Stephen E. Boyd wrote. ''Mr. Epstein was later removed from suicide watch after being evaluated by a doctoral-level psychologist who determined that a suicide watch was no longer warranted.''
Epstein was found unresponsive in his cell at the Metropolitan Correctional Center in Manhattan, N.Y., on Aug. 10, as he awaited trial on federal sex trafficking charges involving underage girls. He had been placed on suicide watch weeks earlier, on July 23, after he was found on the floor of his cell with bruises around his neck.
Both the FBI and the Justice Department's inspector general are investigating the circumstances surrounding Epstein's death.
''Although Mr. Epstein is deceased, the department's case against anyone who was complicit in his alleged crimes will continue,'' the DOJ's letter said.
Epstein's ability to take his own life while incarcerated at one of the most secure jails in America ended the possibility of a trial that could have involved prominent figures and sparked widespread anger that he wouldn't have to answer for his alleged crimes.
Since Epstein's death, Attorney General William Barr has removed the director of the federal Bureau of Prisons and appointed a new director and deputy director. The jail's warden has been reassigned to a desk post at a regional office and two guards who were supposed to be watching Epstein the night he died were placed on administrative leave.
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Meanwhile, on Friday France announced it had opened an investigation into the alleged rape of minors and a raft of other charges linked to the Epstein case. Epstein had a home in Paris and was arrested in early July after arriving at New Jersey's Teterboro Airport from the French capital.
Epstein had pleaded not guilty to sexually abusing girls as young as 14 and young women in New York and Florida in the early 2000s.
His lawyers maintained that the charges were nullified by a non-prosecution agreement he reached with the federal government when he pleaded guilty in 2008 to state charges of soliciting a minor for prostitution. Under that agreement, besides serving 13 months in jail, he was required to reach financial settlements with dozens of his alleged victims and register as a sex offender.
Fox News' Jake Gibson, Bill Mears and Samuel Chamberlain and The Associated Press contributed to this report.
Amdocs - Wikipedia
Sat, 24 Aug 2019 16:21
Amdocs (Hebrew: אמ×'×•×§× 'Ž) is a multinational corporation that was founded in Israel and currently headquartered in Chesterfield, Missouri, with support and development centers located worldwide. The company specializes in software and services for communications, media and financial services providers and digital enterprises.
History [ edit ] The company was founded in 1982 in Israel as an offshoot of Golden Pages, the Israeli phone directory company, which was owned by the Aurec Group headed by Morris Kahn.[3] Together with others at Golden Pages, Kahn developed a billing software program for phone directory companies and with Boaz Dotan established a company called Aurec Information & Directory Systems to market this product.[4][5]In 1985, Southwestern Bell Corporation acquired a 50 percent ownership share of Aurec Information & Directory Systems, and its name was changed to Amdocs. Within two years, the Aurec Group sold off all its holdings in Amdocs for almost US$1 billion.[4]
Between 1990 and 1995 Amdocs took its initial diversification steps, expanding first into the wireline telephony arena and then the mobile space. Over the years, Amdocs has continued to expand its product and services offerings. The company went public on the New York Stock Exchange in June 1998, moving to the NASDAQ Global Select Market in 2014.[4]
On September 7, 2016 Amdocs launched Amdocs Optima, a new division geared towards providing its customer care solution for digital enterprises with less than 10 million subscribers and MVNOs/MVNEs.[6]
CEO Timeline
In 1982, Boaz Dotan became Amdocs' first President and CEOIn 1995, Avi Naor replaced Boaz Dotan as President and CEO of AmdocsIn 2002, Dov Baharav replaced Avi Naor as Amdocs' President and CEO.[7]In November 2010, Eli Gelman replaced Dov Baharav as Amdocs' President and CEO.[8]In October 2018, Shuky Sheffer replaced Eli Gelman as Amdocs' President and CEO.Controversy [ edit ] Amdocs' broad access to U.S. telephone transaction records has raised counterintelligence concerns in the U.S. government about the vulnerability of this information to exploitation by Israeli spies.[9][10][11] "As early as 1999, the National Security Agency issued a warning that records of U.S. government telephone calls were ending up in foreign hands '' Israel's, in particular."[12]
In early 2000, federal agencies conducted a counterintelligence investigation to determine if Amdocs was being used by Israel to eavesdrop on U.S. government communications. The investigation found no evidence of such activity.[13]
See also [ edit ] Amdocs (Israel) Ltd. v. Openet Telecom, Inc.VOIP telephonyIsraeli spywareReferences [ edit ] ^ "Amdocs Website". Amdocs.com . Retrieved 26 January 2013 . ^ Habib-Valdhorn, Shiri (13 December 2018). "Amdocs sees revenue growth in next three years". Globes . Retrieved 13 December 2018 . ^ "#937 Morris Kahn". Forbes.com. 12 February 2010 . Retrieved 26 January 2013 . ^ a b c Georgi, Anat; Grimland, Guy (9 May 2011). "Confessions of a 'start-up junkie ' ". Haaretz . Retrieved 12 May 2011 . ^ "AIG's Joint Venture Insurance Company In Israel Receives License To Market Life Insurance". 9 June 1999. [permanent dead link ] ^ "Amdocs Introduces Amdocs Optima, Expanding its Value Proposition to Midsized Communication Businesses and Digital Enterprises". www.amdocs.com . Retrieved 7 September 2016 . ^ "Dov Baharav to Succeed Avi Naor as President and CEO of Amdocs Management Limited - Eff. Oct 1, 2002; Naor to Become Vice Chairman of the Board", Business Wire, 13 March 2002 ^ "Amdocs Announces Eli Gelman to Succeed Dov Baharav as President and CEO in Early Calendar 2011", PR Newswire, 6 September 2010 ^ "Fox News Series On Israeli Spying In America". www.rense.com . Retrieved 25 June 2017 . ^ NoTimeToStray (28 February 2013), The Notorious Banned FOX 9-11-2001 News Footage Israeli/Mossad Links , retrieved 25 June 2017 ^ "Despite Coverup, Israel Caught Spying in Washington Again". Washington Report on Middle East Affairs . Retrieved 25 June 2017 . ^ "An Israeli Trojan Horse". CounterPunch. 27 September 2008 . Retrieved 25 June 2017 . ^ Johnston, David (6 May 2000). "Israeli Spy Inquiry Finds Nothing, Officials Say". The New York Times . Retrieved 5 October 2017 . External links [ edit ] Media related to Amdocs at Wikimedia Commons
Official website "Smith Micro and Amdocs Complete ANDSF Interoperability Tests for Seamless Wi-Fi Access and Traffic Optimization".
The Child Prostitution Sex Ring Involving the Bush Whitehouse
Sat, 24 Aug 2019 16:05
HOMOSEXUAL CHILD PROSTITUTION RING INVOLVING GEORGE BUSH SR.ARCHIVE OF PUBLISHED ARTICLES OF YET ANOTHER OF MASSIVELY SUPPRESSED STORY INVOLVING THE FAMILY WHO IS ABOVE ALL LAWS - THE BUSHES
In the high stakes world of global politics, it is common practice to procure sexual favors in the hopes to gain leverage or to gain power through blackmail. It's done all the time. The Soviets did it. The Americans do it, and many other countries as well. This following is the bizarre and very real child sexual prostitution ring involving the Republican elite of Washington. And the trail leads right up to George H. W. Bush. Read the chilling story.
KARLYN BARKER, WASHINGTON POST,JULY 24, 1990: The alleged leader of what authorities have called the largestmale prostitution operation in the Washington area surrendered to federal agentsyesterday and pleaded not guilty to racketeering charges that have been filedagainst him and three alleged accomplices. Henry W. Vinson, 29, of Williamson,W.Va., a coal miner's son accused of setting up the homosexual escort service,was arraigned in U.S. District Court here yesterday afternoon after turninghimself in to Secret Service agents . . . At a news conference after thearraignment, [U.S. Attorney Jay] Stephens said the investigation into thealleged prostitution ring "is concluded" and that the indictment,which was unsealed yesterday, focused on those who allegedly set up the ringrather than on clients who reportedly patronized it. Asked about earlier reportsthat some of those clients included high-level officials in the Reagan and Bushadministrations, Stephens said the investigation had not revealed"additional conduct which suggests criminal conduct on behalf of otherpeople." . . . The Vinson case provoked additional notice after TheWashington Times published reports last summer suggesting that the allegedprostitution ring had been patronized by government officials. The Times namedas clients several low-level government employees and Craig J. Spence, aWashington lobbyist and party-giver who, the paper said, took friends andprostitutes on late-night tours of the White House. Spence was found dead in aBoston hotel room last fall, and authorities ruled his death a suicide . . . Todate, however, investigators have disclosed no evidence linking any high-levelgovernment official to the escort service.
THE ARTICLES BELOW CHRONICLE THE VERY REAL BEHAVIOR OF THE POWER ELITE IN AMERICA
"MINGO MESS BAFFLING TANGLE" The Charleston Gazette, Editorial; Pg. P4A, July 03, 1997.In which we hear of the appointment of a coroner who had been convicted of bribery and who supposedly had been married to a Henry Vinson, a mortician who had operated a "call boy" service utilized by White House officials
This is the hook into a long story.
We now turn to some news stories that appeared in the Washington Times more than a decade ago, but apart from a few having to do with Barney Frank, these stories have never generated much attention. We then recover as full a story as can be constructed from accounts in the press, in chronological order.
"'CALL-BOY' SERVICE PROSPERS USING HIGH FINANCE, HIGH TECH," Paul M. Rodriguez and George Archibald , The Washington Times, June 20, 1989In which we see Henry Vinson's name first surface, along with Robert Chambers, a funeral director, who operated a call boy network that laundered money through umbrella organizations in the District of Columbia area, Florida, Kentucky and West Virginia.
"POWER BROKER SERVED DRUGS, SEX AT PARTIES BUGGED FOR BLACKMAIL," Michael Hedges and Jerry Seper, The Washington Times, June 30, 1989In which we learn of Craig J. Spence, who arranged midnight tours of the White House, threw lavish parties for the famous and powerful where cocaine was generously served, spent $20,000 a month on male prostitutes from a D.C. prostitution ring, and bragged of connections to the CIA, whom he worried might kill him and then make it look like a suicide.
"RNC CALLS SCANDAL A 'TRAGIC SITUATION,'" George Archibald and Paul M. Rodriguez, The Washington Times, Friday, June 30, 1989In which we learn of the resignation of an aide to Secretary of Labor Elizabeth Dole, and of the reaction of Rep. Barney Frank, who is "not surprised" by the revelations.
"White House mute on 'call boy' probe," Frank J. Murray, The Washington Times, July 7, 1989In which we learn that President Bush followed the story, and that a Uniformed Division officer of the Special Service, Reginald deGueldre, arranged the midnight White House tours for Craig Spence and two male prostitutes, and was moonlighting as Spence's bodyguard.
"Spence was target before raid on ring," Jerry Seper, and Michael Hedges The Washington Times, July 10, 1989In which we learn that Craig Spence brought a 15-year old boy on at least one of his midnight tours of the White House, that Spence asked detailed questions about the Delta Force operations, that he partied with former U.S. Attorney Joseph diGenova and his wife, Victoria Toensing, and that he bragged of having blackmailed a high-ranking Japanese politician, Motoo Shiina.
"Spence ma[y] be Shiina's downfall," Edward Neilan, The Washington Times, July 18, 1989In which we hear of the connections between Motoo Shiina, groomed to be a future prime minister of Japan, and Craig Spence: how Spence had made more than $700,000 from Shiina's Policy Study Group, and how Spence had refused to pay back a loan made by Shiina for the purchase of Spence's house.
"First lady not worried about hookers' tour of White House," Paul Bedard, The Washington Times, July 10, 1989In which we learn that First Lady Barbara Bush was not concerned about the security questions raised by midnight White House tours, but did think it good that the Washington Post had not followed the Times' story.
"Secret Service furloughs third White House guard ," Jerry Seper, and Michael Hedges, The Washington Times , July 26, 1989In which we hear that, contrary to earlier White House claims, 1 a.m. tours were "totally out of the ordinary." We also learn that Spence introduced a 15-year old boy to Ted Koppel in the Nightline studio right before one of the tours.
"SEX PARTY HELD AT AUSSIE EMBASSY 'WE'RE NOT TALKING CROCODILE DUNDEE HERE,'" Michael Hedges and Jerry Seper, Washington Times, July 28, 1989In which a woman who worked for one of the prostitution rings linked to Spence claimed she worked a party held at the Australian embassy. She also claimed that one of her military clients told her Spence was blackmailing him.
"SPENCE ELUSIVE, SAID TO BE EVERYWHERE BUT ISN'T," Jerry Seper and Michael Hedges, Washington Times, Thursday, August 3, 1989In which we learn that Spence has disappeared, but has told his friends not to take any account of his death at face value. We also discover that Ted Koppel is a longtime friend, and that the Special Service is not as interested in credit card fraud as they are in Spence's military and political connections.
"SPENCE ARRESTED IN N.Y., RELEASED BIZARRE INTERVIEW IS NO NIGHT ON THE TOWN," Jerry Seper and Michael Hedges, Washington Times; August 9, 1989In which Craig Spence is interviewed and speaks of his own death and of the connections he had to powerful people who will pretend never to have known him.
Spence arrested in N.Y., released; Once-host to powerful reduced to begging, sleeping in park, Michael Hedges, and Jerry Seper, The Washington Times, August 9, 1989.More from Craig Spence's interview. Highlights include his hint that Donald Gregg arranged the late-night White House tours. Spence also speaks of more significant secrets that he plans to take to the grave.
"Sex sold from congressman's apartment: Frank's lover was 'call boy,'" Paul M. Rodriguez and George Archibald, The Washington Times , August 25, 1989.The only story that received much attention. A male prostitute, identified by the alias Greg Davis, entertained clients in the apartment of Rep. Barney Frank. Frank admitted having a relationship with the prostitute, but denied knowledge of the use of his apartment for illicit purposes.
"Sex sold from congressman's apartment: School used as base for sex ring," George Archibald and Paul M. Rodriguez, The Washington Times, August 25, 1989.In which we learn that Barney Frank's call boy also did business in a local public school.
"THE GOBIE STORY: Frank's 'call boy' tells all," George Archibald, and Paul M. Rodriguez, The Washington Times, September 1, 1989.In which Stephen L. Gobie, whose professional name in the underground prostitute trade is "Greg Davis," insists that Rep. Barney Frank knew of the use of his apartment as a base for prostitution. Gobie also reveals that one of his clients was Craig Spence.
"IN DEATH, SPENCE STAYED TRUE TO FORM," Michael Hedges, and Jerry Seper, The Washington Times, Monday, November 13, 1989.Craig Spence is found dead in a Boston hotel room. Near his body is a newspaper clipping that details legislative efforts to protect CIA agents called to testify before government bodies. Friends of Spence reported that he had claimed the CIA used the call boy service to compromise other federal intelligence officials and foreign diplomats. One friend quoted Spence as saying, "Casey's boys are out to get me,"
"SPENCE AS MUCH AN ENIGMA IN DEATH AS HE WAS IN LIFE," Jerry Seper, and Michael Hedges, The Washington Times, November 13, 1989.In which we learn how slow had been the federal investigation into the allegations swirling around Craig Spence. Spence himself had been handed a subpoena more than two months before his death, but was never called to testify. Officials of the Reagan and Bush administrations, identified in The Times as having used the call-boy service, had not even been contacted by law enforcement officials. One witness reported: "They asked me what I thought Spence wanted to know about the Delta project."
"Prostitutes corroborate Frank stories," Paul M. Rodriguez, The Washington Times, February 2, 1990.In which other prostitutes corroborate Gobies' claims that Rep. Barney Frank knew of his use of the congressman's apartment for use as a bordello. Gobie also claims that Craig Spence was one of his clients and had tried to recruit him to help "in a sordid scheme to blackmail the powerful politicians invited to his lavish parties." Gobie claimed that Mr. Spence said to him, "Do you know what kind of power you can have over people if you've got something on them? . . . I need boys and girls for people in government and high-level businessmen for my parties, for individuals, for whatever comes up."
MINGO HIRES CONTROVERSIAL DOCTOR, Maryclaire Dale, The Charleston Gazette; News, July 01, 1997.Returning full circle to the Mingo case, we find the newly appointed medical examiner of Mingo County arguing that the fact that she is a physician argues in favor of her having the position over the previous nominee, a funeral home owner. Shafer argues: "A physician has nothing to gain from a suicide. A mortician does. He would probably process the body for burial," she said. "I don't think it's [the funeral industry] a charity business." Ironically, Shafer's "husband" is Henry Vinson, a former mortician and coroner who is linked, as we saw above, to the child sex ring scandals. We also learn that his lawyer is the legal commentator Greta van Susteren.
MINGO MESS BAFFLING TANGLE The Charleston Gazette Editorial; Pg. P4A July 03, 1997, ThursdayP ERHAPS world chess champion Garry Kasparov (or his nemesis, the Deep Blue computer) would have the mental capacity to keep track of the amazing complexities involving Mingo County public officials. Vinson vowed that he'd never be convicted, because he said his "call boy" service had been utilized by officials of the Moore administration in Charleston and by officials of the Reagan-Bush White House in Washington. Consider:State Sen. Truman Chafin, D-Mingo, was indicted on federal wiretap charges in his messy divorce, but was found innocent.
Former Mingo Sheriff Gerald Chafin - no relation to Truman, and part of a rival Democratic faction - likewise was indicted on federal wiretap charges, supposedly stemming from an attempt to blackmail a "whistleblower" deputy, but likewise was found innocent.
Ex-Sheriff Chafin, a mortuary owner, was appointed coroner by Mingo County's commissioners - but state rules require that coroners be physicians, so he couldn't take the post.
Next the commissioners gave the job to Dr. Diane Shafer of Mingo County, who previously was convicted of bribery in nearby Kentucky. (She had been under investigation in Kentucky for suspected overbilling, but she married the overbilling investigator and gave him $ 42,500. They both were convicted of bribery, and he of bigamy, but the convictions were set aside. West Virginia's Board of Medicine has set August hearings on whether to revoke her license.)
Meanwhile, Dr. Shafer may - or may not - have married a former Mingo coroner, Henry Vinson, who was convicted of running a male prostitution ring in Washington, D.C.
Vinson, also a mortician , had been ousted as Mingo coroner after he was convicted of making harassing phone calls to a rival funeral home director. Then he was accused in a paternity suit. Next he moved to Washington, where he was charged with operating "Dream Boy," a male escort service.
While the Washington investigation was in progress, Vinson "died" and his obituary was printed by newspapers around West Virginia - but his sister in Mingo County said the obit had been phoned to papers as a hoax.
In 1990, Vinson vowed that he'd never be convicted, because he said his "call boy" service had been utilized by officials of the Moore administration in Charleston and by officials of the Reagan-Bush White House in Washington. But the next year, he pleaded guilty and got a five-year prison term.
Now Vinson's sister says she thinks he's married to Dr. Shafer. Reporter Maryclaire Dale (who is white) called Dr. Shafer's office Monday and talked to a man who called himself "Henry Shafer." When she asked if his name is Henry Vinson, he screamed: "Would you like to come and have sex with me, you [racial obscenity]?" Is this another count of phone harassment?
Well, that's just this week's developments in murky Mingo, where public officials have always been bizarre.
Matewan Police Chief Sid Hatfield led strikers in a historic shootout with Baldwin-Felts detectives; Sheriff Johnie Owens "sold" his elected office to another politician for $ 100,000; Kermit Fire Chief "Wig" Preece and his relatives sold drugs from the firehouse - that's public life in the Deep South coal county.
Mingo residents must wonder if they're living in a zoo.
Not for commercial use. Solely to be used for theeducational purposes of research and open discussion.
POWER BROKER SERVED DRUGS, SEX AT PARTIES BUGGED FOR BLACKMAIL Michael Hedges and Jerry Seper The Washington Times; Final Section: A Page: A1 Friday, June 30, 1989C raig J. Spence, an enigmatic figure who threw glittery parties for key officials of the Reagan and Bush administrations, media stars and top military officers, bugged the gatherings to compromise guests, provided cocaine, blackmailed some associates and spent up to $20,000 a month on male prostitutes, according to friends, acquaintances and records. How a man whom even his closest friends describe as a flawed, malevolent personality managed to court Washington's biggest names is a quintessential Washington story. The 48-year-old D.C. power broker has been linked to a homosexual prostitution ring currently under investigation by the U.S. Attorney's Office. Its clients included several top government and business officials from Washington and abroad. Among the clients identified in hundreds of credit-card vouchers obtained by The Washington Times - and identified by male prostitutes and escort operators - are government officials, locally based U.S. military officers, businessmen, lawyers, bankers, congressional aides, media representatives and other professionals.
Mr. Spence's influence appeared unlimited, aptly demonstrated by his ability to arrange midnight tours of the White House, according to three persons who said they took part in those tours.
"It was a show-the-flag time for Craig Spence," said one person who went on a July 3, 1988, tour that included two male prostitutes. "He just wanted everyone to know just how damned powerful he was," said the person. "And when we were strolling through the White House at 1 o'clock in the morning, we were believers."
One man who was on the tour but asked not to be named for fear it would damage his business said it was cleared by a uniformed Secret Service guard whom the man had seen attending Mr. Spence's parties as a bodyguard.
"For once in his life, Craig was doing something nice. We just thought, neat, we get a free midnight tour of the White House," the man said. Another person on the tour said the group walked through all the public areas of the White House and "even took pictures of ourselves in the barber's chair."
After arriving in Washington in the late 1970s, Mr. Spence was hosting parties during the early Reagan years attended by, among others, journalists Eric Sevareid, Ted Koppel and William Safire; former CIA Director William Casey; the late John Mitchell, attorney general in the Nixon administration; conservative activist Phyllis Schlafly; Ambassador James Lilley; and Gen. Alfred M. Gray, the commandant of the Marine Corps.
Arnaud de Borchgrave, editor-in-chief of The Times, went to dinner once at Mr. Spence's home to honor Mr. Lilley.
Efforts to reach Mr. Spence in the past week were unsuccessful. He contacted The Washington Times yesterday in response to a telefaxed message but hung up when queried about his activities.
According to many current and former friends, Mr. Spence was a dangerous friend to cultivate. Several former associates said his house on Wyoming Avenue was bugged and had a secret two-way mirror, and that he attempted to ensnare visitors into compromising sexual encounters that he could then use as leverage.
One man described having a limousine sent to his home by Mr. Spence and being brought to a gathering at which several young men tried to become friendly with him. "I didn't bite; it's not my inclination," the man said. "But he used his homosexual network for all it was worth."
The man, a business associate of Mr. Spence who was on the White House tour, said: "He was blackmailing people. He was taping people and blackmailing them."
One former friend said he saw an 8-foot-long, two-way mirror overlooking the library of Mr. Spence's home which, he said, he was later told was used for "spying on guests."
Georgetown University law professor Richard Gordon said he was a close friend of Mr. Spence's until his "behavior began deteriorating quite markedly."
Mr. Gordon recalled being at a gathering at Mr. Spence's home and having a conversation with veteran NBC and CBS correspondent Liz Trotta.
"We were sitting in a corner, talking about our mutual concern about Craig's physical condition. He came down later and said he had been listening to us and didn't appreciate it at all," Mr. Gordon said.
Ms. Trotta, contacted in New York City, yesterday confirmed Mr. Gordon's comments and said it was "one in a series of incidents" in which she began to question Mr. Spence's emotional and physical stability.
"He was fragmenting right before our eyes," she said. "I was very concerned about him."
One former Reagan administration official who worked at the U.S. Information Agency and is an open homosexual said he went to private parties at Mr. Spence's home and saw a great deal of recording and taping equipment.
"It was my clear impression that the house was bugged," he said. Another man, an Air Force sergeant who worked for Mr. Spence as a bodyguard, said: "The house was definitely bugged. I can't say what he was doing with the information. I don't know that. But he was recording what occurred there."
Several others confirmed that Mr. Spence had bragged on several occasions that he had his house bugged and that conversations between guests often had been overheard. They said Mr. Spence often would come down late to parties he hosted and told close associates that he had been listening to what was being said about him.
Several people also said Mr. Spence boasted about getting control of the million-dollar home on Wyoming Avenue by blackmailing clients in Japan.
William Harbin, a former U.S. Foreign Service official who worked for Mr. Spence in the mid-1980s, said: "He pretty much blackmailed a Japanese client. He had represented this firm in Washington, the Policy Study Group.
"The Japanese put up the money for Spence to buy a big house on Wyoming Avenue," Mr. Harbin said. "I heard he later had a quarrel with this Japanese because he was really using this house to advance his own purposes, not for the Japanese. But he threatened to expose that they had transferred the money illegally, so it made the Japanese back down."
Another longtime friend confirmed that Mr. Spence bragged about the Wyoming Avenue deal, saying he had beaten "a very rich, old-line Japanese family."
Secret Service spokesman Bob Snow, when asked yesterday for records about Mr. Spence's visits to the White House, said only the White House counsel could authorize release of the material.
C. Boyden Gray, the White House counsel, said he did not know why Mr. Snow referred The Times to him, adding that he was unaware that his office was required to release such information. "I just don't know anything about that," Mr. Gray said. "But maybe there's something I don't know about." Federal law enforcement authorities, including the Secret Service, involved in the probe of the homosexual prostitution ring have told prostitutes and their clients that a grand jury will deliberate over evidence gathered in the ongoing investigation throughout the summer.
Hundreds of credit-card vouchers, drawn on both corporate and personal accounts and made payable to the Washington-based escort service operated by the homosexual ring, have been examined by The Washington Times.
Mr. Spence, a former ABC-TV correspondent who covered the war in Vietnam, was one of the biggest spending clients of the homosexual prostitution network, according to credit-card vouchers obtained by The Times. For example, on Oct. 5, 1988, he made four separate payments totaling $1,525 with his American Express card for male escorts from Professional Services Inc.
On. Oct. 8, he paid $600 for male escorts, and another $600 payment Oct. 20, the documents show. There were some months when Mr. Spence spent as much as $20,000 for male escorts hired to provide him sexual services, according to documents and interviews with prostitutes who served him.
Many of Mr. Spence's guests soured on his hospitality when his darker behavior emerged. A case in point is his relationship with former U.S. Attorney Joseph diGenova.
According to Mr. diGenova, he attended a few of Mr. Spence's parties both as U.S. attorney and after he left the government to enter private practice. He eventually traveled to Japan last December on a business trip with Mr. Spence and Wayne Bishop, chairman of the Washington law firm of Bishop, Cook, Purcell & Reynolds, where Mr. diGenova works.
"When I got back from Japan, some anonymous person suggested that he (Mr. Spence) might be using cocaine. Well, of course my antennae went up right away and I checked those rumors out . . . and found much to my surprise that people suspected the worst," Mr. diGenova said.At that point, Mr. diGenova said, he severed his relationship with Mr. Spence. "When you compared it to his other eccentric behavior, it made sense. But I had no evidence whatsoever," he said.
Mr. diGenova said he never took his concern that Mr. Spence might be using drugs to authorities.
Others interviewed said they witnessed drug use and other crimes at parties thrown by Mr. Spence but also never shared their observations with law enforcement officials.
The saga of Mr. Spence, described by one friend as "Washington's Jay Gatsby," began unraveling when federal and D.C. police raided a male prostitution ring in Northwest Washington and discovered credit-card vouchers signed by Mr. Spence and others.
But for several years - even as publications such as The New York Times were describing Mr. Spence as Washington's ultimate power broker -acquaintences noticed bizarre behavior.
Mr. Spence was generous with cocaine at his parties , according to several people who said they witnessed drug use at the exclusive Kalorama house.
"I know he was a coke freak," said the business associate who was on the White House tour. "A lot of people saw it. His behavior spoke for itself."
Several friends said Mr. Spence bragged that U.S. military personnel, for whom he had built a gymnasium in El Salvador, had smuggled cocaine back to him when they returned to the United States.
"I heard he was selling drugs, or smuggling drugs into the country from El Salvador," said a friend who worked closely with Mr. Spence. "He went down there two or three times or maybe more. He was trying to interest a Japanese firm with buying a fishery in El Salvador.
"I found out the United Nations had rejected a similar scheme; they found if you put more boats in there the fish would just get smaller. So I told him that it was no good," the former associate said.
U.S. Drug Enforcement Administration officials said this week they had no evidence of any such operation.
Others said the drugs came from a more mundane source - midlevel dealers in Northwest Washington.
How a man whom even his closest friends describe as a flawed, malevolent personality managed to court Washington's biggest names is a quintessential Washington story.
Mr. Spence arrived in Washington in the late 1970s. Even intimate friends said his depiction of his background was as shifting as his guest list. What can be confirmed is that he attended Syracuse University and worked as a journalist with ABC in Southeast Asia during the Vietnam War.
One former friend, who became acquainted with Mr. Spence in Tokyo, said that the latter had a "falling out" with ABC News because of his political views. The former friend said Mr. Spence was a hard-line conservative and was opposed to what he described as "the liberal treatment of the news by the network."
Mr. Spence made good contacts in Japan and among Chinese expatriates, often bragging of his close association with former Japanese Prime Minister Yasuhiro Nakasone and appearing in public with a Chinese businessman who once served as an unofficial representative of Communist China in Washington, sources said.
The businessman said this week that he did not know exactly what work Mr. Spence did, but that he often bragged about his contacts with Japanese businessmen and political leaders, particularly Mr. Nakasone.
He described Mr. Spence as "strange," saying that he often boasted that he was working for the CIA and on one occasion said he was going to disappear for awhile "because he had an important CIA assignment."
According to the businessman, Mr. Spence told him that the CIA might "doublecross him," however, and kill him instead "and then to make it look like a suicide."
The businessman also said he attended a birthday bash for Roy Cohn at Mr. Spence's house. He said Mr. Casey was at the party. "One time he stormed into another party with a big, white hat and an entourage of security guards," the businessman said. "It was all rather bizarre."
Mr. Spence's trump card in courting the rich and famous apparently was his access to high-ranking orientals at a moment when Japan was flowering as an economic giant and relations with China were thawing.
"Craig had an interest in the Japanese economy," said Mr. Gordon. "He was very interested in breaking through the bureaucratic level and getting people to come to seminars.
"He developed a kind of genuine and effective influence among important doers and thinkers in Washington and from New York," Mr. Gordon said. "I met some interesting senators and representatives at his parties."
He was doing extensive business with Japan in the early 1980s, some of which former Reagan administration officials said appeared to violate trade laws.
Mr. Gordon said he warned Mr. Spence of the need to be registered as a lobbyist, and documents show that in January 1985 he became a registered agent lobbying for Japanese businesses.
A January 1982 New York Times profile of Mr. Spence was headlined "Have Names, Will Open Right Doors." The article quoted a Washington Post columnist in 1980 saying of Mr. Spence: "Not since Ethel(D-) Kennedy used to give her famous Hickory Hill seminars for great minds of our times during the days of Camelot has anyone staged seminars successfully on a continuing social basis in Washington. That's what Craig Spence has been doing."
Mr. Spence was described in the New York Times as "something of a mystery man who dresses in Edwardian dandy style, a former television correspondent who now wears many hats, including international business consultant, party host, registered foreign agent and something called 'research journalist.' "
Those who knew Mr. Spence best were astonished by his ability to court the rich and powerful.
"He conned people into going to parties - big people, Cabinet members and personalities and so forth," said Mr. Harbin, who wrote research papers that Mr. Spence peddled to Japanese clients.
"Everybody likes to go to a free party around here. He'd have a photographer there, get his photo taken with a great man, and use that," he said.
"He was quite secretive, but from what I could see these things had little or no substance," Mr. Harbin said. "Usually a grain of truth, but he'd build a pile of lies on top of it. Usually he'd start with a photograph of himself with some guy and build a lie around it that he was his top adviser. Nakasone was one."
Mr. Spence also bragged about social companions, telling friends that he had hosted Mr. Cohn, Rock Hudson and others at his Wyoming Avenue home.
The former Reagan administration aide said he decided to sever a friendship with Mr. Spence when he witnessed him trying to force his off-duty military bodyguards into homosexual acts.
"I'm openly gay myself," he said. "Most gays find that type of behavior reprehensible."
Several people who attended Mr. Spence's parties remarked at what one guest called "his personal honor guard." "I don't know where he got them, but he liked to surround himself with tall, handsome, stalwart young men. He liked to surround himself with decorations," one frequent guest said.
Mr. Spence has been living on Massachusetts Avenue in recent months, friends said. His legitimate business contacts have "one by one dropped away," said one close friend.
He has told a number of his friends that he plans to leave the country by Aug. 15. Mr. Spence also has said his health is failing.
"I can unhappily confirm that. He has been in ill health. I am not truly aware of what it is that is wrong with him," said Mr. Gordon.
* Paul M. Rodriguez contributed to this report.
Photo, Power broker Craig J. Spence demonstrated his influence by providing late night strolls through the White House for groups of selected friends., By Richard Kozak/The Washington Times
Not for commercial use. Solely to be used for theeducational purposes of research and open discussion.
White House mute on 'call boy' probe Frank J. Murray The Washington Times; Part A; Pg. A1 July 7, 1989, Friday, Final EditionA dministration officials continued yesterday to stonewall reporters on the growing federal "call boy" investigation, apparently hoping the scandal will fade before President Bush is asked his view of a late-night White House tour that reportedly included two male prostitutes. "Mr. Bush knows about the story. Yes he does. He's aware of the story," said one White House source who, like virtually all the others, insisted on anonymity. Treasury Secretary Nicholas Brady, who heads the Secret Service, reluctantly conceded yesterday at the White House that the agency is looking into the July 3, 1988, tour - one of several arranged by a Secret Service officer for lobbyist Craig J. Spence.Meanwhile, White House sources confirmed that President Bush has followed the stories of the late-night visit and Mr. Spence's links to a homosexual prostitution ring under investigation by federal authorities since they were disclosed June 29 in The Washington Times. But top officials won't discuss the stories' substance, reportedly even among themselves.
"Mr. Bush knows about the story. Yes he does. He's aware of the story," said one White House source who, like virtually all the others, insisted on anonymity.
Press officers have rebuffed repeated requests to obtain Mr. Bush's reaction and decline to discuss investigations or fallout from the disclosures.
"I don't have anything on that," said Deputy Press Secretary B. Jay Cooper, the latest member of the press office to respond.
"There's no gain in talking about it," explained an official who declined to be quoted by name. "It only makes the story grow and helps keep it alive."
The president has not had "serious discussion" about the reports even with his most senior aides, including Chief of Staff John Sununu, according to another source.
Reports on the matter have been included in the Daily Press Summary, a comprehensive half-inch-thick digest of print and broadcast media stories and editorials prepared by a division of the White House press office for the president and aides throughout the complex.
Because the summary is an internal document, officials would not disclose its reports on the news stories. One official said, "I'm sure that the story was summarized, but the president also reads The Washington Times and The Washington Post."
Mr. Brady, the ranking administration official to speak publicly about the episode, appeared nonplussed when asked yesterday about Reginald A. deGueldre, a uniformed White House officer who moonlighted as Mr. Spence's bodyguard and arranged the late-night White House tours.
"Sir, were any Secret Service policies violated by Officer deGueldre's moonlighting relationship with Craig Spence, and, if so, what actions have you taken to correct that?" he was asked."Would you repeat that again?" Mr. Brady requested.
"Yes, sir, I'm talking about the UD [Uniformed Division] officer, Reginald deGueldre, who was working moonlighting for Craig Spence and who arranged the tours for him. I'm wondering if any Secret Service policies are violated by such moonlighting, and whether these visits to the White House are . . ."
Mr. Brady interrupted at that point and said, "I can't give you a precise answer on that now. We'll certainly look into it."
"You don't know if your own Secret Service is conducting an investigation into something that's been this prominent?" the secretary was then asked.
"I am sure they're looking into it," he said. "The nature of that investigation I cannot report to you at this time."
A Treasury Department spokeswoman said later, "The director of the Secret Service is looking into whether or not any policies have been violated" by the moonlighting or admission of outsiders to the White House compound.
She said neither Mr. Brady nor the Secret Service would comment on additional matters involved in a criminal investigation by the U.S. Attorney's Office of the homosexual prostitution ring that Mr. Spence patronized.
White House spokesman Marlin Fitzwater and several of his deputies have said repeatedly that they do not know if Mr. Bush considered it appropriate for male prostitutes to be touring the White House at 1 a.m.
Yesterday, while talking informally to several reporters at the White House, Mr. Fitzwater parried one question this way: "What are they saying, that you should have sexual-preference checks on people that come into the White House?"
He also said, "We don't have any involvement that I know of."
Although he has talked repeatedly to individual reporters, including those for The Washington Times, Mr. Fitzwater has not held a general briefing since before the prostitution ring stories broke, largely because of the holiday weekend and because administration experts gave briefings on Mr. Bush's European trip, which begins Sunday.
The last of those briefings was scheduled for today, but Mr. Fitzwater reportedly was considering holding a general briefing as well, his first in nine days.
Mr. Fitzwater and his staff have declined consistently to say if they would take the question to Mr. Bush, a practice done only rarely and generally only on matters they expect the president might be willing to discuss.
One senior official, who insisted on anonymity, said it was unlikely any staff member would ask Mr. Bush such a question, discounting any threats to security and portraying it as a sordid sex matter beneath presidential dignity.
Photo, Treasury Secretary Nicholas Brady concedes a probe is under way., Photo by Kevin T. Gilbert/The Washington Times,
Spence was target before raid on ring Jerry Seper, and Michael Hedges The Washington Times; Part A; Pg. A1 July 10, 1989, Monday, Final Edition; Correction AppendedC raig J. Spence, the Washington lobbyist and power broker, was the subject of a Secret Service investigation even before a February raid on a homosexual prostitution ring to which he has been linked, The Washington Times has learned. Mr. Spence arranged at least four midnight tours of the White House, including one June 29, 1988, on which he took with him a 15-year-old boy whom he falsely identified as his son. The Secret Service last week expanded its investigation with inquiries about friends and associates of Mr. Spence. Two of those friends are former U.S. Attorney Joseph diGenova and his wife, Victoria Toensing, a former deputy assistant attorney general for the Justice Department's criminal division.
During interviews last week with friends and associates of Mr. Spence, the Secret Service made copies of photographs from a July 4, 1988, party showing him mugging for the camera with Mr. diGenova and Miss Toensing, who in one photo is draped in an American flag.
It was on that same weekend that Mr. Spence arranged a 1 a.m. tour of the White House, which one participant said included two male prostitutes.
The Secret Service also wants to talk to Mr. Spence, but has been unable to locate him, according to persons the agents have interviewed.
Mr. diGenova couldn't be reached yesterday for comment. He has been interviewed twice by The Times over the past two weeks. In the first conversation, he described a fleeting contact with Mr. Spence which, he said, was based solely on mutual business interests.
In a second conversation, he said he attended a few of Mr. Spence's parties, as U.S. attorney and later after he left the government to enter private law practice. He eventually traveled to Japan last December on a business trip with Mr. Spence and Wayne Bishop, chairman of the Washington law firm of Bishop, Cook, Purcell & Reynolds, where Mr. diGenova works. Business contacts made on the trip proved fruitful and are still being pursued, he said.
"When I got back from Japan, some anonymous person suggested that he [Mr. Spence] might be using cocaine. Well, of course my antennae went up right away, and I checked those rumors out . . . and found much to my surprise that people suspected the worst," Mr. diGenova said.
At that point, Mr. diGenova said, he severed his relationship with Mr. Spence. He said he didn't report his findings or concerns to authorities.
Although the Secret Service hasn't said what sparked its interest in Mr. Spence, one of the persons questioned by the Secret Service said investigators appeared to be "interested" in the connections the lobbyist had made.
The Secret Service was the lead agency in a Feb. 28 raid on a house on 34th Place NW used by a homosexual prostitution ring, a ring with which Mr. Spence spent up to $20,000 a month, according to call boys, his friends and documents obtained by The Times.
The federal investigation, headed by the office of U.S. Attorney Jay Stephens and conducted by Secret Service agents, appears to be aimed at determining whether Reagan and Bush administration officials and others were compromised by Mr. Spence, through the use of female and male prostitutes and with electronic audio and video eavesdropping at parties at his house in the fashionable Kalorama neighborhood in Northwest Washington.
Another focus of the probe, persons interviewed by the Secret Service have told this newspaper, is whether White House security was compromised by the late-night tours arranged by Mr. Spence.
Mr. Stephens has said only that his office is investigating "possible credit-card fraud" in connection with arrests made in the 34th Place raid. But numerous sources have told The Times that the Secret Service is asking about Mr. Spence's activities.
Secret Service agents on Friday also asked a former Spence colleague detailed questions about attempts by the lobbyist to obtain information about the Delta Force, an elite U.S. commando team involved in top-secret military operations.
The former friend said Mr. Spence had given a gold Rolex watch to a highly decorated Vietnam veteran who is now associated with Army anti-terrorist units. Later, according to the former friend, Mr. Spence alluded to the gift of the watch and asked the veteran detailed questions about the Delta Force operations.
The Vietnam veteran was one of six persons on the July 3 White House tour , arranged by Mr. Spence. A uniformed Secret Service guard, who admitted the group to the White House and served as an unofficial host, also told The Times that he had received a gold Rolex watch worth about $8,000 from Mr. Spence but said Mr. Spence had asked for nothing in return.
Mr. Spence collected key officials of the Reagan and Bush administrations, media celebrities and high-ranking military officers, among others, for his glittery dinner parties at his Kalorama home. According to friends, visitors to Mr. Spence's Wyoming Avenue NW house and records, the host eavesdropped on some gatherings to compromise guests and blackmailed some associates with threats to disclose their indiscretions.
Efforts to reach Mr. Spence during the past three weeks have been unsuccesful. He telephoned The Times on June 29 in response to a telefaxed message but hung up when asked about his activities. His fax machine number has since been disconnected.Mr. diGenova was nominated by President Reagan to be U.S. attorney in 1983. Prior to that, he was an assistant U.S. attorney in the Washington office, chief counsel and staff director of the Senate Rules Committee and chief minority counsel for the Senate Judiciary Committee.
In 1981, as chief counsel for the Senate Rules Committee, Mr. diGenova was responsible for overseeing the Reagan transition after Republicans gained control of the Senate in the 1980 elections. From June 1975 to April 1976, Mr. diGenova was counsel to the Senate Select Committee on Intelligence, the so-called Church Committee that investigated allegations of CIA and FBI wrongdoing.
Mr. diGenova announced his resignation as U.S. attorney in January 1988, and he left office to begin his private practice on March 1.
Miss Toensing, who also is in private practice, was chief counsel for the Senate Select Committee on Intelligence from 1981 to 1984 when she resigned to join the Justice Department as a deputy assistant attorney general.
At Justice, she headed the criminal division's procurement fraud unit and was instrumental in a number of high-profile indictments, including several involving General Dynamics. She also was responsible for the investigation and prosecution of terrorists.
A number of photographs, including more than a dozen from the 1 a.m. White House tour, were taken over the July Fourth weekend in 1988 by a participant in Mr. Spence's revelries. The photos, copies of which were obtained last week by The Times, have been reviewed by the Secret Service.
Of the several snapshots of the July 4, 1988, tour reviewed by the Secret Service, only two - both of which included Mr. diGenova and his wife - were copied.
Craig Spence was a registered lobbyist for several Japanese firms through 1987 and established close friendships with a number of leading Japanese politicians, including Motoo Shiina, considered by Tokyo analysts to be an inside favorite to replace scandal-plagued Sousuke Uno as prime minister.
Mr. Spence and Mr. Shiina were embroiled in a real estate deal involving the house in Kalorama, a two-story Victorian showpiece valued last year by real estate agents at $1.15 million.
By the time a lawsuit filed by Mr. Shiina over the property was settled, the Japanese official had admitted in court papers to giving Mr. Spence $345,000 in cash.
Mr. Spence has told several current and former friends that he obtained the money to buy the house by blackmailing Mr. Shiina. Mr. Shiina has denied he was blackmailed by Mr. Spence.
The lobbyist moved in November 1988 from the Kalorama house, on Wyoming Avenue, to an apartment on Massachusetts Avenue NW, but apparently his operations remained unchanged.
A female prostitute who worked for the escort service that supplied Mr. Spence with call boys, said he hired her to have sex with young military men in his part-time employ.
The prostitute, describing herself as retired, said Mr. Spence ordered her to engage in those assignations in certain specific locations in his Massachusetts Avenue apartment, enabling him to eavesdrop on the encounters. One of her clients, an enlisted man stationed at a local Army base, confirmed that he worked for Mr. Spence, and the prostitute's account.
"Some of the men were married," she said. "They told me he was using what I did with them against them."
Once, Mr. Spence's influence with the Washington power elite appeared almost limitless, demonstrated by his ability to arrange midnight tours of the White House. The Times has confirmed that Mr. Spence arranged at least four midnight tours of the White House, including one June 29, 1988, on which he took with him a 15-year-old boy whom he falsely identified as his son.
One man Mr. Spence apparently cultivated was a uniformed Secret Service officer assigned to the midnight shift at the White House. The officer, Reginald A. deGueldre, was interrogated for more than 10 hours last week about his association with Mr. Spence. Five Secret Service agents, armed with search warrants, searched his house for nearly two hours Friday night, although they wouldn't say what they were looking for. The agents seized several photographs from Mr. deGueldre's home.
Mr. deGueldre said he has been told he will be called to testify before a federal grand jury. According to one law enforcement official, Mr. deGueldre failed the portion of a polygraph test involving favors he may have done for Mr. Spence.
Photo, In a snapshot copied by the Secret Service, Craig J. Spence (right) and former U.S. Attorney Joseph diGenova watch Mr. diGenova's wife, former Deputy Assistant Attorney General Victoria Toensing, clown at a party.; Photo, Reginald A. deGauldre, a uniformed Secret Service officer, holds the door to the White House open for two of the six persons who were given a tour at 1 a.m. on July 3, 1988. The tour, arranged by Craig J. Spence, is the subject of a Secret Service probe. The photo was taken by another tour pa[rticipant.]
CORRECTION-DATE: July 14, 1989, Friday, Final Edition
CORRECTION:
Due to an editing error, a story Monday in The Washington Times incorrectly said that photographs of former U.S. Attorney Joseph diGenova and his wife, Victoria Toensing, an ex-deputy assistant attorney general, were taken during a July 3, 1988, tour of the White House arranged by former Washington lobbyist Craig J. Spence.
Mr. diGenova and Ms. Toensing did not go on the July 3 tour, which, according to one participant included two male prositutes. However, the couple did attend a party at Mr. Spence's house on the same weekend, during which the photographs were taken.
Spence ma[y] be Shiina's downfall Edward Neilan The Washington Times, Part A; Pg. A1 July 18, 1989, Tuesday, Final EditionTOKYO apanese nuclear-physicist-turned-politician Motoo Shiina has been described here as "a good friend of the United States" - and as a shrewd businessman who may have passed U.S. aerospace secrets to the Soviet Union.
The magazine "Shukan Shincho," a popular weekly, raised past allegations that Mr. Shiina leaked sensitive U.S. information to the Soviet Union - allegations the magazine said have never been explained. Mr. Shiina, 54, a member of Japan's lower House of Representatives, has been keeping an extremely low profile lately amid a swirling scandal involving his relationship with Craig J. Spence, a onetime U.S. lobbyist for Japan and business associate of Mr. Shiina's.Mr. Shiina has declined to answer telephone inquiries on his dealings with Mr. Spence, but has responded cautiously to direct questions through a lawyer, Chikahiko Soda. The questions have dealt mainly with a loan by Mr. Shiina to Mr. Spence to purchase the Wyoming Avenue NW house where homosexual parties took place.
"If his [Mr. Shiina's] involvement in any of this is true, then it would create a serious political problem for Shiina and his political life will probably be damaged considerably," said Hisao Imai, a well-known Japanese political commentator.
Mr. Imai, head of the Japan Commentators Association and a former political editor of Sankei Shimbun newspaper, said yesterday that there is hope among younger ruling Liberal Democratic Party members that Mr. Shiina will be a future party leader or even prime minister.
"If we lose him, this is a great loss not only for the LDP [the ruling Liberal Democratic Party] but for the nation," Mr. Imai said.
"The reason that Mr. Shiina is touted as a rising star is that he has been previously untainted by any scandal and he is an internationalist," said another political commentator, Kan Ito.
With his own independent style of diplomacy he has established himself as a leading expert on U.S.-Japan relations, analysts said.
Although several Diet members speaking anonymously yesterday described Mr. Shiina as a "true internationalist" and "good friend of the United States," one Japanese magazine came close to calling him a spy for the Soviet Union.
The magazine "Shukan Shincho," a popular weekly, raised past allegations that Mr. Shiina leaked sensitive U.S. information to the Soviet Union - allegations the magazine said have never been explained.
The magazine quoted a newsman covering the Japan Defense Agency as saying that General Dynamics Corp. in 1979 allowed Mr. Shiina to photograph on microfilm specifications of the new F-16 fighter.
In exchange, the newsman was quoted as saying, Mr. Shiina agreed to lobby for the company's involvement in the joint U.S.-Japan production of the FSX jet fighter.
The magazine noted that stories surfaced in Japan that the technical data of the F-16 was leaked to the Soviet Union by "the son of an influential Japanese politician." No name was given, but the magazine followed with a description of Mr. Shiina's father, the late Etsusaburo Shiina, who was a former LDP kingmaker and holder of several key Cabinet posts.
But Mr. Ito said yesterday, "Any charges that he is soft on the Soviet Union doesn't add up in my opinion. He's always speaking out about the Soviet buildup in Northeast Asia."
Mr. Ito also said, "Mr. Shiina is regarded as well-informed on foreign affairs and defense matters and has been known to criticize both ruling and opposition members for talking nonsense on those subjects in the Diet."
Mr. Imai said political circles around Nagatacho - the Tokyo area akin to Washington's Capitol Hill - are talking more and more these days about stories in The Washington Times about Mr. Spence and Mr. Shiina. He said some rumors hold that the Central Intelligence Agency cooked up the whole thing to discredit Mr. Shiina.
"I hope Mr. Shiina is not such a bad guy as was described in recent Japanese periodicals' reports," said Mr. Imai. "It has been believed that he will sooner or later become foreign minister. But because of this scandalous news, he may have some difficulties in reaching a Cabinet post or beyond.
"The news that Mr. Shiina was closely associated with Mr. Spence was quite a shock to LDP members and those in the Diet. But a possible examination into the matter will not come before the July 23 Upper House elections for which they are waging an unprecedentedly defensive campaign," he said.
An article profiling Mr. Shiina published 10 years ago in The Daily Yomiuri English-language newspaper began:
" 'What should I say about myself?' he asks smilingly, taking a slow, deep drag at his cigarette between sips of hot, steaming coffee which Hideko, his charming wife, had served. Meanwhile, outside, the gently falling snow had blanketed Shiina's quite ample garden, giving up an impression of serene quiet.
"In his well-modulated voice, Motoo talked of what he calls his 'humble' existence.
"Not so, for this diminutive (5 feet, 5 inches) man has been his father's active and devoted campaigner for a number of years. His father is Etsusaburo Shiina, former vice-president of the ruling Liberal-Democratic Party, Diet member, ex-Minister of Foreign Affairs, ex-Minister of International Trade and Industry (MITI) and ex-Minister of Finance."
The article said Mr. Shiina spent his campus days at Nagoya University, graduating in 1954 with a major in nuclear physics, a field in which he was awarded a scholarship by the U.S. State Department for one-year's study of nuclear reactors at the Argonne National Laboratory in Chicago.
Leaving his infant daughter behind with his mother, a friend was found to sponsor Hideko's stay in the United States. "It was quite tough for both of us, but somehow we managed," he told The Daily Yomiuri, crediting his success to his wife's devotion and care.
On his return to Japan in 1954, the younger Shiina set up his own company which manufactures precision instruments. He founded two other companies, one a joint venture with an American firm, according to newspaper reports that provided no additional details.
Mr. Shiina's lawyer said yesterday of his client's business affairs, only that he resigned as an officer of the Tokyo-registered company Samutaku Co. Ltd. on becoming a Diet member in 1979 but still holds a large number of shares in the company and remains an adviser.
In addition, Mr. Shiina in 1979 was a board member of two non-profit organizations - the World Economic Information Service and the Asian Club, the latter funded by MITI.
Mr. Shiina told a reporter at the time that World Economic Information Service collates and studies economic information from all over the world for the guidance of the Japanese government and business world."
The Asian Club, established in 1975, aimed at "promoting economic goals." Mr. Shiina told an interviewer prior to his first election that he devoted much time to a private organization called Participation which sent out Japanese artists and musicians to various Southeast Asian countries.
On July 5, The Washington Times published a story describing a business deal between Mr. Shiina and Mr. Spence in which the latter made more than $700,000 in four years working for Mr. Shiina's Policy Study Group.
Mr. Spence also bought a Kalorama house using cash loaned to him by Mr. Shiina. When he refused to pay back the loan, Mr. Shiina sued.
* Special correspondent Hiroyasu Tomaru contributed to this report.
That sounds familiar, Satanism, child abuse, and grave desecration is notnew.... We hear about it in the news and we see some kid dressed in black withsuicidal lyrics.. but where did they learn this behaviour?
SEX PARTY HELD AT AUSSIE EMBASSY 'WE'RE NOT TALKING CROCODILE DUNDEE HERE' Michael Hedges and Jerry Seper Washington Times; Final Section: A Page: A1 Friday, July 28, 1989T hree female prostitutes took part in a sex party at the Australian Embassy in November that included several members of the embassy staff, according to one of the women involved who worked for an escort service now under federal investigation. She said she had been to Mr. Spence's house on at least four occasions and that during each visit she had sex with young soldiers whom Mr. Spence bragged he was blackmailing The prostitutes had sex with at least three men each during the party that lasted a little longer than three hours, said the woman. She said she was paid $800 in "crisp, new $100 bills" after the job.The young blonde former prostitute, who asked that she not be identified, described the men she had sex with as middle-aged, adding, "We're not talking Crocodile Dundee here."
The escort service which employed the woman is one of several tied to a Washington area homosexual prostitution ring that serviced officials of the Reagan and Bush administrations, military officers, media representatives, lawyers, businessmen and others.
The former prostitute also said she had sexual encounters with U.S. military personnel at the behest of former Washington lobbyist Craig J. Spence, a major client of the male call-boy ring, and with a high-ranking Canadian diplomat at his waterfront Georgetown home.
She provided details about her jobs, including the names of some clients, which have been confirmed by The Washington Times.
Both the diplomat and one of Mr. Spence's soldier-bodyguards have admitted they had sex with the woman under the exact circumstances she described.
The U.S. Attorney's Office is probing alleged credit card fraud involving the escort services, and the Secret Service is looking into possible security breaches that may have occurred during late-night tours of the White House arranged by Mr. Spence for his friends. Two male prostitutes went on one of the tours, according to a person who participated in the 1 a.m. White House walk-through.
The former prostitute, who was interviewed on several occasions by The Times, described in detail paid sexual meetings with foreign diplomats, both in their homes and in Massachusetts Avenue embassies, scheduled through Jet Set, the escort service which the woman said supplied the Australian Embassy party.
The woman said that during the late afternoon November embassy party, the group, which included the two other women she came with, a few other women she believed were prostitutes and a dozen or more men, met in one large office-type room.
"The men I had sex with took me one at a time into a smaller room nearby which was like an office, it had office-type furniture," the woman said.
The men never identified themselves beyond first names, she said. "There wasn't a lot of small talk. We were there for one thing."
The woman also described the interior of the embassy, correctly gave its address and location on Massachusetts Avenue, and depicted the furnishings of the room where she said the sex occurred.
Australian Embassy officials, when told on July 6 of the woman's allegations concerning the party, originally said they would turn the information over to U.S. Attorney Jay Stephens for a full investigation.
However, John McCarthy, minister of congressional liaison for the embassy, said during a second interview with The Times that he and his staff had conducted an extensive internal investigation - coordinated by Australian Federal Police stationed at the embassy - and, while not ruling out the possibility that the November affair had occurred, had concluded that the woman's story was "improbable."
A report of that investigation concluded, "We cannot completely exclude that a clandestine function did occur, but our investigations have made clear that it would have required a great deal of planning beforehand to gain entry surreptitiously."
The report said, "The embassy's investigations produced no corroboration of the allegations."
An Australian television station, informed of the woman's charges by The Times, met with the former prostitute and determined that her story was valid. A story concerning the allegations ran yesterday on an Australian network news program.
"I saw no good reason to disbelieve her story," said Tony Coghlan, the Network Ten bureau chief in New York City who interviewed the former prostitute. "She came to us in good faith and didn't ask to be paid. "I talked with her at great length and grilled her about the incident and the embassy. It was my feeling she was telling the truth," he said.
Mr. Coghlan said the factors which led to the embassy staff concluding the episode probably did not occur did not impress him, and that he found the woman's depiction of the event consistent with his knowledge of the embassy and Australian customs.
Neale Prior, a reporter for the Sydney Morning Herald, said his newspaper published a story yesterday recounting the television report. He said the paper planned a follow-up account in today's editions.
"This story has only broken in Australia four hours ago," Mr. Prior said yesterday. "If more comes out on it, there will be a big reaction here."
Yesterday, Brett Bayly, press officer at the embassy, said, "Frankly, we're just puzzled. We haven't been able to take it any further."
Kunjurit "Dennis" Singh, the man who operates the Jet Set escort service, admitted that the three women worked for the service during 1988, but he declined to name specific jobs on which they were dispatched.
"This is confidential, like a dating service," Mr. Singh said. "I can't tell you who was dating whom."
He said the men and women working for him were paid only to spend time with clients, adding that he was unaware of any illegal sexual activities which occurred on these dates.
One of the prostitutes employed by Mr. Singh said she was given a W-2 form at the end of the year listing her job as "escort."
The former prostitute provided names of some of her embassy clients, including a key official at the Canadian Embassy for whom she said she was hired for sex at his Georgetown house.
The Canadian official originally denied the encounter. But after he was provided with detailed information about himself, his habits and his Georgetown home - all described by the former prostitute - he said his personal life was "none of the newspaper's business" and asked that his name not be used to spare him embarrassment.
Wesley Pruden, managing editor of The Times, said when the newspaper first broke the sex ring story that names of participants would not be made public unless their involvement appeared to compromise U.S. or friendly nation security.
The former prostitute, who has taken a legitimate job and said she has put her past behind her, also in a relatively brief period had sexual liaisons with a number of wealthy businessmen while working for an escort service at 34th Place NW, which federal authorities raided in February, according to her recollections and diaries she kept at the time.
The service was one of several that, according to federal authorities and others, accepted cash, checks and credit cards to pay for prostitution activities - from both men and women.
The former prostitute said she had worked on numerous occasions for Mr. Spence, the once powerful Washington lobbyist whose name has surfaced in the probe of the homosexual prostitution ring. She said she had been to Mr. Spence's house on at least four occasions and that during each visit she had sex with young soldiers whom Mr. Spence bragged he was blackmailing.
One of the soldiers, now working on a prestigious detail at Fort Myer, admitted he worked for Mr. Spence, and also that he spent time with a female prostitute while at Mr.Spence's Massachusetts Avenue apartment. He said he was paid several hundred dollars to provide security at various parties Mr. Spence hosted.
The former prostitute said on one occasion Mr. Spence forced her to take a bath with two men and him, which degenerated into "an unhappy outing."
The woman said that one of the soldiers contacted her a few months after the bathtub incident and told her Mr. Spence had shown pictures of them having sex to the soldier's wife and that it led to a separation.
The soldier told her that Mr. Spence initially blackmailed him into "beating up a couple guys" to keep his wife from finding out, she said. But Mr. Spence "burned him anyway" because the soldier refused to have sex with him, the woman said.
Photo, The Australian embassy in Washington., By The Washington Times
SPENCE ARRESTED IN N.Y., RELEASED BIZARRE INTERVIEW IS NO NIGHT ON THE TOWN Jerry Seper and Michael Hedges Washington Times; Final Section: A Page: A1 Wednesday, August 9, 1989NEW YORK -H e must have thought he was still wearing his red-lined black cape, his wide-brimmed black felt hat and his trademark silk handkerchief dangling at a precise angle from his tailored Edwardian-cut suit. "How do you think a little faggot like me moved in the circles I did?" Mr. Spence asked, his hand fondling the razor blade like the flesh of a lover. "It's because I had contacts at the highest levels of this government. His plain white knit shirt was wrinkled and soiled, with smudge marks on the back and shoulders from a night on a bench in Central Park. His high-top white Reebok athletic shoes were scuffed, his pants rumpled and loose.With his belt missing, an unshaven Craig J. Spence - the onetime Washington lobbyist of the rich and powerful who is a focus of a federal investigation - kept tugging at his pleated khaki pants to keep them from falling down.
"Do you know who you are talking to?" he demanded in a loud voice as he moved his back along a wall of a friend's fashionable East Side apartment, his right hand tightly clutching a razor-blade dispenser from which he slid a double-edged blade. "Do you have any idea who I am?"
So began a rambling, eight-hour interview of Craig Spence, the object of a monthlong search by print and television reporters and agents of the the Secret Service. The interview ran from midafternoon Monday until shortly before midnight.
Federal authorities have been pursuing him as part of an investigation into allegations of credit-card fraud involving a Washington-based homosexual prostitution ring he frequented and possible security breaches during late-night tours of the White House that he arranged.
After an initial and volatile discussion about suicide and a tense moment in a narrow hallway during which he menaced two reporters with the razor, Mr. Spence decided to hold court to "impart a few words of wisdom" and to "educate the unwashed" about journalism, politics, government operations, life and death.
"Death, you know, is only painful to the ones you leave behind," he said, congratulating himself on what he suggested was an excellent quote and encouraging the reporters to write it down. "As a matter of fact, I'm looking forward to it.
"At 48, I'll still look good in hell."
What followed was bizarre, highlighted by moments of brilliance and wit, outrageous and obnoxious behavior, unbridled and spontaneous humor, and profound and unrelenting bragging.
"How do you think a little faggot like me moved in the circles I did?" Mr. Spence asked, his hand fondling the razor blade like the flesh of a lover. "It's because I had contacts at the highest levels of this government.
"They'll deny it," he said, his voice rising with anger. "But how do they make me go away, when so many of them have been at my house, at my parties and at my side?"
Mr. Spence's recollections of times past are filled with the names of many of Washington's powerful and those of influential men and women from other countries. Most of the claims are documented in dozens of filings at the Department of Justice, which are required of lobbyists who work for foreign governments.
What they all had in common, Mr. Spence said, was that they used him for their personal gain, and when things went bad, they forgot his name.
"I can't think of one person who hasn't benefited personally from knowing me," he said. "I had the world at my house, and now they don't know who I am."
During the interview, Mr. Spence picked continually at his nose and rubbed his finger across the outline of his shabby mustache. He snorted and coughed up mucus. He constantly rubbed his left eye until it was red, and he said his vision was blurred.
He walked from chair to chair in the apartment, staying only briefly in each spot. He pointed, grabbed, poked and pushed at the reporters to make a point or to avoid a question. He intermittently leaned forward to strike out at his questioners and then leaned back in a defensive mode, lowering his body into whatever chair was at hand.He refused to answer inquiries he deemed "stupid" and said several times he was going to "terminate" the interview, jumping out of a chair to run to the door. He nearly left on one occasion but couldn't figure out how the locks on the sturdy wooden door worked.
Mr. Spence threatened on four occasions to kill himself. He had planned to do so last week, he said, but New York City police had taken away his loaded 9mm handgun. "That's the great terminator," Mr. Spence said. "Just open your mouth and point to the rear."
The only suicide weapon he had left was the white plastic dispenser of cheap double-edged razor blades, which he displayed threateningly. He fingered the dispenser constantly throughout the interview, pushing one of the blades halfway out to create a knifelike effect.
"The man who cuts himself across the veins is looking for help," Mr. Spence said, his right hand moving the razor slowly along his outstretched left arm. "The man who cuts down the vein is looking to die."
He pulled the razor along his arm lengthwise and smiled, then suddenly moved the thin blade to the chest of one of the two reporters and then to the other. There was silence for a few seconds, then he spoke.
"I am not a person to fool with. You should know that by now," Mr. Spence said.
His threat soon ended, however, when he remembered he hadn't eaten dinner. A mugger in Central Park, he said, had taken his last $100, borrowed the day before from a friend, who also had paid off the last $400 of a $5,000 bill for three days in the penthouse at the Parker Meridien. His credit charges had exceeded the card's limit, and he had had no cash to make up the difference.
"I felt sorry for him," said the friend, who asked not to be identified.
The friend, in whose apartment the interview took place, later discovered that $300 stashed in a jewelry box was missing.
Once he arrived at a nearby restaurant, Ronasi Ristoranti Italiano, Mr. Spence's mood changed again. He became loud and demanding, ordering the waiters around with the snap of his fingers and shouting various vulgarities obviously aimed at shocking both the restaurant's employees and its patrons.
He issued cooking instructions to the chef and chastised the busboys for almost everything.
Mr. Spence, a frequent visitor to Italy, found nothing on the menu to his liking. He ordered a special pasta dish with red, white and green noodles - "just like the Italian flag, but you probably didn't know that," he shouted at the waiter. He demanded minestrone soup, but only after being assured that the vegetables in it were fresh.
He complimented one of the reporters for his choice of wines, selected only because it happened to be the least expensive on the menu, and then proceeded to order three bottles of it.
While lecturing those at his table on proper etiquette, Mr. Spence spilled his wine, knocked over his water glass (which flooded his appetizer of baked clams) and blew his nose on the white linen tablecloth.
After ordering chocolate cake for dessert, he berated the waiter because the piece was too small. "I want to see something brown on this white plate," Mr. Spence shouted. "I see nothing here now." The waiter, quite unhappy at this point, cut another piece and returned it to the table. His waiter's benediction, "enjoy," seemed forced.
At the dinner's end, Mr. Spence borrowed $10 for cab fare to the Plaza Hotel on Central Park South, where he said he had left his luggage. He said he'd be available to continue the interview in an hour.
He disappeared into the night, not to be seen again.
Photo, Craig J. Spence, By Peter Kolk/Special to The Washington Times
Photo, The Secret Service has searched Craig Spence's Massachusetts Avenue apartment twice to see if his late-night tours breached White House security., By Peter Kolk/Special to The Washington Times
Spence arrested in N.Y., released; Once-host to powerful reduced to begging, sleeping in park Michael Hedges, and Jerry Seper THE WASHINGTON TIMES; Part A; Pg. A1 August 9, 1989, Wednesday, Final EditionNEW YORKC raig J. Spence, the once-powerful Washington lobbyist under scrutiny by the Secret Service for late-night White House tours and theft from the presidential mansion, was arrested here last week for carrying a loaded gun and crack cocaine. Mr. Spence hinted the tours were arranged by "top-level" officials, including Donald Gregg, national security adviser to Vice President Bush and now ambassador-designate to South Korea. "Who was it who got Felix Rodriguez [the CIA's former Costa Rica station chief, who became embroiled in the Iran-Contra affair] in to see Bush?"
Mr. Spence, who has spent recent weeks prowling this city's finest hotels, cutting deals with inmates to protect himself in jail and eventually sleeping on a bench in Central Park, faces up to eight years in prison.Monday, in a tense eight-hour interview with The Washington Times at a friend's apartment where reporters had tracked him, Mr. Spence said the discovery in 1986 that he had AIDS triggered his descent into using call boys and crack.
In a conversation that plumbed the depths of morbidity and self-pity, Mr. Spence caressed a shiny, double-edged razor blade he said he would ultimately use to kill himself and alluded frequently to his impending suicide, a move he said he would take before AIDS debilitates him.
Asked how he thought he would be remembered in Washington, he quoted Carl Sandburg: "Does it matter in the dust and the cool tombs . . ."
Mr. Spence said he left Washington early in July after becoming aware - through news accounts - of the Secret Service investigation. He spent several nights in expensive hotels in New York, rapidly spending his diminishing funds, according to hotel records and his account.
He was arrested July 31 at the Barbizon Hotel on East 63rd Street in Manhattan. According to police records, police took Mr. Spence into custody after a disturbance there. A loaded 9mm pistol was seized, along with a small amount of crack.
He spent parts of the next three days in jail before being released on personal recognizance Aug. 2. He faces another hearing Aug. 28. Maximum sentences for the charges against him total eight years in prison.
Mr. Spence's account of the episode considerably colored the drab prose of police reports. He said he had set up a meeting with a call boy who arrived with drugs.
When the male escort attempted to steal $10,000 in cash and traveler's checks from his room, according to Mr. Spence and police reports, Mr. Spence started the ruckus that led to the arrest.
"They put me in the Tombs [slang for the New York jail] for three days without a phone call," Mr. Spence said. "I survived by offering to be the valet to the biggest thug there, a man appropriately named Heavy, and giving him half my bologna sandwich. I had to teach him not to pronounce it 'val-ay' like some parking attendant."
Mr. Spence, who is central to an investigation into the theft of Truman administration china from the White House and a male call-boy ring raided in February by D.C. police and federal agents, has eluded Secret Service agents and reporters since his dealings were first reported by The Times on June 29.
Mr. Spence, 48, who is being sought by the Secret Service to testify early next week before a grand jury empaneled by U.S. Attorney Jay Stephens, said the late-night tours could not have been set up by uniformed Secret Service Officer Reginald deGueldre. Officer deGueldre and another officer were suspended without pay last week as a result of the ongoing White House investigation.
"Reggie couldn't have arranged anything," Mr. Spence said. "Poor Reggie is a nice guy. I gave him a Rolex watch unsolicited, and he later gave me this little 'dish,' as Rosalyn Carter would say, out of the Truman china. I didn't ask for it.
"Reggie's like an elevator operator pushing the buttons. But he is not the guy who can clear it for you to get in the elevator."
Mr. Spence hinted the tours were arranged by "top-level" officials, including Donald Gregg, national security adviser to Vice President Bush and now ambassador-designate to South Korea.
"Who was it who got Felix Rodriguez [the CIA's former Costa Rica station chief, who became embroiled in the Iran-Contra affair] in to see Bush?" Mr. Spence asked when pressed to say who got him inside the White House. He agreed that he was alluding to Mr. Gregg.
Mr. Gregg yesterday dismissed the allegation as "absolute bull." Vacationing in Delaware, Mr. Gregg said the only time he met Mr. Spence - at an April party the lobbyist arranged for former South Korean Prime Minister Nam Duc Woo - he found him to be "a thoroughly unpleasant character."
"It disturbs me that he can reach a slimy hand out of the sewer to grab me by the ankle like this," Mr. Gregg said. "The allegations are totally false."
Mr. Spence said all of the parties he held at his Kalorama home were bugged by "friendly" intelligence agents.
He described in detail how he rigged his apartment with listening devices in electrical outlets in the walls after he was approached by an intelligence agency that he refused to identify.
"They basically just wanted to be sure that nothing was being said that shouldn't be said," he said.
He boasted that he had "created" important Japanese politicians, conducted covert operations for Central American governments and traveled in a circle of high-ranking closet homosexuals in Washington. He said he would not identify homosexuals in the Bush administration.
"I'm not going to smear the Republican Party," he said.
Mr. Spence described other midnight White House tours, including one he said he arranged for a group of powerful Japanese businessmen who, he said, photographed themselves in the Oval Office.
He alluded frequently to even deeper mysteries. "All this stuff you've uncovered, to be honest with you, is insignificant compared to other things I've done. But I am not going to tell you those things, and somehow the world will carry on without knowing," he said.
After he became aware of Secret Service interest in his activities, Mr. Spence said he destroyed audio tapes and hundreds of photographs, many obtained surreptitiously during his parties. By the time the Secret Service raided his apartment in July, he said all that was left behind was his AZT anti-AIDS medicine.
A Secret Service source confirmed that the agency served a search warrant at the Massachusetts Avenue apartment and that agents did in fact find vials of AZT.
Careening from the wit that had won him powerful friends to glum resignation that "my life is over," Mr. Spence reserved his deepest bitterness for former acquaintences who he said have now forsaken him. "I've had the world at my house and now they don't know who I am," he said. "But they did come, didn't they?"
Mr. Spence said that he frequently used call-boy services and that he liked "handsome young blond, 19-year-old boys," but he said he had not spent $20,000 a month for them, as reflected in credit card documents obtained by The Times. These charges were inflated illegally by one escort service manager, he said. He declined to elaborate but said he fired his accountant over the matter - although it was never turned over to authorities.
During his hour as a Washington host, Mr. Spence dressed in Edwardian finery and lived extravagantly, affecting touches such as scarlet-lined capes and stretch limousines.
Among those who frequented his parties were journalists Eric Sevareid, Ted Koppel and William Safire; former CIA Director William Casey; the late John Mitchell, attorney general in the Nixon administration; conservative activist Phyllis Schlafly; then-Ambassador to Korea (now to China) James Lilley; and Gen. Alfred M. Gray, commandant of the Marine Corps.Arnaud de Borchgrave, editor-in-chief of The Times, said he went to dinner once at Mr. Spence's home, to honor Mr. Lilley.
Even in recent months, Mr. Spence insisted, he retained enough cachet to set up large business negotiations such as one between the Washington law firm of Bishop, Cook, Purcell and Reynolds - represented by former U.S. Attorney Joseph diGenova - and a major computer manufacturer, Compaq.
He said influential persons such as Mr. diGenova, although aware of his increasing use of drugs, courted him for his network of business connections.
Mr. diGenova was in Hawaii yesterday and could not be reached for comment. A secretary, told of the nature of the inquiry, said she could not divulge Mr. diGenova's vacation telephone number. In earlier interviews, the former federal prosecutor said he went to Japan with Mr. Spence and Mr. Bishop in 1988 on business.
"When I got back from Japan, some anonymous person suggested that [Mr. Spence] might be using cocaine. Well, of course, my antennae went up right away and I checked those rumors out . . . and found much to my surprise that people suspected the worst," Mr. diGenova said.
At that point, Mr. diGenova said, he severed his relationship with Mr. Spence. "When you compared it to his other eccentric behavior, it made sense. But I had no evidence whatsoever," he said.
Mr. diGenova said he never took his concern that Mr. Spence might be using drugs to authorities and said he had never witnessed cocaine use by Mr. Spence or others at the parties.
A spokeswoman for Compaq, which is based in Houston, said yesterday that the firm had no record of any contact with Mr. Spence. She said, however, that there had been dealings with Mr. Bishop's law firm, but she declined to say what they were.
By Monday, Mr. Spence's flash had been replaced by the grim residue of his recent three-day stay in a New York City jail and a fitful night on a Central Park bench during which, he said, muggers had lifted the last few dollars he'd borrowed from a friend.
Located by reporters at the stylish apartment of a friend near Central Park, Mr. Spence first resisted, then relished describing his career.
After initial jobs in Massachusetts politics and as a correspondent for ABC News in Vietnam, Mr. Spence began focusing on Far Eastern affairs, he said.
Mr. Spence said his "genius" was in recognizing before other U.S. observers that Japan was headed for economic greatness and in being able to identify and help Japanese Diet members on the way up.
"I became a very significant intellectual force in Japan," he said with typical braggadocio. "I created three members of the Japanese Diet. It's called perspicuity. I saw a future prime minister in an obscure little man named [Yasuhiro] Nakasone when all our spastics here didn't see that."
Mr. Spence claimed he coached Mr. Nakasone on dealing with the United States, advising him to buy President Reagan a saddle for a present rather than golf clubs and always to mention the former president's movies just before the press was admitted for photo opportunities to ensure the two would be engaged in animated conversation.
Among his achievements, Mr. Spence said, was producing a "brilliant" position paper that persuaded the Japanese to allow the Palestine Liberation Organization to open an office in Tokyo.
He also said he greatly enhanced the reputation of Motoo Shiina, a powerful member of the Diet, Japan's parliament, who is considered Japan's top expert on defense issues and a likely future prime minister.
"Motoo's father, Etsusburo, who was a great man, asked me to help his son, who he saw as playboy," Mr. Spence said. "I made Motoo Shiina in the United States, then he sued me."
The lawsuit over a house on Wyoming Avenue NW, in a fashionable neighborhood of homes of senior diplomats, began when Mr. Shiina sought the return of $345,000 he had lent Mr. Spence to purchase the property. Eventually, the suit would be dropped on the day Mr. Shiina was to give a sworn deposition.
The settlement terms led to Mr. Spence's company's getting $68,000 from the Policy Studies Group headed by Mr. Shiina. Mr. Spence agreed to repay Mr. Shiina $379,000 at 5 percent interest.
The money was repaid when Mr. Spence sold the house for $900,000, and he kept the approximately $500,000 profit.
Mr. Spence said yesterday that he had forced Mr. Shiina's attorneys to drop the suit by threatening to reveal that the money was "hot."
"The money came into the country illegally from Hong Kong, and I knew it," he said. "That's why I could be so sarcastic in my deposition. I knew they wouldn't push it."
Mr. Shiina has denied any wrongdoing in the case. He has specifically denied any violations of currency exchange laws.
Mr. Spence said he later turned his lobbying talents to China, with the intention of establishing high-level influence there. "They have no money. What were they going to pay me with - rice?" he asked. "I did it to make contacts."
Throughout this period, Mr. Spence admitted to leading a dual-level existence, with separate but strong excitements.
On the surface, he threw dazzling parties and weighty seminars, ensnaring Washington celebrities.
A profile of Mr. Spence in The New York Times in January 1982 was headlined "Have Names, Will Open Right Doors." The article quoted a Washington Post columnist saying of Mr. Spence in 1980: "Not since Ethel Kennedy used to give her famous Hickory Hill seminars for great minds of our times during the days of Camelot has anyone staged seminars successfully on a continuing social basis in Washington. That's what Craig Spence has been doing."
Mr. Spence was described in The New York Times as "something of a mystery man who dresses in Edwardian dandy style, a former television correspondent who now wears many hats, including international business consultant, party host, registered foreign agent and something called 'research journalist.' "
One former friend, William Harben, said of those days: "He conned people into going to parties - big people, Cabinet members, and personalities and so forth. Everybody likes to go to a free party around here."
That description eerily paralleled Mr. Spence's depiction of the guests at his soirees. "The town [Washington] is full of phonies," he said Monday. "All of these people I helped have turned on me."
The business was lucrative. Mr. Spence earns $200,000 a year as a consultant for Becton, Dickinson & Co., a New Jersey-based firm that makes health care products for physicians, laboratories, pharmacies and the general public. He has worked for the firm since the fall of 1981 and, according to a Becton, Dickinson spokesman, is under contract until March 1990.
In documents filed with the Justice Department, Mr. Spence said he made $666,774 working for the Policy Study Group, a company of which Mr. Shiina was president between 1979 and 1983.
He made many thousands more for other foreign and domestic companies but said Monday that he had no access to money. He said his accounts had been "frozen" but refused to elaborate.
Mr. Spence admitted Monday to a second lifestyle he kept hidden from most, in which he pursued young "military-looking" men. He bragged of many sexual conquests of otherwise straight men, including several servicemen stationed in the Washington area.
Mr. Spence said he discovered he had AIDS "about three years ago" after going to Johns Hopkins Medical Center on the advice of his doctor.
GRAPHIC: Box, On the trail of Craig J. Spence
Sex sold from congressman's apartment; Frank's lover was 'call boy' Paul M. Rodriguez and George Archibald The Washington Times; Part A; Pg. A1 August 25, 1989, Friday, Final EditionA male escort ran and provided homosexual and bisexual prostitution services from a U.S. congressman's house on Capitol Hill on a periodic basis from late 1985 through mid-1987 , The Washington Times has learned. "I had instructed him [Davis] not to use my apartment for his illegitimate purposes ... It just never occurred to me that he'd bring people over. I guess I was lied to." "I had reason to believe that he might be trying to do that," said Rep. Barney Frank, Massachusetts Democrat, who confirmed in an interview with The Times on Wednesday that the escort had access to his house in the 200 block of 8th Street SE."And when I found out about it, I kicked him out [in August 1987]," Mr. Frank said.
Mr. Frank said he knew that the call boy - who asked to be identified by his professional name Greg Davis - was a practicing prostitute. But he denied knowing that his former lover was involved in a prostitution ring.
"I thought I could get him to stop," Mr. Frank said of Davis, whom he employed with personal funds as a housekeeper and chauffeur.
A senior-level Senate staffer, whom The Times has interviewed and chosen not to identify, confirmed this week that he called Davis' "massage" advertisement in City Paper, a District weekly newspaper, "about two years ago" and went as instructed to meet the male escort at a Capitol Hill house.
Davis told him the house was Mr. Frank's, and from the aide's description and documents obtained by The Times, the place they met has been identified as the congressman's home.
Davis said that when he used Mr. Frank's residence to operate the escort services, he or an accomplice would transfer the escort services' telephone calls from his residence to the congressman's number via call-forwarding.
The prostitute, who was living with a fiancee at the time, said he used the ploy because she was unaware of his activities.
Davis also said that he serviced customers at the congressman's house.
A former call girl who worked with Davis and often spoke to Mr. Frank on the phone confirmed this telephone switching operation. She said that she helped run the escort services, and also had sexual relations with clients in Mr. Frank's basement home.
Mr. Frank confirmed that he sometimes spoke to the female escort but assumed she was just a friend of Davis', not a prostitute. He also said that on at least one occasion he remembered a "strange phone call" from somebody asking for Davis and his service.
"The guy said a woman's name that he was supposed to meet," Mr. Frank said. "I was suspicious, but could not prove anything at the time."
The congressman also said that he was told by his landlords several months before asking Davis to leave that there were "strange things going on" in the apartment with lots of people "coming and going."
Mr. Frank said, too, that "one time, somebody came to the door and I told him to get out."
When asked why he did not inform the police about Davis' activities, Mr. Frank replied: "I had reason to believe that he was doing that [running an escort service], but I didn't have anything to take to a judge or to the cops."
Mr. Frank initially denied either knowing of or condoning Davis' profession. But during questioning, he acknowledged that he was aware that his lover was a working prostitute.
"I had no idea that he was doing anything other than personal [prostitution]," Mr. Frank said.
"I knew that he personally did some [sex-for-hire] stuff, but had no idea" about a larger operation that advertised in local newspapers, including City Paper and The Washington Blade, a weekly gay newspaper, the congressman said.
Mr. Frank, one of two openly homosexual members of Congress, said he met Davis by responding to Davis' "escort/model" advertisement in The Washington Blade.
"I met him sexually and had a personal relationship with him," Mr. Frank said.
He said he subsequently allowed the male escort to use his house and car for almost 18 months after first having paid sex with him in April 1985.
Mr. Frank also said that Davis accompanied him on several politically oriented functions and also helped to arrange a speaking engagement at a conference put on by the American Association of School Administrators.
Davis said he accompanied Mr. Frank to the White House in 1986 to witness President Reagan's signing of immigration and naturalization legislation.
"He said he was on probation and I tried to help him out. I got him a lawyer and I hired him [Davis] to work for me - no governmental money," Mr. Frank said. "He was my driver, my housekeeper . . . who took care of the car and took it to get it inspected."
The congressman said he wrote a letter to the U.S. Capitol Police authorizing Davis, who also has been linked to the homosexual prostitution ring now under investigation by federal authorities, to have access to the House garage as his driver. Mr. Frank also said Davis played on his congressional softball team.
"That was the only official thing I did," Davis said.
Mr. Frank said he did not withhold federal income taxes or Social Security from Davis's salary. "I considered him to be a consultant," he said.
Davis did not receive regular paychecks because "I tended to pay for some of his expenses. He had use of the car, I bought him a lot of meals, I bought him food to use here, and I paid for his lawyer," Mr. Frank said.Describing his four years with Davis as "a sexual relationship that turned into a friendship," Mr. Frank said he also paid for the prostitute's court-ordered psychological counseling stemming from four felony convictions in 1982: possession of obscene material, production of obscene items involving a juvenile, oral sodomy and possession of cocaine. Davis also was convicted in 1975 of cocaine distribution.
Mr. Frank said he wrote at least four letters to Alexandria probation officials on behalf of Davis. The letters had been obtained by The Times from Alexandria criminal records with a signed privacy waiver from Davis.
In one of the letters, dated March 10, 1986, Mr. Frank told the Alexandria probation officer: "Mr. [Davis] works for me on personal and political matters which should not be paid out of my congressional allowance."
Each of the letters signed by Mr. Frank has the letterhead, "Congress of the United States, House of Representatives, Washington, D.C.," lists the committees the congressman serves on and the addresses of his Washington and home-district offices.
Two of the letters include the disclaimer "Not Printed At Government Expense." Mr. Frank said it is his personal stationery.
"I needed those letters to continue to operate my escort services in Washington," Davis said. "As a condition of my probation, I was not supposed to live outside of Virginia and I had to have a reason why I was still in D.C.," he said.
On two occasions the probation officer visited Davis at Mr. Frank's Capitol Hill residence.
Chevy Chase Elementary School principal Gabriel A. Massaro - another Davis client who met Mr. Frank through the call boy - went to the congressman's house for one of the meetings with probation officials, both Davis and Mr. Massaro told The Times.
Mr. Frank said he was aware of the meeting with the probation officials but did not attend them.
Mr. Massaro said Davis lived during this period in an apartment in the 1000 block of 25th Street NW.
"I never lived at Barney's house," Davis said.
"It was a favor for me," he said, referring to Mr. Frank's decision to write letters to the probation department.
But Davis said Mr. Frank was constantly worried about the escort activities being discovered by the probation department, police and the news media.
"He was concerned about security and he was concerned about the publicity if this were to come out," the prostitute said. "He was concerned about the things that a person would be concerned about.
"Yet the excitement, the thrill, so to speak, with being connected to that type of world, which he found to be titillating in various ways, obtaining vicarious thrills being around this type of world, he [Mr. Frank] didn't discourage it, and he was fully aware of the situation as it occurred," Davis said.
Interviews with resident managers and an owner of one of the apartments at the 25th Street location confirmed that Davis had a rented apartment there and was running his male and female prostitution services from the dwelling.
One of those prostitution services called Saxons eventually was disbanded and Davis then opened his own services providing heterosexual, homosexual and bisexual sex-for-hire. The services were called Touch of Class, Male Ad and Bi-Couples, according to Davis.
When Mr. Frank first responded to Davis's prostitution ad in The Washington Blade, he paid for one hour's worth of sex, Davis said.
"The first time the cost was $80," the prostitute said. "He [Mr. Frank] called and asked for Greg and he asked me if I was versatile [willing to assume either a male or female sex role]".
The two had sex at Mr. Frank's basement townhouse apartment in the early evening of April 1, 1985, Davis said.
"He said he would like to see me again . . . and at the door he asked me if I had recognized him," the prostitute said. Mr. Frank, according to Davis, "said his picture had appeared in The Washington Blade . . . It was very, very abnormal to be told who he really was."
Davis said he "wasn't blown over or anything . . . I've been with priests and others in public office . . . It was just kinda strange."
Davis said Mr. Frank continued to purchase sex from him for several weeks and was provided discounted or free sex as their relationship grew.
Davis also said that he later arranged discounted and free sex for Mr. Frank from other male prostitutes in return for use of the lawmaker's house to run the escort services.
"That's an absolute lie," Mr. Frank said in an initial interview on Wednesday. But yesterday the Massachusetts Democrat said he did remember discussing with Davis procurement of male prostitutes for himself.
"He did offer that [call boys] to me. . . . We talked about it . . . and I put him off and finally told him no," Mr. Frank said.
The congressman said he never knew such sexual services were being provided to others at his house while he was at his congressional office or out of town.
"I had instructed him [Davis] not to use my apartment for his illegitimate purposes," Mr. Frank said Thursday. "It just never occurred to me that he'd bring people over. I guess I was lied to."
When asked how he could not have known that his admitted prostitute friend was having sexual liaisons with paying clients in his own bed, Mr. Frank said, "I was emotionally vulnerable at that time. I guess I was still coming to terms with being gay . . . It was a difficult period."
Concerning Davis' actions, the congressman said, "He suckered me."
Illustration, ANATOMY OF A FRIENDSHIP; BOX, Rep. Barney Frank, THE WASHINGTON TIMES
Sex sold from congressman's apartment; School used as base for sex ring George Archibald and Paul M. Rodriguez The Washington Times; Part A; Pg. A1 August 25, 1989, Friday, Final EditionA male prostitute convicted of drug trafficking and sex offenses against a minor used the Chevy Chase Elementary School in late 1987 to run his prostitution operation after the school's principal began buying sex from him , an investigation by The Washington Times has revealed. The call boy was allowed to sleep and use phones in the school even after the principal left at 5 p.m., while teachers and the children were still involved in after-school activities such as chorus, Mr. Massaro said. The principal, Gabriel A. Massaro , conceded in a two-hour interview with The Times Wednesday that he had a four-year relationship with the prostitute and provided him with a guidance counselor's office and telephone at the model "magnet school" even while children were in classes elsewhere in the building .The 48-year-old principal also confirmed that he told the school's custodian to give the prostitute - who told The Times that he has also worked for a homosexual prostitution service now under investigation by federal authorities and the subject of earlier articles - unlimited access to the building .
Their relationship ultimately soured, Mr. Massaro said, in part because the prostitute used his credit card number without his permission to pay for a personal ad in The Washington Blade, a weekly newspaper of the homosexual community.
"I knew he was an escort, but I didn't know he was running an escort service," Mr. Massaro said. "I couldn't condone it from going out of here . . . He may have done that, but I did not know that."
The escort, who asked to be identified as Greg Davis, the alias he uses in personal ads, told The Times he was at the school at Mr. Massaro's invitation "on a fairly regular basis" during October and November 1987 and that he regularly used drugs in the building during that time.
Davis said Mr. Massaro "was very aware of what I was doing and what was going on" when he was at the upscale Montgomery County school, which enrols about 350 children, aged 9 through 12, in the third through sixth grades.
"I would be allowed to use the telephones to check my [computerized answering] service and to set up appointments [with homosexual and heterosexual clients], as long as they weren't set up at the school - that was the arrangement," the prostitute said in one of several interviews.
Davis said Mr. Massaro also explained to him how to turn off the school's audio security system so his calls would not be overheard.
Mr. Massaro confirmed that such listening devices were installed in the school ceilings but denied telling Davis how to have the security system turned off.
"How would I know that these devices were in operation at the school unless he had warned me about them?" Davis asked.
"I normally used the time between 5 p.m. and 10 p.m. to set up the appointments for that evening with any of the ladies or myself. And then after 10 o'clock I would have a person who was used as the driver for the [escort] services pick me up at the school. He would pick me up about 10 p.m.," Davis said.
On at least one occasion, Davis claimed to have performed homosexual sex with a client in the guidance counselor's office.
The 45-year-old man who came to the school to have sex with Davis "was a regular client that I knew," the prostitute said. "When I told him that he was going to come to a school, at first he sounded concerned on the telephone. In a joking sort of manner, he asked me if he was being set up.
". . . The client, after thinking about it for a couple of minutes, said, 'Well, it might be a kick.' That was his response. In other words, it was a turn-on for him," Davis said.
The Times has been unable to locate the customer to confirm Davis' story.
The prostitute said that Mr. Massaro did not know "that I had met a client at the school."
"He knew me well enough to know that that was possible and told me that that was not supposed to be done," Davis said. "For the most part, I agreed. I went along with it because it was a threat to the security of the [prostitution] service to have anybody come to the school."
Davis also said Mr. Massaro never knew that his driver went into the school or about the drug use in the building. "I would be there maybe three out of the five nights a week," the prostitute said.
Mr. Massaro said Davis came to the school several times a week during the two-month period in question.
The principal's secretary, Peggy Monday, confirmed Davis's access to the school, but said she saw him no more than once a week. Mrs. Monday said that Mr. Massaro explained Davis' presence at the school by saying the man was a friend of his.
"I would either use his [principal's] office or I would use a guidance counselor's office upstairs" on the school's second floor where 6th grade classrooms and a science lab are located, Davis said.
Told that Davis had given The Times a detailed accounting of his call boy activities and criminal convictions, the principal conceded that he was aware of Davis' work as a prostitute.
Mr. Massaro said he knew the prostitute was still on probation for felony drug and sex offenses and undergoing court-ordered psycho-sexual therapy when he allowed him to use the school's facilities.
A former school counselor, Mr. Massaro said he talked to Davis's sex therapist about his court-ordered treatment after the call boy's felony conviction in 1982 on four charges: possession of obscene material, production of obscene items involving a juvenile, oral sodomy and possession of cocaine. Davis was convicted in 1975 of cocaine distribution.
"There were some afternoons when he just had nowhere to go, so I would just let him come here to the school and just use the bathroom and stuff like that," Mr. Massaro said.
"[The prostitute] used that [counselor's] office," the principal said.
Asked if he authorized the escort free use of school phones, Mr. Massaro responded, "Oh, yes."
Pressed whether Davis might have molested or tried to molest any children at the Chevy Chase school, the principal said, "Oh God, no. He couldn't have. I don't think so. No."
Davis said he had no dealings with any of the children who attended the elementary school.
The call boy was allowed to sleep and use phones in the school even after the principal left at 5 p.m., while teachers and the children were still involved in after-school activities such as chorus, Mr. Massaro said.
"I introduced him to one of the custodians and the custodian just let him use the facility," he said. "I told him [the custodian] that he was my friend."
"I would leave at five and I thought he [the prostitute] would leave shortly thereafter, but before the custodian would close the building," Mr. Massaro said.
Davis said he advertised his services as an "escort/model" in the classified section of The Washington Blade. He also advertised homosexual escort services under the name "Male Ad" and services for bisexual threesomes under the name "Bi-Couples."
Davis said he and a woman partner in the "Bi-Couples" business also ran a female prostitution operation called "Touch of Class," which advertised in City Paper, a District weekly newspaper.In his interview with The Times, Mr. Massaro, who is married, at first denied procuring sex from the male prostitute.
But as the interview continued, and a photograph of himself with Davis in the audience of a 1986 telecast of the Phil Donahue show, the principal said he had had a longtime, secret sexual liaison with Davis.
"That's not true [previous denials of having homosexual sex with Davis]," Mr. Massaro said about 30 minutes into the interview. "I did. Yes, I did. But it was nothing, though. I mean it was. . . ." His voice trailed off as he fought back tears.
"My son died very suddenly [in 1984] and I met [Greg] through a friend" - another education professional, he said. The friend, whom he declined to identify, gave Mr. Massaro the prostitute's telephone number listed in his escort advertisement in The Washington Blade.
"I began to know [Greg] and I got to know him very well," Mr. Massaro said. "He became also a surrogate son to me . . . I don't want you to think I behaved this way with my son. I had a normal father-son relationship with my own son, John."
Mr. Massaro's son died at age 19 in August 1984 of a viral infection resulting from drug abuse, the principal said.
Mr. Massaro acknowledged frequent payments in cash and by check to Davis ranging from $20 to $100. He also gave the call boy gifts of clothing and restaurant outings, and the loan of his car when the principal went to the beach with his wife and daughter.
After Davis lost his bank account, Mr. Massaro paid for his trysts with checks made out to Davis's roommate, also the call boy's homosexual client and a social friend of the elementary principal, he said. The roommate has confirmed the arrangements.
Both Davis and Mr. Massaro said the call boy was not only a sex partner to the principal but also a family friend. However, Mr. Massaro said neither his wife nor daughter knew about his secret homosexual sex life.
Mr. Massaro acknowledged that he attended a meeting between Davis and his Alexandria probation officer at the Capitol Hill home of Rep. Barney Frank, Massachusetts Democrat, another client whose home the call boy used to perform sexual services.
"We [Mr. Massaro and Mr. Frank] tried to help him through it [the probation]," the principal said. "[Davis] invited me over [to Mr. Frank's house] one day and said, 'Hey, I'd like you to meet with this person,' and he was trying to get off [probation]. I don't even remember all the details . . . I went as a friend of [Davis's] who could vouch for him as being the person who was trying to pull his life together."
On some days, Davis said he would arrive at the Chevy Chase school as early as noon, when classes were still in session.
"There were times when the guidance counselor's office was not available to me," the prostitute said. "I would actually use the principal's office itself, and he would move to another location and I would sit at his desk using his telephones on his desk."
The phone numbers listed in his escort advertisements were call-forwarded to a Maryland-based answering service called Compu-Voice, he said.
"It's all done by computer. When a client calls the answering service, they hear my voice, recorded by remote from a telephone using a series of code numbers. I would call my own phone number and, through punching in a series of code buttons [on the telephone dial] I was able to obtain access to my own system, and I was able to obtain the messages from the system, and then erase them after I had recorded them into the appointment book," Davis said.
"I let them know on the tape that I usually returned calls within one hour. And at the time that I was at the school, I would check in every 15 minutes," he said. "And I would go ahead and set up the appointments for the evening until Bobby [the man who would drive him to his sexual liasons and supply him with illegal drugs] would arrive."
Davis said he used cocaine in the school with Bobby and that the two men often raided the school's cafeteria for their dinner.
"Bobby and I would make something to eat, we'd play a little basketball [in the school gym], we'd do some coke, and then we'd go out to meet the appointments and to meet the ladies and obtain the commissions from their appointments."
On several occasions Davis said he and Bobby "did use cocaine in the guidance counselor's office," Davis said.
Davis said Mr. Massaro "instructed me on how to have the [school's audio] security system turned off so that the conversations would not be overheard [when he was conducting his prostitution business]. They [security listening devices] were in operation after 5 p.m. when all the administration leaves," he said.
"I would call the security of the school system, report in . . . I would call in and tell them that I would be there until 10 p.m. doing work for Dr. Massaro," Davis said.
The prostitute said he "never stayed overnight [at the school] or anything like that. I would take a nap there maybe - there was a couch there - because I was running around a lot from place to place at the time."
Mr. Massaro said he helped Mr. Davis move from one apartment to another on several occasions during their relationship, and allowed the male escort to store his personal effects and furniture in the school's basement machine room in 1987 while he was looking for a new place to live.
His landlord found out that he was running a prostitution operation and kicked him out of the apartment, Davis said.
Mr. Massaro said the relationship ultimately soured just over a year ago when Davis started stealing from him.
"I loaned [Greg] my car, and he literally stole it. He never returned it. He finally did return it. I sent him money and he did return it," the principal said.
Also, Davis used the principal's credit card number without permission to pay for his escort ads in The Washington Blade, Mr. Massaro said.
A spokesman for the newspaper's publisher confirmed "a problem" that caused The Blade to cancel Davis's ads but would not elaborate.
"I just used very poor judgment, what can I tell you?" Mr. Massaro said. "It was just stupid. I just never thought it through. I just thought I was helping somebody."
After the car and credit card incidents, Mr. Massaro said he told Davis, " 'Hey, you've got real problems and I can't help you.' So that was it and he just left. And I guess it was then that I really realized that he was a drug abuser."
Asked if Davis had ever used drugs in his presence, Mr. Massaro said he "may have" smoked marijuana. "I don't remember that. He may have. He never used anything else, though, other than pot. I don't think I ever knew that, until very recently. . . .
"I've never used the stuff. I don't know what it's like. And we talked about that in trying to get off it and trying to help him get off it . . . Our lives just became very intertwined and I guess I felt as though I could save him."
Davis, for his part, said that the relationship with Mr. Massaro soured because of a lack of "sensitivity" and "a lack of interest" on his part sexually towards the principal.
Mr. Massaro characterized Davis's action in going public as "an effort to get back at me."
He said Davis "was always going to sell his story and I was going to write a book for him and make him famous . . . He said he had a very interesting life, and one day we were going to sit down and write a book, and I guess that's what he's doing."
Photo, Homosexual escort services were operated out of Chevy Chase Elementary School and the Capitol Hill basement apartment of Rep. Barney Frank., Photos by Joseph Silverman/The Washington Times
THE GOBIE STORY; Frank's 'call boy' tells all George Archibald, and Paul M. Rodriguez The Washington Times; Part A; Pg. A1 September 1, 1989, Friday, Final EditionS tephen L. Gobie wanted a sugar daddy, but Barney Frank turned out to be "Sweet'n Low" instead - "a sweet guy, low on cash." Gobie insisted again as he has in previous interviews that he used the congressman's apartment as a base for a prostitution service - with Mr. Frank's knowledge. That's what he called his congressional sex partner, Gobie said in exclusive interviews with The Washington Times."In this business, the term 'sugar daddy' is popular for a person that supports you and sponsors you financially as well as otherwise," the prostitute said. "In this case, I had a nickname for Barney - it was 'Sweet'n Low' - sweet guy, low on cash, that's what the moniker stood for . . . And I told him that . . . And he said, 'Hey, I'm only a congressman, I don't make a million dollars a year.' "
Gobie called "preposterous" the Massachusetts Democrat's claim that he was the male hustler's Henry Higgins, intent on helping him straighten out his life while paying him about $20,000 a year to be Mr. Frank's housekeeper and driver.
"The true story is there were no such compensations anywhere near that level of money . . . I would say the total dollar value that came to me from the beginning of the relationship [was] maybe less than $2,500," Gobie said.
Gobie insisted again as he has in previous interviews that he used the congressman's apartment as a base for a prostitution service - with Mr. Frank's knowledge.
One of his clients was Washington power broker and former Japanese lobbyist Craig J. Spence , who has been linked to the homosexual prostitution ring being investigated by federal authorities.
Gobie also said he would willingly appear before the House ethics committee which is expected to investigate Mr. Frank's relationship with the prostitute, "if my lawyer told me that it was in my best interest."
Mr. Frank has acknowledged purchasing sexual services from Gobie after contacting him through an advertisement in The Washington Blade, a newspaper catering to the homosexual community.
The congressman also has admitted knowing of Gobie's continued work as a prostitute while on Mr. Frank's personal payroll from mid-1985 to early 1987 and while Gobie continued to have unlimited access to his house in the 200 block of Eighth Street SE.
But Mr. Frank has denied knowledge of Gobie's operating a prostitution service from his house and has requested the ethics probe in part out of fear that Gobie will embellish his story to improve the chances of selling it as a book.
The differing accounts in this unfolding story of a troubled 18-month liaison between one of the House's leading liberals and the man Mr. Frank says pushed him into publicly acknowledging his homosexuality seem to capture the inherent contradictions in both of their lives.
Mr. Frank, a portly middle-aged Boston career politician when he met Gobie, led the fight in the state legislature in the 1970s for urban "combat zones" for prostitutes. Calling the world's oldest profession "a victimless crime," Mr. Frank now says he was victimized by Gobie.
The prostitute, in turn, a 28-year-old hooker when Mr. Frank answered his ad for "hot bottom and large endowment," rejects being labeled homosexual or bisexual. Instead, he said he's a heterosexual who isn't good at deviant sex.
"My proclivities, my heterosexuality, precluded me from being a successful escort for men because sex was almost non-existent, and the strength of my relationships with men was strictly on my character, personality and my sense of humor," Gobie said.
"But being able to to have people call you and respond [to ads], and continue to be successful and have repeats - people calling you again - is difficult. And then I realized that I was not going to make it as an escort, either for women or for men . . . So I thought if I was going to make it at all, I would make it actually running escort services as a madam because I have a good sense for business."
Coloring Gobie's accusations, however, are a series of criminal convictions dating to 1975. He was convicted at 17 for the felony sale and possession of cocaine in Fairfax County.
Gobie was convicted on four felony counts in 1982: possession of obscene material, productions of obscene items involving a juvenile (taking photos of a 15-year-old girl with whom he was having sex), oral sodomy and possession of cocaine.
Gobie, whose professional name in the underground prostitute trade is "Greg Davis," grew up the son of a Marine Corps master sergeant who was a budget analyst at the Pentagon.
"He was a very strict conservative person from the military, . . . your traditional gung-ho Marine . . . He wanted to lock me in my room for the rest of my life until I agreed to get a haircut," Gobie said.
It was an unhappy boyhood marked by rebellion all the way, Gobie said. He defied all his parents' moral values and teachings.
"At six, I performed oral sex on my first female. She reciprocated. She was five," Gobie said. "I was having orgasms from age nine on . . . My father came to me at the age of 14, I believe, the first time in the basement of my house to discuss sex with me, and I cut him off right away and I said, 'Dad, I probably know more than you do at this point.' "
By age 14, Gobie had been labeled "incorrigible" by Fairfax County juvenile authorities for skipping 9th grade classes at West Springfield High School and refusing to return home on Friday afternoons.
"Me and my friends at 15 were watching X-rated movies on the family projector down in the basement when my family was watching TV upstairs," he said. "A friend of mine worked at a medical building as a janitor at night and he got them out of the psychiatrist's office who used them for sexual marriage counseling."
A year away from home during his sophomore year at a southwest Virginia boarding school failed to mend Gobie's ways, despite his claims of a promising record.
"I was a standout basketball player [at the private school]. I played for the school team. And I also brought my grades back up to an acceptable level," he said. "I wasn't real concerned with making straight As. That wasn't a goal of mine. If it had been, I would have."
Instead, Gobie turned to marijuana and other drugs after his return to Fairfax County and expulsion from West Springfield High for truancy during his senior year in 1974. He never received his diploma, although he subsequently passed the General Educational Development test, the equivalent of high school completion."I didn't start using drugs until after the trouble started in Springfield, smoking marijuana and experimenting with every drug you could think of - everything," Gobie said.
The serious run-ins with the law then began, court records show. In 1975, Gobie was convicted of a misdemeanor marijuana possession charge in the District. Later that year, he received a five-year suspended sentence in Fairfax County for distribution of cocaine and served three years probation.
In 1977-78, Gobie said he attended Chowan College in Murfreesboro, N.C., a fundamentalist Southern Baptist school and one of few colleges that would accept him "to get a school record that would enable me to transfer" to the University of South Carolina, where he hoped to join a girlfriend.
But it didn't work out. At Chowan, "I raised the roof off the place," he said. "I threw extensive parties and I was responsible at that time for the entertainment at parties, whether it be females or whether it be party favors - drugs and things like that."
Gobie said his parents were divorced in 1979 and left the area. The prostitute said he hasn't seen his family, including two younger brothers and an older sister, since. By then, at age 21, he had decided to reject the family name and start a new life as a male escort.
"I met a woman one day in Hecht's clothing store," he said. "I was trying on a suit and she asked me if I had ever done any modeling work. She was just a customer, a very elegant looking woman, a very attractive older woman. And she approached me and asked me if I wanted to have lunch with her. She picked me up."
Gobie says of the 47-year-old woman, whom he refuses to name: "I owe everything to her. I'll never do anything to hurt her in any way."
"Our first discussion centered around modeling and advertising, things like that," he said. Then I went to her apartment . . . She took me under her wing . . . I worked for her. She was a madam. She operated an underground escort operation of mostly females, but she had a few select males also. She had extensive women clientele that she had a hard time finding suitable escorts for. It was very hard to find gentle young men.
"It's easier to find women than men [escorts], apparently - men who have the inclination and the capabilities, who have what it takes to be successful with women as an escort."
Women clients - middle-aged and older women, both married and widows - place more emphasis on obtaining male escorts who are charming, entertaining, good conversationalists and socially attentive, Gobie said, while male homosexual clients are more interested in obtaining "animalistic" sex.
"Male clients are more sexually oriented. They very seldom care about character, personality, sense of humor, things like that," he said.
Since becoming an escort, Gobie said he has personally serviced "more than 500" women clients and "hundreds" of male clients, but would not be more specific.
"There was never an occasion, even before the AIDS crisis, I was [ever] involved in any unsafe sex practices," the prostitute said. "I always took precautions . . . using condoms."
Asked if clients always want him to use condoms, Gobie responded, "No. Sometimes clients are willing to pay thousands of dollars for you not to use condoms. In that case, alarm bells would go off in my head, and those are the people that I wouldn't think of having sex without a condom no matter what the dollar figure was.
"Those are people that are potentially dangerous to you," he said. "Their motivations might be sinister, in that they might have contracted a disease from some escort in the past and now, through some sort of revenge motive, try . . . to infect other people in that business as a way of getting back."
However, in dozens of interviews over the last two months, Gobie has given details of sexual acts including an explicit tape-recorded description of his first sexual encounter with Mr. Frank in April 1985, and it was clear that neither Gobie nor his sex partners were wearing condoms.
This week, Gobie said he had recently been tested for AIDS and the results were negative.
Gobie entered the male escort world through a prominent free-lance photographer for leading Washington-area homosexual publications whom he was introduced to by his female madam friend. The photographer "eventually got me involved in the modeling and escort work through the male scene" - including work for some of Washington's homosexual businesses and nightclubs, Gobie said.
"I did advertisements, endorsements for the [homosexual] bars in town and things like that . . . I was the first 'Mr. Rascals,' ' he said, referring to the prominent Dupont Circle homosexual bar Rascals.
Gobie said he also worked at some of the area's posh hotels as a concierge and front office manager as a legitimate "front" for his escort activities from 1978 to 1984. "Hotels are very valuable places to make contacts," he said.
Gobie said he worked at such hotels as The River Inn in Georgetown, Guest Quarters in Foggy Bottom, the Bristol Hotel, Quality-Inn at Pentagon City and the Regency Raquet Club condominium complex in McLean.
But the roof on his legitimate fronts caved in when he was convicted on the four felony charges in Alexandria in 1982.
All but four months of his five-year prison sentence was suspended, and Gobie was placed on probation for three years, during which he was ordered to undergo psycho-sexual therapy at the Washington-based Human Sexuality Institute.
"I was forced into the underworld by my probation and by the nature of the charges and the fact that my probation officer was breathing down my neck to try to try to let everybody in the world know what was going on," Gobie said. "I felt as though I couldn't go through legitimate avenues for work anymore, and the logical thing for me to do was to establish my own escort service.
"I knew that there was a ton of money to be made," he said. "And I knew that I could get away with it if I could provide myself with some sort of official cover to deceive and mislead the probation department, which I did."
That "official cover" was employment by Mr. Frank, who allowed the prostitute to use his house and wrote to the Virginia probation department saying he had hired Gobie as a personal employee, Gobie claimed.
Mr. Frank acknowledged writing the letters but denied they were intended to mislead or deceive probation officials.
IN DEATH, SPENCE STAYED TRUE TO FORM Michael Hedges, and Jerry Seper The Washington Times; Final Section: A, Page: A1 Monday, November 13, 1989BOSTON -C raig J. Spence, the once-powerful lobbyist who entertained and influenced Washington's elite, died Friday much as he had lived: dressed in a tuxedo in Boston's most expensive hotel, listening to Mozart with three dollars in his pocket. Mr. Spence told several friends that the call-boy operation was being investigated by the U.S. Attorney's Office and other federal authorities as a possible CIA front. He told the friends that the CIA used the service to compromise other federal intelligence officials and foreign diplomats. Now, many questions may never be answered about the man who was a focus of a federal grand jury investigation for spending $20,000 a month on male prostitutes, orchestrating unauthorized late-night tours of the White House and possibly bribing a Secret Service officer and a member of the Army's Delta Force.On a mirror in Room 429 of the Ritz Carlton Hotel, Mr. Spence on Friday left his final enigma in the form of a suicide note.
With a black felt-tip marker he had written, "Chief, consider this my resignation, effective immediately. As you always said, you can't ask others to make a sacrifice if you are not ready to do the same. Life is duty. God bless America."
As a postscript, he wrote, "To the Ritz, please forgive this inconvenience."
Mr. Spence was found by hotel employees Friday afternoon lying on his bed, fully clothed, with a telephone cradled in his ear and a Walkman headset containing a cassette tape of Mozart's "A Little Night Music" around his neck, police detectives and other sources said.
Boston's medical examiner had made no official finding on the cause of death yesterday. "That may take as long a couple weeks," said a spokesman for the office. Mr. Spence's body was being held by the medical examiner, who had performed an autopsy, while police tried to contact his survivors.
Found hidden in a false ceiling in the bathroom were seven small packets of Xanex, a prescription anti-depressant, with one pill removed, Detective Sgt. James McDonald said. Also found were Mr. Spence's will and birth certificate.
Mr. Spence was attired in the style he affected at his lavish dinner parties, according to the police report: "black Tux with white shirt, bow tie, white suspenders, black socks and shoes."
"There was no sign of foul play whatsoever, no marks on the body," said Boston Police Detective Robert Harrington. "It was as if he had fallen asleep talking on the telephone."
The door of the hotel had been barricaded with the room's other double bed and a chair, according to a police report. Hotel maintenance workers had to saw through the door to enter the room. The only other way into the room was through a fourth-floor window facing a busy street.
Mr. Spence may have attempted to save himself after taking an intentional overdose, according to police investigators.
"Someone from Washington called the hotel that day and said a Craig Spence had called the caller and may be sick," said a police detective. "But the hotel couldn't find a Mr. Spence registered. It turned out he had checked in under an alias, C.S. Kane." Friends theorized the alias was an ironic takeoff on Orson Welles' fictional hero Citizen Kane, whom Mr. Spence often said he admired.
In an interview with The Washington Times in August, Mr. Spence made frequent allusions to his work with the Central Intelligence Agency, a connection CIA sources deny. But on the bed near him when he died, according to two Boston detectives who handled the investigation, was a newspaper clipping detailing efforts by CIA Director William Webster to initiate legislation giving protection to CIA agents called upon to testify before government bodies.
Mr. Spence had been subpoenaed to appear before a federal grand jury in Washington probing his connections to a call-boy network suspected of committing credit-card violations, to late-night White House tours he arranged and the gift of a Rolex watch to a Secret Service officer who allegedly gave Mr. Spence pieces of the Truman china collection in return.
"All this stuff you've uncovered (involving call boys, bribery and the White House tours), to be honest with you, is insignificant compared to other things I've done. But I'm not going to tell you those things, and somehow the world will carry on." He had boasted to reporters for The Times that - if he testified - he would provide a wealth of damaging information into the workings of the call-boy ring, bribery of Japanese and U.S. officials and other sordid matters. But, despite the subpoena, Mr. Spence apparently never appeared before a grand jury.
During the past few weeks, Mr. Spence told several friends that the call-boy operation was being investigated by the U.S. Attorney's Office and other federal authorities as a possible CIA front. He told the friends that the CIA used the service to compromise other federal intelligence officials and foreign diplomats.
One friend quoted him as saying, "Casey's boys are out to get me," an apparent reference to former CIA Director William Casey, now deceased. Mr. Casey and Mr. Spence were friends, and the former CIA director attended parties hosted by the former lobbyist.
Mr. Spence had come to Boston several days before his death with frequent companion former Air Force Sgt. Ron Paganelli and his dog, Winston, according to police investigators.
During his stay at the elegant Ritz Carlton, just off the Boston Common, he entertained as many as six or seven guests in his $285-a-night room, according to hotel employees.
He had arrived at the hotel Nov. 4. Mr. Spence told a hotel worker with whom he had become friendly that he was in town to meet with a former boss, one-time Massachusetts Speaker of the House John Davoren, police said. But that meeting never occurred, they said.
Hotel employees said he was an eccentric guest, making frequent demands of the staff for chocolate truffles, fresh flowers and other appointments but then somewhat arbitrarily tipping $200 or $300 at a time. He spent much of his stay traveling in limousines to meet friends, police said.
During a lengthy interview at a Manhattan apartment in August, Mr. Spence frequently alluded to deep mysteries. "All this stuff you've uncovered (involving call boys, bribery and the White House tours), to be honest with you, is insignificant compared to other things I've done. But I'm not going to tell you those things, and somehow the world will carry on."
He also talked frequently of suicide, saying repeatedly, "My life is over." He reserved deep bitterness for high-powered friends he said had forsaken him. "I've had the world at my house, and now they don't know who I am," he said. "But they did come, didn't they?"
Photo, Craig J. Spence, who once said he was "looking forward" to death, was found dead Friday in his room at the Ritz Carlton Hotel in Boston.,
By Peter Kolk/Special to The Washington Times
SPENCE AS MUCH AN ENIGMA IN DEATH AS HE WAS IN LIFE Jerry Seper, and Michael Hedges The Washington Times; Final Section: WORLD Page: A11 Monday, November 13, 1989"The rumors of my death are greatly exaggerated." - Craig J. Spence, two weeks ago at a Washington dinner party.
T he room where Craig J. Spence died was awash in the small mysteries and ironies that had followed him - and that he had perpetuated - since he came to Washington in the late 1970s, already an enigmatic figure with strange Asian connections and friends in high places. The sergeant, who also participated in the July 3 White House tour, allegedly was asked by Mr. Spence for information on Delta Force, a special forces counterterrorism unit based in Fort Bragg, N.C. On the bed was a newspaper clipping referring to CIA undercover agents. Scrawled on the mirror was a note written to some unnamed "chief," which also contained an obscure phrase in Japanese, "Nisei Bei," which means second-generation American.But hidden from view, in the room's false ceiling, were personal papers, including a birth certificate describing his arrival as a small-town, middle-class boy - a heritage he spent his life trying to restyle.
"Death, you know, is only painful to the ones you leave behind," Mr. Spence told The Washington Times during an interview in August. "As a matter of fact, I'm looking forward to it. At 48, I'll still look good in hell."
The focus of a summer sex scandal, Mr. Spence was found dead Friday in his room at the Ritz Carlton Hotel in Boston. He had celebrated his 49th birthday just three weeks ago at a lavish Washington party.
The Ritz was among Mr. Spence's favorite hostelries, one of several posh accommodations he demanded in his frequent travels throughout the United States, Europe, South and Central America and the Orient.
"I've always been a first-class person in a second-class world, but I've learned to adjust," he said in the interview. "But there are places I've found where a civilized man can exist with some style and dignity."
Mr. Spence's name surfaced this summer after The Times identified the former lobbyist and prominent social host - who could arrange unauthorized late-night tours of the White House for his friends with a single telephone call - as a major client of a homosexual prostitution service being investigated by the Secret Service, Metropolitan Police, the U.S. Attorney's Office and a federal grand jury.
That investigation centered on a homosexual call-boy service that operated out of a house on 34th Place NW. The ring's clients, according to hundreds of credit-card vouchers obtained by The Times, included government officials, military officers, foreign and U.S. businessmen, lawyers, bankers, congressional aides, media representatives and other professionals.
The vouchers showed that Mr. Spence spent as much as $20,000 a month for call boys from various escort services run by the ring, including Man-to-Man, Dream Boys, Ultimate First Class and Jovan. He admitted in the interview with The Times that he had used credit cards to purchase sexual services, but strongly hinted of having "firsthand information" about people "high in government" who also were involved.
During the past few weeks, Mr. Spence told several friends that he knew "for a fact" that the call-boy operation was being investigated by the U.S. Attorney's Office and other federal authorities as a CIA front. He told the friends the CIA used the service to compromise other federal intelligence officials and foreign diplomats.
Mr. Spence claimed in the interview that he had worked for the CIA on numerous occasions and had been instrumental in a number of covert actions in Vietnam, Japan, Central America and the Middle East - a claim denied by the agency.
"How do you think a little faggot like me moved in the circles I did?" he said. "It's because I had contacts at the highest levels of this government.
"They'll deny it. But how do they make me go away, when so many of them have been at my house, at my parties and at my side?"
The grand jury investigation begun in June by U.S. Attorney Jay Stephens was described as a "credit card" probe. It is not clear, however, how vigorous federal prosecutors have been nor where the case may be headed.
The Times, in contacting a number of principal witnesses and active participants in the case, discovered that few of them had been interviewed and only a handful asked to testify before the grand jury. Several key figures had not been contacted at all. Those who were questioned were being asked mainly about national security concerns and possible security breaches at the White House.
Among those not contacted by law enforcement officials or the grand jury were:
* Officials of the Reagan and Bush administrations who were identified in The Times as having used the call-boy service and paid with credit cards.
* Those running the prostitution ring raided in February, and persons who kept the credit-card records of visits with prostitutes by people who worked in the Reagan and Bush White Houses.
* Any of several high-profile friends of Mr. Spence's who attended parties at his Kalorama home or spoke for pay at numerous seminars he sponsored as a registered foreign agent.
* Prostitutes who said they serviced Mr. Spence and military personnel whom the former lobbyist hired as bodyguards.
"I haven't heard one word from the U.S. attorney, the FBI or anyone else," said one of the men whom Mr. Spence got into the White House for a 1 a.m. visit on July 3, 1988. "The Secret Service talked to me back in the summer, after the stories were out, but nothing since then."
Mr. Spence was one key figure who was handed a subpoena more than two months ago but had yet to testify. What arrangements had been made with the former lobbyist are not known. Mr. Spence vowed during the August interview, however, that he would "never be brought back alive before any damned hearing." Mr. Stephens has declined to comment on the case. Assistant U.S. Attorney Alan Strasser, who is handling the matter before the grand jury, also has refused comment. A spokeswoman, Judy Smith, said yesterday that the U.S. Attorney's Office would have no comment on Mr. Spence'sdeath or its potential impact on the investigation.
A participant in one of the late-night White House tours testified before the grand jury two weeks ago and was asked about the tours, missing china out of the presidential mansion and Mr. Spence's interest in the U.S. military's top-secret Delta Force . The witness, a longtime acquaintance of Mr. Spence's who had spent considerable time as a guest in his home, was not asked any questions about credit cards, Mr. Spence's alleged involvement with the homosexual call-boy ring or about the ring itself.The witness - who was among those taking the July 3 White House tour - also described a lengthy interview with Mr. Strasser, Secret Service agents and then a brief questioning period before the federal panel.
"They pulled out a picture book containing the White House china collection and asked me about the Truman china," said the witness, who asked not to be identified. "They wanted to know if I had seen anything like that. They strongly intimated that more things were missing."
Mr. Strasser, according to the witness, also asked during the private discussion and before the grand jury about the gift by Mr. Spence of an expensive Rolex watch to a U.S. Army sergeant. The sergeant, who also participated in the July 3 White House tour, allegedly was asked by Mr. Spence for information on Delta Force, a special forces counterterrorism unit based in Fort Bragg, N.C.
"They asked me what I thought Spence wanted to know about the Delta project," the witness said. "I said it could mean he was just interested in the young guys there or something else."
The questioning by federal authorities became most detailed when it turned to the subject of the late-night tours. "They asked if we went in any offices, if I had seen any documents or if any documents had left the White House," the witness said.
Secret Service officials have publicly stated there was no breach of security during the tours and that they had no concern that entry was made by the late-night visitors into unauthorized areas of the White House.
Mr. Spence also gave an $8,000 Rolex watch to Secret Service uniformed officer Reginald A. deGueldre, who was assigned to the White House security detail. Mr. deGueldre has admitted in an affidavit that he gave Mr. Spence a piece of Truman china from the White House collection.
In August, Mr. deGueldre and another Secret Service officer, who has not been identified, were suspended indefinitely without pay and a third was placed on administrative leave with pay. Secret Service officials said at the time that the suspensions were the first step to possible criminal prosecution of the two men, although none has yet taken place.
Mr. deGueldre said recently he had not been approached by any federal authorities for an interview or asked to testify before the grand jury. "I have no idea what is going on," he said. "I have not heard from anyone at all."
The grand jury witness said federal authorities also inquired about Mr. Spence's alleged drug use. In his interview with The Times, Mr. Spence admitted to being a heavy cocaine user. He was arrested for possession of cocaine in New York last summer.
The witness also was shown a collection of photographs of male youths between "14 and 17 or 18 years old" and asked if any were a youth Mr. Spence lived with and introduced as his son. "They were a rough bunch of customers," the witness said. "The photographs looked like things that might have been found in the house they raided. I was asked if Craig had a son, and I said I didn't believe he did."
In the August interview, Mr. Spence admitted to using the 34th Place call-boy service, but said the amounts of the charges had been inflated by someone connected with the operation. As a result, he said, he fired his accountant over charges he said he had not authorized.
The accountant, Peter Chase, denied he had been fired and said all the credit-card charges had been verified and each contained Mr. Spence's signature. He steadfastly has declined to comment specifically about his former client, but did confirm that records involving Mr. Spence had been subpoenaed by the Secret Service, that no one from the U.S. Attorney's Office had talked with him and that he was not scheduled to appear before the grand jury.
Mr. Spence, who said in August that he had AIDS and who threatened to commit suicide rather than die of the disease, was scheduled for a hearing Feb. 2 in New York City on weapons and drug charges. He was arrested July 31 at the Barbizon Hotel on East 63rd Street with a 22-year-old Brooklyn man identified by police as Casey Regan, an alleged male prostitute. Two other hearings, one in September and the other last week, had been postponed.
Police seized a loaded .32-caliber pistol and confiscated a small quantity of a white powder believed to be cocaine after a report of a disturbance at the hotel.
During his days as one of Washington's premier hosts, Mr. Spence dressed in finery and lived extravagantly, affecting touches like scarlet-lined capes and stretch limousines.
Among those who attended his parties and were featured at seminars he sponsored were journalists Eric Sevareid, Ted Koppel, William Safire and Liz Trotta; former Ambassadors Robert Neumann, Elliott Richardson and James Lilly; the late John Mitchell, attorney general in the Nixon administration; Mr. Casey and other CIA officials, including Ray Cline, former deputy director of intelligence for the agency; former Lt. Gen. Daniel O. Graham, an expert on the Strategic Defense Initiative who now heads High Frontier Inc.; Sen. John Glenn, Ohio Democrat, and Sen. Frank Murkowski, Alaska Republican; and Joseph diGenova, former U.S. attorney in Washington, and his wife, Victoria Toensing, a former deputy assistant attorney general.
Arnaud de Borchgrave, editor-in-chief of The Times, attended a party for Mr. Lilly hosted by Mr. Spence at the former lobbyist's Kalorama home.
Following the August interview in New York, Mr. Spence returned to Washington and reportedly stayed with friends. He maintained a high profile on the bar and restaurant circuit, and was spotted at several places during the past two months.
Meanwhile, several members of Congress, federal officials, military officers and others have told The Times that they are concerned that the lavish parties and Japanese-sponsored seminars thrown by Mr. Spence, at which the elite of Washington and officials from Japan, China and elsewhere mingled, might have compromised U.S. security.
Rep. Helen Delich Bentley, Maryland Republican, for one, recently questioned the former lobbyist's ties to the Japanese government in a speech on the floor of the House. Citing news articles in the United States and Japan, Mrs. Bentley asked whether plans for the F-16 jet had been transferred by Mr. Spence to a Japanese government official, Motoo Shiina, and later turned over to the Soviet Union.
"I bring this to the floor today, Mr. Speaker, because I am frankly puzzled that these stories are out - in print both in Japan and in America -and there seems to be no official investigation into what to me are very grave charges ," she said.
Photo, Craig Spence
Prostitutes corroborate Frank stories Paul M. Rodriguez The Washington Times; Part A; Pg. A1 February 2, 1990, Friday, Final EditionP enthouse magazine's anxiously awaited account of sexual adventuring by congressmen quotes a female prostitute as corroborating Steven L. Gobie's earlier story that Rep. Barney Frank knew Gobie was operating a bordello in the congressman's Capitol Hill apartment. According to Gobie, Mr. Spence told him, "Do you know what kind of power you can have over people if you've got something on them? . . . I need boys and girls for people in government and high-level businessmen for my parties, for individuals, for whatever comes up." The woman, identified only as Lyn, said Mr. Frank called the apartment from his office before coming home to see whether she had finished with her "trick." She called Mr. Frank's claim that he didn't know what was going on in his Eighth Street SE apartment in his absence "baloney."
The explicit magazine article about Gobie and the sex-for-hire world in which he said he procured prostitutes for famous clients - "Washington's Mayflower Madam" - was written by Art Harris of The Washington Post and Rudy Maxa of Washingtonian magazine.
"Barney would call and ask, 'Are you entertaining company?' " the female prostitute told the authors. "And I'd say, 'Yeah, but they're about to leave.' And he'd say, 'I'll give you 20 or 25 minutes.' "
Many of the details of Gobie's Penthouse story had been reported earlier by The Washington Times, but the article nevertheless cast new light on the underground world to which Gobie says he introduced Mr. Frank.
Mr. Frank's office did not return telephone calls from The Times seeking comment on the Penthouse article. The congressman also would not be interviewed by the authors of the magazine piece.
Mr. Frank, 49, whose actions are under investigation by the House ethics committee, has acknowledged purchasing sexual services from Gobie, 33, and other male prostitutes. He also has admitted employing Gobie as a personal assistant while knowing that Gobie continued to work as a call boy, but has insisted that he did not know that the services of prostitutes were being sold from his apartment.
The congressman has said he threw Gobie out in the summer of 1987, ending their two-year relationship, after he discovered the call boy was running a prostitution business from the apartment.
"Barney was hot," Gobie told the magazine. "He said, 'The landlord found out what's going on. One of your girls asked if this was the place to come for escort interviews. . . . Do you realize what could happen if The Washington Post got a hold of this?' "
But Mr. Frank has conceded that he remained in touch with Gobie through New Year's Day 1988, even allowing the prostitute continued use of his car with its congressional license plate.
In the Penthouse article, Gobie said Mr. Frank even offered him $10,000 to $12,000 to help him relocate to Florida. Gobie, who once said he thought about opening up an escort business along Florida's "gold coast," said he rejected the offer.
Gobie has said Mr. Frank, whom he dubbed Sweet 'n' Low for "sweet guy, low on cash," was aware of the larger prostitution operation and delighted in being told about the call boy's sexual encounters.
Mr. Frank also has admitted to using congressional stationery to write several letters to Virginia probation officials to persuade them to shorten Gobie's probation stemming from felony convictions for drug offenses and for sex offenses involving a minor girl.
Moreover, Mr. Frank has admitted fixing parking tickets that Gobie had obtained while servicing clients using the congressman's Chevrolet Chevette. Although Mr. Frank told The Times he could not remember how many tickets he fixed using his congressional immunity, Gobie estimated the number at between 50 and 60.Gobie told Penthouse that "those letters kept me in operation. . . . The letters and Barney's [congressional] perks were worth far more to me than any fees I could have charged him. I wasn't a gold digger, but I'm not a dumb escort, either."
In fact, Gobie told the magazine that it was Mr. Frank who came up with the idea of hiring the call boy as a driver and providing a cover for the prostitution business, which catered to men as well as women.
"He said, 'You can use me as a reference to the probation people,' " according to Gobie, who said he listed Mr. Frank's house with Virginia law enforcement authorities as his address.
Mr. Frank said in an Aug. 23 interview with The Times that he allowed Gobie to use the apartment as "his house," but admitted that the call boy never lived there - even though the congressman told probation officials and at least one court-appointed social worker that the apartment was Gobie's home address.
Another prostitute, whom Penthouse identified as Ricky, also backed Gobie's claims that Mr. Frank benefited from the prostitution operation with reduced rates for sexual acts.
Ricky, described as an "especially . . . trim, six-foot blond," told the magazine that Mr. Frank paid him a discounted $100 fee on one occasion for a sexual tryst arranged by Gobie and that he agreed to waive his usual referral fee as a favor to the congressman.
Gobie said he made about six prostitutes in all available to Mr. Frank at reduced rates.
Mr. Frank acknowledged in a Sept. 25 Newsweek magazine interview that he purchased sexual services from several male prostitutes but did not elaborate other than to say: "I knew it was wrong, but I just couldn't sit home."
Gobie, according to Penthouse, said Mr. Frank also daydreamed about living a secret life as a paid escort. "He said, 'If I'd been 20 years younger, I would have liked to have tried hustling. . . . I think it would be a thrill to get paid for sex," Gobie quoted the congressman as saying.
The Penthouse article also expanded on the relationship between Gobie and Craig J. Spence, the former lobbyist who was under investigation by the U.S. Attorney's Office in connection with alleged bribery of Secret Service officers, unauthorized White House tours and credit card abuse connected to a male prostitution ring he frequented.
The magazine said Mr. Spence had agreed to "provide lurid details of Washington's bisexual wonderland." But before the interview could occur, Mr. Spence committed suicide in Boston on Nov. 10.
In the magazine, Gobie - who was not a source of The Times on the Spence story - also confirmed many of the things others had said about the lobbyist with ties to the upper echelons of the Reagan administration.
He said Mr. Spence tried to recruit him to help "in a sordid scheme to blackmail the powerful politicians invited to his lavish parties."
Gobie also said he "sexually serviced" Mr. Spence for money three times and, according to the magazine, "watched [the lobbyist] snort cocaine and then do sit-ups as he hung upside down, half-naked, in gravity boots."
According to Gobie, Mr. Spence told him, "Do you know what kind of power you can have over people if you've got something on them? . . . I need boys and girls for people in government and high-level businessmen for my parties, for individuals, for whatever comes up."
The magazine quoted Gobie as saying Mr. Spence was "the most dangerous man I'd ever met. If he hadn't turned into such a crackhead, he could have blackmailed half this town. He used to say, 'Hey, foreign intelligence agencies are doing it.' "
* Michael Hedges contributed to this report. The Washington Post
MINGO HIRES CONTROVERSIAL DOCTOR Maryclaire Dale The Charleston Gazette; News; Pg. P1A July 01, 1997, TuesdayA Williamson doctor facing an August medical licensure hearing and a possible criminal retrial in Kentucky was recently named Mingo County's medical examiner. "A physician has nothing to gain from a suicide. A mortician does." Diane Shafer , who was charged with bribing a Kentucky hearing examiner she later married, will replace former sheriff and funeral home owner Gerald Chafin, who had been named county coroner earlier in the month. Shafer is apparently now married to or involved with Henry Vinson, the former Mingo County coroner who served time in prison for running a Washington, D.C., male prostitution ring which reached the White House.Since 1975, all West Virginia counties have been required to have a physician serve as a county medical examiner, responding to homicides, suicides, accidents and questionable deaths. The examiner's role is to survey the body, talk to police on the scene, and gather information for the state medical examiner offices in Charleston, Morgantown and Wheeling.
The Mingo County post had been vacant for about a year, forcing police to wait up to two or three hours for a medical examiner to come from Charleston.
In early June, Mingo County commissioners appointed Chafin county coroner. He has had his own legal troubles in recent years, having been twice indicted on federal wiretap charges that were later dismissed.
"I told them he really doesn't fit the guidelines. Do you have a physician down there? Then she [Shafer] called," State Medical Examiner Irwin Sopher said.
Sopher knew of Shafer's controversial history, which included a bribery conviction in Kentucky that was later overturned, the current loss of her Kentucky medical license and a prior suspension of her West Virginia medical license.
"Well, she has a license to practice medicine, and I discussed some of these things with her, and I think she'll be able to handle some of this," Sopher said. "The job is mainly a reporting position.
"They don't do examinations, or actual autopsies."
He said the job pays $50 per case, making it difficult sometimes to attract physicians. At times, nurses, dentists, funeral directors or other people have served as interim coroners, as is currently the case in about six counties, Sopher said.
Sopher said the Mingo County medical examiner would typically handle about 60 cases a year.
Shafer's criminal conviction on bribery charges in Kentucky was overturned in 1995 by the state's Supreme Court.
The retrial had been set for earlier this year but was apparently postponed. Shafer said she thinks the charges will be dropped. She was convicted in Kentucky state court of bribing Gregory Holmes, a Kentucky hearing examiner who was reviewing charges she overbilled insurers for her work. Holmes, a blind and already married 39-year-old lawyer, cleared her of wrongdoing 10 days after they were allegedly married and after Shafer allegedly gave him $ 42,500. Holmes, who denied marrying Shafer, was convicted of bigamy and bribery. A medical board panel in West Virginia found probable cause to take
Shafer to a hearing, now set for Aug. 20, 21 and 22, on charges she fraudulently signed four disability papers during a period when her West Virginia license was suspended.Shafer said Monday someone approached her to apply. "Well, people ask me to do house calls. This is certainly less work than that," she joked, when asked why she wanted the post.
She said the job should be held by physicians as opposed to funeral directors. "A physician has nothing to gain from a suicide. A mortician does. He would probably process the body for burial," she said. "I don't think it's [the funeral industry] a charity business."
She could not be reached for comment later in the evening about her relationship with Vinson.
Shafer, who ran unsuccessfully for the House of Delegates in 1996, gave her age Monday as 42.
According to a story published under her byline in a Temple University alumnae magazine, she graduated from Temple's medical school in 1976.
The story described her long days working in an impoverished Appalachian community.
Shafer collected more than $ 500,000 in a six-year period from the West Virginia Workers' Compensation Fund alone.
During the time of her licensure troubles, when she had an office in Kentucky but no license and a license in West Virginia but no office, she was photographed handing pieces of paper presumed to be prescriptions to patients out of her car at a small airfield in Mingo County.
Chafin said Monday he was not upset Shafer replaced him. "If we have an M.D. that is agreeable, then it is to be an M.D.," he said. Sopher, told later that Shafer appears to be involved with Vinson, said he wanted time to think about the situation before commenting on her fitness for the job.
Vinson's sister, Brenda Copley of Fort Gay, said Monday that as far as she knew, Vinson married Shafer after his late 1995 release from federal prison.
A man who answered the phone at Shafer's medical office Monday initially identified himself as Shafer's husband, Henry Shafer, and said he could answer questions about her medical examiner appointment.
"We were married years ago, and then we tried it again recently," he said.
Later in the day, the same man denied saying he was her husband and made a series of sexually explicit and racist remarks when asked if his name was actually Henry Vinson.
"Would you like to come and have sex with me, you f-- n--- b--. What the hell is your problem?" he shouted loudly into the office telephone line.
Several longtime Williamson residents said Monday Shafer has been seen around town with Vinson.
Vinson served as Mingo County coroner from 1985 to 1986 before resigning after a widow complained he left her husband's body in a funeral home for 42 days because of her inability to pay him. In 1990, he was charged with running prostitution rings which advertised in Washington newspapers under the names "Man to Man" and "Dream Boys."
Prosecutors said the business made $ 500,000 to $ 1 million between 1987 and 1989, and clients included low-level staffers in the Reagan and Bush White House.
Vinson, who was represented by lawyer-turned-legal commentator Greta Van Susteren, eventually pleaded guilty to racketeering and credit card fraud charges in the 43-count indictment.
During a 1982 investigation into the use of "drugs and sexual activityto lobby congressmen," Shoffler did indeed advise congressionalinvestigators to look into a male prostitution ring that serviced Capitol Hill.The veteran police detective believed that the sex ring might be linked tohigh-flying Washington lobbyist, Robert Keith Gray, who had more than a fewconnections to CIA folk. According to Peter Dale Scott, some Washingtoninvestigators also suspected that the gay sex ring was connected to DC crimeboss Joe "the Possum" Nesline.
Most interestingly, the Watergate madam, Heidi Rikan, was a girlfriend ofmobster Joe "the Possum" Nesline, whose alleged connection to theCapitol Hill gay sex scandal a decade later aroused the suspicion of Washingtondetectives.
Assorted boyfriends and former husbands of both Rikan and her sometimesroommate, Maurine "Mo" Biner (who married key Watergate figure JohnDean, which makes Mo a pivotal character, according to scandal revisionists)were associated with the Quorum, an early 1960s "swingles' club run byBobby Baker, a former aide to Lyndon Johnson. Scott surmises that all roads ledto Baker's club for a reason: the Quorum functioned a lot like themob-and-intelligence-infested sex traps of the 1970s.
It was Bobby Baker who introduced President Kennedy to an East Germanbombshell named Ellen Rometsch, whom JFK, true to form, promptly bedded. Scottspeculates that J. Edgar Hoover leaked word of this international indiscretionto the press. Whether or not Hoover was behind the leaks, they nearly ignited aglobal scandal.
Hougan, Jim. "Secret Agenda: watergate, Deep Throat and the CIA."New York: Random House, 1984.
Scott, Peter Dale. "Deep Politics and the Death of JFK." Berkeley,CA: University of California press, 1993.
[And who was one of Nesline's best buddies, andlandlord? Yep. Nathan Landow. Mr. Landow knows the 'game', and has for a longtime.]
The individual further advised me of circumstances which indicated thatthe investigation into the activity of the Finders had become a CIA internalmatter. The MPD report has been classified SECRET and was not available forreview. I was advised that the FBI had withdrawn from the investigation severalweeks prior and that the FBI Foreign Counter Intelligence Division had directedMPD not to advise the FBI Washington Field Office of anything that hadtranspired.No further information will be available. No further action will be taken.
ACTION TO BE TAKEN BY LESD/TECS:
No action to be taken on the basis of this report.
U.S. EXPANDS PROBE OF 'CALL BOY' RING Paul M. Rodriguez and George Archibald The Washington Times; Final Section: A Page: A1 Thursday, July 6, 1989A Secret Service officer assigned to the midnight shift at the White House was interrogated for more than 10 hours Monday about his association with Craig J. Spence - Washington lobbyist; host to the capital's political, business and media elite; and patron of homosexual call-boy services - and the officer was said to have failed a lie-detector test.The officer, Reginald A. deGueldre, accepted a gold Rolex wristwatch valued at $8,000 in return for "unspecified favors" from Mr. Spence, for whom he arranged at least four middle-of-the-night private tours of the White House for high-ranking military officers, well-known figures in the news media and male prostitutes.
Mr. Spence, said one law enforcement official close to the case, also asked Officer deGueldre to intervene on his behalf to help clear Secret Service records of a 1987 arrest at a White House gate for disorderly conduct, described by one source as a lewd sex act. Officer deGueldre has been told he will be called to testify before a federal grand jury.President Reagan was in the White House residential quarters during one of the Spence visits, which was restricted to the West Wing, site of the Oval Office.
U.S. Attorney Jay Stephens, meanwhile, widened his investigation of the homosexual prostitution ring, which has ensnared Mr. Spence and several key Reagan and Bush administration officials.
Mr. Stephens' office is now looking closely at the White House tours and the activities of Mr. Spence, 48, a consultant to Japanese government officials and others.
John Pyles, the Secret Service special agent assigned to direct the investigation of allegations of breaches of White House security, said only, "We're not in a position to talk about this."
Mr. Pyles and Secret Service spokesman Allan Cramer said they were ordered to refer inquiries about the investigation to Assistant U.S. Attorney Alan Strasser, who is preparing evidence for presentation to the federal grand jury.
"You'd have to ask them why they referred you to me," Mr. Strasser said yesterday. "There is nothing I care to say to you about this at this time."
The Secret Service, after accounts were published in The Washington Times, has talked to people who took the July 3, 1988, White House tour set up by Mr. Spence, several of those interviewed say.
The agents are investigating possible security breaches by those who entered the White House compound as well as by Officer deGueldre, The Times was told.
One of those reached yesterday by the Secret Service said questioning focused on Mr. Spence and his associates. Questions were also asked about Mr. Spence and the use of cocaine.
Officer deGueldre failed the portion of a polygraph test involving favors he may have done for Mr. Spence, the law enforcement official said. The Secret Service officer visited on several social occasions with Mr. Spence, who was said to have held out the offer of a high-paying security industry job in Florida to him.
Officer deGueldre, who said he immediately reported himself to his superiors when the story of the late-night Spence visit appeared in the June 29 editions of The Washington Times, said he had done nothing wrong.
"To this day, I still believe that Craig is still an American hero," the Secret Service officer said. "The guy never hit on me. . . . My relationship to him was officer to citizen. . . . That's how I met him - when I was walking the street (as a patrolman in the embassy area of the fashionable Kalorama neighborhood where Mr. Spence lived).
"The first time he called me was maybe five years later," Officer deGueldre said. "He said he wanted to be my friend and invited me to a party. . . . I was shocked.
"I was introduced on a one-to-one basis with some very important people. . . . I met top brass, politicals . . . I was invited to a lot of functions at Craig's house. There was all kinds of heavy types there."
But, the officer added: "I had no idea about sex, drugs, nothing like that. . . . A lot of stuff now makes sense though. . . . I always suspected he worked for the CIA."
Officer deGueldre said he understands, given his free access to the White House and the president's living quarters, why the Secret Service is concerned about the Spence tours.Mr. Spence, said one law enforcement official close to the case, also asked Officer deGueldre to intervene on his behalf to help clear Secret Service records of a 1987 arrest at a White House gate for disorderly conduct, described by one source as a lewd sex act.
Three persons who went along on the post-midnight tour of the White House arranged by Mr. Spence July 3, 1988, recalled being admitted by a uniformed Secret Service officer named "Reggie."
"Reggie met us at the gate, and he was the one who let us in," one man said in an interview. "There was another guard who was obviously upset by this."
The three persons also remembered seeing "Reggie" at various parties given by Mr. Spence at which "Reggie" appeared to be serving as a bodyguard or security man for the host.
Others said Mr. Spence used "Reggie" to arrange other White House tours, including one that Mr. Spence took with a 15-year-old boy, whom he identified as his son Will.
That tour, according to former friends and associates of Mr. Spence, occurred June 29, 1988. The "son" had a Southern accent and was actually a male prostitute who provided sexual services for Mr. Spence and several male friends.
Mr. Cramer, the Secret Service spokesman, declined to answer questions about these tours, too. All inquiries about Mr. Spence's past White House dealings and visits were covered by the gag order imposed by the U.S. Attorney's Office, he said.
Evidence concerning Mr. Spence - even information about his past White House connections - is being tightly held by the Secret Service "because it's tied into a criminal fraud case we are investigating."
"We're under orders from the U.S. attorney. . . . The U.S. attorney has restricted us from commenting on that case at all, or anything peripheral to it, because of the judicial tie-in," Mr. Cramer said.
Mr. Stephens' office, which first agreed to discuss the call-boy ring investigation with reporters for The Times last week but later in the day declined to do so, did not respond to inquiries yesterday.
The U.S. Attorney's Office to date has said only that it is investigating "possible credit-card fraud" in connection with arrests made in raids on a house on 34th Place NW, described as the headquarters of a homosexual prostitution ring operating as an escort service.
The Times learned that the FBI is eager to investigate illegal interstate prostitution activities and other possible federal violations incurred by operators of the homosexual prostitution ring, but evidence confiscated by the Secret Service during raids on the house on 34th Place in February and in May is not being shared with the bureau.
This evidence includes information involving high-level government officials and political celebrities who were clients of the ring.
Several law enforcement authorities said relations between local and federal law enforcement agencies have been strained by the Secret Service's behavior in the call-boy case.
The Secret Service - an agency within the Treasury Department whose 1,900 special agents and 960 uniformed personnel are charged with investigating currency counterfeiting and credit-card fraud as well as protecting the president and vice president - is largely dependent on the Metropolitan Police Department, U.S. Capitol Police, National Park Police, the FBI and other law enforcement agencies, Mr. Cramer acknowledged in an interview yesterday.
For example, when the Secret Service arrests anyone on the White House grounds, the person is turned over to D.C. police for "processing, transportation and lock-up," Mr. Cramer said. He declined to discuss allegations that the Secret Service had "frozen out" the FBI in the call-boy investigation.
Craig Spence was linked this week to a Japanese politician, Motoo Shiina, a leading member of the ruling Liberal Democratic Party who is considered an inside favorite to succeed Prime Minister Sousuke Uno.
Federal court records in Washington revealed that Mr. Spence and Mr. Shiina engaged in a bitter lawsuit in 1984 over the ownership of a house on Wyoming Avenue NW, valued last year at $1.15 million. The two-story Victorian house in which Mr. Spence later lived, was planted with electronic bugs and video recording equipment that, according to homosexual call boys and others who routinely visited the house, was used to make incriminating tapes to blackmail guests.
Mr. Spence has told several current and former friends that, after obtaining the money, he blackmailed Mr. Shiina by threatening to reveal that the cash to buy the house had been brought into the country in violation of currency regulations. Mr. Shiina settled the lawsuit out of court after he was ordered to answer questions about the money's origins.
* Michael Hedges and Jerry Seper contributed to this report.
A little outrage for the children? Wesley Pruden The Washington Times; Part A; NATION; PRUDEN ON POLITICS; Pg. A4 August 25, 1989, Friday, Final EditionO .K., you guys over there on 15th Street, if you sleep through this one, too, you ought to go back to Dubuque to sell shoes. That's the energy and curiosity level of a lot of Washington reporters. They get a press flack's lie and that satisfies them. When last we left those wonderful folks at The Post, they were explaining that the way to cover the Great Summer Sex Scandal, starring Craig Spence and a cast of frightened dozens, was to tell their readers that actually there's no story there."The Bombshell That Didn't Explode" is the way Eleanor Randolph, the O.P. media critic, described on Aug. 1 the story that everybody in town has been talking about since the story broke here June 29. The Wall Street Journal even did a story about how The Times had got the best of The Post.
"Journalists have been left debating whether The Times published a blockbuster or a 'blockbluster,'" she wrote. The second 'l' in "blockbluster" was supposed to be the equivalent of a nudge and a wink from the classy Miss Randolph.
Leonard Downie Jr., the managing editor at The Post, stroked his chin whiskers, put on his wise-old-owl look, and told her: " . . . we [had] already reported about this raid and we wondered what more there was in this story that we would want to publish." What he didn't say, but what his readers could only conclude, was that he couldn't get anybody to find out. So he just wondered.
The usual suspects were brought in to help. Jack Nelson of the Los Angeles Times conceded that his newspaper defers to The Post and The New York Times to decide what's news in Washington, and said he sent reporters out to see whether there was a story and they couldn't find anything.
Howell Raines of The New York Times seemed, as usual, a bit dazed by it all. He agreed there was "obviously some kind of investigation going on," but danged if he could figure out what it was about. He said
he would wait, as befits a proper New York Timesman, to see whether there was anything in the story about "public policy." (He ought to thinka little faster, since he's keeping Mr. Nelson's California readers waiting.) "Other reporters around Washington said they were interested in pursuing the story but decided against it when they checked with the Secret Service and other investigative agencies and were told the raid was relatively routine."
Alas, she's probably right. That's the energy and curiosity level of a lot of Washington reporters. They get a press flack's lie and that satisfies them.
Fortunately for the community, that doesn't satisfy The Times, and in particular it doesn't satisfy Paul Rodriguez and George Archibald, the two reporters whose work is arrayed across the top of Page One this morning.
Despite the lady-like grunting and straining by Miss Randolph, seeking to explain why The Post never considered this a story, her editors have in fact tried to keep the story in sight. They ran not once but twice a story on the White House guard's accepting a gold watch from Craig Spence. Despite The Post's disdainful insistence that the story is merely about a commonplace local prostitution ring, its editors devoted 60 inches of newsprint to profile Henry Vinson, the "madame" of the ring. Despite scoffing at the importance of mid-level White House figures, as named in The Times' coverage, they ran a fanciful front-page story, citing unnamed sources (one of whom is said to be John Belushi, interviewed by Bob Woodward at Forest Lawn) about Fawn Hall, a mere secretary at the White House, who was supposed to be snorting coke.
But not to be too hard on Miss Randolph, who was only doing what she was told, and whose heart may not be in the debunking, anyway. Her husband, Peter Pringle, a reporter for the London Independent, has written several stories about the call boy scandal, with none of The Post's pouting skepticism.
Now, with this morning's disclosures, a little domestic harmony can descend on the Pringle/Randolph breakfast table. "The bombshell" has exploded at the seat of Ben Bradlee's pants.
This morning's accounts show the male prostitution ring to have reached into Congress, the White House and a public elementary school. The disclosures about Barney Frank won't surprise many of us. But unless this city, the Congress, the journalists who live here, and the U.S. attorney's office have lost the last vestige of public and private decency, we can expect a little outrage in behalf of our children.
Wesley Pruden is managing editor of The Times.
West Virginia's Chief Medical Examiner Sopher, who hired Diane Shafer was on the medical team that examined the remains in Oswald's coffin todetermine the identity of the exhumed corpse.
Alexandra Colen, "Some Post-Christian Realities," The Human LifeReview, Spring 1997 issue, pp. 53-60.
The author, a member of the Belgian Parliament and former lecturer at theUniversities of Ghent and Antwerp, discusses the pervasiveness and excesses ofpedophilia and pedophilia-related murders and underground events ("The PinkBallets") in Belgium. Pink Ballets andProtected Pornographers ... "Post-Christian Realities" byAlexandra Cohen (Human Life Review, Spring 1997)
Of course, this is all very complicated and convoluted, that's how they know they can get away with anything.That's how they got away with the Kennedy hit. By burying their actions under a mountain of outrageous and heinous acts, they can count on most peoples natural tendency to disbelieve that such nice looking people like the Bushes could be capable of being such monsters - That such evil could exist. It is chilling that such evil people like the Bush family really do exist. But they do.Know Your Enemy
Wake up those around you voxfux
The Genesis and Evolution of the Jeffrey Epstein, Bill Clinton Relationship
Sat, 24 Aug 2019 14:35
O n August 10 th , and for several days after, speculation swirled after it was announced that Jeffrey Epstein had been found dead in his cell. His cause of death has officially been ruled suicide by hanging.
Epstein, the billionaire pedophile and sex trafficker with a myriad of connections to the rich and powerful in the United States and several other countries, had told those close to him that he had feared for his life prior to his sudden ''suicide,'' the Washington Post reported, while his defense lawyers claimed that he had planned to cooperate with federal authorities.
Following the controversial conclusion by the New York Medical Examiner that Epstein's death was a suicide '-- a conclusion contested by Epstein's attornies as well as by independent forensic pathologists, given the apparent evidence pointing towards strangulation '-- corporate media coverage of the Epstein case has slowed to a trickle, save for sensationalist stories about his alleged co-conspirator Ghislaine Maxwell and new salacious details of his past. Gone from corporate media are any hints of the larger scandal, revolving around the admission that Epstein had ''belonged to intelligence.''
In this four-part series, '' The Jeffrey Epstein Scandal: Too Big to Fail ,'' MintPress has revealed that Epstein's activities '-- a sexual blackmail operation involving minors and connected to intelligence agencies '-- was one of many such operations that have taken place for decades, developing from the nexus forged between the CIA, organized crime and Israeli intelligence shortly after World War II.
As Part II of this series revealed, these sexual blackmail operations proliferated during the Iran-Contra affair, which involved this same dark alliance between U.S./Israeli intelligence and organized crime. Though this series has thus far largely focused on the ties of Republican officials to those operations and associated crimes, the final installment of this series will focus on Democratic politicians, namely the Clinton family, and their ties to this same network as well as Jeffrey Epstein.
The Clintons' own involvement in Iran-Contra revolved around the covert activities at Arkansas' Mena Airport, which involved the CIA front company Southern Air Transport and occurred while Clinton was governor. Just a few years into the Clinton presidential administration, Leslie Wexner and Jeffrey Epstein would play a major role in Southern Air Transport's relocation to Columbus, Ohio, leading to concerns among top Ohio officials that both men were not only working with the CIA, but that Wexner's company, The Limited, sought to use the CIA-linked airline for smuggling.
During that same period of time, Epstein had already forged close ties to important Clinton White House officials and prominent Clinton donors like Lynn Forester de Rothschild and made several personal visits to the official presidential residence.
Some of these ties appear related to Epstein's shady financial activities, particularly involving currency markets and offshore tax havens '-- activities he began to perfect while working for prominent Iran-Contra figures in the early 1980s, several of whom were tied to the CIA-linked bank Bank of Credit and Commerce International (BCCI) and had known relationships with Israeli intelligence, namely the Mossad. The nature of Epstein's work for these individuals and other evidence strongly suggests that Epstein himself had a relationship with BCCI after leaving Bear Stearns and prior to the bank's collapse in 1991.
Of particular importance are Epstein's relationship to the Clinton Foundation and the alleged role of Epstein's Virgin Islands-based hedge fund and the Clinton Foundation in money laundering activity, a relationship still under investigation by MintPress .
It is this tale of intrigue that fully reveals the extent to which this decades-old alliance between organized crime, the CIA, and Israeli intelligence has corrupted and influenced politicians of both political parties, both through the use of sexual blackmail and through other means of coercion.
Far from being the work of a single intelligence agency or a single country, the power structure revealed by this network connected to Epstein is nothing less than a criminal enterprise that transcends nationality and is willing to use and abuse children in the pursuit of ever more power, wealth and control. Existing for decades and willing to use any means necessary to cover its tracks, this criminal racket has become so integrated into the levers of power, in the United States and well beyond, that it is truly too big to fail.
Iran Contra, Mena Airport and the Clintons When one thinks back to the now-famous Iran-Contra scandal, names like Ronald Reagan, Oliver North and Barry Seal comes to mind, but former President Bill Clinton also played an outsized role in the scandal '-- using his home state of Arkansas, where he was then serving as governor, as a sort of rallying point for the CIA's U.S.-side of the Central American operation.
In fact, during Clinton's reign as governor a small town called Mena, nestled in the Ozark Mountains west of Arkansas' capital Little Rock, would be propelled into the national spotlight as a hub for drug and arms smuggling and the training of CIA-backed far-right militias.
Under the close watch of the CIA, then led by William Casey, the Mena Intermountain Regional Airport was used to stockpile and deliver arms and ammunition to the Nicaraguan Contras. The arms were sometimes exchanged for cocaine from South American cartels, which would then be sent back to Mena and used to fund the covert CIA operation.
Though efforts have been made to dismiss Clinton's role in the scandal, his direct intervention in the Contras' attempts to overthrow the Sandinista government of Nicaragua suggests Clinton had some sort of personal stake in the efforts and was unlikely aloof to the major smuggling operation taking place in his state while he had been governor. In fact, while governor, Clinton split with many other state governments in sending a contingency of the Arkansas National Guard to Honduras to train the Nicaraguan Contras on how to overthrow their Sandinista government. Clinton would also discuss his first-hand knowledge of the operation with now-Trump administration Attorney General William Barr.
Much of this channeling of both weapons and drugs was carried out by notorious drug smuggler and alleged CIA/DEA operative Barry Seal. According to the book Whiteout: the CIA, Drugs and the Press by Alexander Cockburn and Jeffrey St. Clair:
A federal investigation aided by the Arkansas State Police established that Barry Seal, a drug dealer working for the Medellin cartel as well as with the C.I.A. and the D.E.A., had his planes retrofitted at Mena for drug drops, trained pilots there and laundered his profits partly through financial institutions in Arkansas. Seal, at this time was in close contact with [Oliver] North, who acknowledged the relationship in his memoir. These were the years in which North was constructing his covert supply lines for the contras.''
Seal was known to use aircraft that belonged to the company Southern Air Transport and he also employed flight crews that worked for that same company. Southern Air Transport, formerly Air America, was once directly owned by the CIA and today is remembered for being a CIA front during Iran-Contra. Less known is the relationship between the CIA-linked airline and Leslie Wexner and his then-close associate Jeffrey Epstein, which will be discussed in detail later in this report.
Seal seemed to always operate with much less than six degrees of separation from Clinton while the latter served as governor. In his 1999 confessional expose, Cross-fire: Witness in the Clinton Investigation , former Arkansas policeman turned personal driver and security guard for Bill Clinton, L.D. Brown, recounts how Clinton encouraged him to seek out a post at the CIA. Clinton allegedly went so far as to edit the essay Brown wrote for this employment application. The essay topic was drug smuggling in Central America. Upon receiving his application, the CIA put Brown in touch with none other than Barry Seal. Seal would later be gunned down in 1986 while serving six-months probation for drug-smuggling charges.
Seal was not the only affiliate of Oliver North running a Contra-connected operation in Arkansas. Terry Reed, who had worked for North since 1983, claimed to have been put in touch with Seal by North and established a base just 10 miles north of Mena '-- in Nella, Arkansas '-- where ''Nicaraguan Contras and other recruits from Latin American were trained in resupply missions, night landings, precision paradrops and similar maneuvers,'' according to Cockburn and St. Clair. Reed further asserted that drug money was being laundered through Arkansas financial institutions.
After Clinton's half-brother Roger was busted for cocaine smuggling (Clinton would later pardon him while president) the CIA sought to move Contra operations out of Arkansas, hoping to put a damper on the increasingly public and sloppy Arkansas-based operation. According to Terry Reed in his book Compromised: Clinton, Bush and the CIA , co-written with John Cummings, a hushed meeting was held in a bunker at Camp Robinson in North Little Rock, Arkansas. During the meeting, William Barr, who represented himself as the emissary of then-CIA Director Bill Casey told Clinton:
The deal we made was to launder our money through your bond business but what we didn't plan on was you and your n****r here start taking yourselves seriously and purposely shrinking our laundry.''
Bar chastised Clinton for his sloppy handling of the delicate operation and his half-brother's very public fall from grace. He would later tell Clinton, according to Reed ,
Bill, you are Mr. Casey's fair-haired boy '... You and your state have been our greatest asset. Mr. Casey wanted me to pass on to you that unless you fuck up and do something stupid, you're No. 1 on the short list for a shot at the job that you've always wanted. You and guys like you are the fathers of the new government. We are the new covenant.''
Attempts to investigate Clinton's role in the Mena operations and more broadly in the Iran-Contra affair were allegedly axed by Clinton's own confidantes, who consistently denied he played a role in the scandal. According to the Wall Street Journal , former IRS investigator William Duncan teamed with Arkansas State Police Investigator Russell Welch in what became a decade-long battle to bring the matter to light. In fact, of the nine separate state and federal probes into the affair, all failed.
Duncan would later say of the investigations, ''[They] were interfered with and covered up, and the justice system was subverted,'' and a 1992 memo from Duncan to high-ranking members of the attorney general's staff notes that Duncan was instructed ''to remove all files concerning the Mena investigation from the attorney general's office.'' The attorney general, serving under George H. W. Bush, at that time was William Barr, who is currently attorney general under Trump.
The Bank of Crooks and Criminals International Another Clinton connection to the CIA and the Iran-Contra affair runs through the family's connection to Arkansas financier Jackson Stephens and the CIA-linked Bank of Credit and Commerce International (BCCI), which critics nicknamed the ''Bank of Crooks and Criminals International.'' Stephens was among the richest people in Arkansas and was also a major donor and backer of Ronald Reagan, George H.W. Bush and Bill Clinton . He also played a key role in the rise of Walmart .
Jackson Stephens and other members of the Stephens family bankrolled Bill Clinton's rise to political prominence , contributing large sums of money to both Clinton's gubernatorial and his later presidential campaigns. In addition, Worthen Bank, which was majority-owned by Stephens, provided Clinton's first presidential campaign a $3.5 million line of credit. In addition, Stephens' many businesses were frequently represented by the Rose Law Firm, where Hillary Clinton was a partner.
A redacted FBI report from 1998 describes Stephens as having ''lengthy and continuing ties to the Clinton administration and associates'' and also discusses allegations that Stephens has been involved in the ''illegal handling of campaign contributions to the Democratic National Party.''
BCCI had originally been founded by a group of bankers from Pakistan, though Newsweek later reported that CIA officials appeared to have been involved in the bank's founding and that BCCI founder Agha Hasan Abedi had been encouraged by the CIA to found the bank after ''the agency realized that an international bank could provide valuable cover for intelligence operations.'' CIA documents that later surfaced during congressional hearings on the bank's activities and related scandals stated that BCCI was directly involved in ''money laundering, narco-financing, gunrunning and holding large sums of money for terrorist groups.''
Evidence in the case against BCCI shows cocaine seized from a warehouse and suitcases full of cash to be laundered. Photo | FLMD District Court
Though BCCI was known for its CIA links, Catherine Austin Fitts '-- former Assistant Secretary for Housing''Federal Housing Commissioner at HUD during the George H. W. Bush administration, and investment banker with the firms Hamilton Securities Group and Dillon, Read & Co. '-- believes that those links went well beyond the CIA. Fitts '-- who was placed on the board of the BCCI subsidiary First American Bank following BCCI's collapse '-- told MintPress that, after reading through troves of documents regarding the bank's activities prior to its implosion, it was clear to her that there was ''no way'' its clandestine activities were carried on without the full knowledge of the Federal Reserve, specifically the Federal Reserve Bank of New York, and the White House.
BCCI also played a key role in the Iran-Contra affair and accounts of the bank were used to send payoffs to individuals linked to the scheme. Adnan Khashoggi, a key figure and intermediary in the scandal, used one BCCI account to move more than $20 million related to illegal arms sales and BCCI created fake documentation, including checks signed by Oliver North, allowing the sale to go forward. The bank later, when its activities subsequently came under congressional scrutiny, claimed it had no records of these transactions.
In addition, BCCI appears to have been involved in the sex trafficking of underage girls, including girls that had not yet reached puberty. According to the report entitled '' The BCCI Affair ,'' by then-U.S. Senators John Kerry (D-MA) and Hank Brown (R-CO), BCCI officials were alleged to have obtained leverage with powerful individuals, including prominent members of the ruling families of the United Arab Emirates (UAE), by providing them with young virgins.
The report (page 70) specifically states :
According to one U.S. investigator with substantial knowledge of BCCI's activities, some BCCI officials have acknowledged that some of the females provided some members of the Al-Nahyan family [one of the ruling families in the UAE] were young girls who had not yet reached puberty, and in certain cases, were physically injured by the experience. The official said that former BCCI officials had told him that BCCI also provided males to homosexual VIPs.''
BCCI was largely brought into the United States business community through the efforts of Jackson Stephens and Bert Lance, former budget director for Jimmy Carter, who assisted with BCCI's acquisition of First American Bank. The law firm involved in this effort was Arkansas' Rose Law Firm and it involved several of the firm's lawyers, including Hillary Rodham Clinton, Webster Hubbell and C.J. Giroir. Also involved in the effort was Clark Clifford, former Secretary of Defense under Lyndon B. Johnson, and Kamal Adham, former director general of Saudi intelligence.
One of the men added to the BCCI board after the acquisition of First American Bank was Robert Keith Gray, whom Newsweek described as often having ''boasted of his close relationship with the CIA's William Casey; Gray used to say that before taking on a foreign client, he would clear it with Casey.'' As was discussed in Part II of this series, Gray was also an expert in homosexual blackmail operations for the CIA and was reported to have collaborated with Roy Cohn in those activities. Some of Gray's clients at the powerful PR firm he led, Hill & Knowlton, included BCCI clients and Mossad-linked individuals, such as Adnan Khashoggi and Marc Rich.
While the Rose Law Firm was assisting BCCI's entrance into the American financial system, it also represented the Stephens-owned financial services company, Stephens Inc., as well as the data-processing company Systematics Inc., which Stephens acquired in the late 1960s. According to James Norman in his book The Oil Card: Global Economic Warfare in the 21st Century , Systematics was ''a primary vehicle or front company for the National Security Agency in the 1980s and early 1990s to market and implant bugged software in the world's major money-center banks and clearinghouses as part of the Reagan/Bush 'follow the money' effort to break the Soviets.''
The late journalist Michael Ruppert asserted that this ''bugged software'' was none other than the Promis software, which both U.S. and Israeli intelligence had bugged in order to spy on intelligence and which had been marketed in part by Robert Maxwell, father of Jeffrey Epstein's madam, Ghislaine Maxwell. Ruppert cited Systematics as ''a primary developer of Promis for financial intelligence use.'' Promis had originally been leased by Inslaw Inc., a small software company founded by Bill Hamilton, to the Department of Justice '-- which later stole it from Inslaw, forcing it to declare bankruptcy.
According to a 1995 document sent on behalf of Inslaw's founders to then-independent Counsel Ken Starr that asked him to review Inslaw's case, Systematics had ''covertly implanted [software] into the computers of its bank customers'' that allowed ''allied intelligence agencies surreptitiously to track and monitor the flow of money through the banking system'' and had done so at ''the behest of the U.S. National Security Agency (NSA) and its partner in Israeli intelligence.'' Inslaw also stated that the software was used by these same intelligence agencies in the ''laundering of money, especially drug profits.''
Systematics also had a subsidiary in Israel that, according to a former Israeli intelligence officer, was operated by contractors for the Mossad and sold software to banks and telecommunications companies. According to Richardson's letter, that Israeli subsidiary of Systematics also had a Massachusetts-based front company, which was partially owned by a former U.S. intelligence official.
Two partners in the Rose Law Firm who would later serve in the Clinton administration, Vince Foster and Webster Hubbell, acquired significant financial interests in Systematics through ownership in Alltel, which purchased Systematics in the early 1990s. The Hamiltons also provide considerable evidence that Foster's distress prior to his death in 1993 appears to have been related to concerns about litigation involving Systematics and the on-going litigation over Promis' theft.
BCCI itself was known to employ the Promis software after its theft by the DOJ; and one of its subsidiaries, First American Bank, also '' filtered PROMIS money '' '-- i.e., laundered the money generated from the sale of the stolen Promis software '-- according to the late journalist Danny Casolaro.
Casolaro had been investigating an international crime syndicate he termed '' the Octopus '' at the time of his death in 1991. Casolaro believed that this ''Octopus'' involved powerful individuals in the private and public sectors as well as the criminal underworld and that they were collectively responsible for some of the biggest scandals of the 1980s, including Iran-Contra, BCCI and the theft of the Promis software.
Casolaro had told friends and family that he was close to concluding his investigation and several people close to him had seen documents involving money transfers involving BCCI and the World Bank to people involved in these scandals, such as Earl Brian and Adnan Khashoggi. Casolaro went to Martinsburg, Virginia to meet with some sources to get the final piece of the puzzle and ''bring back the head of the Octopus.'' Two days after arriving in Martinsburg, Casolaro was found dead in his hotel room and his briefcase full of his research notes and evidence was missing. His death was ruled a suicide.
Crime scene photos show deep lacerations in Casolaro's arms
Many, including Casolaro's family, do not believe that Casolaro committed suicide. A week before his death, Casolaro told his brother he had been receiving death threats and the manner in which he died, deep slashes in his arms, was not consistent with Casolaro's well-known squeamishness around even minor amounts of blood. Speculation only grew following the FBI investigation , given that the FBI lied to Congress, pressured its own agents not to question whether it was a suicide and lost 90 percent of its files related to Casolaro's death '-- among other glaring inconsistencies.
In a 1994 letter provided to MintPress by Inslaw Inc., Inslaw lawyer Charles Work told then-Assistant Attorney General John Dwyer that one of Inslaw's confidential sources in government had stated that Casolaro had been injected with a substance that deadened his nerves from the neck down, explaining the apparent lack of struggle and that the substance used had come from the U.S. Army inventory. The person who had arranged Casolaro's final meeting before his death was a U.S. military intelligence officer named Joseph Cuellar.
The same year that Casolaro died, there were several other suspicious deaths involving people directly connected to the Promis scandal or involved in Casolaro's investigation of ''the Octopus'' '-- including Alan Standorf , one of Casolaro's sources; Robert Maxwell , father of Ghislaine Maxwell, Mossad operative, and salesman of the bugged Promis software; and John Tower '-- the former Texas senator who assisted Maxwell in selling the bugged Promis software to the Los Alamos laboratories.
Jeffrey Epstein and ''The Dirtiest Bank of All'' While the role Arkansas played in Iran-Contra is one aspect of the scandal that is often overlooked, so to is the key role played by Israeli intelligence-linked arms dealers and smugglers who would later be connected to powerful individuals in the Mega Group and Jeffrey Epstein, such as Marc Rich and Adnan Khashoggi.
One of the key players in the Iran-Contra affair was Saudi arms dealer Adnan Khashoggi, uncle of the slain Washington Post columnist Jamal Khashoggi. One lesser known fact about Adnan Khashoggi is that, at the time of his Iran-Contra dealings, he was working for the Israeli Mossad, according to former Mossad agent Victor Ostrovsky.
Ostrovsky, in his #1 New York Times bestseller '' By Way of Deception ,'' notes that Khashoggi had been recruited by the Mossad years before and that his private jet had been fitted in Israel. In relation to Iran-Contra, Ostrovsky claims that it was a $5 million bridge loan that Khashoggi provided that helped to overcome the lack of trust between Israel and Iran during the initial arms deals in the early 1980s, and thus his participation was critical to the success of the scheme.
According to journalist Vicky Ward , Adnan Khashoggi was a client of Jeffrey Epstein's in the early 1980s, not long after Epstein's departure from Bear Stearns in 1981. The reason Epstein left the bank remains murky. Though some former Bear Stearns employees claim he was fired, others '-- including Epstein himself '-- claimed that he resigned of his own volition.
Ward suggests that Epstein may have left the bank owing to a Securities and Exchange Commission (SEC) investigation into insider trading in a case that involved a tender offer placed by the Seagrams corporation for St. Joe Minerals Corp. Seagrams owner Edgar Bronfman, son of Meyer Lansky associate Samuel Bronfman and member of the Mega Group, had tipped off several investors and bankers of the coming tender offer. Epstein resigned from Bear Stearns the day after the SEC opened the case and later claimed he had left the company as a result of a relatively minor ''Reg D'' violation and rumors that he had an ''illicit affair with a secretary.''
Yet, as Ward noted:
The SEC never brought any charges against anyone at Bear Stearns for insider trading in St. Joe, but its questioning seems to indicate that it was skeptical of Epstein's answers. Some sources have wondered why, if he was such a big producer at Bear Stearns, he would have given it up over a mere $2,500 fine.''
Regardless of the exact reason for Epstein's sudden departure, it was immediately after he left the bank that ''the details [of Epstein's work history] recede into shadow. A few of the handful of current friends who have known him since the early 1980s recall that he used to tell them he was a ''bounty hunter,'' recovering lost or stolen money for the government or for very rich people. He has a license to carry a firearm.''
Writing in Salon , a former friend of Epstein's, Jesse Kornbluth, also stated that Epstein had claimed to be a ''bounty hunter'' for the rich and powerful:
When we met in 1986, Epstein's double identity intrigued me '-- he said he didn't just manage money for clients with mega-fortunes, he was also a high-level bounty hunter . Sometimes, he told me, he worked for governments to recover money looted by African dictators. Other times those dictators hired him to help them hide their stolen money .'' (emphasis added)
One of Epstein's clients after leaving Bear Stearns, per Ward's sources, was the CIA/Mossad-linked Khashoggi at the very time that Khashoggi was involved in Iran-Contra, an operation involving both U.S. and Israeli intelligence. British journalist Nigel Rosser reported in January 2001 in the Evening Standard that Epstein had claimed that he was also working for the CIA during this same time period.
Since Epstein's arrest, records of Rosser's article have been scrubbed from British newspaper archives, including the Evening Standard 's own. However, MintPress independently confirmed with Bob Fitrakis, whom Rosser had interviewed for the article in question, that the article did allege that Epstein used to claim he worked for the CIA. In addition, other reports from the time period cited excerpts of Rosser's article, including the reference to Epstein's past claims of involvement with the CIA.
Specifically, Rosser's article had included the following passage:
He [Epstein] has a license to carry a concealed weapon, once claimed to have worked for the CIA, although he now denies it '' and owns properties all over America. Once he arrived at the London home of a British arms dealer bringing a gift '' a New York police-issue pump-action riot gun. 'God knows how he got it into the country,' a friend said.''
Though Epstein denied past connections to the CIA at the time Rosser's article was published, it is worth mentioning that Robert Maxwell '-- father of Ghislaine Maxwell and long-time Mossad operative '-- also vehemently denied his now well-documented links to Israeli intelligence until his death. Furthermore, as will be shown later in this article, Epstein and his only known billionaire ''client,'' Leslie Wexner, would later forge a business relationship with the CIA front company Southern Air Transport and play a major role in the airline's relocation to Columbus, Ohio in the mid-1990s. During that period, two prominent Ohio officials believed that both Epstein and Wexner were working with the CIA, according to Ohio-based journalist Bob Fitrakis.
Past claims and evidence of Epstein's involvement with the CIA, coupled with his time as a ''shadowy'' financial fixer for double-asset Khashoggi, strongly suggest that, whatever Epstein was doing for Khashoggi during this time, it likely involved BCCI. According to '' The BCCI Affair '' report, Khashoggi ''acted as the middleman for five Iranian arms deals for the United States, financing a number of them through BCCI'' and ''served as the 'banker' for arms shipments as the undercover scheme developed.'' The report continued:
Khashoggi and [another Iran-Contra arms dealer Manucher] Ghorbanifer performed a central role for the U.S. government in connection with the Iran-Contra affair in operations that involved the direct participation of CIA personnel [and both Khashoggi and Ghorbanifer] banked at BCCI's offices in Monte Carlo and, for both, BCCI's services were essential as a means of providing short-term credit for sales from the U.S. through Israel to Iran.''
Saudi arms deale Adnan Khashoggi arrives at Manhatten Federal Court, New York, April 4, 1990. Photo | AP
This connection is even more likely given the fact that Bear Stearns '-- Epstein's previous employer right up until he became a financial fixer for Khashoggi and other powerful people '-- also worked directly with BCCI during this period. Indeed, Bear Stearns served as a broker to BCCI, a fact that remained hidden until a lengthy court battle in the U.K. concluded in 2011 and forced the government's ''Sandstorm Report'' about BCCI's activities to unredact the names of Bear Stearns and other institutions, individuals and countries that had done business with the CIA-linked bank.
Furthermore, there is the additional fact that BCCI trafficked underage girls for sex as a means of obtaining favors from and gaining leverage over powerful individuals, something in which Epstein would later become deeply involved. As was shown in Part II of this series, several individuals who were running either sexual blackmail operations involving minors or child trafficking operations were connected to CIA front companies like BCCI, other organizations connected to the Iran-Contra scandal, and several individuals close to the Reagan White House.
The CIA director at the time, Bill Casey, was a close friend of Roy Cohn, who also ran the sexual blackmail operation involving underage boys out of Manhattan's Plaza Hotel, described in Part I of this series. According to Cohn's long-time secretary Christine Seymour, Casey was one of Cohn's most frequent callers.
Another fact that further suggests that Epstein had connections to BCCI is that Epstein was known to have been close to other arms dealers of the period and BCCI was frequently used specifically for covert arms deals. After the bank's collapse in 1991, an article in Time magazine entitled ''BCCI: The Dirtiest Bank of All'' noted the following:
'...[T]he CIA may have used B.C.C.I. as more than an undercover banker: U.S. agents collaborated with the black network in several operations, according to a B.C.C.I. black-network ''officer'' who is now a secret U.S. government witness. Sources have told investigators that B.C.C.I. worked closely with Israel's spy agencies and other Western intelligence groups as well, especially in arms deals .'' (emphasis added)
One of the arms dealers that Epstein apparently knew quite well was the British arms dealer Sir Douglas Leese. Leese was involved in brokering the first of a series of controversial British arms deals that involved Khashoggi , known as the Al Yamamah Deal and allegedly involving bribery of members of the Saudi royal family and top Saudi officials. In addition to Khashoggi, several of those officials and royal family members had deep ties to BCCI.
Later iterations of that arms deal were allegedly brokered with the involvement of Prince Charles of the British royal family, and corruption investigations into Al Yamamah were later shut down by the efforts of Tony Blair as well as Prince Andrew. Leese is said to have spoken of Epstein's ''genius'' and lack of morals when he introduced him to Steve Hoffenberg of Tower Financial, and soon after that introduction Hoffenberg hired Epstein.
Two years after BCCI's fraud-driven collapse, Tower Financial imploded in 1993 in what is still considered to be one of the largest Ponzi schemes in American history. Hoffenberg later asserted in court that Epstein had been intimately involved in Tower's shady financial practices and had called Epstein the ''architect of the scam.'' However, by the time Tower Financial had collapsed, Epstein was no longer working for the company. Despite Tower's testimony and abundant evidence regarding Epstein's role in the scheme, Epstein's name was mysteriously dropped from the case.
Given that Epstein allegedly received his ''sweetheart deal'' in 2008 as a result of having ''belonged to intelligence,'' Epstein's activities in the 1980s and early 1990s suggest that his ability to avoid charges in relation to the Tower Financial Ponzi scheme may have been for similar reasons.
Though Hoffenberg claims that he met Epstein through Leese, Epstein himself claimed that he had met the convicted fraudster through John Mitchell, former attorney general under Richard Nixon.
As was noted in Part II of this series, Mitchell was a ''friend'' of disgraced Washington lobbyist Craig Spence, according to Spence before his fall from grace. Spence, for much of the 1980s, ran a sexual blackmail operation in D.C. involving underage boys and had taken some of those ''call boys'' on midnight tours of the White House that he said had been arranged by then-National Security Adviser Donald Gregg. Spence, after his trafficking and exploitation of minors was exposed, died under mysterious circumstances. His death was quickly labeled a suicide, not unlike Jeffrey Epstein's.
With Epstein and Wexner's Help, ''Spook Air'' Finds a New Home While the state of Arkansas became a hub for CIA activity during the Reagan years and the Iran-Contra scandal, another state appeared to take its place in the 1990s '-- Ohio. Just as Arkansas oligarch Jackson Stephens helped attract the CIA to his home state during Iran-Contra, it was also an Ohio oligarch and his close associate that helped attract the CIA to the Buckeye State. Those men were Leslie Wexner and Jeffrey Epstein, respectively.
In Part III of this series, MintPress detailed Wexner's alleged ties to organized crime and his links to the still unsolved homicide of Columbus, Ohio lawyer Arthur Shapiro. Shapiro, who was representing Wexner's company ''The Limited'' at the time of his death, was set to testify before a grand jury about tax evasion and his involvement with ''questionable tax shelters.'' Columbus police described the Shapiro murder as ''a Mafia 'hit''' and a suppressed police report implicated Wexner and his business associates as being involved in or benefiting from Shapiro's death, and as having links to prominent New York-based crime syndicates.
However, Wexner and The Limited also appear to have had a relationship with the CIA. In 1995, Southern Air Transport (SAT) '-- a well-known front company for the CIA '-- relocated from Miami, Florida to Columbus, Ohio. First founded in the late 1940s, SAT from 1960 until 1973 was directly owned by the CIA, which sought to use the company as a cover for covert operations. After 1973, the company was placed in private hands, although all of its subsequent owners would have CIA ties, including James Bastian, a former lawyer for the CIA, who owned SAT at the time of its relocation to Ohio.
SAT was intimately involved in the Iran-Contra affair, having been used to funnel weapons and drugs to and from the Nicaraguan Contras under the guise of delivering ''humanitarian aid,'' while also sending American weapons to Israel that were then sold to Iran in violation of the U.S. arms embargo. In 1986 alone, SAT transported from Texas to Israel 90 tons of TOW anti-tank missiles, which were then sold to Iran by Israel and Mossad-linked intermediaries like Saudi arms dealer Adnan Khashoggi.
Even though the airline's CIA links were well known, Leslie Wexner's company, The Limited, sought to coax SAT to relocate its headquarters from Miami, Florida to Columbus, Ohio, a move that was realized in 1995. When Edmund James, president of James and Donohew Development Services, told the Columbus Dispatch in March 1995 that SAT was relocating to Columbus' Rickenbacker airfield, he stated that ''Southern Air's new presence at Rickenbacker begins in April with two regularly scheduled 747 cargo flights a week from Hong Kong,'' citing SAT President William Langton. ''By fall, that could increase to four a week. Negotiations are underway for flights out of Rickenbacker to the Far East'...Much of the Hong Kong-to-Rickenbacker cargo will be for The Limited,'' Wexner's clothing company. ''This is a big story for central Ohio. It's huge, actually,'' James said at the time.
The day following the press conference, Brian Clancy, working as a cargo analyst with MergeGlobal Inc., told the Journal of Commerce that the reason for SAT's relocation to Ohio was largely the result of the lucrative Hong Kong-to-Columbus route that SAT would run for Wexner's company. Clancy specifically stated that the fact that ''[The] Limited Inc., the nation's largest retailer, is based in Columbus '... undoubtedly contributed in large part to Southern Air's decision.''
According to documents obtained by journalist Bob Fitrakis from the Rickenbacker Port Authority, Ohio's government also tried to sweeten the deal to bring SAT to Columbus in order to please powerful Ohio businessmen like Wexner. Orchestrated by Governor George Voinovich's then-Chief of Staff Paul Mifsud, the Rickenbacker Port Authority and the Ohio Department of Development created a package of several financial incentives, funded by Ohio taxpayers, to lure the airline to relocate to Ohio. The Journal of Commerce described the ''generous package of incentives from the state of Ohio'' as ''including a 75 percent credit against its corporate tax liability for the next 10 years, a $5 million low-interest loan, and a $400,000 job-training grant.''In 1996, then-SAT spokesman David Sweet had told Fitrakis that the CIA-linked airline had only moved to Columbus because ''the deal [put together by the development department] was too good to turn down.''
Though SAT had promised Ohio's government that it would create 300 jobs in three years, it quickly laid off numerous workers and failed to construct the maintenance facility it had promised, even though it had already accepted $3.5 million in taxpayer funds for that and other projects. As the company's financial problems mounted, Ohio's government declined to recoup the millions in dollars it loaned the company, even after it was alleged that $32 million in the bank account of Mary Bastian, the wife of SAT's owner and former CIA lawyer James Bastian, were actually company funds . On October 1, 1998, SAT filed for bankruptcy. It was the very same day that the CIA's Inspector General had published a comprehensive report on the airline's illicit involvement in drug trafficking.
Furthermore, Fitrakis noted that in addition to Wexner the other main figures who were key in securing SAT's relocation to Ohio were Alan D. Fiers Jr., a former chief of the CIA Central American Task Force, and retired Air Force Major General Richard Secord, head of air logistics for SAT's covert action in Laos between 1966 and 1968, while the company was still known as Air America. Secord was also the air logistics coordinator in the illegal Contra resupply network for Oliver North during Iran-Contra. Fiers was one of the key individuals involved in Iran-Contra who was later pardoned by George H.W. Bush with the assistance of then-Attorney General Bill Barr. Barr '-- currently serving as attorney general in the Trump administration, and top of the chain of DOJ command in the investigation of Epstein's death in prison '-- has refused to recuse himself from the investigation into Epstein's network and his recent death.
Despite the involvement of these CIA-linked men, as well as the organized crime-linked Leslie Wexner, the then-president of SAT told the Columbus Dispatch that the airline was ''no longer connected to the CIA.''
Notably, It was during this same time that Epstein exerted substantial control over Wexner's finances; and, according to Fitrakis and his extensive reporting on Wexner from this period, it was Epstein who orchestrated logistics for Wexner's business operations, including The Limited. As was revealed in the Arthur Shapiro murder file and in ties between SAT and The Limited, much of The Limited's logistics involved figures and companies connected to organized crime and U.S. intelligence. It is also important to note that SAT was well-known for being a CIA front company prior to the efforts of Wexner et al. to bring the airline to Columbus, and that, a few years prior, Epstein himself had previously worked for intelligence-linked figures also involved in Iran-Contra, such as Adnan Khashoggi.
In addition, during this time period, Epstein had already begun to live in the now infamous New York penthouse that had first been purchased by Wexner in 1989. Wexner had apparently installed CCTV and recording equipment in an odd bathroom in the home after his purchase, and never lived in the home, as was noted in Part III of this series.
In an exclusive interview, Bob Fitrakis told MintPress that Epstein and Wexner's involvement with SAT's relocation to Ohio had caused suspicion among some prominent state and local officials that the two were working with U.S. intelligence. Fitrakis specifically stated that then-Ohio Inspector General David Strutz and then-Sheriff of Franklin County Earl Smith had personally told him that they believed that both Epstein and Wexner had ties to the CIA. These claims further corroborate what was first reported by Nigel Rosser in the Evening Standard that Epstein had claimed to have worked for the CIA in the past.
Fitrakis also told MintPress that Strutz had referred to SAT's route between Hong Kong and Columbus on behalf of Wexner's company The Limited as ''the Meyer Lansky run,'' as he believed that Wexner's association with SAT was related to his ties to elements of organized crime that were connected to the Lansky-created National Crime Syndicate. In addition, Catherine Austin Fitts '-- the former investment banker and government official, who has extensively investigated the intersection of organized crime, black markets, Wall Street and the government in the U.S. economy '-- was told by an ex-CIA employee that Wexner was one of five key managers of organized crime cash flows in the United States.
As this series has noted in previous reports, Meyer Lansky was a pioneer of sexual blackmail operations and was deeply connected to both U.S. intelligence and Israel's Mossad. Furthermore, many members of the so-called Mega Group, which Wexner co-founded, had direct ties to the Lansky crime syndicate.
Marc Rich's Pardon and Israel's ''Leverage'' over Clinton Another shadowy figure with connections to the Mega Group, Mossad, U.S. intelligence and organized crime is the ''fugitive financier'' Marc Rich, whose pardon during the last days of the Clinton White House is both well-known and still mired in controversy years after the fact.
Marc Rich was a commodities trader and hedge fund manager best known for founding the commodity trading and mining giant Glencore and for doing business with numerous dictatorships, often in violation of sanctions. He worked particularly closely with Israel and, according to Haaretz :
In the years after the 1973 Yom Kippur War and the ensuing global Arab oil embargo, a period when nobody wanted to sell oil to Israel, for almost 20 years Rich was the main source of the country's oil and energy needs.''
It was that trading on Israel's behalf that would ultimately lead to Rich being charged in 1983 for violating the U.S. oil embargo on Iran by selling Iranian oil to Israel. Rich was also charged with tax evasion, wire fraud, racketeering and several other crimes.
Haaretz also noted that Rich's businesses were ''a source of funding for secret financial arrangements'' and that ''his worldwide offices, according to several reliable sources, frequently served Mossad agents, with his consent.'' Rich had more direct ties to the Mossad as well. For instance, his foundation '-- the Rich Foundation '-- was run by the former Mossad agent Avner Azulay. Rich was also friendly with prominent Israel politicians, including former Prime Ministers Menachem Begin and Ehud Barak, and was a frequent provider of ''services'' for Israeli intelligence, services he freely volunteered.
Marc Rich, right, is pictured with Israel's Shimon Peres in a photo from Mark Daneil Ammann's ''The King of Oil.''
According to Rich's biographer, Daniel Ammann, Rich also fed information to U.S. intelligence but declined to give specifics. ''He did not want to tell with whom he cooperated within the U.S. authorities or which branch of the U.S. government he supplied with intelligence,'' Ammann said in an interview with the Daily Beast .
One clue as to the nature of Rich's relationship to U.S. intelligence is his apparent ties to BCCI. ''The BCCI Affair'' report mentions Rich as a person to investigate in relation to the bank and states :
BCCI lending to Rich in the 1980s amounted to tens of millions of dollars. Moreover, Rich's commodities firms were used by BCCI in connection with BCCI's involv[ement] in U.S. guarantee programs through the Department of Agriculture. The nature and extent of Rich's relationship with BCCI requires further investigation.''
Rich was also deeply tied to the Mega Group, as he was one of the main donors to the Birthright Israel charity along with Mega Group co-founder Charles Bronfman and Mega Group member Michael Steinhardt. Steinhardt was particularly close to Rich, first meeting the commodities trader in the 1970s and then managing $3 million for Rich, Rich's then-wife Denise, and Rich's father-in-law from the early 1980s to the mid-1990s through his hedge fund. In the late 1990s, Steinhardt would enlist other Mega Group members, such as Edgar Bronfman, in the effort to settle the criminal charges against Rich, which eventually came to pass with Clinton's controversial pardon in 2001. Steinhardt claimed to have come up with the idea of a presidential pardon for Rich in late 2000.
Rich's pardon was controversial for several reasons, and many mainstream outlets asserted that it ''reeked of payoff.'' As the New York Post noted in 2016, in the run-up to the presidential pardon the financier's ex-wife Denise had donated $450,000 to the fledgling Clinton Library and ''over $1 million to Democratic campaigns in the Clinton era.'' In addition, Rich had hired high-powered lawyers with links to powerful individuals in both the Democratic and Republican parties as well as the Clinton White House, including Jack Quinn, who has previously served as general counsel to the Clinton administration and as former chief of staff to Vice President Al Gore.
However, per Clinton's own words and other supporting evidence, the main reason behind the Rich pardon was the heavy lobbying from Israeli intelligence, Israeli politicians and members of the Mega Group like Steinhardt, with the donations from Denise Rich and Quinn's access to the president likely sweetening the deal.
Among the most ardent lobbyists for Rich's pardon were then-Israeli Prime Minister Ehud Barak, former Prime Minister Shimon Peres, then-Mayor of Jerusalem Ehud Olmert, then-former Foreign Minister Shlomo Ben-Ami and former Director of the Mossad Shabtai Shavit. According to Haaretz , Barak was so adamant that Clinton pardon Marc Rich that he was heard shouting at the president on at least one occasion. Former adviser to Barak, Eldad Yaniv, claimed that Barak had shouted that the pardon was ''important '... Not only from the financial aspect, but also because he helped the Mossad in more than one instance.''
The Israel lobbying effort had considerable help from Mega Group member Michael Steinhardt as well as Abe Foxman of the Anti-Defamation League (ADL), which was at the time heavily funded by Mega Group members, including Ronald Lauder and Edgar Bronfman.
There has been speculation for years that Clinton's decision to pardon Rich may have been the result of ''leverage'' or blackmail that Israel had acquired on the then-president's activities. As was noted in Part III of this report, the Mossad-linked ''Mega'' spy scandal broke in 1997, whereby Israeli intelligence had been targeting Clinton's effort to broker a peace agreement between Israel and Palestine and had sought to go to ''Mega,'' likely a reference to the Mega Group, to obtain a sensitive document.
In addition, Israel is known to have acquired phone conversations between Clinton and Monica Lewinsky before their affair was made public. Author Daniel Halper '-- relying on on-the-record interviews with former officials and hundreds of pages of documents compiled in the event that Lewinsky took legal action against Clinton '-- determined that Benjamin Netanyahu told Clinton that he had obtained recordings of the sexually-tinged phone conversations during the Wye Plantation talks between Israel and Palestine in 1998. Netanyahu attempted to use this information to get Clinton to pardon convicted Israeli spy Jonathan Pollard. Clinton considered pardoning Pollard but decided against it after CIA Director George Tenet threatened to resign if the pardon was given.
Investigative journalist and author Gordon Thomas had made similar claims years prior and asserted that the Mossad had obtained some 30 hours of phone-sex conversations between Lewinsky and Clinton and used them as leverage. In addition, a report in Insight magazine in May 2000 claimed that Israeli intelligence had ''penetrated four White House telephone lines and was able to relay real-time conversations on those lines from a remote site outside the White House directly to Israel for listening and recording.''
Those phone taps apparently went well beyond the White House, as revealed by a December 2001 investigative report by Carl Cameron for FOX News . According to Cameron's report :
[Israeli telecommunications company Amdocs] helped Bell Atlantic install new telephone lines in the White House in 1997'...[and] a senior-level employee of Amdocs had a separate T1 data phone line installed from his base outside of St. Louis that was connected directly to Israel'...
[I]nvestigators are looking into whether the owner of the T1 line had a 'real time' capacity to intercept phone calls from both the White House and other government offices around Washington, and sustained the line for some time, sources said. Sources familiar with the investigation say FBI agents on the case sought an arrest warrant for the St. Louis employee but [Clinton] Justice Department officials quashed it. ''
According to journalist Chris Ketcham :
[Both Amdocs and Verint Inc. (formerly Comverse Infosys)] are based in Israel '' having arisen to prominence from that country's cornering of the information technology market '' and are heavily funded by the Israeli government, with connections to the Israeli military and Israeli intelligence'...
The companies' operations, sources suggest, have been infiltrated by freelance spies exploiting encrypted trapdoors in Verint/Amdocs technology and gathering data on Americans for transfer to Israeli intelligence and other willing customers (particularly organized crime).''
Given the extent of phone tapping of the U.S. government by Israeli intelligence-linked companies and Netanyahu's previous use of intercepted phone calls to pressure Clinton to pardon Jonathan Pollard, it is entirely reasonable to speculate that some other trove of intercepted communications could have been used to push Clinton to pardon Rich in the final hours of his presidency.
Also notable is the fact that several figures who heavily lobbied Clinton over the Rich pardon had ties to Epstein, who also had ties to Israeli intelligence and Israeli intelligence-linked tech companies, as discussed in Part III of this series. For example, Ehud Barak, a close friend and business associate of Epstein, and Shimon Peres, who introduced Barak to Epstein, were the major players in convincing Clinton to pardon Marc Rich.
Furthermore, as will be shown in a subsequent section of this report, Jeffrey Epstein had developed ties with the Clinton administration beginning in 1993 and those ties expanded, particularly in 1996, when Epstein's intelligence-linked sexual blackmail operation was underway. Clinton would later fly on Epstein's infamous private jet, nicknamed the ''Lolita Express,'' and Epstein would later donate to the Clinton Foundation and claim to have played a key role in the creation of the Clinton Global Initiative.
In addition to the role of figures close to Epstein in securing Rich's pardon, Epstein himself appeared to share some level of connection with Rich's former business partners. For instance, Felix Posen '-- who ran Rich's London operations for years and whom Forbes described as ''the architect of Rich's immensely profitable but suddenly very controversial business with the Soviet Union'' '-- appears in Epstein's book of contacts . In addition, Epstein's offshore structured investment vehicle (SIV), Liquid Funding, has the same attorney and director as several Glencore entities : Alex Erskine of the law firm Appleby.
The significance of that connection, however, is unclear, given that Erskine was connected to a total of 274 offshore entities at the time of the ''Paradise Papers'' leak in 2014. Catherine Austin Fitts told MintPress that it could suggest that Epstein's Liquid Funding '-- 40 percent of which had been owned by Bear Stearns , and which may have received a ''secret'' bail-out from the Federal Reserve '-- is part of the same shadow economy ''syndicate'' as Glencore.
This possibility merits further investigation, given that Glencore is partially owned by British financier Nathaniel Rothschild, whose father, Jacob Rothschild, is on the board of advisers of Genie Energy, which includes Michael Steinhardt as well as several alleged associates of Epstein, such as Bill Richardson and Larry Summers. In addition, Nathaniel Rothschild's cousin by marriage, Lynn Forester de Rothschild, is a long-time associate of Jeffrey Epstein with considerable ties to the New York City ''Roy Cohn machine.'' Marc Rich had long-standing ties to the Rothschild family, going back to the early 1970s when he began commodity trading at Philipp Brothers.
Lynn Forester de Rothschild's surprising interest in Epstein After Epstein's arrests first in 2007 and then again last month, numerous media reports emerged detailing the links between Epstein and Clinton, with most asserting that they had met not long after Clinton left office in 2001 and, as recently mentioned, issued the controversial pardon of Marc Rich.
Those reports claimed that the Epstein-Clinton relationship had been facilitated by Epstein's long-time girlfriend and alleged madam Ghislaine Maxwell. However, documents obtained from the Clinton presidential library have revealed that the ties between Epstein and Clinton date back years earlier and were facilitated by powerful individuals who have largely evaded scrutiny in connection with the Epstein case.
One major player who has been largely overlooked in bringing Epstein and the Clintons together is Lynn Forester de Rothschild. Notably, Forester de Rothschild has long been connected to neoconservative Reagan era officials '-- the Lewis Rosenstiel/Roy Cohn network described in Parts 1 and 2 of this series, as well as the Mega Group, which was detailed in Part 3 of this series.
Lynn Forester de Rothschild became involved in the world of Democratic Party politics in the late 1970s when she worked on the 1976 campaign of hawkish Senator Daniel Patrick Moynihan (D-NY) alongside now-notorious neoconservatives like Elliott Abrams , who would go on to play an important role in the Iran-Contra affair during the Reagan era and later serve in the State Department under Trump. She was also introduced to her second husband, Evelyn de Rothschild, by Henry Kissinger at a Bilderberg conference. Several of the individuals connected to the Mega Group and the Mossad-linked media mogul Robert Maxwell '-- including Mark Palmer, Max Fisher and John Lehman '-- were one-time aides or advisers to Henry Kissinger.
Before marrying into the Rothschild family in 2000, Lynn had previously been married to Andrew Stein, a major figure in New York Democratic politics, with whom she had two sons. Andrew's brother, James Finkelstein, married Cathy Frank, the granddaughter of Lewis Rosenstiel, the mob-linked businessman who ran a sexual blackmail operation exploiting underage boys, as was discussed in Part 1 of this series. Rosenstiel's protege Roy Cohn was the lawyer for Cathy Frank and James Finkelstein and it was at their behest that Cohn attempted to trick a nearly comatose Rosenstiel to into naming Cohn, Frank and Finkelstein the executors and trustees of his estate, valued at $75 million (more than $334 million in today's dollars).
According to the New Yorker , Lynn Forester de Rothschild requested ''financial help'' from none other than Jeffrey Epstein in 1993 during her divorce from Andrew Stein.
As far as Forester de Rothschild's ties to the Mega Group go, she is currently on the board of directors of Estee Lauder companies, which was founded and is still owned by the family of Ronald Lauder '-- a member of the Mega Group, a former Reagan official, a family friend of Roy Cohn, and the alleged source of Jeffrey Epstein's now-infamous Austrian passport. In addition, Forester de Rothschild also partnered with Matthew Bronfman '-- son of Mega Group member Edgar Bronfman and grandson of Samuel Bronfman, who had close ties to Meyer Lansky '-- in creating the investment advisory firm Bronfman E.L. Rothschild LP.
It is unclear when Lynn Forester de Rothschild first met Jeffrey Epstein, but she was one of his leading advocates and had the ear of then-President Bill Clinton in the early 1990s, speaking to Clinton specifically about Epstein during her ''fifteen seconds of access'' with the president and also introducing Epstein to lawyer Alan Dershowitz in 1996.
Living History by Hilary Clinton Book Party Hosted Lynn Forester and Evelyn De Rothschild pose with Bill and Hilary Clinton at the Kensington Palace in London. Photo | Alan Davidson
Forester de Rothschild is a long-time associate of the Clintons and has been a major donor to both Bill and Hillary Clinton since 1992. Their ties were so close that Forester de Rothschild spent the first night of her honeymoon at the Lincoln Bedroom in the White House while Clinton was president. Furthermore, a leaked email between Forester de Rothschild and Hillary Clinton saw Clinton request ''penance'' from Forester de Rothschild for asking Tony Blair to accompany Clinton on official business while she was secretary of state, preventing Blair from making a planned social visit to Forester de Rothschild's home in Aspen, Colorado. Humbly requesting forgiveness is not something Hillary Clinton is known for, given that her former bodyguard once said she could ''make Richard Nixon look like Mahatma Gandhi.''
In 1995, Forester de Rothschild, then a member of Clinton's National Information Infrastructure Advisory Council, wrote the following to then-President Clinton:
Dear Mr. President: It was a pleasure to see you recently at Senator Kennedy's house. There was too much to discuss and too little time. Using my fifteen seconds of access to discuss Jeffrey Epstein and currency stabilization, I neglected to talk to you about a topic near and dear to my heart. Namely, affirmative action and the future.''
Forester de Rothschild then states that she had been asked to prepare a memo on behalf of George Stephanopoulos, former Clinton communications director and currently a broadcast journalist with ABC News . Stephanopoulos attended a dinner party hosted by Epstein at his now infamous Manhattan townhouse in 2010 after Epstein's release from prison for soliciting sex from a minor.
While it is unknown what Forester de Rothschild discussed with Clinton regarding Epstein and currency stabilization, a potential lead may lie in the links of both Forester de Rothschild and Epstein to Deutsche Bank. Journalist Vicky Ward reported in 2003 that Epstein boasted of ''skill at playing the currency markets 'with very large sums of money''' and he appears to have done much of this through his long-standing relationship with Deutsche Bank.
The New York Times reported last month :
[Epstein] appears to have been doing business and trading currencies through Deutsche Bank until just a few months ago, according to two people familiar with his business activities. But as the possibility of federal charges loomed, the bank ended its client relationship with Mr. Epstein. It is not clear what the value of those accounts was at the time they were closed.''
In the case of Forester de Rothschild, she served as an advisor to the Deutsche Bank Microfinance Consortium for several years and is currently a board member of the Alfred Herrhausen Society of International Dialogue of Deutsche Bank.
The same year that Forester de Rothschild made the above-noted comments to Bill Clinton about Jeffrey Epstein, Epstein attended another Clinton fundraiser , hosted by Ron Perelman at his personal home, that was very exclusive, as the guest list included only 14 people.
The evolution of the Epstein-Clinton relationship Even before Forester de Rothschild's 1995 meeting with Clinton, Epstein was already an established Clinton donor. Records obtained by the Daily Beast revealed that Epstein had donated $10,000 to the White House Historical Association and attended a Clinton donor reception alongside Ghislaine Maxwell as early as 1993.
The Daily Beast suggests that Bill Clinton's long-time friend from his college days, A. Paul Prosperi, was the facilitator of that early relationship, as Prosperi had a decades-long relationship with Epstein and even visited Epstein at least 20 times while he was in jail in 2008. Prosperi was intimately involved with the 1993 fundraiser for the White House Historical Association noted above.
The relationship between Epstein and Clinton would continue well after Clinton left office in 2001, a fact well-documented by Bill Clinton's now-infamous flights on Epstein's (recently sold) private jet '-- often referred to as the ''Lolita Express.'' Clinton flew on the Lolita Express no less than 26 times in the early 2000s according to flight logs. On some of those flights, Clinton was accompanied by his Secret Service detail but he was unaccompanied on other flights.
Arguably the most infamous flight taken by Clinton on Epstein's jet was a lengthy trip to Africa, where actor Kevin Spacey, who has also been accused of raping minors ; Ghislaine Maxwell; and Ron Burkle, a billionaire friend of Clinton's who has been accused of soliciting the services of ''super-high-end call girls,'' were also present. Clinton specifically requested that Epstein make his jet available for the trip well in advance, with Doug Band as the intermediary. President Donald Trump, also a friend of Epstein, is said to have flown on the plane but appears only once on flight logs. Both Trump and Clinton were known to have visited Epstein's private island, nicknamed ''Orgy Island'' and ''Lolita Island.''
In addition to flights, an Epstein-run foundation gave $25,000 to the Clinton Foundation according to the 2006 filing tax return of Epstein's former charity, the C.O.U.Q. Foundation. Notably, Epstein's lawyers, Alan Dershowitz among them, claimed in 2007 that Epstein had been ''part of the original group that conceived the Clinton Global Initiative, which is described as a project 'bringing together a community of global leaders to devise and implement innovative solutions to some of the world's most pressing challenges.'''
Before the associations between Epstein and the Clinton White House in the early 1990s were made public, Ghislaine Maxwell was thought to have been the bridge between Epstein and the Clinton family because of her close relationship to the family. However, the close relationship between Maxwell and the Clintons appears to have developed in the 2000s, with Politico reporting that it began after Bill Clinton left office. Clinton associate Doug Band was also reportedly friendly to Maxwell, appearing at an exclusive dinner party she hosted at her residence in New York in 2005. Maxwell later became particularly close to Chelsea Clinton, vacationing with Chelsea in 2009 and attending her wedding a year later. Maxwell was also associated with the Clinton Global Initiative at least up until 2013.
Other close Clinton associates and officials in the early 1990s also had notable relationships with Jeffrey Epstein, including Mark Middleton, who was a special assistant to Clinton Chief of Staff Mack McClarty beginning in 1993, and met with Epstein on at least three occasions in the White House during the early Clinton years. In addition, White House social secretary under Clinton, Ann Stock, appears in Epstein's ''little black book'' as does Doug Band , once referred to by New York Magazine as ''Bill Clinton's bag carrier, body man, fixer, and all-purpose gatekeeper.'' Band also appears several times in the flight logs of Epstein's private jet.
Epstein was also associated with both Bill Richardson, former ambassador to the UN and former secretary of energy under Clinton, and Larry Summers, secretary of the treasury under Clinton. Both Richardson and Summers sit on the advisory board of controversial energy company Genie Energy, alongside CIA director under Clinton, James Woolsey; Roy Cohn associate and media mogul, Rupert Murdoch; Mega Group member Michael Steinhardt; and Lord Jacob Rothschild. Genie Energy is controversial primarily for its exclusive rights to drill in the Israeli-occupied Golan Heights. Bill Richardson also has ties to Lynn Forester de Rothschild as she was on the Secretary of Energy's Advisory Board while Richardson was secretary of energy.
Bill Richardson appears to be among the Clinton era officials closest to Jeffrey Epstein, having personally visited Epstein's New Mexico ranch and been the recipient of Epstein donations of $50,000 to his 2002 and 2006 gubernatorial campaigns. Richardson gave Epstein's donation in 2006 to charity after allegations against Epstein were made public. Richardson was also accused in recently released court documents of engaging in sex with Epstein's underage victims, an allegation that he has denied.
The Jeffrey Epstein scandal: A post-mortem In 1990, Danny Casolaro began his fateful one-year investigation of ''the Octopus,'' an investigation that played no small role in his untimely death. Shortly after he was found lifeless in a hotel bathtub, Casolaro's friend Lynn Knowles was threatened and told the following : ''What Danny Casolaro was investigating is a business'...Anyone who asks too many questions will end up dead.''
Nearly thirty years later, that same ''Octopus'' and its ''business'' remains with us and has become ever more wrapped around the levers of power '-- particularly in the worlds of government, finance and intelligence.
This MintPress investigative series has endeavored to show the nature of this network and how the world of ''the Octopus'' is the same world in which Jeffrey Epstein and his predecessors '-- Craig Spence, Edwin Wilson and Roy Cohn among them '-- operated and profited. It is a world where all that matters is the constant drive to accumulate ever more wealth and ever more power and to keep the racket going at all costs.
While this network has long been able to ensure its success through the use of sexual blackmail, often acquired by the unconscionable exploitation of children, it has also been a driving force behind many other ills that plague our world and it goes far beyond human and child trafficking. Indeed, many of the figures in this same sordid web have played a major role in the illicit drug and weapons trades, the expansion of for-profit prisons, and the endless wars that have claimed an untold number of lives across the world, all the while enriching many of these same individuals.
There is no denying that such a network is ''too big to fail.'' Yet, fail it must '-- otherwise this decades-long cycle of abuse, murder and fraud will continue unabated, destroying and taking even more lives in the process.
Though this report marks the end of MintPress' series on Jeffrey Epstein and the network of which he was part, this is not the end of MintPress' work on the case. Several spin-offs '-- investigating the real reasons why Epstein was arrested in July; his connections to money laundering and the intelligence ''black budget;'' and his network's connections to child trafficking in other countries, particularly the U.K. '-- are already in the works and will appear in Mint Press over the next few weeks.
Feature photo | A composite image shows from left to right, Jeffrey Epstein, Bill Clinton, Adnan Khashoggi and Robert Maxwell. Graphic by Claudio Cabrera
Whitney Webb is a MintPress News journalist based in Chile. She has contributed to several independent media outlets including Global Research, EcoWatch, the Ron Paul Institute and 21st Century Wire, among others. She has made several radio and television appearances and is the 2019 winner of the Serena Shim Award for Uncompromised Integrity in Journalism.
China
Claws of the Red Ragon
Bannon to release anti-Huawei film 'Claws of the Red Dragon' | TheHill
Sun, 25 Aug 2019 11:27
Former White House chief strategist Stephen Bannon will release a new film this fall titled "Claws of the Red Dragon," which will go after Chinese telecom giant Huawei, a company which President Trump Donald John TrumpDavid Axelrod after Ginsburg cancer treatment: Supreme Court vacancy could 'tear this country apart' EU says it will 'respond in kind' if US slaps tariffs on France Ginsburg again leaves Supreme Court with an uncertain future MORE has deemed "a national security threat."
"Run by a radical cadre of the Chinese Communist Party, China's Communism today is the greatest existential threat the West has ever faced," Bannon, the executive producer for the film, said in a press release. "Huawei, the technology and telecommunications arm of the CCP and the People's Liberation Army, is the greatest national security threat we have ever faced, as it is already in the process of a global tech domination via 5G and 6G."
"Claws of the Red Dragon is a seminal and timely work exposing the inner workings of the CCP and Huawei," he added.
The film comes as the Trump administration moves to crack down on Huawei. The U.S. intelligence community has called the company a national security threat, highlighting what they say are close ties to the government in Beijing. Huawei has denied those claims.
The administration has banned Huawei from doing business with federal agencies. But Trump officials on Monday also extended a deadline for U.S. businesses to cut ties with Huawei. Commerce Secretary Wilbur Ross Wilbur Louis RossHillicon Valley: Court delays ruling against Qualcomm | Google asks employees not to talk politics at work | Facebook releases early emails discussing Cambridge Analytica | Bannon to release anti-Huawei film Bannon to release anti-Huawei film 'Claws of the Red Dragon' Trump administration announces deal to avert tariffs on Mexican tomatoes MORE said U.S. telecom companies would get another 90 day extension.
''Some of the rural companies are dependent on Huawei. So we're giving them a little more time to wean themselves off," Ross said on Fox Business. "But there are no specific licenses being granted for anything.''
Trump has at times sent conflicting signals on Huawei, suggesting that the U.S. could strike a deal over the company as part of larger trade talks with China.
That trade war is deepening, with China indicating on Friday that it would slap new reciprocal tariffs on $75 billion worth of American auto parts and other goods.
Trump vowed to respond in a series of tweets.
''The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing '... your companies HOME and making your products in the USA,'' Trump tweeted.
''I will be responding to China's Tariffs this afternoon. This is a GREAT opportunity for the United States,'' he added.
Bannon has long called for a tougher stance on China.
In a May 6 op-ed for The Washington Post, Bannon wrote that the country "has been waging economic war against industrial democracies ever since China joined the World Trade Organization (WTO) in 2001."
"[N]ow China has emerged as the greatest economic and national security threat the United States has ever faced," he added.
Bannon, 65, has produced several films, including 2010's "Battle for America" that covered the rise of the Tea Party movement, 2011's "The Undefeated" that looked at the career of Sarah Palin and 2018's "Trump @War."
Pence signals openness to human rights sanctions over China's detention of Uighur Muslims - Axios
Sun, 25 Aug 2019 13:00
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StoriesPence at the UN. Photo: Selcuk Acar/NurPhoto via Getty Images
Vice President Mike Pence has signaled that the Trump administration is open to using the Global Magnitsky Act to sanction top officials in Xinjiang, China, where more than 1 million Uighur Muslims are being held in internment camps, according to a Chinese religious freedom advocate who met with Pence at the White House Monday.
Driving the news: Bob Fu, founder of ChinaAid, said that Pence also told him that he planned to give a second speech about China in the fall to address religious freedom issues. Beijing has been paying close attention to Pence's plans for a second speech, as the vice president has been at the forefront of the administration's confrontation with China. So hawkish was a speech Pence gave in October that the New York Times framed it as a portent of a "New Cold War."
9 dotted line - Nine-Dash Line - Wikipedia
Sun, 25 Aug 2019 13:06
Okinawa Files Fresh Suit against State Govt to Stop U.S. Base Construction | Nippon.com
Sat, 24 Aug 2019 19:42
News from Japan
PoliticsSocietyAug 7, 2019 English日æ'¬èªžç®ä½'字繁é--字Fran§aisEspa±olاÙعربيØ(C) РусскийNaha, Okinawa Pref., Aug. 7 (Jiji Press)--The Okinawa prefectural government filed Wednesday a fresh lawsuit against the central government in a bid to prevent the construction of a U.S. base in the southernmost Japan prefecture.
The lawsuit, filed with Naha District Court, seeks the cancellation of a decision by land minister Keiichi Ishii to nullify the prefecture's reversal of approval of landfill work off the Henoko coastal district of Nago to build a replacement facility for the U.S. Marine Corps' Futenma air base, currently located in Ginowan, another city in Okinawa.
The Okinawa government's legal protest against Ishii's decision, made based on the administrative case litigation law, followed a lawsuit the local government launched against the central government at Fukuoka High Court's branch in Naha, capital of Okinawa, in July seeking the reinstatement of its revocation of the approval based on the local autonomy law.
As the administration of Prime Minister Shinzo Abe has no intention to compromise, the rift between the prefectural and the central governments is expected to deepen further, observers said.
Meeting the press at the prefectural government's head office, Okinawa Governor Denny Tamaki stressed that Ishii's decision is unreasonable.
[Copyright The Jiji Press, Ltd.]
Jiji Press
New military base could seal fate of Okinawa dugong | Science | AAAS
Sat, 24 Aug 2019 19:45
Julien Willem/Wikimedia Commons
The Okinawa dugong's days could be numbered. At most 10 of the marine mammals remain in Japan's southernmost prefecture, according to the Nature Conservation Society of Japan (NACS-J). Now, land reclamation needed for a new U.S. Marine Corps air base threatens two of the region's few remaining major beds of seagrass, which dugong depend on, says NACS-J, which has petitioned U.S. Ambassador to Japan Caroline Kennedy for permission to conduct a survey.
Dugong inhabit coastal zones in tropical and semitropical waters of the Indian and Pacific oceans. Populations have been decimated by hunting, habitat loss due to coastal development, and fishing by-catching. The International Union for Conservation of Nature lists the dugong as vulnerable to extinction worldwide. Japan's environment ministry considers the Okinawa dugong, the northernmost population of the species, critically endangered.
The new base offshore of the Henoko district of Nago city in Oura Bay could be the death knell for the Okinawa dugong. One seagrass bed will be covered by the construction, and another will be dredged for sand. In mid-July, the Okinawa Defense Bureau, which is overseeing construction, restricted access to the site to start a drilling survey needed to finalize reclamation plans. NACS-J had planned to have two foreign experts last month examine recently sighted feeding trails, the characteristic paths through seagrass beds dugong create as they uproot and eat the vegetation. But the U.S. Marine Corps denied access to the construction zone, citing safety concerns. So last week NACS-J appealed to Kennedy, emphasizing the scientific nature of their intended survey and asking for her "special attention to and reconsideration on this profound problem."
NACS-J acknowledges that its aim is to stop construction of the base. "It will be very, very hard for the dugong to survive if this project goes on," says Mariko Abe, head of conservation for NACS-J.
The controversy over the new base is just the latest twist in a protracted dispute over the U.S. military presence on Okinawa. Responding to concerns about noise, air pollution, and safety, in 1996 the U.S. and Japanese governments agreed to relocate the current U.S. Marine Corps air base, called Futenma, to the Henoko''Oura Bay site in northern Okinawa. Environmental groups have long opposed the plan, as the construction would destroy a coral reef as well as the two major seagrass beds. Twice in the past month, thousands of demonstrators have marched to the shore near the site demanding construction be halted, and sympathizers in Tokyo staged a protest rally this past Saturday. On 3 September, the Okinawa prefectural assembly adopted a resolution calling for an immediate halt to the drilling survey. The current governor was elected in 2010 on a platform calling for the base to be moved out of Okinawa Prefecture entirely. But late last year he changed his mind and gave the go-ahead for reclamation work. He now faces an antibase rival in a 16 November election.
The U.S. Marine Corps apparently feels that environmental concerns have already been dealt with. In a letter to NACS-J denying the request to enter the restricted waters, C. B. Snyder, deputy commander of the Marine Corps Installation Pacific, wrote: ''Our understanding is that Japan studied the potential impacts of the current construction activity under Japanese Environmental Impact Assessment law.'' The U.S. embassy press office could not immediately confirm whether Kennedy had received the 16 September NACS-J letter. In the meantime, the Center for Biological Diversity and other U.S. and Japanese environmental groups filed a lawsuit on 31 July in U.S. district court in San Francisco, California, seeking to force the U.S Department of Defense to halt construction.
Okinawa's dugong may be doomed no matter what. Even if the seagrass beds are preserved, "it's hard to imagine that a population this small is viable, as it is also isolated and at the extreme of its range," says Ellen Hines, who specializes in marine and coastal conservation at San Francisco State University. Nevertheless, she says, "it is against both U.S. and moral conventions for the U.S. military to degrade habitat for this critically endangered species and accelerate its extirpation."
See here for more on conservation science.
A second dugong dies in Thailand in blow for vulnerable species - Los Angeles Times
Sat, 24 Aug 2019 19:46
Marine resources officials in Thailand say an ailing 5-month-old dugong has died during surgery, just days after the much-publicized death of another dugong from what biologists believe was a combination of shock and ingesting plastic waste.
The latest dugong was found in July washed ashore in southern Thailand and put in a protected enclosure by marine experts.
It was found to have contracting stomach muscles and an X-ray showed a buildup of gas in its intestine together with seagrass clogging its stomach.
It died Thursday during surgery to have the seagrass removed.
Dugongs are listed as a vulnerable species by the International Union for Conservation of Nature and protected under Thai law.
There are about 250 in coastal waters. Experts say 17 have died this year, an abnormally high number.
Thailand's beloved lost baby dugong dies with plastic in stomach, vets say | Fox News
Sat, 24 Aug 2019 19:47
An official of the Department of Marine and Coastal Resources, hugs in May "Mariam," a baby dugong lost from her mom in southern Thailand. The 8-month-old dugong nurtured by marine experts after it was found has died with plast in her stomach.(Sirachai Arunrugstichai via AP.)
A sick baby dugong beloved in Thailand has died with bits of plastic in her stomach, officials reported Saturday.
''Mariam'' was adopted by the Thai public and became an internet sensation after being discovered alone without parents, Sky News reports.
Dugongs are a type of mammal that is sometimes thought to be the source of the mermaid myth, the news outlet reported
The animal died Saturday a week after being found ill and refusing to eat.
THAI VETS NURTURE LOST BABY DUGONG WITH MILK AND SEA GRASS
"Marium," a baby dugong lost from her mom in Thailand, was found last week bruised after being chased and supposedly attacked by a male dugong during the mating season. (Sirachai Arunrugstichai via AP)
"Many pieces of small plastic clogged her intestines and caused inflammation, leading to blood infection and inflamed lungs,'' one of her vets Nantarika Chansue said on Facebook, according to Sky News.
INTERNET SENSATION GRUMPY CAT, 7, DEAD AFTER 'COMPLICATIONS' FROM INFECTION
"Everyone is saddened by this loss, but it reiterates that we need to save the environment to save these rare sea animals," the vet said.
Mariam became a hit in Thailand after images of biologists embracing and feeding her with milk and seagrass spread across social media.
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Last week, she was found bruised after being chased and supposedly attacked by a male dugong during the mating season, said Jatuporn Buruspat, director-general of the Department of Marine and Coastal Resource.
The Associated Press contributed to this report.
Ministry of Truthiness
Cornell scholar cited in NYT's '1619' series charged with fabricating quotes, evidence | The College Fix
Sun, 25 Aug 2019 15:00
Inflated statistics, altered quotes
A Cornell University scholar cited in a recent New York Times piece tying slavery to capitalism was previously found to have inflated statistics, invented facts, and altered quotes, according to fellow academics in his field.
In an October 2016 paper, scholars Alan Olmstead of the University of California Davis and Paul Rhode of the University of Michigan harshly criticized the research of Cornell's Edward Baptist presented in Baptist's 2014 book ''The Half Has Never Been Told.'' In the book, Baptist argues that modern capitalism still contains many of the remnants of slavery and America's current economy is still influenced by the exploitation of slaves.
Among charges leveled by Olmstead and Rhode were accusations Baptist concocted numbers out of thin air and that Baptist fabricated research to fit his narrative. At a public event at Dartmouth University in 2016, Olmstead decried Baptist's work as ''hocus pocus'' while he waved an imaginary wand in the air.
In an email to The College Fix, Rhode said he preferred ''more open discussion and debate about important issues.''
''What bothered me was when Ed Baptist dropped out of public debates about his work (methods and findings),'' Rhode said.
Yet Baptist (pictured) was quoted approvingly by Princeton Professor Matthew Desmond in a recent essay for the New York Times' ''1619'' project, which is intended to reframe the nation's history around the narrative of slavery. Desmond's piece states that in ''order to understand the brutality of American capitalism, you have to start on the plantation,'' and he then quotes Baptist saying that before the Civil War, Americans ''lived in an economy whose bottom gear was torture.''
Baptist has also been cited by influential opinion journalists such as Ta-Nehisi Coates, who recently used the scholar's figures to argue in favor of reparations for African-Americans.
''By 1836 more than $600 million, almost half of the economic activity in the United States, derived directly or indirectly from the cotton produced by the million-odd slaves,'' Coates testified at a congressional hearing in June.
Yet according to Olmstead, Rhode, and others, the $600 million number appears to be fabricated, using double and even triple-counting to arrive at an inflated figure.
In his book, Baptist says that in 1836, cotton production was valued at $77 million, or around five percent of the nation's entire gross domestic product. Yet he says cotton contributed to $600 million in economic activity that year, or half of all the economic activity in America.
Olmstead and Rhode charge that Baptist ''adds the value of inputs used to produce cotton, though this double counts costs already subsumed in the cotton's price.'' They claim Baptist ''adds the estimated value of land and slave sales, though asset sales are not counted as a part of GDP.''
''Further, he inexplicably adds the 'money spent by millworkers and Illinois hog farmers,' and so on,'' they add. ''If one extended this faulty methodology by summing the 'roles' of cotton with a few other primary products, the amount would easily exceed 100 percent of GDP, which of course makes no sense.''
In a blog post following Coates' testimony, Senior Research Fellow at the American Institute for Economic Research Philip Magness called the $600 million number ''unambiguously false.'' On Twitter this week, Magness said the ''1619'' project ''contains multiple blatantly false empirical claims about the relationship between slavery and capitalism that a consensus of economic historians reject.''
Baptist did not respond to a request from The College Fix to comment.
Olmstead and Rhode also challenge Baptist's assertion that the growth in cotton production was due to more vigorous torture being levied by slaveholders. Their research suggests that larger yields were primarily a result of advances in agriculture, most notably better seed varieties.
''A reading of the primary sources (including those Baptist cites) yields no evidence that violence against slaves increased between 1800 and 1860 and provides no evidence of any significant innovations in violence,'' they wrote. ''There is no evidence that increases in violence accounted for the persistent increase in per capita output over a sixty-year period.''
''We are not deniers that there was whipping and torture,'' Rhode told the Washington Post in 2016. ''But they were bringing in cotton that was easier to pick. Baptist basically ignored that alternative.''
In order to make the case that higher yields were the result of the brutalization of slaves, Baptist uses a number of first-person accounts from slaves that he shows back his theory. Yet Olmstead and Rhode demonstrated that in several cases, Baptist altered the slaves' quotes to buttress his argument.
For instance, slave Sarah Wells of Little Rock, Ark., said: ''Some of the slaves would pick five hundred pounds of cotton in a day; some of them would pick three hundred pounds; and some of them only picked a hundred. IF YOU DIDN'T PICK TWO HUNDRED FIFTY POUNDS, THEY'D PUNISH YOU, put you in the stocks.'' (emphasis in the original.)
Yet Baptist's quote from his book reads: ''Sarah Wells remembered that near Warren County, Mississippi, where she grew up, some slaves picked 100 pounds a day, some 300, and some 500. But if your quota was 250 pounds, and one day you didn't reach it, 'they'd punish you, put you in the stocks' and beat you.''
As Olmstead and Rhode point out, Wells makes no mention of individual quotas, which Baptist's version implies. Further, Baptist adds ''and beat you'' to Wells' recollection.
''These are not cases of reading between the lines, filling in the gaps based on other accounts, or cleaning up the language to avoid offense,'' wrote Olmstead and Rhode in the 2016 paper. ''These are cases of misattribution and obfuscation, of dropping the narrators' own words, or of changing their meaning in ways that advance Baptist's argument.''
''The problem of quotations differing in a material way from the source and of inaccurate, incomplete, and misleading citations are not limited to these examples, all drawn from one page. A direct and accurate reading of the narratives does not support Baptist's argument.''
''Even if some of the uptick came from seeds, it's still a system driven by force,'' Baptist told the Washington Post in 2016, claiming Olmstead and Rhode ''weigh everything on the seeds. It's the seeds, the seeds, the seeds. That takes the violence out of the picture.''
MORE: I don't owe reparations for slavery
IMAGE: Shutterstock
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2020
BernieGate 2.0? Gabbard Gutted By DNC's Dubious Debate Dodge | Zero Hedge
Sun, 25 Aug 2019 15:24
Authored by Michael Tracey via RealClearPolitics.com,
Tulsi Gabbard is on the verge of being excluded from the next Democratic presidential debate on the basis of criteria that appear increasingly absurd...
Take, for instance, her poll standing in New Hampshire, which currently places Gabbard at 3.3% support, according to the RealClearPolitics average as of Aug. 20. One might suspect that such a figure would merit inclusion in the upcoming debates -- especially considering she's ahead of several candidates who have already been granted entry, including Cory Booker, Amy Klobuchar, Beto O'Rourke, and Andrew Yang.
But the Democratic National Committee has decreed that the polls constituting this average are not sufficiently ''qualifying.''
What makes a poll ''qualifying'' in the eyes of the DNC? The answer is conspicuously inscrutable. Months ago, party chieftains issued a list of ''approved sponsoring organizations/institutions'' for polls that satisfy their criteria for debate admittance. Not appearing on that list is the Boston Globe, which sponsored a Suffolk University poll published Aug. 6 that placed Gabbard at 3%. The DNC had proclaimed that for admittance to the September and October debates, candidates must secure polling results of 2% or more in four separate ''approved'' polls -- but a poll sponsored by the newspaper with the largest circulation in New Hampshire (the Globe recently surpassed the New Hampshire Union Leader there) does not count, per this cockamamie criteria. There has not been an officially qualifying poll in New Hampshire, Gabbard's best state, in over a month.
The absurdity mounts.
A South Carolina poll published Aug. 14 by the Post and Courier placed Gabbard at 2%. One might have again vainly assumed that the newspaper with the largest circulation in a critical early primary state would be an ''approved'' sponsor per the dictates of the DNC, but it is not. Curious.
To recap:
Gabbard has polled at 2% or more in two polls sponsored by the two largest newspapers in two early primary states, but the DNC -- through its mysteriously incoherent selection process -- has determined that these surveys do not count toward her debate eligibility. Without these exclusions, Gabbard would have already qualified. She has polled at 2% or more in two polls officially deemed ''qualifying,'' and surpassed the 130,000 donor threshold on Aug. 2. While the latter metric would seem more indicative of ''grassroots support'' -- a formerly obscure Hawaii congresswoman has managed to secure more than 160,000 individual contributions from all 50 states, according to the latest figures from her campaign -- the DNC has declared that it will prioritize polling over donors. In polls with a sample size of just a few hundred people, this means excluding candidates based on what can literally amount to rounding errors: A poll that places a candidate at 1.4% could be considered non-qualifying, but a poll that places a candidate at 1.5% is considered qualifying. Pinning such massive decisions for the trajectory of a campaign on insignificant fractional differences seems wildly arbitrary.
Take also Gabbard's performance in polls conducted by YouGov. One such poll published July 21, sponsored by CBS, placed Gabbard at 2% in New Hampshire and therefore counts toward her qualifying total. But Gabbard has polled at 2% or more in five additional YouGov polls -- except those polls are sponsored by The Economist, not CBS. Needless to say, The Economist is not a ''sponsoring organization,'' per the whims of the DNC. It may be one of the most vaunted news organizations in the world, and YouGov may be a ''qualified'' polling firm in other contexts, but the DNC has chosen to exclude The Economist's results for reasons that appear less and less defensible.
Then there's the larger issue of how exactly the DNC is gauging grassroots enthusiasm, which was ostensibly supposed to be the principle governing the debate-qualifying process in the first place. Gabbard was the most Googled candidate twice in a row after each previous debate, which at a minimum should indicate that there is substantial interest in her campaign. It's an imperfect metric -- Google searches and other online criteria could be subject to manipulation -- but then again, the other metrics are also noticeably imperfect. There is no reason why the DNC could not incorporate a range of factors in determining which candidates voters are entitled to hear from on a national stage. For what it's worth, she also tends to generate anomalously large interest on YouTube and social media, having gained the second-most Twitter followers of any candidate after the most recent debate in July. Again, these are imperfect metrics, but the entire debate-qualifying process is based on imperfect metrics.
Gabbard has a unique foreign-policy-centric message that is distinct from every other candidate, and she has managed to convert a shoestring campaign operation into a sizable public profile. (She is currently in Indonesia on a two-week National Guard training mission, therefore missing a crucial juncture of the campaign.) Other candidates poised for exclusion might also have a reasonable claim to entry -- Marianne Williamson passed the 130,000 donor threshold this week -- but the most egregious case is clearly Gabbard.
If only out of self-interest, the DNC might want to ponder whether alienating her supporters is a tactically wise move, considering how deeply suspicious many already are of the DNC's behind-the-scenes role -- memories of a ''rigged'' primary in 2016 are still fresh.
In its December 2018 ''framework'' for the debates, the DNC declared: ''Given the fluid nature of the presidential nominating process, the DNC will continuously assess the state of the race and make adjustments to this process as appropriate.''
Now would likely be an ''appropriate'' time for such a reassessment.
Hearing Aids
CVS closes hearing centers. FDA to clear OTC sales of hearing aids
Sun, 25 Aug 2019 15:06
Pedestrians walk past a CVS Health Corp. store in Chicago.
Christopher Dilts | Bloomberg | Getty Images
CVS Health is closing its roughly 30 hearing centers, as it experiments with new store formats and federal regulators write new rules that will allow hearing aids to be sold over the counter.
CVS spokeswoman Erin Pensa confirmed the closures to CNBC and said the company made the decision to close the centers because the hearing-care market has evolved since CVS started piloting audiology services in 2015. Hearing Health & Technology Matters first reported the news.
CVS is pivoting ahead of changes that could reshape the hearing aid market. Next year, the FDA will introduce regulations to allow hearing aids to be sold over the counter, eliminating the need for CVS to dedicate space in stores for audiologists to conduct hearing tests and fit people for the devices.
The company is experimenting with new store formats as its core drugstore business faces pressure from online companies such as Amazon. It's piloting HealthHUBs, which offer more health services, such as blood pressure testing and yoga classes.
"The FDA is preparing to approve lower-cost, over-the-counter hearing devices in the near future, and new technology is emerging to enable self-serve hearing testing and care," Pensa said.
Currently, people must undergo an exam by a licensed professional in order to buy hearing aids. Congress in 2017 required the FDA to develop regulations for over-the-counter hearing aids in a bid to make them more affordable and thereby more accessible.
The law requires the FDA to draft its regulations by 2020, though actually implementing them may take longer.
There are currently no FDA-approved hearing aid products that can be sold over the counter. The FDA in October approved Bose hearing aids that are self-fitting but are considered direct-to-consumer rather than over-the-counter, meaning they are subject to federal and state regulations dictating how they can be sold.
Amplifiers are not subject to the same requirements, meaning they can be purchased in stores. CVS sells eight of these products at its HealthHUB stores in Houston, Texas, Pensa said. Prices range from $40 to $500.
Hearing industry calls Bose self-fit hearing aid study flawed in complaint to FDA | MedTech Dive
Sun, 25 Aug 2019 15:07
Dive Brief:The Hearing Industries Association argued FDA's marketing authorization of Bose's self-fitting hearing aid relied on a flawed Phase II clinical study design in a May letter obtained by MedTech Dive.The trade group, which is lobbying the government to limit the sound amplification of hearing aids intended for patients with mild to moderate hearing loss without assistance from a licensed audiologist, argues the standards FDA's decision relied on could "adversely impact safety and effectiveness and would jeopardize the hearing health of consumers."Bose has not introduced the product to the market yet, but a company spokesperson told MedTech Dive the FDA decision to grant marketing authorization to the device "speaks for itself."Dive Insight:FDA granted Bose's self-fit hearing aid a De Novo in 2018 based on clinical studies of 125 patients examining if the outcomes of self-fitting the device were comparable to professional fitting. The device is indicated direct-to-consumer sale to those over 18 without the assistance of an audiologist.
HIA's letter to Srinivas Nandkumar, the branch chief of FDA's Division of Ophthalmic and Ear, Nose, and Throat Devices, argues the Phase II clinical study "does not provide enough evidence of effectiveness of the self-fitting method given the study's initial reliance on professionals for fitting."
According to FDA's decision summary, the two-arm study of 75 patients had three clinic visits alongside several weeks of use in the real world. During the first two visits, patients were fit professionally by audiologists before being assigned to a one-month field trial in a professional fit group or self-fit group.
During the third visit, patients were accessed using speech-in-noise tests and questionnaires about the benefit of the devices.
"This does not reflect the actual real-world experience," HIA's letter states. "As such, HIA has concerns the data the study relies upon may not accurately reflect the ability of treatment-naive hearing patients to adequately 'self-fit' without the assistance of a licensed hearing professional."
Bose declined to elaborate on the specific concerns raised by HIA, pointing to FDA's determination the device is safe and effective.
"Our submission to the FDA for the De Novo grant, which we received last fall, speaks for itself," Bose spokesperson Joanne Berthiaume told MedTech Dive.
FDA declined to comment on the specific HIA letter but noted the De Novo pathway is intended to provide a path to market for medical devices when general and/or special controls can provide a reasonable assurance of safety and effectiveness.
"The Bose company submitted, and FDA granted, a request for De Novo classification," an FDA spokesperson told MedTech Dive in an email. "These decisions are based on a benefit vs risk decision making that is outlined in our publicly available decision summary."
HIA declined an interview with MedTech Dive, but its letter makes it clear it is attempting to influence over-the-counter hearing aid regulations under development.
HIA spent $30,000 during the second quarter lobbying Congress over the regulation of hearing aids and over-the-counter hearing aid devices. Brandon Sawalich, the chairman of the trade group's board of directors, is also the president of Starkey Hearing Technologies, a hearing aid firm that also heavily lobbies the government to protect its bottom line.
The FDA Reauthorization Act of 2017 mandates the agency establish a category of over-the-counter hearing aids by August 2020. The agency plans to issue a proposed rule in November that is intended "to promote the availability of additional kinds of devices that address age-related hearing loss," according to FDA's spring regulatory plan.
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ADOS
Bots in Blackface '' The Rise of Fake Black People on Social Media Promoting Political Agendas - Black Enterprise
Sun, 25 Aug 2019 11:08
If you follow Donald Trump's Twitter feed, you may have noticed several prominent accounts that appear to be profiles belonging to black people''high up on his Twitter feed of responses. Some of these accounts have thousands and thousands of followers. Others even have the blue Twitter check mark next to their account names. Yet, exactly who is behind these accounts is ambiguous. The rise of bots in the guise of black people on social media remains a worrisome issue heading into the 2020 elections.
Take for instance, the Twitter account @RyanHillMI, aka Ryan Hill. This account has a blue check mark which, supposedly, means it was vetted by Twitter and confirmed to be an actual person. Yet, a Google (or Bing) search on 'Ryan Hill Michigan' only yields results of a white, male lawyer in Michigan, and nothing about a young, black man in the Michigan area'--which the @RyanHillMI's avatar depicts.
I reached out to the Ryan Hill account on Twitter. I asked him (it?) about doing an interview and providing some background information. The conversation turned bizarre as you can see from the below screenshot (these are his remarks to my inquiries):
I also contacted Twitter and asked the company about assigning a blue check to an account a journalist could not find much information about. I was told I would receive an answer. I am still waiting.
Needless to say, the account raises some suspicion about authenticity. If it is indeed some sockpuppet account posing as a black person to influence politics'--it wouldn't be the first time some vested interest engaged in 'bot blackface.'
Perceptive social media users have even unearthed fake black accounts using Google's reverse image search feature. One such Twitter account, @Mike47441781, was proven to use a stock image as the account's avatar.
Shireen Mitchell is the founder of Digital Sisters and Stop Online Violence Against Women. She's done in-depth research about the use of impostor black accounts pushing political agendas across social media.
Mitchell says the activity behind these fake accounts boils down to ''getting people not to vote for Democrats.'' She points out that social media is the ultimate affordable platform for white supremacists.
As one of the authors of Stop Online Violence Against Women's report on targeted black voter suppression on social media, Mitchell and her team reported on the Russian Internet Research Agency's purposeful political ad targeting to black Americans.
''The 3,500 ads on Facebook by the Russian Internet Research agency were centered largely on Black American Culture over all other identity and race-based narratives. While the race-based focus of the Russian-purchased ads has been acknowledged in some reporting and previous studies, it has not been pointed out in the media that the themes of Black Identity and culture were the focus of the majority of the ads with the intent to engage in voter suppression of Black voters,'' stated Mitchell and the other report authors in a press release.
''The sobering analysis in this report documents that Russian ads were overwhelming focused on Black American Culture, and often specifically on Black women with the goal of voter suppression,'' says Jessie Daniels, Professor of Sociology at The City University of New York, and a Fellow at The Data & Society Research Institute. ''This report is an urgently needed reminder that we ignore the way racism is woven into technology at our own peril.''
The report found that Russian actors specifically manipulated topics such as Hillary Clinton's ''super predator'' comment from 1996; and issues related to race and policing, immigration, and guns. You can read the entire report here.
Much of the controversy over fake black social media accounts also surrounds the American Descendants of Slavery (ADOS) movement. ADOS activists claim that African American voters should vote for politicians that support policies beneficial and exclusive to the African American community, such as reparations.
Buzzfeed reported that social media ADOS activist accounts are often accused of being bots and ''Russian trolls'':
Some Twitter users still doubt the authenticity of some of the accounts tweeting about the movement. One user account questioned if she'd have to mute #ADOS and posted a screenshot of an account created in 2009. ''This might be important,'' the user said. ''I saw a warning the other day that the new bot movement is old accounts that have been dormant. This account was created in 09 but just started tweeting literally 15 mins ago.''
Clearly, there are concerted efforts to splinter the powerful black voting bloc and to keep black people from voting. It's important that black people stay vigilant over whose information to trust on social media.
One professor offered a few tips to NPR on how to pinpoint possibly fake black profiles:
''Beware of accounts that regularly use stereotypical quote-unquote black language. These accounts typically use language they think black people use.
''Check the number of tweets and followers on an account.
''Check how long ago an account was created.
''Check the type of tweets or posts the account has on its timeline.
Brexit
Lowlands
Overtourism in the Netherlands - The Atlantic
Sun, 25 Aug 2019 15:02
Rami NiemiT he Dutch have suffered some brutal occupations, from the Roman empire and Viking raids to Spanish and Nazi rule. But now they face an even larger army of invaders: tourists.
In the era of cheap flights and Airbnb, their numbers are staggering. Some 19 million tourists visited the Netherlands last year, more people than live there. For a country half the size of South Carolina, with one of the world's highest population densities, that's a lot. And according to the Netherlands Board of Tourism & Conventions, the number of annual visitors is projected to increase by 50 percent over the next decade, to 29 million. Urban planners and city officials have a word for what the Netherlands and quite a few other European countries are experiencing: overtourism. With such an influx of humanity comes a decline in quality of life. Residents' complaints range from inconvenience (crowds spilling from sidewalks to streets) to vandalism to alcohol-induced defilement (vomiting in flower boxes, urinating in mailboxes).
Annie Lowrey: Too many people want to travel
Amsterdam, with its museums, guided canal tours, and picturesque architecture, sees much of this collateral damage. To combat it, the city recently passed various pieces of legislation, including a moratorium on new hotel construction in much of the city; new fines (140 euros for public urination or drunk and disorderly conduct); new restrictions on Airbnb rentals (30 nights a year per unit); and a combination of bans and restrictions on new tourist-centric businesses, such as bike-rental outfits and donut shops, in the historic city center. Guided tours of the city's Red Light District will be banned in January 2020, and thanks to new government regulations, many of its cannabis ''coffee shops'''--the first of which dates back to 1967'--have closed. There's even talk of charging day-trippers to set foot in the city, a bold policy recently enacted in Venice. Perhaps most telling, earlier this year the Dutch tourism board officially shifted its mission from ''destination promotion'' to ''destination management.''
Overtourism may have pierced a part of the Dutch psyche that once seemed inviolable: its gedoogcultuur, or culture of permissiveness. Ko Koens, who studies sustainable tourism at Breda University of Applied Sciences, finds the anti-tourist sentiment expressed by his fellow citizens both curious and troubling: ''There's a certain irony that many left-wing people who condemn xenophobia nonetheless talk about 'the Chinese' and 'the English''--if they're tourists, that's seen as okay,'' Koens says.
Read: Iceland vs. tourists
Tony Perrottet, the author of Pagan Holiday: On the Trail of Ancient Roman Tourists, says anti-tourist sentiment can be traced at least as far back as the first and second centuries a.d. , when wealthy Romans visited Greece (where they complained about the food), Naples (where they complained about the guides), and Egypt (where they defaced the pyramids and the Sphinx with graffiti). ''The structure of tourism historically is that you have resentful locals, and rich, obnoxious, clueless intruders: the Greeks and the Romans, the Brits and the Americans, the Dutch and Germans,'' says Perrottet, who lives in Manhattan. ''But I sympathize with the Dutch. God, there's nothing more annoying than getting stuck on Fifth Avenue between a bunch of tourists.''
This article appears in the September 2019 print edition with the headline ''The War on Tourists.''
We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.
Rene Chun is a contributing editor at
Wired.
SJWLGBBTQQIAAPK
Schools Relax Dress Codes in Bid to End Body Shaming - WSJ
Sun, 25 Aug 2019 15:07
The old fingertip test to measure length of shorts and skirts is out in a growing number of school districts, while short shorts, tube tops, pajamas and attire showing cleavage are in.
Clothing once considered taboo is now permitted as more districts across the U.S. relax student dress code policies, deemed disproportionately targeted at females, and move to gender-neutral or equitable dress codes. The districts also want to end body shaming, causing humiliation by criticizing a person's body shape or size.
''A decision of how a student comes to school, that is a decision with the family,'' said Tracy Spinner, director of comprehensive health in the Austin Independent School District in Texas, which is moving to a less restrictive dress code this coming school year. ''Clothing is just made differently than it was 10 years ago. Trying to find shorts for girls that come down to their knees, it's impossible.''
Austin ISD's new policy, prompted by high-school students who felt the old policy discriminated against females and students not identifying with a gender, allows students to wear halter tops, leggings, ripped jeans, hats and hoodies with the hood up, as long as the face and ears are visible. Waistbands and straps on undergarments can show, but no midriffs or private parts.
The Austin policy is partly modeled on one created in 2016 by the Oregon chapter of the National Organization for Women, dubbed the ''Oregon NOW model,'' that is used by school districts in at least 16 states. It gives students and parents much control of what's worn, but requires that students wear shoes, a top and bottom, with no offensive language and images, and opaque material covering private areas. The policy is gender free; for instance, males can wear skirts.
Elleanor Chin, a member of Oregon NOW and co-writer of the policy, said the idea to create a policy came after hearing young girls in Portland, Ore., speak out on disproportionate dress-code rules.
''Assumptions are that the girl's body is a problem, that these girls, who are just barely in puberty, are capable of sending a sexual message,'' Ms. Chin said. ''Our goal was to take the onus off of the body.''
The Alameda Unified School District in California stripped many rules from its dress code, mostly leaving it up to students and parents to decide as long as students wear a top, bottom and shoes, and private parts don't show. Midriff-baring clothes are allowed. The district, which piloted its new dress code last school year and made it permanent for this coming school year, also addressed cleavage, allowing it as long as no areolae or nipples show.
''Some girls develop faster, some have bigger bodies,'' said Susan Davis, the Alameda schools spokeswoman. ''Some people who were upset said it would teach girls not to respect their bodies. Our boys need to learn that just because a girl's body is showing does not mean she's open for sex.''
Some school districts aren't ready to make such a leap with dress code'--while others have recently added parental dress codes.
Maryville City Schools in Tennessee is moving to a formal dress code next school year with detailed rules. It includes requiring shirts be tucked in or cover the waistband of bottoms and visible piercings limited to earrings and nose studs. Shirts also cannot extend below the bottom hem of skirts or shorts, giving the appearance that the student doesn't have bottoms on. Mike Winstead, director of schools, said the new rules aren't that strict for his conservative community.
''We had very few parents wanting us to open the door, saying, `whatever you want to do is fine.' That's not our community,'' he said.
Some conservative groups disagree with a one-size-fits-all dress code and the blurring of gender roles behind it.
''Boys and girls are different, and those differences should be recognized, celebrated and affirmed'--not denied or blurred,'' said Jeff Johnston, culture and policy analyst for Focus on the Family, a Christian ministry. ''We strongly oppose schools teaching or catering to this gender ideology.''
The Hico Independent School District in Texas is among those that have enforced hair length in their policies. Last school year, a teacher in the district cut Lane Kiesling's hair bangs because they extended below his eyebrows and violated dress code, he and his mother said.
''I was really angry that I had to go back to class, and just about walked straight home instead. Everyone was talking trash,'' said the 16-year-old, who said the cut was crudely done and too short.
Lane transferred to another school district, said his mother, Amy Martin, adding she didn't consent to the school cut. She acknowledges her son's hair was out of code, but said she couldn't afford to get it cut. ''There are choices that have to be made'--the electric bill or a haircut,'' she said.
The Hico school superintendent wasn't available for comment, a district official said. In a statement issued to the Stephenville Empire-Tribune, he cited the district's policy without addressing the issue with Lane.
Some districts say the burden of policing student dress often falls on teachers, taking time away from educating students.
Ken Zarifis, president of the Education Austin employees union and a former teacher, said teachers welcomed the new dress code in Austin.
''As a man, telling a 13-year-old girl to put her fingers next to her shorts or skirt, you have to start explaining why, and it's awful,'' he said. ''We have so many more important things to do.''
Write to Tawnell D. Hobbs at Tawnell.Hobbs@wsj.com
NBC News Report: ''Heterosexuality Is Just Not Working'
Fri, 23 Aug 2019 21:24
Women are increasingly opting out of heterosexuality because it is ''the bedrock of their global oppression,'' NBC News asserted in a bizarre opinion piece this week.''Men need heterosexuality to maintain their societal dominance over women,'' writes Marcie Bianco for the NBC News website. ''Women, on the other hand, are increasingly realizing not only that they don't need heterosexuality, but that it also is often the bedrock of their global oppression.''
Ms. Bianco lumps together a series of recent news stories, ''from Jeffrey Epstein to the Dayton and El Paso mass shooters, to Miley Cyrus's separation and Julianne Hough's declaration that she's 'not straight,''' which, she says, ''together have laid bare the strictures of an American patriarchy on the edge of a nervous breakdown.''
''As the status quo, heterosexuality is just not working,'' she concludes, before explaining just how evil men are and how women are learning to live without them.
''As a snapshot of 2019 America, these stories present a startling picture: Men continue to coerce, harass, rape and kill girls and women '-- and go to extreme lengths to avoid responsibility for their actions,'' she states. ''On the other side of the issue, girls and women are challenging heterosexuality, and even absconding from it altogether.''
''Patriarchy is at its most potent when oppression doesn't feel like oppression, or when it is packaged in terms of biology, religion, or basic social needs like security comfort, acceptance and success,'' Ms. Bianco declares.
''Heterosexuality offers women all these things as selling points to their consensual subjection,'' she concludes, in a painful piece of contorted logic that reveals far more about the writer than it does about society and its institutions.
''Historically, women have been conditioned to believe that heterosexuality is natural or innate, just as they have been conditioned to believe that their main purpose is to make babies '-- and if they fail to do so, they are condemned as not 'real,' or as bad, women,'' she pronounces.
A series of new role models are emerging, she suggests, whose lives and choices '-- as dysfunctional as they may appear to the general public '-- are teaching women how to take back power from men.
''Celebrities are not always at the vanguard of feminist thought, but both Julianne Hough and Miley Cyrus have recently spoken out about sexuality in ways that puts the power '-- and responsibility '-- back into their own hands,'' she declares.
Men, on the other hand, particularly heterosexual men, are a blight on the earth and a source of unending woes, one infers.
''Where men seem to never to have to take responsibility for their actions, women always must take responsibility for not only their own actions but the actions of men,'' she states. ''Absconding from responsibility is the quintessential strategy of the patriarchy; it's how men stay in control and never lose their power.''
''While men stew in their mess, women are rising,'' she continues. ''They are taking back control of their lives and their bodies and they are questioning the foundation of the patriarchy '-- heterosexuality '-- that has kept them blindly subordinate for centuries.''
While Ms. Bianco is certainly entitled to her opinions, as outrageous as they may be, one cannot help but wonder why NBC News would want to abet such overt and venomous misandry.
A similar tirade proposing that women are the source of all the world's ills would garner well-deserved condemnation and no self-respecting news site would publish it.
Why, then, prop up such irrational hatred when the target is men?
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The Purge
My Ghod, CATO Gets It Right in [Market-Ticker]
Sun, 25 Aug 2019 14:57
I'm stunned, I tell you....
Unfortunately, the Fourth Estate has recently allowed misinformation about Section 230 to spread, which is especially regrettable given that falsehoods about Section 230 are already ubiquitous.
The most recent example of such misinformation is an op-ed in The Wall Street Journal by the conservative commentator and Prager University founder Dennis Prager. The first falsehood appears in the subhed: ''Big tech companies enjoy legal immunity premised on the assumption they'll respect free speech.''
This is not true. Congress did not pass Section 230 on the understanding that Internet companies would engage in minimal moderation and ''respect free speech.''
CATO is correct.
I was an Internet CEO in 1996 -- I ran MCSNet of Chicago, one of the first firms in the area (second by a day, factually) to sell Internet access to consumers. We also had a lively business connection aspect, as well as one of the first virtual web-hosting offerings.
In other words I was one of the people who really made what you have and do today happen.
I was also, as a consequence, in the middle of the debate on the Communications Decency Act -- and Section 230.
Prior to that ISPs had only case law to shield them. It was pretty good law, in the general sense; the seminal case was called Cubby .v. CompuServe, which turned on exactly this issue -- whether CompuServe could be held liable because it failed to restrict speech.
The holding at the time was that retroactive moderation, or the failure thereof, did not give rise to derivative liability. Left open was the question about prospective moderation -- that is what is commonly known as editorial review. This is the process that an editor in a newspaper uses, for example: Only that which is actively approved passes. This was left open to a circumstance-by-circumstance evaluation.
Cubby shielded providers who either did or did not retroactively moderate. In other words if you had an open forum and either decided to or decided not to, after someone posted, take something down other than on the clear presentation of evidence of wrongdoing such as a copyright claim, you were immune from liability. If you were presented such a claim at the point of actual knowledge there was risk of liability -- but not before.
This is distinct from the speaker being liable. That is, the person who actually posted the material was (and remains today) responsible for it.
Section 230 changed all that. Under Section 230 the operator of the system is not responsible -- period .
It does not matter if they censor.
It does not matter when they censor (before or after the fact.)
It does not matter irrespective of what the material is, including that which normally has the highest First Amendment protections (e.g. political speech.)
The only remaining exceptions that have been broadly found under Section 230 is if you edit (that is, change, not remove or refuse to remove) someone else's speech -- that makes it your speech, not the users -- or if the material is illegal and complicity can be shown in that regard (e.g. hosting child porn where you either know or have reason to know it's there.)
It also leaves in place Copyright suits. However, the DMCA dealt with that separately provided the operator of the site again (1) is not the original poster and (2) conforms with specific requirements of the DMCA, including taking down claimed violations on a commercially-reasonable basis.
Note that under the law there is no differentiation between a "platform" and not. It's similar to journalism in that journalism is an activity, not a person. Anyone engaged in journalism, whether for profit or not, whether their usual means of making a living or not is a journalist at that particular point in time.
I had at the time of Section 230's debate and passage serious concerns over the law as written. But the current range of censorship and such on the Internet today isn't so much about Section 230 or not, it is about the collusive nature of said censorship and concentration of market power.
It's not the banhammer -- it's that the providers collude to collectively deny basic infrastructure purchases by those they dislike, effectively forbidding them from going somewhere else. This is exactly what happened with 8Chan recently and many others over the last few years.
That's illegal under 15 USC Chapter 1 and worse for those who engage in this sort of collusive behavior that's not a civil matter either, it's a criminal felony carrying 10 years in the slam-slam per incident and it is applicable to everyone involved from CEOs on down.
But heh -- today nobody goes to jail for violating anti-trust law. Not in the medical field, not in the pharmaceutical field and certainly not in the social media field.
Every one of these people should go to prison -- right now. But this is not a failure of enforcement of Section 230; rather, it is a failure to enforce 15 USC Chapter 1 as written , with so-called "interpretations" that have unlawfully given a pass to break felony criminal laws on the books for more than 100 years not only in the technology field but in the medical and pharmaceutical fields as well.
There are relatively-simple remedies for this, along with prison sentences for the current violators of which there are many apparent ones, all of whom ought to be facing indictments right here and now. We need no new law; the existing 100+ year old anti-trust law is plenty sufficient to send many of these firms CEOs and other executives to prison for a decade and ruin their firms with billions -- or even tens of billions in fines since violations are good for $100m each .
Among more-permanent structural remedies are classifying "unbranded" utility-style services as those forbidden to discriminate for or against like kind and quantity buyers. These would be DNS providers, cloud hosting services, anyone offering colocation services irrespective of their specific type of primary business, CDNs (including those that work to prevent DDOS attacks from working such as Cloudflare, etc.), circuit providers (e.g. telcos, fiber companies, etc), payment processors and aggregating firms irrespective of whether they're in the "fintech" or "traditional" money handling businesses and meet-point operators.
PS: Want someone on air to talk about this was actually there at the time as CEO and won't BS you? You know how to find me.....
Amazon Has Ceded Control of Its Site. The Result: Thousands of Banned, Unsafe or Mislabeled Products - WSJ
Sun, 25 Aug 2019 15:09
Many of the millions of people who shop on Amazon.com see it as if it were an American big-box store, a retailer with goods deemed safe enough for customers.
In practice, Amazon has increasingly evolved like a flea market. It exercises limited oversight over items listed by millions of third-party sellers, many of them anonymous, many in China, some offering scant information.
A Wall Street Journal investigation found 4,152 items for sale on Amazon.com Inc. 's site that have been declared unsafe by federal agencies, are deceptively labeled or are banned by federal regulators'--items that big-box retailers' policies would bar from their shelves. Among those items, at least 2,000 listings for toys and medications lacked warnings about health risks to children.
The Journal identified at least 157 items for sale that Amazon had said it banned, including sleeping mats the Food and Drug Administration warns can suffocate infants. The Journal commissioned tests of 10 children's products it bought on Amazon, many promoted as ''Amazon's Choice.'' Four failed tests based on federal safety standards, according to the testing company, including one with lead levels that exceeded federal limits.
Of the 4,152 products the Journal identified, 46% were listed as shipping from Amazon warehouses.
After the Journal brought the listings to Amazon's attention, 57% of the 4,152 listings had their wording altered or were taken down. Amazon said that it reviewed and addressed the listings the Journal provided and that company policies require all products to comply with laws and regulations.
''Safety is a top priority at Amazon,'' says a spokeswoman. Amazon uses automated tools that scan hundreds of millions of items every few minutes to screen would-be sellers and block suspicious ones from registering and listing items, using the tools to block three billion items in 2018, she says.
''When a concern arises,'' she says, ''we move quickly to protect customers and work directly with sellers, brands, and government agencies.''
Amazon declined to make executives available for interviews.
Christy Stokes blames her son's death on a fraudulently labeled helmet bought on Amazon. Albert Stokes trusted Amazon's quality control, she says, when he picked a motorcycle helmet with an Atlanta Falcons logo for his girlfriend to buy for his 23rd birthday in 2014. It was listed on Amazon as certified by the U.S. Transportation Department.
On June 3, 2014, Mr. Stokes was riding his red Kawasaki in rural Missouri when a Ford Ranger pulled out. He crashed into it, and his helmet came off. A friend phoned his mother to alert her. ''When I came up over the hill on the interstate,'' she says, ''there was my son laid out on the highway.''
The coroner declared Mr. Stokes dead at the scene, a day before he and his girlfriend planned to find out their unborn baby's gender. His mother sued Amazon, claiming the helmet was flawed. Amazon in court argued it didn't sell the helmet but merely listed it on the seller's behalf. It settled for $5,000 without admitting liability. It declined to comment on the case.
The National Highway Traffic Safety Administration said last month that the helmet wasn't DOT compliant and that it had been recalled. It was still listed, and as DOT compliant, last month until the Journal inquired about it, after which Amazon took it down.
Within two weeks of Amazon's removing or altering the first problematic listings the Journal identified, at least 130 items with the same policy violations reappeared, some sold by the same vendors previously identified by the Journal under different listings. Amazon said it then ''removed these items and refined our tools to prevent them from being offered in our store.''
''There are bad actors that attempt to evade our systems,'' Amazon said of products in violation of its policies that appear on the site, adding that ''should one ever slip through, we work quickly to take action on the seller and protect customers.''
Amazon's struggle to police its site adds to the mounting evidence that America's tech giants have lost control of their massive platforms'--or decline to control them. This is emerging as among the companies' biggest challenges.
Amazon, Facebook Inc., Twitter Inc., Alphabet Inc. 's YouTube and others are under scrutiny over how they wield their dominance in booming internet markets while their forums are used for fraudulent listings, offensive content and misinformation'--including some spread during America's 2016 elections.
Some lawmakers have begun calling for more regulation of the companies. Courts have begun challenging the firms' interpretation of their legal protections, and regulators are scrutinizing them. Tech companies say they aren't illegal monopolies and have generally pledged to address issues such as misinformation and privacy.
Amazon's common legal defense in safety disputes over third-party sales is that it is not the seller and so can't be responsible under state statutes that let consumers sue retailers. Amazon also says that, as a provider of an online forum, it is protected by the law'--Section 230 of the Communications Decency Act of 1996'--that shields internet platforms from liability for what others post there.
This is similar to a common defense by internet companies faced with complaints about content or services offered on their platforms. Courts and regulators have largely agreed'--until recently.
Last month, the U.S. Court of Appeals for the Third Circuit held that a Pennsylvania customer could sue Amazon over an allegedly unsafe product. The court said Amazon could be considered a seller under Pennsylvania law, in part because the company had no vetting process to ensure that third-party sellers were accessible and available for consumers to sue if they were harmed by an item, leaving consumers with no recourse in many cases. The court also held Amazon had considerable control over third-party sellers and could prevent sales of unsafe items. Amazon has asked the appeals court to review the decision.
Last year, the Environmental Protection Agency fined Amazon for letting people sell unregistered pesticides. Amazon agreed, without admitting wrongdoing, to pay a fine and set up new systems to stop such sales. Earlier this year, Washington state's attorney general and Amazon filed a settlement in state court over state allegations that the company allowed school products on the platform that contained lead and cadmium above federal and state limits. Amazon didn't admit wrongdoing.
Amazon tells customers, on its payments site: ''We want you to buy with confidence anytime you make a purchase on the Amazon.com website.''
On its site aimed at third-party sellers, it says customers ''know and trust us, and that trust extends to you.''
Third-party sellers are crucial to Amazon because their sales have exploded'--to nearly 60% of physical merchandise sales in 2018 from 30% a decade ago, Amazon says. The site had 2.5 million merchants with items for sale at the end of 2018, estimates e-commerce-intelligence firm Marketplace Pulse.
Amazon doesn't make it easy for customers to see that many products aren't sold by the company. Many third-party items the Journal examined were listed as Amazon Prime eligible and sold through the Fulfillment by Amazon program, which generally ships items from Amazon warehouses in Amazon-branded boxes. The actual seller's name appeared only in small print on the listing page.
Customers ''could end up in the part of the product pool where who knows where this came from,'' says Bill Pease, a chief scientist at safety-labeling company UL LLC, who is working with large retailers on setting up new product-safety systems. ''And most people don't know that.''
Amazon's overriding corporate philosophy of offering ever more options is clashing with internal efforts to make sure product listings won't harm buyers, the Journal found in interviews with former employees and others close to Amazon's safety practices, and from internal records.
The Amazon spokeswoman says: ''Our mission is to be Earth's most customer-centric company. We strive for that goal by building the best shopping experience for customers, with unbeatable prices, selection and convenience'--but not at the expense of our customers' safety and this insinuation is simply wrong.''
To test the effectiveness of Amazon's safety practices, the Journal analyzed listings on Amazon between May and early August, and hired a federally certified testing company to examine certain items bought on Amazon. Among the findings:
'116 products were falsely listed as ''FDA-approved'' including four toys'--the agency doesn't approve toys'--and 98 eyelash-growth serums that never undertook the drug-approval process to be marketed as approved.
'43 listings for oral benzocaine, a pain reliever, lacked advised FDA labels warning against use on children under 2.
'80 listings matched the description of infant sleeping wedges the FDA has warned can cause suffocation and Amazon has said it banned.
'52 listings were marketed as supplements with brand names the FDA and Justice Department have identified as containing illegally imported prescription drugs.
'1,412 electronics listings falsely claimed to be UL certified'--indicating they met voluntary industry safety standards'--or didn't provide enough information to verify the claim.
'The Journal analyzed 3,644 toy listings for federally required choking-hazard warnings. Regulators don't provide databases of toys requiring the warning, so the Journal compared the Amazon listings with the same toys on Target.com and found that 2,324, or 64%, of the Amazon listings lacked the warnings found on the Target listings.
'In addition to the 4,152 items, the Journal initially found 4,510 balloons lacking required choking-hazard warnings listed.
U.S. Public Interest Research Group, a consumer-advocacy organization, in 2018 reported that a large portion of Amazon balloon listings lacked the warning. That Amazon hasn't fixed the problem ''shows that Amazon has decided not to put safeguards in place to ensure that kids are protected from one of the largest choking hazards from toys,'' says Adam Garber, who co-wrote the report. ''You can't tell me they can't come up with a system to require companies to include the necessary hazard labels based on what they're selling.''
Warnings were added to most listings and a small number were removed after the Journal sent Amazon a list of balloon listings that didn't include the correct language.
Weeks later, the Journal identified an additional 2,208 balloon listings without choking hazard warnings; those, too, now have appropriate warnings or were taken down. Amazon declined to comment on the balloons.
Including the balloons, 83% of the 10,870 total listings the Journal presented to Amazon were taken down or altered. Amazon didn't alter the UL listings. The Amazon spokeswoman says electronics are often rebranded by multiple different sellers that may not be searchable in UL's database.
The Journal's analysis didn't include safety risks of counterfeit products, which some consumers have reported receiving through Amazon. Items disguised as name brands may contain dangerous materials or lack proper warning labels. Amazon says it ''strictly prohibits counterfeit goods.''
Dozens of products the Journal identified as dangerous or mislabeled had the Amazon's Choice designation, which many consumers take to be Amazon's endorsement. The company's website says Amazon's Choice reflects a combination of ratings, pricing and shipping time.
One was the toy musical-instrument set Darice Taipalus bought her son in March when he was 16 months old, she says. The Texas database developer says she assumed everything on Amazon met safety standards, until the Journal contacted her.
The Amazon listing said the set was ''made of high quality nontoxic material, safe and reliable for little children'' and claimed approval from the FDA. Journal-commissioned testing showed the set's xylophone contained nearly four times the lead the federal government allows in children's products. According to the testing company, the set also failed tests based on federal requirements for determining sharp points.
''He's a toddler,'' Ms. Taipalus says. ''Everything goes in his mouth.'' She says she threw the set away after hearing the Journal's testing results.
Amazon initially didn't take the product down after the Journal informed it of the test results, saying a Chinese entity that goes by the name Ailuki had previously provided a test report showing there were no detectable lead levels. It subsequently took the set down in the U.S. and says it is asking Ailuki for more documentation.
Ailuki sent the Journal a test report it said it had commissioned that stated there were no detectable lead levels. It didn't respond to further requests for comment.
Another musical-instrument set failing the Journal's tests, made by a company calling itself Innocheer and listed as in China, likely contributed to a New York City child's lead poisoning, according to city health officials. The city in May 2018 began tracking down contaminated products including the set bought on Amazon, a New York health-department spokesman says.
Subsequent testing showed the set's bright-yellow maracas contained 411 times the lead legally allowed, health-department documents show. After a federal recall last fall, Amazon pulled the listing and notified customers of the recall, the company says. ''We execute recalls as soon as we are aware of them,'' it says.
The set later appeared online with red maracas, stating the instruments were lead-free. In the Journal-commissioned tests, conducted after the recall, the maracas didn't contain lead but other instruments in the set failed sharp-point tests. Innocheer couldn't be reached for comment. Amazon has taken the set down in the U.S., saying it is requesting additional compliance documentation.
In its early days, Amazon operated a lot like big-box stores, largely in direct control of its supply and distribution chains. Customers got products directly from Amazon or a known retail partner such as Toys ''R'' Us. In 2001, third-party sellers made up 6% of Amazon's physical merchandise sales, company data show.
The same year, the company articulated a core philosophy that helped spur the growth of third-party sellers. According to published company histories, founder Jeff Bezos and other officials scribbled an image of a ''virtuous cycle'': It depicted how third-party vendors would want to sell to Amazon's customers and would add more products at less expensive prices, attracting even more customers and more sellers.
As smaller retailers joined Amazon's marketplace, the company seemed unprepared to police them, some former employees say. In 2011, a team of three oversaw safety for the entire site, which essentially consisted of managing recalled products, say some of them, including Rachel Johnson Greer, a former employee who managed Amazon's safety systems until 2015 and now advises third-party Amazon sellers.
The main enforcement effort on product safety was rudimentary and involved running an Excel spreadsheet script to identify products recalled by the consumer-safety commission and manually then remove them, Ms. Greer and the other former employees say.
Many risky products got through, and the third-party marketplace became ''a giant disaster zone,'' says Ms. Greer. ''It was absolutely insane.'' Ms. Greer says she worked initially with an engineer and legal intern to develop a machine-learning tool to automatically take down restricted products. It scanned third-party-item descriptions for certain keywords, growing smarter as the team refined what to target, she says.
The safety team grew rapidly alongside the artificial-intelligence tool, with hundreds of people across several departments and countries. But product volume was growing, and many products continued to slip through, she and other former employees say.
At one point in 2013, some Amazon employees began scanning randomly selected third-party products in Amazon warehouses for lead content, say people familiar with the tests. Around 10% of the products tested failed, one says. The failed products were purged, but higher-level employees decided not to expand the testing, fearing it would be unmanageable if applied to the entire marketplace, the people familiar with the tests say. Amazon declined to comment on the episode.
''Amazon will always default to allowing more stuff to be available to the customer,'' says Ms. Greer. In 2017, she ordered baby products, children's toys and food-related products from Amazon that came up high in search results but had false certification claims, such as claiming FDA approval, and sent them to federally certified laboratories for testing. She says that, at the time, she estimated 80% of Amazon's third-party sellers didn't comply with federal, state or industry safety and labeling standards and that the vast majority of the issues were not having proper warnings and labels.
The Amazon spokeswoman calls Ms. Greer's analysis ''wrong and baseless'' and says Amazon doesn't sacrifice product safety in favor of selection. Ms. Greer says she stands by her analysis.
Amazon doesn't do its own testing for product safety, according to documents the company filed in the Washington-state case. It does sometimes randomly buy certain high-end jewelry and send it out for testing to make sure third-party sellers aren't peddling fake jewels, according to its publicly posted procedures. The Amazon spokeswoman says the jewelry spot tests are one of various programs the company does to ''ensure customers receive the compliant products they expect.''
Amazon openly encourages anyone to sign up and start selling right away unless something in their registration or initial posting triggers the automated tools to flag them for more vetting.
In contrast, Walmart Inc. requires all products on store shelves be tested at approved labs, company documents show. Target says it requires suppliers of store-branded products to undergo additional inspections and testing beyond government standards.
Target and Walmart have created online marketplaces for third parties to sell directly to consumers. Target's site, launched earlier this year with several sellers, is invitation-only. Walmart had around 22,000 sellers at the end of 2018, according to Marketplace Pulse. It requires an application that can take days for approval, and only a fraction of merchants applying make it through the vetting, says a person familiar with Walmart's policy.
The Journal didn't analyze products sold on Walmart and Target shelves or websites.
A persistent problem for Amazon has been magnetic toys. Amazon and other big retailers banned sets of high-powered magnetic balls and cubes in 2012 after reports of thousands of children ending up hospitalized for swallowing them. Inside the body, the magnets can snap together and rupture abdominal tissue. The Consumer Product Safety Commission, or CPSC, has called them a ''substantial product hazard.'' Retailers still selling them generally allow them on store shelves only when marketed for adults.
Amazon's policy said it prohibited ''Products that include large quantities of magnetic balls or cubes, such as:'' then listed eight brands. But knockoffs of the toys slipped through. The Journal found nearly 80 that appeared to match listings of the banned toys. About 40 of these listings were removed after the Journal contacted Amazon. Roughly 30 still remain that appear to match descriptions of prohibited products originally described on Amazon's compliance pages.
Danny Puskarcik, who worked in product compliance at Amazon until early this year, says the magnets issue ''was an extremely high priority,'' seen as so serious that employees sought to enforce the policy very broadly. ''The idea was to catch all powerful magnets,'' he says. ''Get rid of them. Destroy them.''
Creed Cameron, an Amazon manager for restricted products until 2017 and no longer at the company, says his team never found a good way to handle the magnet problem. Taking down the cheap, mass-manufactured products, he says, was ''like trying to stop a bullet.''
After the Journal contacted Amazon about the knockoffs, the spokeswoman said that despite the wording of the policy'--and the experiences described by the two former workers'--the company intended to ban only the specific magnet-toy brands listed. Other magnet toys, including ones identical to the banned toys but sold under different names, were supposed to be allowed on the site, she said.
Amazon then changed the wording of the policy to ban the specific brands. The spokeswoman declined to comment on why Amazon has banned some brands but not others.
Amazon's policy of banning only some brand-name products ''makes no sense,'' says Alan Schoem, a lawyer who has represented one of the banned brands and is a former CPSC official. ''You'd think they'd want to be a little more careful.''
When Amazon does take down listings for banned items, the same products sometimes reappear under new accounts, the Journal found.
The EPA has announced a ban starting in November on consumer products containing methylene chloride, which the agency has linked to cancer and sudden death from toxic fumes. Amazon late last year said it would purge paint strippers using the chemical by March, but there were still dozens of them for sale then. When an advocacy group named Safer Chemicals, Healthy Families identified the products, Amazon took them down.
More such paint strippers popped up and were removed only after the group flagged them. ''They clearly need to do a better job of setting up a system to police their supply chain,'' says Mike Schade, a campaign director for the nonprofit. Amazon declined to comment on the paint strippers.
Neither Amazon nor federal regulators have made public attempts to measure the scale of the site's safety issues, but at least one state has done so for one product category. This year, the Washington state attorney general's office examined school supplies and found 35 out of 41 Amazon products tested contained amounts of cadmium, lead or both above federal or state limits, state documents show.
Discount stores that the state studied also had a similar ratio of problem products, while other retailers in the test didn't, says Kelly Wood, one of the state attorneys involved in the case.
After the state notified Amazon, the company conducted tests in a warehouse and found that four of 45 tested items had hazardous levels of lead or cadmium, including a unicorn necklace whose pendant-backing makeup was 35% cadmium, more than 8,500 times the legal limit in Washington, state documents show.
Washington state asked Amazon to provide documentation for the children's products showing they had passed safety tests outlined in the company's internal policies. Amazon told the state the company may request certificates for certain high-risk products, and that any seller is required to provide them when asked, but that it didn't have any for the products identified by the state.
Even after Amazon, prompted by the state, went to retailers and asked them directly for the compliance documents and certifications, it didn't receive documents back, the company said, according to documents obtained by the state.
''They weren't really checking that these products were tested prior to putting them up on their website,'' says Mr. Wood.
The Amazon spokeswoman says the company ''worked with our selling partners to verify that the school supplies and children's jewelry in our store are safe and enhanced our processes to verify the safety of these products moving forward. We welcome ongoing collaboration with the Attorney General and other agencies to promote customer safety.''
Amazon customers the Journal contacted who bought products that didn't meet safety standards say they had assumed they were buying from Amazon directly or that everything on the website passed safety standards.
That includes Ms. Stokes, whose son died in the motorcycle accident wearing a helmet falsely claiming DOT compliance. She sued Amazon, the Ford Ranger driver and Ivolution, the Corona, Calif., company that sold the helmet, in Missouri state court, alleging that the truck driver was at fault for the accident and that the helmet had a faulty strap. The driver settled. The case against Amazon and Ivolution was moved to federal court in the Western District of Missouri.
Ivolution owner Ricky Zhang in court statements said another man had bought 103 helmets from him and sold them on Amazon and that Ms. Stokes didn't prove the accident was related to the helmet. His company bought products from China to resell on Amazon, according to the legal documents. It was so small he couldn't afford legal representation, he said in court.
The judge ordered Ivolution to pay $1.9 million to Mr. Stokes's family, which says the company hasn't done so. Mr. Zhang didn't respond to requests for comment.
Amazon attorney Monte Clithero says the company, which settled the case for $5,000, denies any responsibility. ''Basically, a third party was using Amazon as a bulletin board to advertise the product and sell.''
On July 1, 2019, the National Highway Traffic Safety Administration said Ivolution had recalled the helmet'--it said 4,071 were on the market or sold. An agency test in April 2018 had found the helmet cracked open on contact.
On July 29, the helmet model and eight other helmets that failed federal safety tests in 2018 were still listed for sale on Amazon. Amazon removed them after the Journal pointed them out.
A week later, the Journal found a listing for the helmet model Mr. Stokes wore was listed on Amazon by a different vendor, labeled as out of stock. There were also listings for four other helmets Amazon had taken down after the Journal notified it that the products had failed federal safety tests.
Amazon then took those down.
'-- Lisa Schwartz and Fanfan Wang contributed to this article.
'--Additional design and development by Angela Calderon, Joel Eastwood, Jessica Kuronen, and Allison Pasek
Write to Alexandra Berzon at alexandra.berzon@wsj.com and Justin Scheck at justin.scheck@wsj.com
Nukes
What exploded in Russia on Aug 8? My estimate is a (chemical) booster rocket for a nuclear powered cruise missile. - Atomic Insights
Sun, 25 Aug 2019 11:13
A cruise missile with a nuclear reactor heated turbofan engine and a liquid fueled booster rocket is the most likely description of the Russian developmental weapons system that exploded while being tested on August 8. It's likely that the explosion occurred during maintenance or fueling operations on a barge floating off shore and not during an actual flight test.
Like other operational cruise missiles, the developmental weapons system probably flies at a low altitude at a velocity of roughly 500 kts, well below the speed of sound. The payload is likely to be less than 1000 kilograms. The missile probably has a small radar cross-section and includes a sophisticated navigational, communications and maneuvering system that allows it to be redirected while in flight.
Its small (approximately 10-20 MWth) nuclear fission reactor heat source provides it with almost unlimited range and a flight duration that is likely to be measured in days or weeks instead of hours. While operating, the reactor heat source will create a moderate to high level of direct radiation. It is a ''point source'' of radiation with a dose rate that falls off rapidly in inverse proportion to the square of the distance from the reactor.
Since there are generally no living organisms close to a cruise missile in flight, that radiation field is not an operational impediment to using a nuclear fission-heated turbofan engine. Even after the missile hits its eventual target and explodes, the reactor is likely to remain just a local source of radiation without much spreading of radioactive material.
Aside: Basis for that surprising conclusion rests on what bomb damage assessment photos show of the remains of a conventional cruise missile. It's common to be able to detect recognizable turbofan engine parts. If they can survive warhead detonation, so will a propulsion reactor. End Aside.
The above is my own pieced-together interpretation. It is not the official story released by any government agency or investigative news outlet.
What have other sources said?On August 8, 2019, there was a powerful, deadly explosion on a barge floating near the Nenoksa military base on the White Sea's southern shore. That base is well known to intelligence sources as a place where Russia tests military weapons systems.
Four Russian monitoring stations that are capable of detecting radiation and that routinely provide data into an international network set up to help monitor for nuclear weapons testing reported a brief-duration increase in background radiation levels.
Based on publicly available sources on the Internet, it's not clear exactly how long the increased levels lasted. Even the most pessimistic articles indicate that the levels reported from Severodvinsk '' about 40 km from the test site '' were no more than 16 times normal background. No monitoring station outside of Russia measured any increased radiation levels.
On August 21, Vladimir Putin stated that the explosion happened during testing of a promising weapons system. He also described the people killed during the explosion as doing ''extremely important work to ensure the security of our state.''
Official Russian news sources have described the explosion as one that involved ''isotope power sources.'' Several of the five killed or three injured people were described as experts in the nuclear energy or radiological fields and as employees of the Russian Federal Nuclear Center. In some reports, the word ''fissile'' has also been used along with isotope power sources.
President Trump has described the missile that exploded as a nuclear powered cruise missile. Quoted experts for major media outlets like the New York Times and CBS News have disputed that description.
CBS's quoted expert, Pavel Luzin, stated the explosion could not have involved a nuclear powered cruise missile because ''Its (characteristics are) simply against the laws of physics.''
Mr. Luzin expanded on his dismissal of the existence of a nuclear fission heated cruise missile in an article for the Moscow Times titled I Don't Believe a Missile Is to Blame for Russia's Deadly 'Nuclear' Explosion. That article concluded with a bold, but ill-informed and incorrect statement.
However, the bottom line is that the mysterious cruise missile doesn't exist because it contradicts the laws of physics.
''I Don't Believe a Missile Is to Blame for Russia's Deadly 'Nuclear' Explosion'' Moscow Times, August 14, 2019The New York Times quoted Ankit Panda, described as a nuclear expert at the Federation of American Scientists as follows.
''I've generally been of the belief that this attempt at developing an unlimited-range nuclear-powered cruise missile is folly. It's unclear if someone in the Russian defense industrial bureaucracy may have managed to convince a less technically informed leadership that this is a good idea, but the United States tried this, quickly discovered the limitations and risks, and abandoned it with good reason.''
''U.S. Officials Suspect New Nuclear Missile in Explosion That Killed 7 Russians'', NY Times, Aug 12, 2019Truth about nuclear propulsion for aircraftDuring the period from 1951-1961, the US invested more than $1 billion then-year dollars developing and testing a wide range of systems for aircraft nuclear propulsion. Though a number of ''experts'' have stated that the program was halted due to technical failures or insurmountable physical obstacles, the truth is that the program ended as a result of fairly typical budgeting and prioritization decisions.
Some decision makers, like Secretary of Defense Charles Wilson, weren't impressed by the speed or altitude limitations in systems achievable with 1950s vintage materials and control system technologies. He called the proposed nuclear powered bomber a ''shitepoke'' a bird that flies low and slow when comparing it to supersonic, high-flying penetration bombers.
A major effort during the Aircraft Nuclear Propulsion program involved radiation shields for the crews of manned bombers with mission that lasted days or weeks. It is a big technical challenge to provide sufficient protection for long duration exposures.
The problem is made tougher by its circular nature. Big, heavy planes require high powered reactors. High powered reactors produced more intense radiation fields and require more shielding. More shielding requires larger, heavier airframes. And so on.
Those design challenges shrink rapidly when the airframe is a few thousand kilograms and the ''pilot'' is a lightweight, easily shielded piece of electronic equipment. Nuclear fission turbofans work just like those heated by chemical combustion, but their exhaust gas is heated air instead of a mixture of combustion products.
In contrast to the simple safety of a nuclear fission-heated turbofan motor, a liquid fueled rocket motor is a volatile, explosive component that has been known to suffer seriously damaging explosions.
Unlike the frequently directional explosions produced by cruise missile warheads, an exploding booster rocket can cause unidirectional harm and might even break enough barriers in the reactor to produce a moderate radioactive material release.
One final observation '' creating mystery and refusing to openly answer simple questions is a terrific way to generate fear, uncertainty and doubt in a public that has been taught to distrust. Nations that depend on revenues from selling oil and gas to provide roughly 50% of their government budgets have numerous reasons to stoke fear of radiation and small nuclear powered systems.
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