Dirty Gold in Goldman Sachs?
“Greed changed Goldman Sachs”
– A former Goldman Sachs’ partner
Sightings from The Catbird Seat
~ o ~
December 20, 2006
Goldman CEO’s $53.4M Bonus Breaks Record
By Vinnee Tong, AP Business Writer
Goldman Sachs Breaks Wall Street CEO Bonus Record,
Pays Blankfein $53.4M
NEW YORK (AP) — John Mack’s record for the biggest bonus ever paid to a Wall Street CEO didn’t last even a week. It was smashed by the $53.4 million that Goldman Sachs gave its chief executive, Lloyd Blankfein.
The bonanza for Blankfein included a cash bonus of $27.3 million, with the rest paid in stock and options. He took the helm of the investment bank in June after President Bush nominated Henry Paulson to be Treasury secretary.
The record payday, disclosed by Goldman Sachs Group Inc. in a filing with the Securities and Exchange Commission on Tuesday, breaks the one set just last Thursday when Morgan Stanley disclosed that it paid CEO Mack $40 million in stock and options. Mack, who is 62, rejoined Morgan Stanley 18 months ago to turn around the company after the ouster of Philip Purcell. Mack’s short-lived record bested one set in 2005 by Goldman’s Paulson, who was given $38.3 million.
Other than Blankfein, 11 other senior Goldman executives as a group were granted slightly more than $150 million in shares and stock options. The highest paid among those were Gary Cohn and Jon Winkelried, who both hold the titles of president and chief operating officer. They each received $25.6 million in shares and options in 2006.
Any cash bonuses for the other executives were not mentioned in the filings.
The bonuses come after Goldman reported last week that it had earned the highest yearly profit in the history of Wall Street. Net profit rose 70 percent to $9.4 billion on revenue of $37.67 billion. Goldman and other firms have benefitted from a surging market for takeovers and a strong stock market.
Goldman said last week it had set aside a total of $16.5 billion this year for salaries, bonuses and benefits. On average, this would translate to $622,000 per employee.
The bonuses come in a year in which Goldman shareholders have benefitted from a rise of about 58 percent in the company’s share price, the strongest returns of any Wall Street investment house.
Lehman Brothers Holdings Inc. and Bear Stearns Cos. have said they would pay about $12 billion in compensation each. Lehman said last week it paid its chief executive, Richard Fuld, $10.9 million in stock this year…
Yahoo Finance
For more on commodities trading, GO TO > > > BP: Buzzards in the Pipelines
For more on Goldman Sachs, AIG, Coral Re, Marsh McLennan, Henry Kissinger, the SEC, etc. …GO TO > > > Axis of Evil, Cooking the Insurance Books; Nests of the Insurance Vampires
November 29, 2006
SCUFFLES IN GOLDMAN SACHS
LONDON OFFICE FOYER
PAULSON CONFLICT OF INTEREST OVER
WANTA’S FUNDS LOOKS WORSE THAN EVER
By Christopher Story FRSA, Editor and Publisher, International Currency Review,
World Reports Limited, London and New York: www.worldreports.org.
~ ~ ~
Goldman Sachs, the giant financial corporation which is illegally holding on to Ambassador Wanta’s $4.5 trillion Settlement funds as co-conspirators with the US Treasury Secretary, its former CEO, Hank M. Paulson – appears to have a problem paying its own office cleaners properly.
The Guardian, London, published a large picture today of scuffles and fisticuffs in the foyer of the institution’s plush London offices in Fleet Street*.
The fighting in the foyer was part of a protest by about 20 office cleaners who stormed the bank’s headquarters, trapping some of the wealthiest financiers in the building.
The staff, from a cleaning firm called ISS, took their protest to the investment firm’s premises because, believe it or not, Goldman owns a stake in the firm.
The cleaners, who work elsewhere in the City of London, are campaigning for an increase in the London living wage of £7.05 an hour, compared to the low wage of £5.35 they now receive. Their claim is supported by the Transport and General Workers’ Union.
The union, and the workers themselves, will no doubt be interested to learn, from this posting, that Goldman Sachs continues illegally to hold $4.5 trillion of financial resources that it does not own, that should have been paid out months ago to Ambassador Leo Emil Wanta and his Virginia-based corporation, AmeriTrust Groupe, Inc, as repeatedly explained on www.worldreports.org: see ARCHIVE.
The union and the cleaners they represent will also be interested to learn that Goldman earns vast returns on this illegally retained fund, and that the huge bonuses they will be paying out next month may form part of the overall obfuscation of this ‘source of funds’.
City of London police were called to the bitter demonstrations in the Goldman Sachs foyer, where financiers are expecting the huge bonuses to be paid to them in December. A photographer from the Press Association (PA) was present at the angry scuffles and fisticuffs, which can hardly have been welcomed by the institution’s complacent and smooth public relations people.
Goldman responded pompously that it took ‘its responsibilities as a shareholder of any company very seriously. And we also support responsible union representation and the right for people to earn a living wage’.
If Goldman Sachs is so concerned to behave properly towards the employees of a London cleaning company, why is it at the same time continuing to behave so irresponsibly and illegally by holding on to $4.5 trillion of tagged funds earmarked and belonging to Ambassador Leo Wanta?
Or does this institution suffer from a disease called DOUBLE STANDARDS – one consequence of which could be that it may prefer to do the underhand thing until it is forced to comply with the law and common decency and morality?
By being at the very least an accessory to the fact of Goldman Sachs’ illegal retention of the $4.5 trillion fund, tagged in the name of Ambassador Leo Wanta and his Virginia-based corporation, Mr Paulson is presiding over a glaring conflict of interest, which probably has no parallel in financial history. His reputation, and that of the US Treasury and the Federal Reserve, like the US dollar, is in tatters – as he allows this irregular situation, abhored by the Rest of the World, to continue.
In fact, as the cleaners proclaimed on their placards: ‘GOLDMAN SUCKS’.
www.worldreports.org./
For more on Ambassador Leo Wanta, GO TO > > > The Antechamber
October 5, 2006
‘Goldman Sachs Effect’ hurts
U.S. defense against China
William Hawkins, The Examiner
WASHINGTON – A front-page article in the Sept. 25 issue of Defense News reported that China has tried to blind U.S. satellites with high-powered lasers. With sufficient power, lasers can blind electro-optical satellites or even interfere with radar satellites.
Satellites have become critical to American military communications, surveillance and targeting, and are at the heart of the strategy to transform the U.S. military through net-centric warfare systems.
That China would seek to disrupt American capabilities should not be surprising, given the number of hot spots in Asia and the Middle East where U.S. and Chinese policies are at odds. There have been reports for many years that Beijing is working on a variety of advanced weapons under the heading “assassin’s mace.” The goal is to find ways to knock out Washington’s ability to act in a crisis.
What is disturbing is the lack of response from the Bush administration. According to the Defense News report, “Pentagon officials, however, have kept quiet about China’s efforts as part of a Bush administration policy to not anger Beijing, which is a leading U.S. trading partner and seen as key to dealing with North Korea and Iran. Even the Pentagon’s recent China report failed to mention Beijing’s tests. Rather, after a contentious debate, the White House directed the Pentagon to limit its concern to one line.”
The desire of the White House not to “anger” Beijing is an attitude apparently not reciprocated in China, where there seems to be no fear of angering America by testing weapons against U.S. targets. Who instills fear, and who shows fear, is a measure of the real balance of power in a relationship.
Let’s call this the “Goldman Sachs Effect” after the international banking firm that seems to have taken over White House China policy, even as it continues to raise capital for Chinese industry and the regime.
Shortly after Goldman Sachs CEO Henry Paulson became secretary of the treasury, Robert Zoellick, deputy secretary of state and former U.S. trade representative, took a high post at Goldman Sachs. President Bush’s chief of staff, Josh Bolten, worked for Goldman Sachs in London. Goldman Sachs senior partner Stephen Friedman briefly headed the National Economic Council before returning to the firm.
This is not an entirely new situation. Robert Rubin, who was treasury secretary in the Clinton administration, had been a vice chairman of Goldman Sachs.
The trade-off between commerce and security works against the United States on both ends. It is well-known that Beijing manipulates the value of its currency by as much as 40 percent to gain a competitive advantage against American firms. Chinese officials claim that basing their currency on market values would cause economic turmoil, harming China’s “fragile” banks and financial sector.
Paulson has embraced this explanation, and on his recent trip to Beijing said the U.S. would be “patient.” He prevailed on Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., to pull their bill levying sanctions on China for its currency policy, so as to buy Beijing more time.
Yet, last May — while Paulson was still its CEO — Goldman Sachs invested $2.6 billion in Industrial & Commercial Bank of China, the country’s largest state-owned bank. According to a Sept. 28 report in the Wall Street Journal, “when ICBC, as the bank is known, lists its shares on the Hong Kong and Shanghai stock markets next month, the value of Goldman’s stake could double based on current demand for the offering.” Goldman Sachs was also a major underwriter for the Bank of China’s June stock offering, which raised $11.2 billion. So much for “fragile” Chinese banks!
Beijing has integrated its economic and security strategies within what it calls “comprehensive national power.” There is no such unity in the United States, because major banks and corporations are conducting their own private foreign policies. They are willing to sacrifice the long-term security of the United States for the chance to make a few extra bucks here and now. Thus they lobby for the appeasement of Beijing in the hopes of avoiding any confrontations that might interfere with trade or elevate security issues to the top of the policy agenda.
Chinese leaders are well aware of the “Goldman Sachs Effect” and are exploiting it to the fullest. Beijing needs time to develop its military capabilities, and continued American passivity is a critical factor in their strategic plans.
William Hawkins is senior fellow at the U.S. Business and Industry Council in Washington, DC.
July 10, 2006
From the U.S. Treasury Dept. website:
Henry M. Paulson, Jr.
Secretary of the Treasury
~ ~ ~
President George W. Bush nominated Henry M. Paulson, Jr. to be the 74th Secretary of the Treasury on June 19, 2006.
The United States Senate unanimously confirmed Paulson to the position on June 28, 2006 and he was sworn into office on July 10, 2006 by Supreme Court Chief Justice John Roberts.
As Treasury Secretary, Paulson is the President’s leading policy advisor on a broad range of domestic and international economic issues.
Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs. He joined Goldman Sachs in 1974 in the Chicago Office and became a partner in 1982….
Prior to joining Goldman Sachs, Paulson was a member of the White House Domestic Council, serving as Staff Assistant to the President from 1972 to 1973, and as Staff Assistant to the Assistant Secretary of Defense at the Pentagon from 1970 to 1972.
Paulson graduated from Dartmouth in 1968, where he was a member of Phi Beta Kappa and All Ivy, All East, and honorable mention All American for football. He received an M.B.A. from Harvard in 1970. He and his wife, Wendy, have two children, Amanda and Merritt.
www.whitehouse.gov/government/paulson-bio.html
HAPPY 4TH OF JULY, MR. SECRETARY!
July 4, 2006
Goldman Gives Ex-Chief
$18.7 Million Bonus
By REUTERS
The incoming Treasury secretary, Henry M. Paulson Jr., was awarded an $18.7 million cash bonus for half a year of work as the chief executive of the Goldman Sachs Group, the company said yesterday.
In its quarterly report, Goldman said the compensation committee of its board approved the payment on June 29 in recognition of Mr. Paulson’s leadership for the six months ended in May, when profit doubled to $4.79 billion.
Goldman also agreed to buy, for an undisclosed price, stakes owned by Mr. Paulson and his wife in private investmentfunds it manages. A spokesman for the investment bank declined to elaborate on the filing….
Goldman’s first-half results benefited from soaring trading revenue and higher underwriting and merger advisory fees.
Last Wednesday, the Senate confirmed Mr. Paulson, 60, for the Treasury post, succeeding John W. Snow. No date for Mr. Paulson’s swearing-in has been set.
Mr. Paulson resigned from Goldman after seven years as its chairman and chief executive. Lloyd C. Blankfein, who had been chief operating officer, succeeded him.
Goldman filed with regulators last Thursday for a sale of Mr. Paulson’s 3.23 million common shares, worth $491.6 million based on that day’s closing price.
It said Mr. Paulson also owned restricted stock worth $75.2 million, plus options to buy 680,474 shares. His holdings were equal to 1.02 percent of Goldman’s common shares, the investment bank said.
Goldman awarded Mr. Paulson about $38.8 million of compensation for its 2005 fiscal year, mainly in restricted stock, making him Wall Street’s highest-paid chief executive.
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February 1, 2004
Goldman’s CEO Strikes Gold
Despite Firm Fraud
CBS MarketWatch reports that Goldman Sachs chairman and CEO, Henry Paulson, received a $20.8 million restricted stock bonus compared to a $2.6 million bonus the year before.
For a company that is receiving subpoenas for mutual fund trading abuses, recently agreed to pay $45.5 million for floor special abuses and recently received notice from he NASD that it violated NASD and federal security laws, I can’t understand why the CEO would deserve a bonus at all.
CBS also mentioned that former Goldman Sachs president and CEO John Thain, who now serves as the NYSE CEO, received $20.1 million. 02:11 PM
June 2, 2006
Goldman says to name Blankfein as top boss
Board says move will take effect after
Paulson confirmed for Treasury post
MSNBC
NEW YORK – The board of Goldman Sachs Group Inc. announced Friday that it intends to elect Lloyd C. Blankfein as its next chairman and chief executive officer after the investment banking company’s current head, Henry M. Paulson Jr., moves to the U.S. Treasury.
The board said in a statement that the election of Blankfein, who is 52, will occur after Paulson is confirmed by the U.S. Senate for the Treasury post.
Paulson, 60, was selected Tuesday by President Bush as the next Treasury secretary. He will succeed John Snow, the former head of CSX Corp., who indicated he wanted to return to the private sector.
Goldman Sachs, which is headquartered in New York, is a leading global investment banking, securities and investment management company.
Blankfein has been its president and chief operating officer since January 2004 and a director since April 2003, Goldman Sachs said.
He has been an executive at the company since 1994, when he was head of the currency and commodities division. He later advanced to the rank of vice chairman with responsibility for fixed income, currency and commodities as well as the equities division.
Blankfein is not on the board of any public company other than Goldman Sachs, his corporate biography says.
He does have associations with nonprofit groups, including as a trustee of the New York Historical Society and an overseer of the Weill Medical College of Cornell University. He is also a director of the Partnership for New York City and a director of The Robin Hood Foundation.
Founded in 1869, Goldman Sachs is one of the oldest and largest investment banking companies with offices in New York, London, Frankfurt, Tokyo, Hong Kong and other major cities.
May 30, 2006
Ethics Group Criticizes Henry Paulson
Nomination for Treasury
Cites Nature Conservancy Conflict of Interest
and Fannie Mae Fraud
WASHINGTON, U.S. Newswire — Peter Flaherty, resident of the National Legal and Policy Center (NLPC), criticized the expected nomination today of Goldman Sachs CEO Henry Paulson as Treasury Secretary. NLPC was the sponsor of a shareholder proposal at the Goldman Sachs annual meeting on March 31. The proposal, which generated significant media attention, asked for a report on Paulson’s apparent conflict of interest in chairing both Goldman and the Nature Conservancy.
In November 2005, Goldman Sachs adopted an “Environmental Policy” that closely parallels the Nature Conservancy agenda on key issues like global warming. Moreover, Paulson’s son Merritt is a trustee of a Nature Conservancy-related group that was the recipient of a Goldman Sachs donation in the form of a tract of land totaling 680,000 acres in Chile.
In his remarks at the annual meeting, Flaherty also noted that the Nature Conservancy has been mired in scandal in recent years, as detailed in a Washington Post series and in Senate hearings. The group sold ecologically sensitive land at a discount to its own trustees on which they built multi-million-dollar vacation homes, and structured land donations so wealthy donors could improperly receive tax breaks.
Goldman’s defense, delivered at the meeting by John H. Bryan, chairman of the Goldman Governance Committee, was essentially that the Goldman board reviewed the environmental policy and the Chilean land deal and approved them. Bryan specifically denied that the Nature Conservancy was involved at all in the land deal. According to the Nature Conservancy tax return, however, it was paid a consulting fee of $144,000 by Goldman for assistance on the land deal.
In an April 4 opinion article in the Wall Street Journal titled “Green-Nosing,” business writer Judith Dobrzynski wrote, “It’s ludicrous to suggest that Goldman’s board acted alone, as if directors didn’t know of Mr. Paulson’s involvement with the conservancy or his advocacy of environmental causes.”
Flaherty said, “There remain unanswered questions about Paulson’s personal and business ethics. At Goldman Sachs, Paulson promoted his own personal interests at the expense of shareholders. As Treasury Secretary, will he promote the public interest, or his own?”
Flaherty also cited Goldman Sachs’ role in the Fannie Mae scandal. According to last week’s report by the Office of Federal Housing Enterprise Oversight (OFHEO), Fannie Mae managers engaged in a series of questionable transactions, including two with Goldman Sachs, which improperly pushed $107 million of Fannie Mae earnings into future years. The goal was to rig the company’s books to make it appear that the company had reached earnings targets triggering the maximum possible payout for executives including Franklin Raines.
Steve Milloy of Action Fund Management, LLC, an investment adviser to the Free Enterprise Action Fund, who also raised questions at the Goldman Sachs annual meeting, reacted to the nomination by saying, “Paulson was CEO of Goldman when the fraudulent Fannie Mae transactions occurred. With all the corporate scandals, is Paulson the right person to now head Treasury?”…
The National Legal and Policy Center (NLPC) promotes ethics in public life.
www.nlpc.org/view.asp?action=viewArticle&aid=1305
May 30, 2006
WALL STREET’S POLITICAL MEDICIS
President Bush today chose for his new treasury secretary Henry M. Paulson Jr., chief executive of Goldman Sachs. The investment banking firm is very active politically, primarily (but not exclusively) on behalf of Democrats.
Former Goldman Sachs executives who entered politics have included Robert Rubin (treasury secretary to Bill Clinton), Jon Corzine (New Jersey senator and now governor), Josh Bolten (Bush White House chief of staff), and Stephen Friedman (former chief of Bush’s National Economic Council).
According to the Center for Responsive Politics, a nonprofit that crunches data from the Federal Election Commission and other sources, Goldman Sachs has, in individual contributions by its members, PAC contributions, and “soft money” contributions to political parties, given nearly $23 million to political candidates for federal office since 1989.
In case you’re wondering, that’s quite a lot.
The charts on this and the three succeeding pages are from the Center for Responsive Politics’ Web site, opensecrets.org….
www.slate.com/id/2142663/entry/0/
Catbird Note: Of particular interest to some bird watchers, Goldman Sachs is shown as giving $52,000 to Barack Obama for his 2004 Congressional race.
September 4, 2005
Cash payoffs, bonds and murder
linked to White House 911 finance
Documents point to attack on America
by White House crime families
by Tom Flocco, www.tomflocco.com
Sioux City, Iowa – According to leaked documents from an intelligence file obtained through a military source in the Office of Naval Intelligence (ONI), on or about September 12, 1991 non-performing and unauthorized gold-backed debt instruments were used to purchase ten-year “Brady” bonds. The bonds in turn were illegally employed as collateral to borrow $240 billion–120 in Japanese Yen and 120 in Deutsch Marks–exchanged for U.S. currency under false pretenses; or counterfeit and unlawful conversion of collateral against which an unlimited amount of money could be created in derivatives and debt instruments.
The illegal transactions are also linked to the murder of a U.S. Army colonel charged with overseeing approximately 175 secret CIA bank accounts, according to the officer’s wife, Mrs. V. K. Durham. During multiple interviews, Durham told TomFlocco.com that Bush 41 and Clinton administration officials visited her husband Colonel Russell Hermann several times in the months prior to and three days before his torture and murder on August 29, 1994.
Durham told us the $240 billion in stolen currency was obtained resulting from George H. W. Bush’s presidential abuse of power, when he authorized former Treasury Secretary Nicholas Brady and former Secretary of State James Baker III to make fraudulent use of the Durham Family Trust collateral without her permission. There is evidence that Colonel Hermann’s and V. K. Durham’s signatures were forged on a Goldman-Sachs bank account certification requesting the conversions to U.S. currency.
The money was never repaid since the ten-year Brady bonds–purchased before September 13, 1991 using the fraudulent collateral and gold bullion as security came due on September 12, 2001—the day after the 9.11 attacks, having allegedly been underwritten and held by the trustee, Cantor-Fitzgerald bond brokerage firm [whose offices on floors 101-105 in the North Tower of the World Trade Center (WTC) were destroyed on 9.11 along with the Brady bond evidence].
Three days before his suspicious death, Colonel Hermann told his wife that former President George H. W. Bush, Federal Reserve Chairman Alan Greenspan and U.S. Marine Colonel Oliver North (pardoned by Bush Sr. two years earlier for his Iran contra indictments when Bush Sr. was also facing indictments for his role in Iran contra) all passed V. K. Durham coming up in an adjacent elevator after all three had left Hermann’s room and gone down in another elevator at the Veterans Administration Health Care Center in Marion, Illinois.
Hermann had been probing Bush 41 and Clinton links to narcotics money laundering, according to his wife.
Durham told us that Colonel Hermann told her “Bush, Greenspan and North were trying to get me to sign off on the CI Ltd., the Central Intelligence, Ltd., Iran and Latin American contra accounts. They held about $13-17 billion in physical gold.”
This, raising questions about an evidence trail for a grand jury to seek restoration of funds potentially stolen by high government officials from United States taxpayers….
Misused collateral = gold security = bogus bonds =
$240 billion stolen currency
Evidence indicates that on August 19, 1991, John D’ Aquisto of DFG Inc. mailed Federal Express packages to United States Federal Reserve Bank Chairman Alan Greenspan and Bush 41 Secretary of the Treasury Nicholas Brady to communicate details of currency exchange transactions which ultimately led to multiple allegations of bank fraud involving billions of dollars, according to V. K. Durham. It is not known whether this cash was laundered into the Philippines and then used for the “family,” referred to in the Wanta-Cheney memo.
The FedEx receipts show contact between Greenspan, Brady and John D’ Aquisto and given the bank fraud links, Greenspan’s visit to Russell Hermann and the close proximity of the transactions to September 11, Durham says prosecutors should interrogate the three about their knowledge of improper banking activities which could be linked to the North Tower attacks at Cantor-Fitzgerald and the Pentagon impact reportedly involving the ONI on September 11–witnesses for a grand jury, should an official entity decide to prosecute mass murder on behalf of U.S. taxpayers….
According to Stewart Webb, Nevada Secretary of State Frankie Sue Del Papa, a Bush shadow government player, participated as a co-conspirator to obstruct justice, intentionally switching forged documents pertaining to registrations and filings of corporations involving Bush 41 and Leonard Millman. One of the corporations connected to the gold-backed Brady bonds above was Cosmos Corporation of Nevada–one of several Cosmos corporations.
Robert D. Hammond, Vice President of the Securities Sales Department, Goldman Sachs & Co., wrote to John D’ Aquisto and DFG, Inc. on August 7, 1991, certifying that DFG had an account with Goldman, number 027-02082-2; however, the letter’s notary seal contained the forged signatures of both V. K. Durham and her husband, Colonel Russell Hermann [ Durham initialed and attested to the alleged bank fraud directly on the notarized document, indicating the signatures Goldman sent to D’ Aquisto were forgeries ]:
“Please be advised that if DFG wishes to engage in foreign currency transactions, Goldman Sachs has extensive capabilities in this area. For instance, upon receipt of approximately 700 million Japanese yen into the above account, Goldman could convert such funds into approximately $5 million U.S. dollars.”
D’ Aquisto also complained about more alleged bank fraud by Goldman Sachs in a letter to Phil Roberts in the Bank Fraud Division at the U. S. Department of the Treasury, written on September 10, 1991, regarding suspect banking procedures wherein “funds were reversed and withdrawn from our account without our permission.”
In another letter on September 10, 1991 to Karl Ehm, D’ Aquisto and Russell Hermann asked “did you receive the return of $5,117,280.00 back from Goldman-Sachs?” The letter also indicated “no zero balance shown after the activity summary,” providing no evidence that $5+ million was withdrawn just minutes after it was deposited while showing that the money was still in the account.
The letter specifically referred to a partial Japanese Yen transfer which took place at Goldman’s Los Angeles office prior to the September 13, 1991 ten-year contract. The transaction in California provides potential U.S. jurisdiction and venue for another citizen grand jury should obstruction of justice continue in New York City where Spitzer and Morgenthau refuse to probe the suspect $240 billion dollar financial transaction which came due at Cantor-Fitzgerald two days after the 9.11 attacks:
“On September 10, 1991 we received our August 1st-August 31 statement from Goldman…On the statement enclosed you will see that the Japanese Yen went to Mitsui Bank of Tokyo, which is Goldman Sachs’ correspondent bank. The monies were then credited to the account and exchanged and deposited, U.S.D. equivalent at the rate of exchange. That part of the transaction was perfectly normal.”
“What happened next is what concerns me. On August 7, 1991, the funds were reversed and withdrawn from our account without our permission! There is no reference to the whereabouts, or disclosure of the whereabouts of this money, or of the receipt of acknowledgment that this transaction even took place.”
“As an ex-banker of 16 years, I feel that my rights have been violated to the highest degree, and the laws of the United States have been broken. I think you would call this bank fraud? According to Goldman Sachs, this was probably a clerical error on their part. I find it hard to believe that a company such as Goldman Sachs would be so negligent as to make a $5,117,280.00 “clerical error….you can call me at our other company Ariel Life Systems Inc., a government contracted corporation with the National Aeronautics and Space Administration (NASA).”…
According to two witnesses, Greenberg-Traurig is allegedly tied to suspect legal entanglements surrounding the challenge for control of New Hampshire 9.11 widow Ellen Mariani’s estate and her husband Neil’s death on September 11. Mariani’s litigation in New York and New Hampshire against President Bush and other top officials seeking court-ordered discovery about White House involvement in the attacks and obstruction of justice by members of Congress was blocked due to complications surrounding the challenge for control of her husband’s estate.
Norman Brownstein was a former Director and the current corporate attorney for the late Leonard Millman’s MDC Holdings, Inc., the parent company of Silverado Savings and Loan Association where President George W. Bush’s brother Neil was a Director of the failed institution which cost American taxpayers at least $50 billion dollars.
Webb revealed he has evidence that proves Silverado laundered $12 trillion dollars in narcotics money during the time period that President Bush’s brother Neil was on the board of directors of the failed bank organization.
According to Leonard Millman’s ex-son-in-law Stewart Webb, $2.6 billion in Mena, Arkansas/Iran contra drug money was laundered through the Rose Law firm [where New York Senator Hillary Clinton was a partner] into Millman’s failed M&L Business Machines Company of Denver.
Webb alleged that his documented evidence and first-hand witnesses prove that Hank Greenberg, Leonard Millman and Meyer Blinder were all involved in massive securities fraud involving National Brokerage Group of Companies, and its Stinger Securities, Coral Gables Securities and others that allegedly milked American investors for billions of dollars during the 1980s. This, while Webb also alleged that Hank Greenberg was involved in re-insurance fraud loans with Millman’s National Acceptance Company which owned First National Acceptance Company, both of which own Bank of America, with the first two being financially connected to AIG.
Attorney General Spitzer is in possession of part of the above evidence relating to Leonard Millman’s links to $6 trillion in American pension fund fraud; moreover, Webb told us that former Independent Counsel Kenneth Starr–who the whistleblower said obstructed justice in his investigation of Clinton/Bush-linked narcotics money laundering–had lunch with Mr. Spitzer a few weeks ago, raising additional questions regarding obstruction of justice for a grand jury with subpoena power.
Webb alleges that drug money was laundered by Millman into Hank Greenberg’s AIG and other Wall Street accounts by Gwendolyn Waymark of the Waymark Group and also the Foundations Group–which the Cheney memo above links to boxes of cash moved from the Philippines and tied to both the recently deceased Millman and George H. W. Bush.
The Foundations Group’s laundered drug money paid for a group of 9.11 terrorists secretly headed by the Defense Intelligence Agency’s (DIA) Gary Best–one of the former Iran contra shadow government players–according to Webb.
Most shockingly, Webb alleges that “ONI-CIA Marine officer Oliver North, CIA-DIA agent Gary Best, CIA agent Terry Lynn Nichols and CIA contract agent Timothy McVeigh were all paid through Waymark’s Foundations Group funding arm–directly or indirectly.”
This raises the bar as to why the Vice President has not been subpoenaed when the Wanta memo directly links Cheney, Dr. Rice (and by authority and the obligation to act upon a financial terrorist threat– President Bush) to knowledge of the Foundations Group in what appears to be United States covert black operations involving financial terrorism and mass murder.
Webb told us, “this explosive evidence is why Eliot Spitzer and Robert Morgenthau are obstructing justice to let AIG off the 9.11 hook in the “public” part of their current and high-profile Wall Street probe. But it’s also why the Joint Congressional Intelligence Committee members are obstructing justice and committing treason by refusing to subpoena Cheney and other key intelligence officials regarding their awareness of a “family” extending from the Philippines to Europe and the United States–all with links to financing terrorism.”
A comprehensive grand jury investigation, with subpoenas, testimony and interrogation by independent, a-political career prosecutors like Patrick Fitzgerald could well blow the lid off 30+ years of illegal operations, financial terrorism, 9.11 mass murder, the Oklahoma City bombing, the Kennedy assassination and pre-emptive war based upon lies–a lengthy pattern of illegal activities by a succession of White House crime families, according to both Webb and V. K. Durham.
All this, tacitly endorsed by quietly complicit congressmen–either too frightened to speak truth to power due to past small-plane assassinations or having been self-absorbed by pensions, perks and power to exercise their constitutional mandate to protect the very citizenry which honors them with high office.
CIA banker’s strange death
Colonel Russell Hermann–a 53-year career military officer, had been conducting a two-year internal investigation of President Clinton, White House counsel Vincent Foster and protracted drug shipments into Mena, Arkansas; but Central Intelligence would not let him retire since it was too expensive to train new personnel and re-start the investigative trail, according to his wife “V.K.” who witnessed the first attempt on her husband’s life from her front porch in 1993.
Durham told us “he traveled in a big black truck with tons of surveillance equipment. I saw it, but he didn’t want me to come near it. He said ‘you don’t want to know about this;‘ and as he put his arms around me and kissed the back of my neck, he said ’we caught President [Clinton’s] man [Vince Foster] with Swiss bank accounts, so now I can file my investigation reports, retire, and we can start living a new life.’ “
“This was July 1, 1993. Vince Foster turned up dead on July 20 and my husband Russell was murdered on August 29, 1994,” she said.
“The next day, while mowing his lawn on July 2, 1993, Russell was sprayed with some type of poison gas–possibly sarin–from a passing vehicle. He took a few steps and went down, bleeding from the eyes, ears and nose,” said Durham who had married Hermann six years earlier on November 27, 1987.
“Russell had not finished his report on Clinton, Foster and the Mena, Arkansas drug money laundering, she said, adding that her husband had cryptically told her, “If I go to the hospital without that report being finished, I am a dead man.” This, reminiscent of Michael Corleone’s “men are coming to kill my father” plea to a lone nurse caring for the Godfather in an empty wing of a New York City hospital.
“There was no sign of an ambulance,” said Durham, “a 24 foot white box van with no lettering or markings took Colonel Herman away and he was missing and unaccounted for from 9:00 am till 10:00 pm at night. I found him the next day through a phone call at my neighbors.”
“He was at St. Mary’s Hospital in Clayton, Missouri–in a wing all by himself, strapped down to a bed with no life support system when I got to him, nothing,” she said, adding “Russell was a U.S. intelligence officer–a full Colonel–and he told me to ‘call my CWO2 [Chief Warrant Officer] and tell him to get my mandatory two men in here to protect my life.”
Offering a warning to current CIA officers, Durham said “Russell told me they strung him up on meat hooks on the way to the hospital–I saw the [warning: graphic photos] hook marks under his collar bone: they beat him and burnt him with cigarettes, broke his ribs, left hand and left arm, and shoved a cattle prod into his rectum,” said the furious widow, making a clear point: “they’ll do it again to any of the intelligence guys walking around now if they don’t do something to stop these criminals.”
St. Mary’s hospital was described to us as some sort of secret military asylum–a hospital of horrors, by Durham, who said “the hospital was filled with naval officers and a woman named Ruth said ‘you have to sign these papers (4-inch stack),’ and I asked ‘where are my husband’s records;’ she pulled them back and shredded them right in front of me–all his military records–a full-bird U.S. Army Colonel.”
“When Ruth had her back to me, another woman slipped me a piece of paper of the hours and medical log sheets with the hour Russell was taken to the hospital–helping to fix the hours of his torture and the fact that his ambulance authorization had not even been signed,” she said, “proving he was tortured in the back of that white truck–and this is the United Stated Veterans Administration!”
“Russell was kept there against his will after he recovered until November 17, 1993. One of the doctors, another friend of Russell’s and I saw Marine Colonel Oliver North dressed in a white medical coat attempting to disguise himself while visiting Russell’s hospital room on November 13 or 15, just before he was released from the hospital.
Durham told us, “something was going on at that hospital. I saw a Navy Commander strapped to a gurney–from Seal Beach…tied down. A female doctor was sitting there with his wife and they were bartering over his body parts. I heard all this with Russell’s doctor friend. The Commander was alive and strapped there, his eyes looked terrified and his mouth was taped shut,” she said, offering “his wife walked over to her husband and said ‘Now I’ll never have to know when you’re coming home again.’ We inquired about him later and found that he had come up ‘missing.’ “
Still weak and declining from the first murder attempt on his front lawn, Colonel Russell Hermann ended up at the Veterans Administration Health Care Center in Marion, Illinois; and Durham told us “Hillary Clinton’s operatives, David Horowitz and Karen Koffee came to meet with Russell, seeking money to underwrite the National Healthcare Program she was pushing in 1994.”
“This was on July 20. Russell told me Clinton’s people said ‘you’re going to die before very long and your wife will disappear and no one will know where she is,’ and both of them are accessories to murder as far as I am concerned,” said Durham, as we listened in stunned silence.
“Russell was doing pretty well around August, 1994, and on Friday, August 26, he said that George Bush Sr., Alan Greenspan and Oliver North came to see him in his hospital room at the VA, and tried to get him to sign off on the Iran and Latin America contra accounts so they could get control of them,” Durham told us, adding, “but Russell told me he just reached down and grabbed a hand-full of excrement from his hospital bowel and threw it at President Bush, saying ‘go to hell.’ Then the three of them left the room as I was coming up the other elevator.”
“I was planning to take Russell home from the VA the following Monday, August 29–a couple days after Bush, Greenspan and North visited on Friday. I came in to pick him up and he was dead,” she said, adding “the attending physician, Dr. Pettit, refused to do an autopsy, even though Russell’s body was all red and he was given 8 or 9 injections on his hip and the base of his skull, and his back and body were as red as fire–but his eyes were as clear as mine.”
“The coroner, Michael Vickery, took a number of photographs and told me ‘this man was murdered,’ and I had been refused possession of his body for six days–from August 29 until September 5–after being told there was evidence that he was frozen alive, she told us while still in stunned silence.
When we asked what happen next, Durham said “I found out the contra accounts were moved from Republic Bank in Texas to Republic Bank in New York; I think Teddy Lloyd was the banker in New York. I believe they knocked Russell out and I thought he was dead. Then they moved him to the Guernsey Islands near England and used his voice-activated and fingerprint codes to sign over control of the $13-17 billion in gold that was in the accounts,” providing another paper trail for recovery of missing funds from the U.S. Treasury–but also a public view into the inner-working of intelligence bank account security.
V. K. Durham told us one of Russell’s men contacted her and said there had been a government contract to take out the Colonel by either a Commander McDonough or MacDonald, and that there are transcripts from the tape of his torture and death, but she does not know where they are.
“Control files” blackmail congressional
and DOJ officials
Stewart Webb alleges that an important key to the “control” of the U.S. House and Senate has been the use of blackmail via “Operation Brownstone,” led by individuals he calls CIA shadow government players like Ted Gunderson, Harold George Pinder and Clint Murchinson Jr. – setting up legislators for blackmail through child pedophilia rings using both vulnerable male and female children from orphanages all across the United States. This, according to scores of documents and witnesses.
Americans who are concerned about pedophilia, with near daily reports of kidnappings or disappearances of young children who later turn up dead or fall victim to Mexican, South American and Middle Eastern child sex slavery need only start with the ongoing cover-up of pedophilia in the halls of Congress and the White House. It’s still a hushed-up secret, waiting for irate parents and family victims to march on Washington.
Other congressional blackmail was employed, according to Webb, by the late Leonard Millman, New York Senator Hillary Clinton, Neil Bush and Florida Governor Jeb Bush in an entity known as the MCRD-Boulder Properties Limited Partnerships – financed by Silverado Savings & Loan; and Webb says this forced dozens of current and former congressmen into bankruptcy, including high-profile current New York Senator Charles Schumer. [Media Bypass, May, 2000]
Additional bribes and payoffs were affected through Millman’s cutout company, Denver’s M&L Business Machines to David Mann, Asst. DOJ Inspector General, who works under Lee Redneick, DOJ Inspector General, with money also paid to Denver U.S. Attorney Mike Norton and Robert Pence, head of the FBI Denver office.
Illegal campaign money laundering involved Millman’s MDC holdings–fined by the SEC in 1991 and covered up by former Colorado Attorney General Gail Norton, the current Bush 43 Secretary of Interior, according to Webb. [ TIME, “Rush for Gold–How Silverado Operated,” 8-14-1990, and TIME “Running With A Bad Crowd,” 10-3-1990]
Norman Philip Brownstein, a current Director of Denver’s Chubb Insurance Company, allegedly owned by George H. W. Bush and Webb’s ex father-in-law, the late Leonard Millman – through illegal trusts funded by laundered drug money controlled by Brownstein – paid President Clinton’s legal fees and also paid off Paula Jones in her sexual harassment suit against the President. Clinton’s personal attorney, James M. Lyons–engulfed in the Whitewater scandal–sits on the board of Millman’s MDC holdings.
All this, according to Webb’s documents and first-hand witnesses, but also Webb’s grand jury demand–filed three times.
Webb told us as recently as August, 2004 in U.S. Federal Court in Denver [Case No. 95-Y-107], Chief Judge Richard Matsch has continued to ignore and obstruct his explosive evidence in a manner similar to when Matsch ruled in the Oklahoma City bombing case.
Lastly, another illegal operation employed to “control” and pay off House and Senate members was through Apartment Investment and Management Company (AIMCO)–a real estate investment trust (REIT) currently run by former Congressman Terry Considine and Bush 41 attorney Norman Brownstein.
Members of Congress have been bribed via the Department of Housing and Urban Development (HUD) via Millman and Brownstein’s handing over hidden corporate ownerships in AIMCO’s stolen HUD properties, the federal whistleblower has alleged.
According to Webb, AIMCO is the largest landlord of U.S. apartments–with units that were stolen by Millman’s partner Phil Winn of Denver’s Winn Group, the focus of the 1989 congressional “HUD Scandal “ investigation which led to Independent Prosecutor Arlen Adams convicting Switzerland Ambassador Phil Winn and others–but three months before leaving office, President Clinton pardoned Winn. And congressmen continue to profit from money stolen from the taxpayers.
All this, as the voices of thousands of American boys cry out from their graves on the bluffs above the Normandy beaches on the English Channel: “France!…now it’s your turn to help America.”
Who will guard the guards?
Mary Schneider contributed additional research for this report.
[Mary was illegally fired by the Department of Homeland Security for her whistleblower activity in the Orlando, FL Immigration office to protect America. Rep. Ric Keller (R-8-FL) and Sen. Bill Nelson (R-FL) refused to help Mary even after I flew to Florida and met personally with them….]
www.tomflocco.com/fs/FinancialTerrorism.htm
www.theantechamber.net
From: BHaasS@aol.com
Date: Wed, 31 Aug 2005 16:42:47 EDT
Subject: eToys
To: thecatbird@the-catbird-seat.net
Dear Catbird:
I would like to state the following.
eToys Fraud, Perjury, Failure to Disclose and Cover Up
The eToys shareholders and creditors have been deceived and are defrauded out of opportunity and net return.
I am Laser Steven Haas the 100% owner of Collateral Logistics, Inc. (CLI) which is the Court approved liquidation company by Federal Order in eToys. They were going to sell all of eToys assets for $3 to $5 million and I helped get the same assets to $20 million which helped put over $45 million in the cash reserves of eToys.
I was offered a bribe of $750,000 and said no — I was unwilling to become part of the good ole boys club in Bankruptcy in Wilmington DE.
The details I give you are Facts that are in the Public Bankruptcy Court records and can be seen online by Pacer or Racer.
I will begin by telling you what the Truth, a list of facts, that has been accomplished thus far. (for though I am given credit — it is the facts/truth that has accomplished several items that are really unimaginable)
1. I made allegations in the Fall of 2004 (Oct, Nov, Dec) on the failure to disclose the MOST serious violation of conflict of interest any one has ever seen in a bankruptcy case….
For more, GO TO > > > Tinkering with eToys
April 7, 2005
Goldman Sachs Analysts Influenced
by Banking Interests
The Consumer Law News
In violation of NASD and NYSE regulations, analysts at Goldman Sachs were encouraged to participate in investment banking activities and were compensated with raises and bonuses.
The SEC’s complaint against Goldman Sachs includes reports that certain analysts were “known to be swayed by banking to support certain names.”
During meetings with potential investment banking clients, known as “pitches,” firm representatives implicitly suggested that Goldman Sachs would provide favorable research coverage after the investment banking transaction.
One analyst had doubts about ratings on AT&T’s stock, but wrote in an email that “investment banking considerations prevented [him] from making a change” in his recommendations….
In July 2000, a pitch book for the Willis Group stated: “[the analyst] has sold more stock than any research analyst in the sector.”…
If you have purchased shares in any of the following stocks from Goldman Sachs, you may have a potential stock fraud claim. Contact the Consumer Justice Group immediately for an evaluation of your case.
AT&T; Crosswave Communications; Crown Castle; Exodus; GenProt; Global Crossing; Loudcloud; StorageNetworks; WebEx; Willis; Winstar Communications; WorldCom; 360Networks
www.consumerjusticegroup.com/goldmansachs.htm
September 8, 2005
Securities Liability
Ennis & Ennis, PA, Attorneys at Law
Ennie & Ennis, is currently representing investors in arbitrations against Goldman, Sachs & Co. The SEC and the New York Attorney General found that Goldman Sachs
> issued reports that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts, contained exaggerated or unwarranted claims about the covered companies, and/or contained opinions for which there were no reasonable bases in violation of NYSE Rules 401, 472 and 475(a)(6), and NASD Rules 2110 and 2210 as well as state ethics statutes.
Goldman Sachs defrauded many investors through these actions. Many of these investors are suing Goldman Sachs to recover damages for their losses. If you lost money in the stock market because of advice from Goldman Sachs or any other stockbroker, regardless of which stocks they recommended to you … call us….
Stocks involved in the Fraud:
StorageNetworks; Level3; Loudcloud; Amazon; GeneProt; Equinix; Crosswave Communications; Ventro; Willis; Winstar Communications; Crown Castle; 360 Networks; Exodus; WorldCom; WebEx; AT&T
www.floridapersonalinjury-lawyers.com/goldman.htm
March 25, 2005
Goldman Sachs offers to buy
Seibu Railway group for $8.5 billion
Yahoo biz
US investment bank Goldman Sachs has offered to buy the scandal-hit Seibu Railway group for about 900 billion yen ($8.5 billion dollars), a newspaper said.
Goldman Sachs has proposed purchasing Seibu Railway shares held by the group’s core company Kokudo and taking over Kokudo’s debt obligations, the Nihon Keizai Shimbun said, citing anonymous Seibu officials….
The group has been hit by a financial scandal.
Former Seibu railroad and hotel empire chief Yoshiaki Tsutsumi, once dubbed the world’s richest man, has been charged with falsifying financial statements to conceal his family control over the listed Seibu Railway.
He has also been indicted for insider trading after orchestrating the sale of shares in the now delisted railway firm before the concealment came to light.
The group’s reform panel was set to compile the final version of its reform plan centering around Kokudo’s absorption into Seibu Railway and a 200-billion-yen capital increase, the economic daily said.
The offer by Goldman Sachs would serve as an alternative to this plan, it said….
For more on Seibu Railway, GO TO > > > Paradise Paved; Yakuza Doodle Dandies
November 17, 2004
Cooking the Insurance Books
A Decade of Lax Regulation Lays Groundwork for Scandal
By Lucy Komisar, Special to CorpWatch
In October, New York Attorney General Eliot Spitzer filed suit against the world’s largest insurance broker, Marsh, accusing it of rigging bids and receiving kickbacks in order to defraud clients such as other corporations, city governments, school districts and individuals of billions of dollars through inflated premiums.
“Greedy trial lawyers were the usual excuse for premium increases. Now we know that greedy corporations also have a starring role,” Spitzer said, accusing several insurance companies as co-conspirators in making phony or inflated bids and paying kickbacks to the brokerage to get business.
Spitzer also announced that two executives from the insurance conglomerate American International Group (AIG) had already confessed to related criminal charges. But his investigations into AIG may have only scratched the surface. A paper trail stretching back a decade reveals that AIG used offshore shell companies to skirt the law.
The current scam which Spitzer has uncovered works like this: Marsh, an insurance broker, is supposed to find the best insurance policies for its clients from a wide range of companies. Instead it steered the policies to companies such as AIG that agreed to pay kickbacks. It solicited phony competitive bids for insurance contracts to deceive customers into thinking there was real competition for the business. Marsh made $800 million on kickbacks in 2003 alone – over half its $1.5 billion profit. With a 40-percent share of the global insurance brokerage market, its fraud drove up prices for everyone….
Lax Regulators Give AIG a Free Pass
At Spitzer’s press conference, New York State Insurance Superintendent Gregory V. Serio said: “This has gone from an inquiry into failure to disclose compensation to an active investigation of bid rigging and improper steering. This certainly proves the adage that where there is smoke, there is fire.”
But AIG’s comportment could not have been much of a surprise to Serio, who was New York’s deputy insurance superintendent in the late 90s. That’s when New York and three other states gave the powerful company a pass on some very questionable practices. If they had paid attention to the smoke then, perhaps this billion-dollar fire wouldn’t have ignited.
In the late 90s, four state insurance departments – New York, Delaware, Pennsylvania and California were aware that AIG was moving debt off its books via the use of an offshore shell company it secretly set up and controlled. But despite clear evidence of wrongdoing, no sanctions were ordered….
In the mid-80s, two of AIG’s reinsurers failed. The bankruptcy liquidators paid creditors, including AIG, over several years but meanwhile the amount owed was liable to show up as unacceptably high levels of debt on the AIG books.
Trevor Jones, an insurance investigator who for 20 years has run Insurance Security Services in London, explained, “Hank [Greenberg] decided to set up Coral Re [a reinsurance company] to move the debts he couldn’t claim as assets into this other company. … No real company would play ball, because you are fiddling the accounts, moving your bad debts off your books.”
So AIG went to elaborate lengths to set up a shell company in Barbados, where capital requirements and regulation was minimal compared to the U.S., where American regulators couldn’t readily discover AIG’s involvement and where, as an added incentive, it could move money out of reach of U.S. taxes….
Though it is an American company listed on the New York Stock Exchange, AIG makes extensive use of offshore jurisdictions such as Barbados, Bermuda and Luxembourg that are immune from U.S. regulatory and tax scrutiny. They help the company launder profits to evade U.S. taxes and hide insider connections in supposedly “arms-length” deals. This is especially important as the company has moved into financial services and asset management, handling the wealth of “high net-worth” clients – the mega-rich.
Greenberg has enviable political clout, never so much in evidence as when, with the help of Henry Kissinger – chair of AIG’s international advisory committee and a paid consultant via Kissinger Associates – AIG became in 1995, the first company licensed to sell insurance in China. AIG was the only foreign firm that owned 100 percent of its license there….
Goldman Sachs and Robert Rubin
Coral Re, a Barbados reinsurance company, was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin, who would become President Clinton’s Treasury Secretary and is now chairman of the executive committee of Citigroup. A confidential memorandum … told why the company was formed: “AIG’s interest in creating the Company is to create a reinsurance facility which will permit the U.S. companies to write more U.S. premiums. For a U.S.-domiciled company, a high level of surplus is required to support insurance premiums in accordance with U.S. statutory requirement. The statutory requirements in Barbados are less restrictive.”…
Rubin buddy Bill Clinton, then governor of Arkansas, may also have thrown his weight behind the project. The Arkansas Finance and Development Authority (ADFA), headed by a man who went to work in the Clinton White House, became lead investor, although state law banned it from buying stocks.
The new company was not a legitimately independent business. For investors, there was no money at risk; the board of directors never made a decision; and Coral Re had no office of its own but was managed by American International Management, a subsidiary of none other that AIG.
Eventually, the scheme unraveled. State insurance examiners look at company books every five years. “In 1992, Delaware examiners auditing Lexington (an AIG subsidiary) smelled a rat,” a former regulator from one of the four investigating insurance departments told CorpWatch….
Things have gotten tougher for the company since the Enron affair caused the SEC to look more serious about corporate corruption. … Last year, AIG paid a $10 million fine to the SEC for helping the Indiana wireless telecom company Brightpoint commit accounting fraud.
AIG marketed a “non-traditional” insurance product aimed at “income statement smoothing,” spreading a loss over future reporting periods. The SEC called such financial products “just vehicles to commit financial fraud” and said the insurance giant refused to give it subpoenaed documents, compounding its misconduct. The U.S. Justice department is currently investigating but has yet to file criminal charges.
Business Insurance, a trade publication, editorialized on the timidity of regulators for giving AIG “little more than a tap on the wrist” in exchange for “a promise not to do it again.”
“The message delivered here is that a company of AIG’s power and complexity can afford to be openly hostile to state oversight and, in the end, have things pretty much its own way. That is a disheartening message, indeed,” wrote the magazine’s editors….
(Read the complete article in CorpWatch)
Lucy Komisar is an investigative journalist who is writing a book about offshore bank and corporate secrecy. She receive research assistance on this report from the Arkansas Committee. The committee was started in 1990 by University of Arkansas students, who, suspicious that Arkansas Development Finance Authority was selling more bonds than it could use to finance state projects, demanded the agency’s documents under the Freedom of Information Act. It fought the case to the Arkansas Supreme Court before it got the papers describing the AFDA deal to buy shares of Coral Re.
~ ~ ~
For more, GO TO > > > AIG: The Un-American Insurance Group
July 2, 2004
Goldman Sachs Settles SEC Case
Bloomberg News
NEW YORK – Goldman Sachs Group Inc. agreed yesterday to pay $2 million to settle U.S regulators’ allegations that it improperly tried to spur interest in four Asian share sales, including one in which it told investors to “TAKE A GOOOOOOOD LOOK” at PetroChina Co.
The Securities and Exchange Commission claimed that Goldman, the No. 3 securities firm, sent e-mail to investors with details of PetroChina’s $2.9 billion sale before the initial public offering in April 2000 was cleared by the agency. Beijing-based PetroChina is China’s biggest oil producer.
“If you’re sending out detailed e-mails about planned offerings to some customers, then there are other people out there who don’t have that information,” said Paul Berger, the SEC lawyer who handled the investigation.
“That’s not fair.”
U.S. securities law bar underwriters from issuing written communications on a stock sale – other than a preliminary prospectus or a so-called tombstone advertisement – without SEC clearance.
“We’re pleased to put this matter behind us,” Goldman spokesman Peter Rose said. New York-based Goldman, which neither admitted nor denied wrongdoing, agreed to tougher penalties if it violates securities laws in the future.
A senior Goldman official also spoke to the media before PetroChina’s IPO was cleared, saying proceeds of the offering would be used in China and not Sudan, the SEC said, without identifying the executive….
Human rights activists had said China National Petroleum Corp., PetroChina’s parent, might make investments that could funnel oil revenue to support oppression in the African nation.
Goldman said at the time that it sent the e-mail to 77 hedge fund and institutional clients in the United States by mistake. It then sought to correct the error by publishing the contents of the e-mail in PetroChina’s prospectus….
November 12, 2003
Goldman Sachs Economist Pleads Guilty
to Multimillion-Dollar Scam
NewsMax.com
NEW YORK – A former Goldman Sachs & Co. economist pleaded guilty Wednesday to fielding an insider bond tip that gave the firm an eight-minute edge on the market and nearly $4 million in tainted profits.
John Youngdahl, 44, of Summit, N.J., will spend roughly three years in prison if a federal judge accepts the terms of a plea deal he reached with the government.
He will also pay $240,000 to settle related charges by the Securities and Exchange Commission if the judge approves the settlement.
The tip came Oct. 31, 2001, when the government announced it would end sales of its benchmark 30-year Treasury bond. The announcement came with a strict 10 a.m. embargo, meaning no one could publicize the information until then.
But at 9:35 a.m., a consultant hired by Goldman who had attended the Treasury press conference passed the information to Youngdahl, who relayed it to a Goldman trader.
A Treasury Department employee inadvertently posted the announcement online at 9:43 a.m., eight minutes later.
The news triggered the largest single-day rally in the long-term bond since the stock crash of October 1987.
$3.8 Million in Eight Minutes
The government said Goldman made $3.8 million on its eight-minute advantage.
Youngdahl admitted in court Wednesday that he had a prior arrangement with the consultant to receive the illegal tip. He also admitted lying about the matter to the Justice Department and the SEC….
The consultant, Peter Davis, has already pleaded guilty to securities fraud, wire fraud and conspiracy and is awaiting sentencing. He has also agreed to pay nearly $150,000 to settle SEC charges.
Another Scandal That Started During the Clinton Years
Government court papers said Davis was attending the Treasury press conferences as far back as 1994 and was illegally violating the Treasury embargo as early as 1999.
Youngdahl, who was facing trial in February on a seven-count indictment related to the bond tip, will be sentenced Jan. 30. His attorneys have asked the judge to dismiss the remaining three counts.
Goldman has agreed to pay $9.3 million to settle SEC charges related to the illegal bond trading.
February 4, 2003
Goldman Sachs’ CEO apologizes
for employee remarks
NEW YORK, Feb 4 (Reuters) – Goldman Sachs Group (NYSE:GS – News) Chairman and Chief Executive Officer Henry Paulson apologized to employees for suggesting last week much of the company’s workforce was expendable.
Paulson sent a firmwide voice mail explaining the context of comments he made last Tuesday during a Manhattan financial conference. He apologized for being “glib and insensitive,” according to a person who received the message.
Paulson told investors and analysts the top 15-20 percent of bankers and traders are responsible for making 80 percent of the revenue, which provides leeway if more cuts become necessary.
“You can cut a fair amount and not cut into muscle,” he said during a question-and-answer session with investors following his presentation.
The head of the world’s top merger and acquisitions adviser and largest stock underwriter said he thought reductions made last year were sufficient. Goldman laid off 2,938 people, or 13 percent of its headcount.
But if the weak investment banking market continues it had room to cut more employees without risking losing its best talent, he said.
Paulson backtracked on those comments in his voice mail, saying they do not represent how he feels about Goldman employees. He stressed the investment bank’s output is a team effort.
After hearing employees were discouraged by the remarks, Paulson initially planned to meet with individual departments to explain the comments. But over the weekend he decided to speak to employees in one shot by voice message.
October 3, 2002
Top executives risk lawsuits
over Goldman IPO list
By Michael Erman and Per Jebsen
NEW YORK, Oct 3 (Reuters) – Some of America’s best-known executives may face lawsuits demanding they give up the profits made on initial public offerings they were allocated by investment bank Goldman Sachs.
State and federal regulators may jump on evidence produced in a congressional report issued on Wednesday night that indicated Goldman doled out hot IPOs by the hundreds to the executives of companies that were leading clients of the investment bank, a practice known as “spinning,” legal experts said on Thursday. The executives sold many of the IPOs soon after the shares began trading and took substantial profits.
Among those most at risk because of the report from the House Committee on Financial Services are eBay Inc.’s (EBAY) CEO Margaret Whitman and Yahoo Inc. (YHOO) co-founder Jerry Yang. Others named included Ford Motor Co. (F) Chairman and CEO William Clay Ford, who is the great-grandson of Ford founder Henry Ford, and Barry Sternlicht, CEO of Starwood Hotels & Restaurants Worldwide Inc. (HOT).
Investigators are looking into allegations that investment banks “spun,” or directed, hot IPO shares to the top executives of favored corporate investment banking clients as a way of retaining or keeping their investment banking business.
Legal experts said the information revealed in the report appeared to be similar to that in civil lawsuits brought on Monday by the New York Attorney General Eliot Spitzer against former WorldCom CEO Bernie Ebbers and four other telecom company executives. That case alleged the executives made millions by “profiteering” from hot IPOs, access to which was provided by Citigroup’s (C) Salomon Smith Barney in exchange for investment banking business. . . .
EXECUTIVES COULD ATTRACT LAWSUITS
A report by the U.S. House of Representatives Committee on financial services said the investment banks’ practices took advantage of the average investor by giving the high-profile investors preferential access to the lucrative IPO markets.
“Our goals are to correct abuses in the markets and to make the system fair for the average investor,” said Representative Michael Oxley, chairman of the committee.
“People are willing to take a risk with their money, but they’re not willing to gamble when the system seems rigged against them.”…
© 2002 Reuters
October 3, 2002
Goldman Sach’s sterling image
comes under fire
By Jake Keaveny
NEW YORK, Oct 3 (Reuters) – Goldman Sachs Group (GS) Chairman Henry Paulson, Jr. won plaudits in the business press last June when he proposed a plan to put ethics back into the business mix, speaking before the National Press Club in a rare public appearance.
As head of the venerable 133-year old bank, Paulson stood out amid the ranks of executives discredited by a string of corporate scandals. But a congressional committee’s revelation Wednesday may knock Goldman off its pedestal.
The House Financial Services Committee alleged that Goldman’s bankers regularly doled out shares in hot IPOs to executives who gave them investment banking business.
“It can be pretty damning on a firm’s reputation,” said John Davidson, who helps manage $4.5 billion as president and chief executive of Greenwich, Connecticut-based PartnerRe Asset Management Corp.
Davidson, who’s been in the business for 25 years and worked with Goldman for most of them, said he sees the alleged IPO practices as widespread, and draws little distinction between different banks.
In other recent securities investigations, the Securities and Exchange Commission has reportedly probed Goldman for “laddering” — requiring investors to buy stock in the after market as a condition to IPO allocations. Investors have sued the bank for allegedly rigging IPOs.
Enron Corp. have sued it for stock losses.
Goldman, the biggest underwriter of IPOs during three of the last five years, has denied the allegations….
September 27, 2002
Mammoth IPO suit hinges on
early defense motion
NEW YORK (Reuters) – A mountainous legal suit claiming that Wall Street banks and their corporate clients rigged hundreds of initial public offerings has hardly begun, but the most important arguments may have already been made.
Friday is the deadline for the final documents in a motion to throw the case out made by defendants like Goldman Sachs Group Inc. and Credit Suisse Group First Boston and once hot IPOs like EToys.
The motion is a standard defense tool, but lawyers on both sides say that expanding government investigations into IPO practices, the breadth of litigants, and the sheer size of a potential settlement make this ruling particularly critical.
Barring an outright dismissal, U.S. District Judge Shira Scheindlin has an array of options in deciding how the case proceeds. Because the case won’t likely make it to trial, her decision will have a major impact on each side’s position of strength during settlement negotiations…
ARMY OF LAWYERS
The motion and opposing responses have been pored over by a platinum list of litigation firms.
Securities lawyers representing 55 underwriting banks, as well as 308 issuer companies, have tried to punch holes in the range of complaints with six different motions to dismiss.
Investors, led by class action attorneys, allege there was industry-wide misconduct to artificially boost demand and the price of shares. Among the complaints: that analysts manipulated the market with optimistic research; that banks ramped up commissions in exchange for access to IPO shares; and that investors allocated IPOs were required to buy shares in the after-market in a practice known as “tie-ins”….
“You can’t just say there’s fraud, you need to set forth detailed allegations, you need some meat on the bone,” said Joseph De Simone, an attorney at Mayer, Brown, Rowe and Maw, which represents GigaMedia Inc and several other issuer defendants….
The group of attorneys representing banks, which are the primary target, include Gandolfo DiBlasi from New York-based Sullivan & Cromwell, the lead counsel for Goldman Sachs and the liaison for the entire group.
CSFB, owned by Credit Suisse Group, is being represented by Robert McCaw from Washington-based Wilmer, Cutler & Pickering, who represented the bank’s Swiss parent in litigation over the assets of Holocaust victims. . . .
MOVING FAST
The argument that no legal lines were crossed has become more difficult amid a steady stream of headlines from government investigations into alleged fraud by investment banks.
Among the pending investigations is a U.S. House of Representatives Financial Services Committee inquiry into the IPO allocations and research practices of Citigroup Inc.‘s Salomon Smith Barney, Goldman Sachs and CSFB.
Driven by a flow of new evidence, the U.S. Securities and Exchange Commission is expected to announce a set of new regulations governing banks, which could include a complete divorce between investment banking operations and sell-side research departments….
July 25, 2002
DEMOCRATS WON’T QUESTION RUBIN
Dave Boyer , THE WASHINGTON TIMES
Senate Democrats investigating the collapse of Enron Corp. said yesterday that they have no plans to question former Clinton Treasury Secretary Robert Rubin, a top official at Citigroup Inc., over its role in hiding Enron’s debt from investors.
“I don’t,” said Sen. Joseph I. Lieberman, chairman of the Governmental Affairs Committee, when asked whether he intended to call Mr. Rubin as a witness.
But he said it was up to Sen. Carl Levin, Michigan Democrat and chairman of the subcommittee probing Enron’s internal practices, to decide whether to question Mr. Rubin.
Mr. Levin said he “probably” will call the chief executive officers of Citigroup and J.P. Morgan Chase & Co. to testify, but not Mr. Rubin.
Asked whether he thought Mr. Rubin’s testimony might be appropriate, Mr. Levin said, “I’d rather go to the top.”
Mr. Rubin, who enjoyed a stellar reputation as Treasury secretary, is chairman of Citigroup’s executive committee. In November, he sought the Bush administration’s help with Wall Street credit-rating agencies on behalf of Enron when those agencies were about to downgrade Enron’s ratings.
Citigroup is Enron’s largest creditor and is one of the top contributors to Mr. Lieberman and his political network in the past five years.
Congressional Republicans said Senate Democrats are playing politics by issuing subpoenas for Bush White House aides in the Enron probe but shielding a former Clinton official from sensitive questions. Top Democrats have criticized President Bush repeatedly for his ties to Enron and a former chief executive officer of the company, Kenneth L. Lay.
“You can’t ask questions on one side if you’re not going to ask questions on the other side if something like this is done,” said Senate Minority Leader Trent Lott, Mississippi Republican. “I think that they may want to call in Mr. Rubin and others before the Government Affairs Committee, and —— if that’s where the trail leads —— and see what happened.”
A House Republican yesterday said Congress should compel the testimony of Mr. Rubin and of Sen. Jon Corzine, New Jersey Democrat, who was chairman of the investment banking firm Goldman Sachs Group Inc. before he spent $60 million of his fortune to win a seat on Capitol Hill.
“If we’re going to have hearings, Mr. Lieberman, let’s have Goldman Sachs, let’s have Citigroup brought to the dais,” said Rep. Mark Foley of Florida.
Democrats “have been talking about the vice president and the president,” Mr. Foley said on the House floor. “Let me suggest to them, if they want to have good hearings, let’s call Senator Corzine, who headed Goldman Sachs. Let’s call Secretary Robert Rubin, the Clinton secretary of treasury, who heads Citigroup.
“When we talk about Enron, we ought to talk about all the players,” Mr. Foley said. “And there seems to be some real mischief. In fact Mr. Corzine used $60 million to run for the Senate. Goldman Sachs was hyping Enron stocks past $90. They encouraged people to buy it.”
A spokeswoman for Goldman Sachs could not be reached for comment. Mr. Corzine has denied inflating stock prices while chairman of Goldman Sachs and said investors make their own decisions about whether to buy stocks at certain prices.
On Tuesday, Senate investigators accused J.P. Morgan Chase and Citigroup of helping Enron hide debt and boost cash flow before filing for bankruptcy last year.
At a hearing, J.P. Morgan Chase and Citigroup officials defended themselves against charges that they helped Enron amass by September an estimated $5 billion in various dealings that were effectively hidden debt.
William Harrison, chief executive of J.P. Morgan Chase, said the bank acted “properly and with integrity” in all of its dealings with Enron.
Mr. Lott said reports that the banks may have helped Enron hide debt in offshore arrangements “need to be explored.”
“I don’t know Mr. Rubin’s involvement,” Mr. Lott said. “I think he did a lot of good things when he was secretary of treasury, and I’m not alleging anything improper, but I do think, if they were involved in this kind of operation, I think it needs to be explored. It looks on its face suspicious.”
Another Clinton White House official, former chief of staff Erskine Bowles, is taking heat for a corporate scandal as a board member of Merck Pharmaceutical Inc., which is accused of inflating revenue by $12 billion.
Mr. Bowles is running for the Democratic nomination for the Senate in North Carolina, and the state Republican Party yesterday criticized him for “his unwillingness to explain his role in a string of disastrous investments while a managing partner of investment bank Forstmann Little that led to the loss of more than $100 million for Connecticut retirees.“
Copyright © 2002 News World Communications, Inc. All rights reserved
July 17, 2002
Corzine tied to stock scheme
Dave Boyer, THE WASHINGTON TIMES
Sen. Jon Corzine, whose Wall Street expertise plays a key role in Democrats’ strategy on corporate responsibility, led an investment banking firm that is being accused of inflating stock prices in the 1990s and contributing to the market crash.
Senate Majority Leader Tom Daschle lately has kept Mr. Corzine at his side frequently as Democrats call on President Bush to get tougher with corporate executives who fraudulently inflate company earnings to boost stock prices.
“I think he’s made a stellar contribution,” said Sen. Paul S. Sarbanes, Maryland Democrat and author of a bill approved Monday by the Senate that would increase the penalties for corporate wrongdoers.
But Goldman Sachs, the firm that Mr. Corzine left as chairman in May 1999, has been a target of class-action lawsuits and accusations by a former broker who complained to the Securities and Exchange Commission that the investment house engaged in a scheme to force unwitting investors to pay artificially high prices for certain stocks.
Mr. Corzine, New Jersey Democrat, said he knew nothing about such schemes when he ran the firm from 1994 to 1999.
“I don’t believe there is ever going to be anything that sticks about us at Goldman Sachs forcing anybody to buy anything,” Mr. Corzine said in an interview.
“Goldman Sachs never forced anyone to buy anything when I was chairman, I can tell you that.”
But Nicholas Maier, who was syndicate manager of the Wall Street firm Cramer & Co. from 1996 to 1998, told SEC investigators in the spring that Goldman Sachs routinely forced him to buy stocks at inflated prices if he wanted to purchase shares of an initial public offering (IPO).
“Goldman, from what I witnessed, they were the worst perpetrator,” Mr. Maier said. “They totally fueled the [market] bubble. And it’s specifically that kind of behavior that has caused the market crash. They built these stocks upon an illegal foundation —— manipulated up, and ultimately, it really was the small person who ended up buying in.”
For example, Mr. Maier told the SEC that Goldman Sachs would offer him shares of a new company’s IPO at the initial, low price of $20 per share only if he agreed to purchase “aftermarket” shares of the same company at $100 each. In turn, he would sell the shares of the higher-priced stock to small investors.
“None of these aftermarket orders had anything to do with what I honestly valued a company to be worth,” Mr. Maier said. “Goldman created the convincing appearance of a winner, and the trick worked so well that they seduced further interest from other speculators hoping to participate in the gold rush. The general public had no idea that these stocks were actually brought into the world at unnaturally high levels through illegal manipulation.”
Mr. Bush on Monday said Wall Street went on a “binge” in the 1990s and now has a “hangover,” a characterization that Mr. Corzine called “a diversion away from reality.”
“What we had was a breakdown in corporate ethics and corporate responsibility that I don’t think has anything to do with anything other than excessive focus on share price and managed earnings,” he said.
Mr. Corzine retired from Goldman Sachs in 1999 after taking the firm public and receiving $320 million worth of its stock. He ran for the Senate in New Jersey in 2000, spending more than $60 million of his fortune to win the seat.
The bubble of high-priced technology stocks began to burst in March 2000. In August 2000, the SEC issued a warning against aftermarket sales, also known as “laddering.”
“I’ve never even heard the term ‘laddering’ before,” Mr. Corzine said yesterday.
“We may have recommended on the analysis that we had that [a stock] was a ‘good buy,’ but you can’t force anyone to buy anything. Investors make their choices about where people invest, unless they’ve asked somebody to manage their money.”
Mr. Corzine was highly respected in his tenure at Goldman, and no one has accused him of encouraging “laddering” or even knowing about the practice. But Mr. Maier said it happened on Mr. Corzine’s watch.
“For Corzine not to know of a common practice being utilized to generate and manipulate stock prices would be surprising,” Mr. Maier said.
“He was obviously there during this time. I definitively saw his company engaged in illegal activity.”
The SEC would not comment yesterday on whether Goldman is under investigation. Mr. Maier said he has not spoken to the investigators in several months.
“They expressed to me that laddering is a trickier thing [to prove],” Mr. Maier said.
“I will say it. They did it. They laddered. Whether the SEC can construct a case is a different story.”
Asked whether he knew about an SEC investigation, Mr. Corzine said, “That could very possibly be; I’m not aware of it. I’m divorced from [Goldman] since 1999.”
A class-action lawsuit filed in April 2001 accused Goldman Sachs and others of engaging in “laddering” on the initial sale of stock of NetZero, driving up the company’s share price to artificially high levels.
In another class-action suit, shareholders of Buy.com have accused the firm and its underwriters, including Goldman Sachs, of engaging in a laddering scheme in its IPO in February 2000, after Mr. Corzine left Goldman. And investors of defunct online grocer Webvan.com have filed a similar suit in federal court concerning that firm’s initial public offering in November 1999.
Another class-action suit filed last year says that underwriters, including Goldman Sachs, manipulated several IPOs since 1997, including at least six when Mr. Corzine was still at the helm of Goldman.
Copyright © 2002 News World Communications, Inc. All rights reserved.
INSIDERS DON’T SWEAT COLLAPSE
by
Michael Perkins and Celia Nunez
Long before the stock market went into the toilet, the big boys got out.
Last March, the tech-heavy Nasdaq index reached a staggering 5048, prompting venture capitalist John Doerr to claim that we were witnessing “the greatest-ever legal creation of wealth in the history of the world.”
This week, the Nasdaq fell below 2000. Someone is out a lot of money, and that someone is primarily the small retail investor. Why? Because the insiders– entrepreneurs, venture capital firms, investment banks and large institutional investors– pulled out their capital long before the fall, leaving mom-and-pop investors holding the bag.
Instead of the greatest-ever legal creation of wealth, the high-tech financial bubble represented the greatest-ever legal transfer of wealth – from retail investors to insiders.
For example, between November 1998 and July 2000, Goldman Sachs, Morgan Stanley Dean Witter and Credit Suisse First Boston each pocketed more than $500 million in underwriting fees from Internet companies. And over the past two years, technology underwriting as a whole brought in close to $1 billion for each bank….
Some insiders would argue they, too, have been hurt by the market’s decline. And in fairness, it should be noted that not every insider pulled out early. … But the fact is, not all stock losses are the same, because the insiders get their stock for pennies a share, if that.
Thus, while an insider may have seen his portfolio slip from $50 million to $5 million, he probably paid only $100,000 for his stock, so he’s still ahead in terms of real money.
But when individual investors see their stock portfolios plummet, it’s real.
The TRUTH is, little investors never stood a chance, because they simply don’t have the same access, both to key information and to early deals, as big investors.
One reason is the “quiet period” mandated by the Securities and Exchange Commission, which requires a startup company to shun any publicity regarding its finances for at least three months before its initial public offering. The law was intended to keep a company from hyping its stock, but in reality its main effect is to keep small investors in the dark.
Big institutional investors such as Fidelity and Vanguard are never in the dark. They’re treated to what’s known as a “road show” just days before an IPO. In this private meeting with company executives, they are updated on the startup’s financial situation.
Thus, the big investors know if a stock has recently become more risky and can pass on it. Or they may decide to buy it anyway, knowing they can resell the stock on the first day of trading before any bad news about the company is reported. This practice, known as “flipping,” became common in an era when Internet stocks were routinely tripling in value on their first day of trading.
Institutional investors weren’t the only ones flipping stock during the hot market. Individual insiders did it too.
During the Nasdaq bubble, investment banks would routinely give hot new IPO stocks – FREE – to corporate executives, venture capitalists and other decision-makers sitting on the boards of companies whose business the banks wanted.
These privileged decision-makers would then flip their shares on the first day of the IPO for quick profits.
While the investment banks were giving out free stock to their favored clients, they were also giving out bad advice to their mom-and-pop customers.
In a study of high-tech stocks, Roni Michaely of Cornell University and Kent Womack of Dartmouth College found that investment banks rarely downgrade a company’s stock to a “sell” rating if they have a business relationship with the company.
Despite these shenanigans, the savvy retail investor could at least take comfort in Rule 144, the SEC regulation that bars a company’s owners from selling their stock for 180 days after an IPO. (This type of stock is sometimes referred to as “locked stock.”) So if the stock did tank three months after it was issued, at least the small investor could find solace in the fact that the entrepreneur and his venture capital backers had taken a loss on their stock as well.
Or did they?
Actually, during the high-flying days of the tech bubble, few insiders were required to take risks. The investment banks devised a new financial service: They would promise to buy a venture capitalist’s or tech executive’s locked stock as soon as the 180 days were up – but at the stock’s higher early issue price.
This special service for favored customers didn’t cost the banks a thing, since they would then use a combination of sophisticated financial instruments to “short” the stock. That is, the banks would make money if the stock dropped in value, which it almost always eventually did.
The technology stock bubble is already being compared to previous financial manias: Dutch tulips in the 1600s, U.S. railroads in the late 1800s, etc. But what sets this most recent mania apart is its Ponzi scheme quality.
Never before has so much wealth been transferred from one group of people to another in such a short time.
Maybe if the Securities and Exchange Commission steps in to restore fairness, it never will again.
(Michael C. Perkins is a founding editor of Red Herring magazine and co-author of “The Internet Bubble.” He and Celia Nunez are authors of “A Cool Billion,” a novel about Silicon Valley.}
June 17, 2002
Goldman unit insists it met
Japan tax obligations
TOKYO (Reuters) – The Japanese unit of Goldman Sachs Group Inc (GS) said on Monday it had met all tax obligations in Japan and declined to comment on media reports that said it had failed to report some income by transferring funds overseas.
Japanese media reports said on Sunday that seven Japanese affiliates of the U.S. securities giant failed to report a total of five billion yen ($40.24 million) in income in Japan….
Jiji news agency and the Mainichi Shimbun newspaper on Sunday quoted unidentified sources as saying that the tax authority imposed an additional tax of some 1.5 billion yen, including penalty taxes, on the Goldman Sachs group firms after searching their premises for evidence.
The seven firms purchased bad loans, along with real estate assets put up as collateral, from Japanese banks at low prices, and transferred some of those assets to a dummy company in the Cayman Islands, a tax haven, Jiji said.
The Japanese affiliates also transferred the proceeds from related transactions to a Goldman Sachs group company in the Netherlands, effectively evading tax payments in Japan, Jiji quoted sources as saying….
© 2002 Reuters
May 23, 2002
EToys sues Goldman Sachs
for mishandling IPO
EToys Inc., the bankrupt Internet toy seller, on Thursday said it has filed a lawsuit against Wall Street firm Goldman Sachs Group Inc. for mishandling its 1999 initial public offering.
The suit — filed in New York State Supreme Court — alleges that Goldman, one of the leading underwriters of IPOs, intentionally underpriced eToys’ offering and received kickbacks from its customers who profited when the shares soared.
It charges Goldman with fraud and breach of contract and fiduciary duty.
A Goldman spokeswoman declined to comment on the suit, citing company policy.
Thousands of individual investors have sued dozens of investment banks alleging fraud in the way they doled out shares of IPOs. This case — which echoes a federal investigation into IPO allocation practices — is unique because a company is suing.
Goldman priced eToys’ IPO at $20 a share, and the shares closed at $76.56 in their Nasdaq debut on May 20, 1999, after hitting an intraday high of $85. Shares of eToys now trade on the Pink Sheets — akin to a minor league exchange for companies booted off the Nasdaq or New York Stock Exchange — at less than a penny a share.
For more, GO TO > > > Tinkering with eToys
May 2, 2002
Steve Friedman Joins Goldman Sachs’
Board of Directors
NEW YORK –– The Goldman Sachs Group (NYSE: GS) announced today that Stephen Friedman, Senior Principal of Marsh & McLennan Capital, Inc., has joined its Board of Directors. Mr. Friedman served as Chairman and Senior Partner of Goldman Sachs from 1990 to 1994.
“Over the course of his three decade-long career at Goldman Sachs, Steve’s keen strategic sense and focus helped us expand our global presence and achieve preeminence in our core investment banking businesses,” said Henry M. Paulson, Jr. , Chairman and Chief Executive Officer of Goldman Sachs.
“Steve has a deep knowledge and understanding of our firm and industry and is a highly-qualified addition to our Board of Directors.”
Mr. Friedman spent nearly 30 years with Goldman Sachs, retiring as Chairman and Senior Partner. From 1987, he worked closely in executive leadership of the firm with Bob Rubin, first as Vice Chairmen and Co-Chief Operating Officers and then as Senior Partners and Co-Chairmen, until Mr. Rubin joined the Clinton Administration in 1992. Mr. Friedman continued as sole Senior Partner and Chairman until his retirement from the firm. Earlier assignments at Goldman Sachs included co-head of the Investment Banking and Fixed Income Divisions and head of the Mergers and Acquisitions Department. He became a partner in 1973 and joined the Management Committee in 1982.
In addition to his role as Senior Principal of MMC Capital, Mr. Friedman currently serves as a director of Wal-Mart Stores, Inc. and Fannie Mae.
Mr. Friedman is also a member of the President’s Foreign Intelligence Advisory Board and is Chairman Emeritus of Columbia University.
March 29, 2002
Goldman may face fraud charges
SEC could charge brokerage for improperly obtaining information.
NEW YORK (CNN/Money) – The Securities and Exchange Commission told Goldman Sachs Group Inc. it may charge the brokerage with securities fraud after it learned about the Treasury Department’s plan to stop selling the 30-year bond before it was publicly disclosed, according to a published report Friday.
The Oct. 31 news that the U.S. Treasury would no longer sell the 30-year triggered the biggest bond market rally in 14 years – prompting bond-market traders to snap up bonds before and after it was made public.
Goldman was informed it will receive a “Wells” notice from the SEC notifying the Wall Street firm of the agency’s plans to recommend civil charges be filed related to the Treasury leak, the Wall Street Journal reported citing people familiar with the matter.
A Goldman Sachs spokeswoman could not immediately be reached for comment Friday.
The SEC also informed longtime industry consultant Pete Davis, who admitted that he leaked the information, that he may be charged with securities fraud, the paper reported. Davis attended a Treasury briefing intended only for the media and later acknowledged telephoning certain clients while news of the Treasury halting 30-year bond sales was still embargoed. Davis’s lawyer, Brad Bennett, declined comment to the Journal.
March 12, 2002
Goldman Sachs sells its 6.3% ResCare stake
Goldman Sachs has sold its 6.3 percent stake in ResCare, according to U.S. Securities and Exchange Commission filing.
The filing yesterday did not indicate when the company sold the stock. Goldman Sachs reported in a similar filing in February 2000 that it held more than 1.5 million shares.
ResCare stock fell about 9 percent last Wednesday after the company reported it had to set aside money for client bills that may never be paid, and the stock has yet to recover. The charge put it in violation of the terms of its bank loans.
ResCare stock finished yesterday at $8 per share, down 10 cents.
November 27, 2001
$1 million fine for Goldman Sachs’ unit
NEW YORK (Chicago Tribune) — In its largest penalty ever, the American Stock Exchange announced a $1 million fine Monday against Spear, Leeds & Kellogg LP, a Wall Street firm that matches stock buyers and sellers, for violating supervisory rules.
The company, which was bought by Goldman, Sachs & Co. last fall for nearly $7 billion, also was ordered to conduct a review of its Amex operations and to adopt new supervisory rules, Amex said in a statement.
At the time of the merger, Spear Leeds had hundreds of Chicago employees and was the largest U.S. stock and options clearing firm by volume and the largest specialist firm on the New York Stock Exchange.
An Amex disciplinary panel found Spear Leeds failed to supervise Pasquale Schettino, the company’s former managing director in charge of clearance operations on the exchange floor. Schettino earlier was fined $100,000 and permanently barred from the securities industry for alleged misconduct in 1994 and 1995.
The Amex panel found that Schettino, while employed by Spear Leeds, initiated unlawful stock and option trades for Bullseye Securities without approval of Spears Leeds or Amex. The exchange asked Spear Leeds in 1995 to restrict Schettino’s access to the exchange floor, but the firm declined, Amex said.
Schettino went on to secretly trade for Viking Securities and secretly funded the acquisition of an exchange seat in 1997 through his Spear Leeds partnership account, Amex said. He was fired in 1998.
The fine for Spear Leeds dwarfs Amex’s second-highest penalty–a $225,000 fine for Lehman Bros. in 1998.
Goldman Sachs consented to the disciplinary panel without admitting or denying the violations. Schettino could not be reached for comment.
PROFITS OF DEATH —
INSIDER TRADING AND 9-11
by Tom Flocco – Edited by Michael C. Ruppert
http://www.copvcia.com/free/ww3/12_06_01_death_profits_pt1.html
~ ~ ~
Buzzy the Banker Joins the CIA
According to a CIA press release, in February 1998, A.B. “Buzzy” Krongard, former CEO of Deutschebank-Alex Brown (the nation’s oldest investment banking firm) and Vice Chairman of the Board of Bankers Trust, left BT and the investment banking community to join the CIA full time.
As a matter of fact, the Washington Post reported that Krongard helped engineer the $2.5 billion BT merger with Deutschebank shortly before sliding over to the intelligence side of the stage.
Buzzy (as his friends call him) had served a long-term “moonlighting” stint as a “consultant” to a series of CIA Directors. He left his banking position to become counselor to CIA Director George Tenet just 11 months prior to the final $19.1 million guilty plea by BT, which was by then a subsidiary of Deutschebank.
Given Krongard’s lofty intelligence and investment banking positions, there are no reports available dealing with important questions concerning his knowledge about such relevant issues as the disposition of “unclaimed” funds, monitoring of global stock trades for national security purposes, and wealthy “private client” operations –- let alone whether the developing investigation into BT fraud had necessitated his, ”leaving town just ahead of the sheriff,” as it were.
Yet Krongard has since risen to new heights, having received a March 16, 2001 Bush Administration promotion by President George W. Bush to Executive Director, the number three position at the intelligence agency.
Ingram’s Last Trade
On August 28, 2001, 14 days before the Trade Center attacks, former Deutschebank senior bond investment trader Kevin Ingram, pled guilty in a $2.2 million dollar money laundering conspiracy, resulting from a government sting operation investigating the illegal sale of night vision goggles, Beretta machine pistols, M-16 machine guns with silencers, rocket-propelled grenade launchers, mortars, surface-to-air missiles (SAMs), TOW anti-tank missiles, and Stinger missiles, according to court papers examined by the New York Post.
The next day, Alert Global Media, Inc., publishers of Money Laundering Alert, reported that Ingram “pled guilty on August 28 to money laundering conspiracy as part of an agreement [plea bargain] with the U.S. government, which will drop other charges and receive Ingram’s testimony against two co-defendants from Egypt and Pakistan.” Some published reports say that both of the other defendants were from (current U.S. ally) Pakistan.
“Bin Laden has long-standing contacts with senior officials [of Pakistan]…,” said Andrew Pearce of the Rand Institute in Washington. The Times of India also reported on June 17, 2001 that one of three Pakistani middlemen working illegally with Ingram asked undercover agents about the chances of obtaining components for nuclear weapons.
Earlier (July 7) Associated Press reported that “Kevin Ingram, 42, an investment counselor at the World Trade Center, was indicted June 28 on three counts of trying to conceal at least $350,000 and one count of violating the Arms Export Act.”
“Ingram allegedly laundered $100,000 and $250,000 for federal agents, both times taking a 9 percent cut before being asked to launder the $2.2 million,” according to court papers examined by the New York Post in a June 15, 2001 report.
AP added that “Ingram is also named in two other counts…for trying to launder $2.2 million in illegal arms sales. Ingram, out on $250,000 bond, faces a maximum of 100 years in prison if convicted of all charges.”
Arrested with Ingram were two New Jersey-based Pakistanis who had offered to make a partial payment for the arms “in the form of heroin,” also according to both AP and the New York Post.
A September 29, 2001 Bloomberg News/St. Louis Post Dispatch report revealed that Ingram had angered his judge in July by failing to disclose his Swiss bank account. Bloomberg reported that the Swiss account contained $1,086,000 in cash and 75,800 shares of Carver Bancorp, Inc. worth $650,000.
“He was afraid of the implications, and he just panicked,” attorney Richard Lubin told U.S. Magistrate Judge Ann E. Vitunac at a bail hearing on July 10. Vitunac raised Ingrams’s bond to $1.25 million and ordered him jailed two days later.
Curiously, however, given the terrorism that has transpired, federal agents refused to divulge the name of the country that would have received the arms according to court papers examined by the New York Post and others. However, the documents confirmed that the defendants “referred to their foreign arms buyer…as a well-known, former military official who wanted to partially pay for the weapons with heroin.”
On June 15, 2001, the New York Post, reported that experts said the most likely buyers connected to the former Deutschebank securities trader and the two Pakistanis were current U.S. ally Pakistan or Osama bin Laden.
The Associated Press reported on 12/1/01 that Ingram had been sentenced to 18 months plus two years probation and a $20,000 fine on the money laundering charges in this case. All other charges were dropped in the plea bargain. AP quoted Ingram as saying at his sentencing hearing, “I made a horrible mistake and I did something wrong. I’m very sorry about it, sorry for my family.” Ingram’s sentence will likely be served at a minimum security facility in Fairton, New Jersey….
In spite of these revelations, no reporter or government official has asked or disclosed how many times Ingram had laundered money or completed arms shipments before he was finally nabbed. The extensive array of military hardware in the possession of the Taliban and al Q’aeda beg this question.
A “Trader’s” Powerful Friends
Deutschebank-Alex Brown’s role in brokering the insider trades that scream foreknowledge of the attacks further provides a common denominator — given the activities and histories of key executives at the highest levels of the world’s financial markets.
Ingram’s history speaks of access to power and financial policy making at the highest levels. Not only was he an associate of Robert Rubin before Rubin left Goldman Sachs to become Clinton’s Treasury Secretary, he has had ongoing relationships with Corzine, who also sits on the Senate’s Subcommittee on Securities and Investment — a subcommittee which should be investigating the insider trading.
Prior to working for Deutschebank, Ingram was a highly placed executive with the investment bank Goldman Sachs. Both Rubin and Corzine have served as CEOs at Goldman. Rubin currently sits on the board of Citigroup — a bank which has been cited for drug money laundering by the U.S. government and which (May 2001) purchased a Mexican bank (Banamex) which has now lost two suits and one appeal over press reports that its former owner, Roberto Hernandez, was a world-class drug money launderer. Hernandez currently sits on the board at Citigroup as a result of the buyout. So too does former CIA Director John Deutch. (See FTW: Vol. IV, No. 3 – May 31, 2001 or visit www.copvcia.com.)
Kevin Ingram joined Goldman Sachs in 1988 after a brief stint at Lehman Brothers, and by 1992 was promoted to run Goldman’s Collateralized Mortgage Obligations desk, overseeing all trading of mortgage and asset-backed securities, according to the New York Observer. Mortgage trading has long been suspected of being a vehicle for the laundering of “hot” money.
In Black Enterprise (BE) magazine’s 1992 “Top 25 Blacks On Wall Street,” Ingram was said to have left his (nine-year) high profile Goldman Sachs treasury securities and options desk position in 1996 to head Deutschebank’s U.S. mortgage-backed securities department — and ultimately their global securitiies operations in 1998.
BE added that “at Deutschebank, Ingram and his team of 25 professionals structure and issue securities for an international clientele, including…high net-worth individuals. These deals can range from $1 million to several billion dollars.”
No member of the House or Senate has even broached the subject of hearings to question either Ingram or recent Deutschebank-Alex Brown Vice Chairman and current CIA Executive Director A.B. Krongard as to whether they dealt with any wealthy Middle Easterners or Saudis in particular. Almost all of the September 11 hijackers were of Saudi nationality. Since both men had high supervisory positions connected to the secretive “private client” operations of Deutschebank, and Deutschebank handled the insider trades, this is an obvious course of inquiry.
Ingram’s position at Deutschebank became tenuous when the bond market crashed in 1998 and the protégé of Corzine and Rubin likely felt insecure. The tumbling bond market combined with periodic absences where “he would sometimes go incommunicado for days — unusual for someone who ran a tradinng desk and was responsible for open positions of $7 billion and more.”
Deutschebank asked for his resignation in September 1999, according to the New York Observer….
www.moneyfiles.org/wilderness3.html
From The Harvard Data Dump:
IS THERE A CONNECTION BETWEEN A $4.7 BILLION RESERVE BY
THE SWISS RE NAZI GOLD, AND A $4.7 BILLION ATTEMPTED
SEIZURE OF GOLDMAN SACHS HUD LOAN SALE ASSETS?
~ ~ ~
In the summer of 1996, a highly political “investigation” was begun by the Department of Justice into bid rigging and insider trading with respect to $4.7 billion of HUD loan sales by Goldman Sachs and PNC.
If various efforts to falsify evidence by the HUD and/or destroy evidence by the HUD Inspector General (DynCorp, now prime contractor) and destroy witnesses through a smear campaign during the subsequent four year investigation had been successful, the Department of Justice Asset Forfeiture Fund (DynCorp, prime contractor) would have had the basis of a $4.7 billion seizure of assets from Goldman and PNC.
During the same summer in 1996, efforts began to identify and seek reparations regarding Nazi gold and other assets maintained by Swiss banks, including the Swiss National Bank, Credit Swiss, and United Bank of Switzerland (UBS). The interim reparations fund was established by the Swiss at $4.7 billion US.
Allegations exist that the PROMIS software system at the Department of Justice was used to identify Nazi accounts at the Swiss banks. According to Bill Hamilton of Inslaw, DynCorp is one of the contractors who assumed Inslaw’s work in managing the PROMIS system for the Department of Justice.
Allegations also exist regarding the use by Lockheed and Pug Winokur/DynCorp of the PROMIS system to compromise the HUD systems, with $17 billion and $59 billion reported missing in FY1998 and FY1999.
Lockheed with DynCorp as a subcontractor manages the largest part of the HUD computer systems. HUD has refused to respond to FOIA’s regarding DynCorp’s contracts and subcontracts at HUD, taking the position that they have no contracts with DynCorp and that the prime contractor refuses to respond to their requests….
November 12, 1997
From Russia Reform Monitor, No. 341, American Policy Council
Washington, D.C. – Gazprom, the natural gas monopoly dominated by Prime Minister Viktor Chernomyrdin, announces a delay in its planned $3 billion bond offering due to pressure from Washington over its gas exploration deal with Iran, the New York Times reports.
The Iran deal would put Gazprom in violation of the 1996 Iran-Libya Sanctions Act designed to penalize those regimes for supporting terrorism.
The deal might also make Gazprom’s lead underwriter, the Goldman, Sachs investment bank, liable under the law as well….
“This is a tough one,” a senior Administration official said. “There are a lot of competing interests, and the coherence of our Iran policy is at stake.”
“Stopping the Gazprom financing” would not only punish a partially state-owned firm vital to Russian economic recovery, the New York Times notes; “It would also punish Goldman, Sachs, a big contributor to President Clinton’s campaign whose former co-chairman is the powerful Treasury Secretary, Robert E. Rubin, without stopping any other foreign company from underwriting Gazprom….
Adding to the pressure on the Administration, Congress had begun to discuss how to punish Goldman, Sachs and is already holding up the issuing of further Export-Import credits to Gazprom.”
[Editor’s note: Secretary Rubin continues to hold financial interests in Goldman, Sachs but claims they do not influence his decisions.]
From Gold-Eagle, by Ted Butler, 12/08/99:
UNRELENTING MISCONDUCT
In my last article, I publicly accused at least six financial firms of fraud and manipulation, for their dealings in the precious metals derivatives arena. I’m still here. The fact that none has responded or acknowledged my allegations can be interpreted in a number of ways. While it doesn’t prove them guilty, it doesn’t exonerate them either. Their silence will not deter me.
Since the manipulation of the price of gold and silver continues, I intend to turn up the heat….
The recent controversy about Goldman Sachs and its relationship with its client Ashanti Goldfields, provides further insight into the murky world of precious metals dealing, as well as the title of this piece. We are fortunate that this relationship has been made as public as it has, for it sheds more light on the gold and silver manipulation and permits specific new accusations against Goldman. One is very ugly indeed.
Published reports (principally from London) have presented detail that paint Goldman Sachs in a far different light than is normally associated with the high powered investment bank. For the record, I had contacted Goldman, once again, at the highest level prior to releasing this article, telling them the nature of this article and giving them the opportunity to refute my claims. Once again, they have chosen not to respond nor refute. I can’t beg them to address this issue. I have no personal vendetta against Goldman … my vendetta is against the crime of precious metals leasing and unlimited and unrestricted short selling in the 15 year manipulation in gold and silver.
Goldman Sachs is a key player in that manipulation and as such, they are a fair target in light of recent revelations. Certainly, no one can accuse me of being a bully towards Goldman, not when there is universal acceptance that Goldman Sachs is the bully of the entire precious metals market.
Let’s face it, this firm is at the top of the food chain.
The dealings that Goldman Sachs had with their client Ashanti are sickening. It is hard to reconcile Goldman’s actions in a world where the meaning of words such as honesty, fiduciary responsibility, fairness and some concern for your fellow man, is known to all.
If an individual lacked such basic traits, we would all consider that unfortunate. For an institution like Goldman to lack such traits is unacceptable. The public record shows that Goldman misled Ashanti. Just a little bit of common sense will prove it.
Step back for a moment, and try to put what happened in the Ashanti – Goldman relationship into proper perspective. Ashanti, which has only been a public company for five years, increased its Goldman-sanctioned short strategy to the point where a $60 increase in the price of gold rendered it insolvent.
Please think about this. This was no renegade unauthorized trader gone wild. This was Ashanti’s corporate policy. Goldman was their banker. Goldman knew, or should have known, what Ashanti was doing. What Ashanti was doing was proving to the world just what a scam leasing/forward selling and derivatives are.
For the first time in history, a deliberate and widely known “hedging” strategy caused a public company to self-destruct financially…
This was no financial accident. This was a direct and unavoidable result of the systemic fraud that leasing is.
Your common sense should tell you that something is wrong, when for the first time ever, higher prices for their product hurts producers.
This Wall Street designed Ponzi scheme has turned the metal world upside down, with producers actually rooting for lower prices. Bad things are destined to happen to the hundreds of mining companies that resemble Ashanti.
The blame can be placed squarely on Goldman Sachs and the other unethical dealers.
It is no wonder that Goldman Sachs and its counter-party posse were quick to white wash the mess they created at Ashanti. (An aside – I’m starting to believe that “counter-party” means having a position that is counter to the best interests of your client). Since Ashanti couldn’t meet its margin calls and no one has figured out how to repossess real estate in Ghana, margin was waived by a “standstill” agreement.
This is outrageous.
Manipulative short sales which, by definition, were a price depressant influence when initiated, were allowed to remain in place even after it became obvious that the short seller couldn’t meet its obligations.
Is it just me, or is this not a direct affront to the concept of free markets?
Those that had reassured themselves that the price depressing influence of all this obscene short selling would be negated and offset by the eventual buyback or delivery, should rethink their position. Every action in this crises revolves around preventing Ashanti from buying back its short position on the open market. Real gold and naked calls were sold on the open market at the outset of the transactions, but the requirement to buy-back was unilaterally waived by the new rules of the crooked dealers, lest the price get out of hand.
Goldman’s and the counter-parties’ mopping up actions in waiving margin requirements for Ashanti make them clearly guilty of market interference for the purpose of price fixing.
I don’t understand how the authorities can’t, or won’t, see this. You would think, aside from reckless client negligence, that this would be the most severe charge one could bring against Goldman. I only wish that were true.
Now I make an accusation that saddens me.
It is an accusation that I have wrestled with, because it is so serious and ugly. The fact that I have offered pre-notification to the party I am accusing, and asked them to set me straight, does not lighten the burden. It is an accusation that not only have I never made about anyone, but one which I never thought I would ever make. But the evidence is so overwhelming, and the nature is so germane to the issue of fraud and manipulation in gold and silver, that I feel I have no choice.
I claim that Goldman Sachs, as part of its role in the sinful manipulation in gold and silver, is additionally guilty of racial discrimination towards its client Ashanti Goldfields.
Please allow me to explain.
First, as a white man, let me give you my definition of racial discrimination. You know I don’t mince words. White men taking advantage of black men, because they are black, is my definition of racism. Clearly, the record shows that this is what Goldman Sachs did to Ashanti in their financial dealings. The proof lies in the public record.
It is no secret that Goldman Sachs has been the main financial advisor to Ashanti since its formation as a publicly-owned mining company in 1994. The recent Financial Times article of December 2, 1999 describes the relationship fully (The title – “All Things to All Men”).
Additionally, the 1998 Annual Review for Goldman Sachs (www.gs.com) actually highlights Ashanti as one of 16 corporate clients (out of thousands) deserving special mention, including a testimonial by Ashanti about how good Goldman was to them. The testimonial obviously predates the current situation.
Additionally, it is no secret that Ashanti led the gold mining world in the shortselling of gold and gold derivatives, compared to production. At its peak, Ashanti was close to 12 million ounces short, or an incredible 8 years worth of production shorted….
The obvious question – how did Ashanti get to be the most aggressive short seller of gold? Did they do it to themselves, or did Goldman do it to them? Or, does it really matter – should Goldman, as its longtime financial advisor, have prevented Ashanti from being in the disaster short position in the first place?
I think you have to look at each participant to determine if Goldman Sachs was racist in its dealings with Ashanti. Ashanti is in Ghana, in the African Gold Coast. The country is poor, with a literacy rate of 60%, a life expectancy of 55 years, and 20% unemployment. The ethnic diversity is 99.8% black African and the GDP is $7 billion….
Ashanti Goldfields is the largest employer by far (around 10 thousand), and along with cocoa, gold provides the bulk of Ghana’s foreign exchange. Ashanti is overwhelmingly a black company, with a CEO who is a native Ghanaian and who worked himself up from a shift mine manager position. Ashanti’s current stock (ASL-NYSE) capitalization is roughly $350 million.
Goldman Sachs is a global financial powerhouse whose ranks are loaded with talented and educated overachievers. It will earn net profits of close to $2 billion this year, and has a market capitalization of around $37 billion, or more than 100 times Ashanti’s (Ashanti does produce a real product or true wealth, while Goldman is a moneychanger, but that’s a different topic). Hell, Goldman’s market cap is 5 times the whole country’s GDP.
Goldman Sachs has been a pioneer and experienced hand in the gold and silver leasing /forward selling scheme for over 15 years. Ashanti has been involved for maybe 4 years or so. Goldman has a tradition of sophisticated financial dealings going back 130 years; the country of Ghana has only been independent for 40 years, mostly under military rule. Ashanti was government-owned until 1994.
One fact that I can’t provide is how much money white Goldman Sachs made off of black Ashanti. You can be sure the amount was as obscene as racism itself.
It is not possible for a reasonable person to conclude that Ashanti, in any possible scenario, could hoodwink Goldman Sachs in a sophisticated game of dealing in precious metals derivatives. So, if Ashanti has ended up on the ropes financially, who’s fault is it? It’s so clear, it’s obnoxious. A new, unsophisticated investor versus the master of the universe.
Ashanti, of all the mining companies hurt by the price rise, had the highest concentration of “exotic”(aka “toxic waste”) naked mutant calls. Do you think that Ashanti dreamed up the terms and conditions of these derivatives that are polluting our financial markets?
The white man (Goldman) tricked the black man. That, my friends, is racism at the worst I have seen in thirty-five years.
Goldman Sachs should be punished severely and stripped of any privilege of dealing with any government entity. At the very least, I can’t imagine how they could be allowed to continue in the metal business.
Even if you refuse to acknowledge this conclusion on the information I’ve provided, and somehow still think Goldman’s role was proper, ask yourself this – why did a majority of gold producing mining companies all do the same thing at roughly the same time? As I detailed in my last piece, there was an unnatural movement by all sorts of mining companies to load up on dangerous short gold derivatives at precisely the wrong time. Was this the mining companies getting together to trick the Wall Street Sharks?
In defense of Goldman, I don’t think they are racist motivated. They are motivated by GREED.
They would steal from anyone, using any available method – in that sense they are truly non-discriminatory. Racism was not the primary motive in Goldman’s dealings with Ashanti – money was.
But even though the people of Goldman may not be personally racists, or the firm may not normally be considered a racist organization, motivation doesn’t matter. The law (both moral and written) doesn’t distinguish – it is not permitted.
The historic Civil Rights Movement that I personally witnessed was about eliminating institutional racial discrimination, and hopefully individuals’ minds in time. That’s what makes Goldman’s actions so repugnant – the racial discrimination they are guilty of is institutional in nature. That Goldman’s prime motivation in its dealings with Ashanti was not racial discrimination, doesn’t excuse the fact that racial discrimination obviously existed.
And it should matter not that those discriminated against were not of our shores. Surely the law intended to preclude US companies from violating the civil rights of foreign citizens.
Goldman’s role in Ashanti’s finances was so pervasive, that they can’t walk away. In this sense, Ashanti is likely to be restructured, rather than liquidated, because Goldman would really get a black eye otherwise. That, plus the mining assets can’t be repossessed. Goldman might even arrange for a backroom covering of Ashanti’s shorts.
But even if Goldman were to refund all fees, rescind all transactions and make Ashanti whole, that doesn’t change the fact that Ashanti was clearly racially discriminated against. And it doesn’t lessen Goldman’s involvement in the broader institutional fraud of leasing.
As disturbing as Goldman’s transgressions against Ashanti are, I’ve always thought that one of the uglier aspects to the fraud and manipulation in gold and silver has been the hardship borne by the individuals who actually toil down in the mines. Not only do they labor in an unbelievably difficult environment, they all too often are deprived a livelihood because of the artificially depressed prices of gold and silver.
Over the course of the leasing scam, hundreds of thousands of innocent people (most of them black Africans) have been thrown out of work due to mine closures because of low prices. If that was because of legitimate supply/demand forces, it remains just sad and unfortunate. But if it was because of a manipulative hand from the canyons of Wall Street, it is also outrageous and unacceptable.
In this sense, while I’ve singled out Goldman Sachs in their dealings with Ashanti, Goldman wasn’t alone at Ashanti, nor in the overall leasing scheme. By artificially depressing the price through their manipulative actions, AIG, Chase, JP Morgan, UBS and Republic Bank, and others, are also racists in the institutional discrimination against laid-off black workers.
That they also caused the non-racist unemployment of non-black or other minority mine workers, does not lessen their guilt, that crime is separate to the discrimination.
So far, I’ve gone to the Federal Reserve, the Treasury, the Justice Dept., US Attorneys, the FTC, the Comptroller of the Currency, the CFTC (many times), and mining companies and their auditors in trying to end this scam. Wouldn’t it be something if what broke the back of the manipulators was a civil rights activist?
The authorities who should be on top of the scam obviously won’t do it – so maybe someone from left field might do the trick. I’ve always known that if this fraud and manipulation were as broad and deep as I’ve insisted over the years, the proof of its existence would manifest itself in many ways. But I must tell you, even I am shocked about the recent revelations in this scam.
Even I am taken back by the ugliness and evil that has sprung from an inherently flawed concept – metal leasing and unlimited short selling.
From The American Populist Review –
America’s Financial Hoodlums
With its highly questionable involvement in the ruinous Ashanti Goldfields (Ghana) hedging mudslide, Goldman Sachs has suffered a public relations scorching of huge proportions.
For these New York-based investment traders, that’s no novelty. …
Goldman Sachs, to put it mildly, has an unfortunate reputation associated with financial bubble crashes….
It was in the late 1920s, when Goldman sought to project a public image as a “rock-ribbed conservative bank.” In hard fact (how history repeats itself!) it was probably the most wildly speculative bank in the US at the time. It was named by a US government-appointed investigation as one of the banks which, by looting, market rigging and outrageous manipulation helped precipitate the Wall Street crash of 1929, at the time the worst financial crash in world history.
It led directly to the Great Depression of the 1930s, the international rise of communism and of Nazi Germany, all leading inexorably to World War II….
Then, as now, Goldman Sachs was one of the top-ranking bond trading companies. It lent some of its capital to its own captive commercial banks, charging them rates as high as 20%, so they could lend it in turn as “call money” to speculators playing the stock market. With the Wall Street crash, the whole house of cards came tumbling down. . . .
The rapid deleveraging of the Goldman Sachs empire helped topple the market. Others involved in producing this outcome included JP Morgan, National Bank (today Citigroup/Citicorp) and Chase Manhattan National Bank (today Chase Manhattan).
The price paid for that insane market, resulting in the runaway disintegration of the US stock market and the pulverisation of the global economy, was bitter indeed. In America, by 1933, the economy had shrunk by 30%, one quarter of all American workers were jobless, a third of the country’s banks were in the bankruptcy court. The banks were blamed – and compared with Al Capone.
The stock market did not fully recover till 1954. . . .
April 25, 1995
Bishop’s Gambit –
Hawaiians Who Own Goldman Sachs Stake Play Clever Tax Game
Their Trust Is Educational, But Investments Produce
Big Incomes for Trustees – Macadamia Nuts For The IRS
The Wall Street Journal
The giant Hawaiian trust that now owns 11% of Goldman, Sachs & Co. bills itself as a charity. It’s an increasingly tough sell…
Take executive pay: For the year ended June 30, 1993, Bishop’s five trustees earned $820,000 each — payments calculated, in unusual fashion, partly as a percentage of the trust’s tax-free investment income…
Wheeling and Dealing
Bishop Estate doesn’t invest like a traditional charity either: Instead of passively pursuing rent, interest and dividends, Bishop wheels and deals in the world of shopping centers, apparel chains…
The highly secretive trust enjoys near-Olympian status in Hawaii and disdains scrutiny from outsiders….
The architect of Bishop’s diversification was then-trustee Matsuo Takabuki . . . a man who savored “relationship investing” with the rich and socially prominent…
In short order, the trust became investment partners with the Rockefellers, Wendy’s hamburger-chain founder Dave Thomas, Marshall Field scion Frederick W. Field and former Treasury Secretary William Simon, among others…
On the federal level, some warn that Bishop risks violating the IRS prohibition against “excessive personal benefit” as a result of its executive compensation scheme.
“The IRS is quite concerned with organizations where people are being paid a great deal,” says Dan Langan, a spokesman at the National Charities Information Bureau, a watchdog group. “You’ve hit the jackpot with this group.”…
Moreover, during the past several decades, Bishop has nurtured close ties with the IRS, whose employees in Washington and Los Angeles are visited periodically by Bishop officials — sometimes bearing chocolate-covered macadamia nuts. . . .
There are signs, though, that Bishop Estate is looming larger on the politicians’ radar screen these days — thanks in part to Treasury Secretary Robert Rubin, former chairman of Goldman Sachs.
In December, 1992, shortly after Bishop purchased its first Goldman Stake, Mr. Rubin, who had just been named U. S. Secretary of Treasury, needed to divest himself of his limited-partnership interest in Goldman Sachs…
In just one phone call from Goldman, Bishop agreed to guarantee, for a fee, Mr. Rubin’s Goldman limited-partnership interest in the unlikely event that the firm ever went under.
Bishop will get to pocket about $1 million in fees from Mr. Rubin and to enjoy the satisfactions, however intangible, of having a lasting relationship with the man who now, it turns out, oversees the IRS.
Mr. Rubin, who has recused himself from Bishop and Goldman matters, disclosed that arrangement last February when questions were raised about his and Goldman Sach’s potential stake in the Mexican bailout.
Now the House Banking Oversight and Investigations subcommittee is planning hearings in which Mr. Rubin may be questioned about his financial links both to Goldman Sachs and Bishop Estate….
Separately, Bishop’s federal subsidies are also under review again in Congress — where the once-influential Hawaiian delegation is suddenly part of the minority party.
Says Rep. John Boehner, a Republican from Ohio who led an unsuccessful fight last year against the handouts, “The Bishop Estate is pushing the limits of the law and deserves more scrutiny…”
From The Buying of the President: . . .
Goldman Sachs has enjoyed very good relations, as you might expect, with the Clinton Administration since January 20, 1993. Not only did the firm’s co-chairman join the president’s cabinet, but Kenneth Brody, a Goldman Sachs general partner until 1991, was appointed by the president to be chairman of the Export-Import Bank.
Goldman Sachs, the president’s top career patron, contributed $15,000 to the Democratic party since Bill Clinton’s inauguration, and also has ties to the president’s legal defense fund, which was begun to defray the Clintons’ legal expenses from the Whitewater investigation and a sexual harassment civil lawsuit. Although the Office of Government Ethics looks unkindly on anyone who solicits contributions for the defense fund, a Washington lobbyist for Goldman Sachs, Michael Berman, has raised money for just that purpose . . .
The general counsel of the President’s Legal Defense Trust was Bernard Aidinoff, whose law firm, Sullivan and Cromwell, has done substantial work for Goldman Sachs, and has contributed $37,600 to Clinton. . .
Rubin spearheaded Goldman’s move into Mexico, and the firm had steered billions of dollars to that emerging market over the years. The peso crisis of 1993-94 came to a head just as Rubin was becoming treasury secretary. His one-year recusal from dealing in matters affecting Goldman Sachs had ended. By helping Mexico to make good on its commitment to bondholders, the $20 billion U.S. portion of the bailout was viewed by some as a publicly-financed insurance policy for Rubin and Goldman Sachs, along with other large investment houses and banks that were highly exposed in Mexico.
Rubin was a partner in the firm and could be civilly liable for claims by investors. Mexico has already used the bailout money to pay back investment banks.
If the bailout was not a guarantee, the investment community was further reassured by the “Framework Agreement For Mexican Economic Stabilization,” signed by Treasury Secretary Rubin and the Mexican Ministry of Finance on February 21, 1995. The document gave the Department of the Treasury “the right to distribute, in such manner and in such order of priority it deems appropriate” the Mexican export revenues it now controls.
In other words, Robert Rubin had the power to grant first rights of payment to whomever he chooses, including the holders of Mexican bonds purchased from Goldman Sachs.
The Savings and Loan Disaster, Rubin, and Altman
Estimates of the cost to the economy of the savings and loan crisis range from $150 billion to $1.3 trillion.
When it came time for the Clinton administration to supervise resolution of the debacle, the president put in charge two men who came from the sector that would end up making money off the disaster: Wall Street.
Both Rubin and Deputy Treasury Secretary Roger Altman, formerly of the Blackstone Group, joined the administration after their investment banking firms had made millions of dollars in the clean-up of the savings and loan disaster. The government was relying on Wall Street to sell the failed thrifts and Goldman, in particular, was one of the early and biggest players, purchasing “several billion” in assets.
Neither Rubin nor Altman was directly involved in their firms’ thrift work, but in one case that began while Rubin ran Goldman, a Resolution Trust Corporation (RTC) audit found, in general, that both Goldman Sachs and the RTC behaved improperly in pursuing the deal and concluded that the adverse effects were magnified by the RTC having given Goldman Sachs an increased role as underwriter.
Essentially, Goldman Sachs was both buying and selling properties.
The RTC was created in 1989 to clean up the savings and loan mess….
“We believe the $10.1 million in fees that RTC paid to Goldman Sachs for assets that it did not sell were unreasonable.”…
May 11, 1998
Elite Gobble Your Tax Dollars
By Martin Mann, The Spotlight
The House and the Clinton administration are eye-ball to eye-ball on billions for the IMF. The key question is, who benefits?…
The Clinton administration is pressing Congress to vote a hefty new handout — some $18 billion — to the International Monetary Fund (IMF) this year...
These stories have been well covered in the mainstream media. But what has been missing from the White House press releases — and mainstream media reports — is where the money really goes. . . .
To make up for such lack of candor, this populist newspaper has launched its own inquiry to find out just who gets the dough rolled out for this conspiratorial one-world financial bureaucracy The answers turned out to be revealing. . . .
First rakeoff rights off the top go to Goldman Sachs, the giant Wall Street investment bank where Treasury Secretary Robert Rubin made his first billion in the anything goes 1980’s…
Goldman Sachs has been retained as a lavishly-paid financial adviser, underwriter and syndicator both by the governments of South Korea and Indonesia, as well as some of the largest banks and corporations in these sorely squeezed countries.
BILLIONS INVOLVED . . .
Under current arrangements, stage-managed by Rubin and his faithful sidekick, Undersecretary of the Treasury Laurence Summers, Indonesia and South Korea are slated to share an eye-popping $100 billion in IMF bailout funds during the next 16 months or so….
“You’d think most of the loot would go to help ease some of the crushing dollar-denominated debt of these hard-hammered Asian economies — at least, that’s what Rubin and Larry Summers claim,” commented Fred Ackerman, a veteran Wall Street trader in international debentures…
Nothing like it, warned this veteran money manager. “In reality, the IMF’s bailout is being used mainly as loan insurance to enable Indonesia’s and Korea’s tapped-out state agencies and corporations to borrow even more in the global markets.”…
Goldman Sachs, chosen as the lead underwriter and syndicator of new bond issues for some of the largest Southeast Asian borrowers, is already collecting millions — and is expected to collect tens of millions — of dollars in fees and royalties for helping to pile more debt on the stumbling Indonesian and Korean economies….
“It’s like one of Mike Milken’s daisy chains, isn’t it?” asked Ackerman sarcastically, referring to the fraudulent syndicates set up in the ‘80’s by convicted swindler Michael “Junk King” Milken to rig the bond markets. . . .
In much the same fashion, there is just a thinly veiled linkup between the official acts of Treasury Chief Rubin – known to insiders as the most powerful man in Washington as well as the main back-channel promoter of the IMF – and the huge profits skimmed by his once-and-future firm, Goldman Sachs, from such international bailouts, Wall Street sources say…
The second kickback from the IMF bailout goes to what even the Wall Street Journal calls “vulture capitalists” — that is, international financiers who pounce on distressed corporations, buy them out at knockdown prices, and then use “special connections” to make a killing on the deal. This is what happened in Mexico in 1994-95, and it’s happening now in Southeast Asia, Wall Street sources say. . . .
For an example, they cite the case of Daewoo, a major Korean car manufacturer, crushed by a back-breaking $3 billion debt it could no longer service after international speculators, led by George Soros, raided Korea’s currency and devalued it by more that a third last year. . .
An international syndicate headed by General Motors and advised by Goldman Sachs is now negotiating to buy a controlling interest in Daewoo at a time when they can acquire the huge bankrupt manufacturing complex at a steep discount, something like “15 cents on the dollar,” these sources averred….
“That’s a real sweet deal for the vulture investors grabbing Daewoo, but will they also get stuck with its $3 billion in outstanding debt,” asked Dr. Gottfried Sieberth, the dean of European financial writers based in the U.S….
Not if the IMF cash is divided up the way it was in Mexico, where it was used to buy up the defaulted loans of the biggest banks and corporations, explained this knowledgeable observer.
May 3, 1999:
Trust Scandal Haunts Goldman –
Sullied Bishop Estate Owns 10% of Bank
USA Today
Daytime television has nothing on the Bishop Estate, a charitable trust that will make a huge windfall in Goldman Sachs’ initial public offering expected Tuesday… The trustees of the estate are mired in an explosive scandal with subplots of greed, cronyism, sex and suicide that are worthy of the tawdriest soap opera….
Kamehameha Schools/Bishop Estate was set up 115 years ago to educate Hawaiian children as stipulated in the will of Princess Bernice Pauahi Bishop, the last direct descendant of the king who united the islands. With assets of about $10 billion, it is one of the richest trusts in the USA and the largest private landowner in Hawaii…
Among its assets: a 10% stake in Goldman Sachs, the leading investment bank that is ending its long reign as a private partnership. When Goldman goes public, the estate stands to at least triple the value of its $500 million investment….
May 4, 1999
Goldman Sachs Leaves Little
To Chance With Red-Hot IPO
The Wall Street Journal
The IPO which raised $3.66 billion, ranks as the largest financial-services IPO ever….
Top executives at Goldman, such as Mr. Paulson, received shares in the company valued at as much as $200 million….
Goldman itself sold 51 million shares. Two Goldman shareholders, Kamehameha Activities Association and Sumitomo Bank Capital Markets, a unit of Sumitomo Bank, also sold nine million shares each, leaving them with Goldman stakes of 4% and 5%, respectively.
May 10, 1999
Goldman Goes Shopping
Fortune Magazine
On the eve of its initial public offering, Goldman Sachs has Wall Street’s attention. It’s the last of the great private investment banks to go public, and its IPO is the most alluring so far this year.
Goldman will sell 11% of the firm during the first week in May. The offering will be priced between $45 and $55 per share and could fetch more than $3.3 billion. That would put a value of $25 billion on the whole company, making it the largest financial services IPO ever.
But what’s really got Wall Street matchmakers abuzz is what happens next: What will Goldman do with all of that valuable currency? . . .
An insurance play is another possibility. Marsh & McLennan is said to have rebuffed several would-be buyers of its Putnam Investments management group. But Putnam isn’t the only big draw for Goldman Sachs. A steady stream of income from insurance fees would quell Wall Street’s concerns that Goldman’s sales are linked too closely to trading.
“Marsh & McLennan has a hammer-lock on the insurance brokerage business globally, and its asset-management group, Putnam, is clearly of the necessary stature,” says Donald Putnam…
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From: Goldman Sachs, by Lisa Endlich:
Above all, (Sidney) Weinberg showed unswerving devotion to his clients….
He had restored the firm’s good name and laid the groundwork for its later profitability. For decades to come Goldman Sachs would benefit from the goodwill generated by this one man….
The day after Sidney died on July 23, 1969, his obituary ran on the front page of the New York Times, alongside news that U.S. astronauts Armstrong, Aldrin, and Collins were returning from the moon….
Gustave Levy was the obvious and only choice to succeed Weinberg as senior partner of Goldman Sachs in 1969….
Weinberg’s style of doing business had no place in Levy’s rough-and-rumble trading world. While Weinberg strove to associate Goldman Sachs’s name with the finest corporations in America, those closest to Levy say his aspirations were more mercantile — he simply wanted to do all of the business….
The choice of Levy to head an investment bank was an unusual and ultimately pivotal one. The senior partners of the firm’s major competitors at the time were bankers. Goldman Sach’s business and culture were heavily weighted toward banking as well, but with a trader at the helm Goldman Sachs would become prepared for the trading-oriented world that would emerge in the early 1980’s.
One of Levy’s greatest contributions was to prepare the firm psychologically for the risky world of proprietary, mortgage-backed securities, and derivative trading…
~ ~ ~
Levy brought trading risk to Goldman Sachs and thereby set the firm on an entirely different path from the one Weinberg had steered. . . .
Weinberg had averred risk, arguing that it had once almost fatally damaged the firm’s name. Levy, too, was concerned about the firm’s reputation, but he was aggressive and ambitious and wanted Goldman Sachs to make money. . . .
During his earliest days in the arbitrage department, [Robert] Rubin got a taste of Levy’s famed impatience. Rubin, analytically minded, had discovered a complex trading opportunity involving warrants that would allow the form to buy stock at an attractive price in the future.
Levy, who himself thrived on elaborate deals, hated long explanations. Rubin took the idea to his boss, who listened for about a minute….
“Stop! D’ya wanna buy or d/ya wanna sell?” Levy shouted at Rubin in his New Orleans drawl.
Rubin tried again. “Gus, it’s not that simple.” …
“I don’t care!” Levy hollered. “D’ya wanna buy, or d’ya wanna sell? Don’t waste my time.” . . .
~ ~ ~
BLOCK TRADING, which revolutionized the exchanges and is now the predominant method for buying and selling large stock holdings, was Levy’s brainchild. After World War II the country’s assets had become institutionalized. Many companies set up self-administered pension funds that pooled savings but invested only in bonds.
Slowly, as the wisdom of diversifying into equities spread and the painful memories of the crash receded, these funds began to purchase stocks….
~ ~ ~
FOR WALL STREET the early 1970s were wretched times. In January 1973 the Dow had stood at 1,051 and by December 1974 it had almost halved to 578 and would not rise above 1,000 again until 1980. For Goldman Sachs, which would struggle with low earnings and a spate of lawsuits, this would be a particularly difficult time.
The low point in Levy’s management of the firm came in February 1979, after the Penn Central Railroad reported dismal earnings. An official of the National Credit Office (the agency that rated commercial paper) telephoned Goldman Sachs, Penn Central’s commercial paper issuer, to discuss the railroad’s creditworthiness. The firm reassured the official of its generally positive view of the situation, and the paper’s “prime” rating was left in place….
Goldman Sachs continued to sell Penn Central paper, but took steps that minimized its own exposure to the securities. While still recommending the commercial paper to customers, the firm feared that there would be little customer demand and insisted that henceforth it would provide customers with Penn Central paper from a “tap” — that is, the railroad would issue a specified amount whenever Goldman Sachs brought them an interested buyer. In this way, Goldman Sachs would have no more than $8 million in inventory….
When Penn Central plunged into bankruptcy, panic engulfed the commercial paper market. Investors concerned about the solvency of other issues by Goldman Sachs–the firm had about 300 issuers at the time–rushed to redeem their securities. Corporations all over America had to borrow from banks to repay these short-term debts, and the Federal Reserve was forced to act to ensure continued liquidity….
Goldman Sachs has assumed, incorrectly, that the Federal Reserve would rescue the railroad by providing it with the needed liquidity….
Levy testified later that at no time was he concerned about the solvency of the railroad. Regardless, Goldman Sachs was censured by the Securities and Exchange Commission for its actions and required to give customers more detailed information about issuers in the future.
Despite the fact that Goldman Sachs had access to a great deal of adverse financial information about Penn Central, the SEC said that it “did not communicate this information to its commercial paper customers, nor did it undertake a thorough investigation of the company…”
For Goldman Sachs the episode was nothing short of a disaster. The firm’s good name, nurtured for so many decades by Sidney Weinberg, was once again tarnished, its credibility damaged, its finances precarious. . .
Clients lined up to sue the firm, with Goldman Sachs named in at least forty-five lawsuits.
The railroad had defaulted on $87 million worth of commercial paper at the time of the bankruptcy, and the firm faced potential lawsuits for an amount greater than the partners’ capital, which stood at only $53 million at the time.
It was a frightening time for the forty-five partners, because their personal liability was unlimited.
Although the firm did not admit liability, it eventually settled with many clients, buying their paper back for between twenty and twenty-five cents on the dollar and granting them some participation in any recovery of funds that might be made from Penn Central.
In October 1974, Welch’s Foods and two other plaintiffs sued the firm, and the case went to trial.
A federal jury found Goldman Sachs guilty of defrauding its customers by selling them Penn Central commercial paper in 1969 and 1970, when the railroad was going broke.
The firm was forced to buy back the commercial paper from the plaintiffs at its face value plus interest….
~ ~ ~
In October 1976, Levy suffered a stroke and collapsed while chairing a board meeting … Leaderless, the firm was left in turmoil….
~ ~ ~
The author writes that the two leading contenders for Levy’s leadership seat were John Whitehead and Sidney Weinberg’s son, John L. Weinberg, and that eventually they were elected to co-chair the firm. Sidney, according to the author, had given his son advice about the business, and relates a story about him sending John to see Floyd Odlum, the man to whom he had sold the Goldman Sachs Trading Corporation:
While the other meetings John attended may have produced some sound advice, Odlum’s words still ring in John’s ears some fifty years later … Odlum offered the younger Weinberg these prophetic words of advice: “I am going to do something for you. I will give you this book, but you have to promise me that for the whole rest of your career, you will keep a copy of this book and refer to it….”
The book was Popular Delusions and the Madness of Crowds by Charles McKay, originally published in 1841.
“Watch for the excesses,” Odlum warned.
“No one is going to tell you what they are or when they will arise; each time they will look different.”
Excesses will be taken care of by the marketplace, he told the younger man, but as each generation forgets the lessons of the last, the same mistakes are made again….
~ ~ ~
By the 1970s, Levy’s legacy had passed to consummate trader Robert Rubin…
The 1980s would mirror the 1920s with an eerie deja vu. The market rally, the ensuing crash, the financial scandals, the merciless government investigations — all had been witnessed sixty years earlier….
The takeover wave would bring new and unimagined opportunities, as hostile tenders and “greenmail” provided price aberrations of the kind that arbitrageurs thrive upon.
Working with a $1 billion portfolio of securities, Rubin and his half dozen assistants immersed themselves in the takeover mania of the 1980s.
Robert Freeman was Rubin’s number one assistant, soon becoming a partner in the division.
~ ~ ~
For years the “Chinese Wall” — the veil of secrecy intended to keep confidential information from traveling from one department to another — between banking and arbitrage was paper thin. Bankers all over Wall Street hopped the divide with frightening regularity, consulting with traders about the market’s perception of a deal . . .
The risk arbitrage department at Goldman Sachs acted as in-house consultant to the firm’s merger specialists in a way that was entirely legal. Arbitrageurs provided expert advice in evaluating the complexities of a deal and calculating the potential market reaction…
Consultations between the two departments would continue until 1986, when the trading environment on Wall Street and what was considered acceptable practice changed radically…
On May 12, 1986, Dennis Levine, an investment banker at Drexel Burnham Lambert, was arrested and charged with making $12 million on insider trading. . . . the stories remained on the front pages of newspapers of the nation until the end of the decade.
By then, dozens of individuals had been arrested, their firms humiliated, as billionaires traded in their mansions for jail cells.
~ ~ ~
The SEC investigations that began in 1986 changed the entire climate on Wall Street. Previously accepted and legal practices came under scrutiny as firms tightened their internal controls in response to a more thorough and aggressive SEC. Many of the accepted practices at Goldman Sachs and other firms that allowed arbitrageurs unimpeded access to information — talking with the bankers working on a particular deal, for example — would be closely scrutinized and after 1986 changed dramatically….
No one dreamed of the damage a minor figure at a second-rate firm could do to Goldman Sachs….
Information provided by Levine resulted in the arrest of a group of relatively junior bankers from Shearson Lehman, Lazard Freres, and Goldman Sachs. These young men had made relatively little or nothing from their illegal activities but would pay a huge price.
The Goldman Sachs banker, who pleaded guilty, was very junior and left the firm immediately. Then, in a desperate plea bargain agreement, Levine offered up Ivan Boesky, the best-known arbitrageur of the day.
Boesky had preached greed, financial success, and self-interest as acceptable, even morally laudable goals….
~ ~ ~
On November 14, 1986, Boesky was arrested, pled guilty to charges of insider trading, and paid the then unheard-of fine of $100 million.
He, in turn, implicated Martin Siegal, a well-respected and successful banker and merger expert who recently had moved from solid Kidder Peabody to more daring Drexel. Siegal had accepted suitcases of cash in exchange for tipping Boesky about upcoming takeovers.
Seigel then pointed his finger directly at Robert Freeman, chief of risk arbitrage, head of international equities, and trusted partner of Goldman Sachs.
On the snowy morning of February 12, 1987, special deputy U.S. Marshall Thomas Doonan and two postal inspectors, all armed, walked onto the 29th floor trading room of Goldman Sachs. They quickly located Freeman and asked him to step into his glass-fronted office. There they lowered the blinds and told the shocked Freeman that he was under arrest…
Goldman Sachs and much of the financial world was in shock. This was a partner of the firm with the cleanest reputation on Wall Street….
Freeman was a high-ranking partner who had worked with both Rubin and Stephen Friedman, and Goldman Sachs would not distance itself from him.
Many within the firm have suggested that it was … the culture of the firm, its commitments to sticking by those in trouble, that caused the firm to pursue Freeman’s defense so doggedly.
A more cynical explanation is that in a private partnership, where liability is unlimited, there is a strong incentive to diminish the guilt of any member of the team….
~ ~ ~
For two years the firm’s top management was consumed with Freeman’s defense…. On April 9, 1987, Freeman was indicted on federal charges of conspiracy to violate securities laws.
On Feb 12, 1988 … James Stewart and Daniel Hertzberg, both Pulitzer Prize-winning editors and writers for the Wall Street Journal, wrote an article that would change the course of events. Based on their own investigation, the story alleged a detailed catalogue of misdeeds by Freeman in his relationship with Siegel, all but one of which Freeman would staunchly deny…
It was the final allegation — the one concerning the now famous “bunny” comment — that would be Freeman’s undoing. . . . In October 1985, the leveraged buyout firm of Kohlberg, Kravis, Roberts and Co. (KKR) had offered almost $5 billion, at $45 a share, for Beatrice Corporation, in what was the largest leveraged buyout to date….
Martin Siegel was one of KKR’s investment bankers. . . . The bid was raised to $47 on Oct 29, and Freeman purchased shares of Beatrice for both the firm’s arbitrage account ($66 million) and his personal account ($1.5 million) after details of the increased offer were made public.
On Nov 14, Beatrice and KKR announced an agreement on a price of $50 per share, $43 in cash and $7 in securities. Freeman was so confident that this bid would go through that he invested almost 40 percent of his family’s “at risk” trading accounts in Beatrice…
On Jan 6, KKR began to fear that the deal could not be financed at that lofty price. The next morning, Freeman bought an additional 22,500 shares in Beatrice for his own account. During the day, trading volume was heavy … and the price edged downward, which concerned Freeman. At the end of the day, Goldman Sachs’s position was worth approximately $66 million, or $16 million over the usual limit for friendly takeover situations…
On Jan 7, Goldman Sachs executed a large sale for a well-known arbitrageur named Dick Nye. When Freeman learned of this trade he grew even more concerned. During the course of that afternoon Freeman spoke to Marty Siegel three times and once to Henry Kravis of KKR… Freeman then proceeded to sell all the shares he had purchased that morning.
The following morning, Jan 8, Freeman put orders in the market to sell his entire personal holding and to reduce Goldman Sachs’s position to below the $50 million level. Later that morning, a floor trader known as Bernard “Bunny” Lasker called Freeman to say he had heard that there was a problem with the Beatrice deal. Freeman telephoned Siegel, KKR’s banker.
According to Freeman, “I told Mr. Siegel that I had heard there was a problem with the Beatrice LBO. He asked from whom I had heard that. When I answered Bunny Lasker, Martin Siegel said, ‘Your bunny has a good nose’.”
Early that afternoon, an announcement was made that the deal would be restructured . . . The share price of Beatrice immediately dropped $4, closing the day at $43.25. . . The options sales that followed Freeman’s conversation with Siegel had saved the firm $548,000…
By the summer of 1989, worn down by the lengthy legal process, Freeman was ready to plead guilty to the “bunny” charge….
On April 17, 1990, Freeman was sentenced to one year, with eight months suspended, of which he served one hundred nine days (including time off for good behavior) at Saufley Federal Prison Camp in Florida. He was also fined $1.1 million by the SEC…
After Freeman’s admission of guilt, the government dropped any further investigation and Goldman Sachs sought to put the entire episode behind it…
~ ~ ~
THE CHANGING OF THE GUARD, heralded for so long, finally came to pass on Dec 1, 1990, when Steve Friedman and Robert Rubin were named senior partners and co-chairmen of the management committee….
~ ~ ~
GOLDMAN SACHS entered the 1990s in an extremely strong position relative to its American investment banking competition….
After years of indulging in speculative financing vehicles, there was now a price to pay for the excesses of the decade. For Drexel there would be Chapter 11, scandal rocked E. F. Hutton, and Kidder Peabody would be sold.
First Boston, one of the firm’s major competitors in mergers and acquisitions, would be stretched to the limit by ill-advised bridge loans (short-term unsecured loans, many of which looked good in the 1980s and failed in the early 1990s) and later aided by its wealthy parent, Credit Suisse.
Lehman Brothers, once one of Goldman Sachs’s most formidable investment banking competitors, would be torn apart by political infighting and forced to sell itself to the American Express conglomerate.
The SEC investigation of Solomon Brothers’s activities in the government bond market followed by the departure of its chairman John Gutfreund would weaken this once-insurmountable competitor, allowing Goldman Sachs’s fixed income department to escape from its enormous shadow….
In the 1970s, Gus Levy had sold the firm’s asset management business because he did not want to compete with the firm’s clients….
The notion of not competing with clients, however, would soon become ludicrous as clients began to compete with their investment bankers and the margins on many client businesses collapsed.
Companies like General Electric would initiate their own asset management business, and American International Group (AIG), the insurance giant, would become a major force in derivatives products….
~ ~ ~
GOLDMAN SACHS had been expanding the size of its partnership steadily for decades. There had been fifty partners in 1973; there were seventy-five in 1983 and one hundred fifty by 1993. But as the size of the partnership increased, the profits of the firm had to grow at breakneck speed if existing partners’ income levels were to be maintained….
With his ascendency in 1990, Rubin openly discussed with the partnership the need for an expanding pie….
In addition to the firm’s limited partners (retired partners who choose to leave capital in the firm), Goldman Sachs has taken on three groups of financial partners. Sumitomo’s investments in 1986 entitled the Japanese bank to 12.5 percent of the firm’s annual profits.
Kamehameha Schools/Bishop Estate, the giant Hawaiian education trust, which also made two major cash infusions into the firm, first in 1992 and again in 1994, receives about 11 percent of what the firm makes every year. Finally, a group of insurers has injected $225 million into the capital structure.
Limited partners do not receive a percentage of the profits, but rather receive interest rate payments as compensation for the use of their capital. Payments made to outsider investors, before the partners see a dime, have run between $300 million and $400 million a year….
Goldman Sachs will go down in history as the last major partnership on Wall Street…
~ ~ ~
Quoting one former partner:
“Greed changed the firm, and the view was to take as much
risk as we can, and make it as fast as we can.”
~ ~ ~
“NINETEEN EIGHTY-SIX,” Institutional Investor magazine proclaimed, “was the year they sold Wall Street.” During the five preceding years John Weinberg had watched his major competitors incorporate, merge, or simply cease to exist. . . .
~ ~ ~
GOLDMAN SACHS, TOO, SOLD A BIT OF ITSELF IN 1986.
The roots of the transaction took hold the year before when one morning a man who refused to identify himself telephoned Ann Ericson, John Weinberg’s secretary. Would Mr. Weinberg, he asked, be in the office on a Tuesday, three weeks hence? …
Two weeks later the same unidentified caller contacted Ericson to confirm the date, and this time she indicated that Weinberg would be in the office. When the appointed day arrived two Japanese men, a speaker and his interpreter, appeared in Weinberg’s office.
The man who spoke only Japanese identified himself through his assistant: I am the president of Sumitomo Bank, Koh Komatsu told Weinberg. I came here in disguise to see you.
Komatsu had tried to hide his tracks. From Tokyo he flew to Seattle, Washington. There he changed planes for a flight to Washington, D.C. From Washington, he boarded the shuttle to La Guardia. He felt certain that he had made the journey undetected….
Weinberg was baffled by the visit. He had no way of knowing that Sumitomo Bank had long been interested in gaining a toehold in the U. S. investment banking market and had been looking at Goldman Sachs. Sumitomo, at that time the world’s third largest and Japan’s most profitable bank….
As Weinberg listened to Komatsu’s proposal he was amazed. The valuation given to Goldman Sachs by Sumitomo was far above the firm’s own. Komatsu was offering cash, an equity injection, in return for a share of the profits.
The deal was almost too good to be true. By offering to make a $500 million investment in exchange for 12.5 percent of the firm’s profits, Sumitomo was implicitly valuing Goldman Sachs at $4 billion — four times book value. Morgan Stanley had just floated itself at under three times book value, and other publicly traded investment banks were selling for less.
The deal, it was stipulated, would be conducted in total secrecy, with Goldman Sachs acting as its own investment banker….
~ ~ ~
For more on Stephen Friedman, GO TO > > > The Stephen Friedman Flock
For more on Sumitomo Bank, GO TO > > > Yakuza Doodle Dandies
* * *
The Catbird Chronicles: Goldman Sachs
1929 – Goldman Sachs is named by a U.S. government-appointed investigation as one of the banks which, by looting, market rigging and outrageous manipulation helped precipitate the Wall Street crash of 1929, which directly led to the Great Depression of the 1930s.
1933 – Franklin Roosevelt is sworn in as U.S. President. The Fletcher-Pecora hearings are set up to ferret out the causes of the stock-market crash and the Great Depression. These hearings disclose elements of the Goldman Sachs misadventures and shed light on the danger of a single institution mingling the activities of commercial banks with those of an investment/brokerage company and that of the insurance industry.
1933 – The Banking Act of 1933, more popularly known as the Glass-Steagall Act, is introduced. The Act stipulated that no single institution or bank holding company could engage in both commercial banking and brokerage/investment banking. No commercial banks could own an investment/brokerage company or engage in insurance.
1979 – Goldman Sachs is found guilty of fraud in the Penn Central Railroad failure.
1985 – Sumitomo acquires the Tokyo-based Heiwa Sogo Bank, leading to their ascent to the number one position in Japan’s banking industry — assisted by the then-Finance Minister Takeshita Noboru and the Yamaguchi Gumi, Japan’s most powerful Yakuza syndicate.
1985 – Ichiwa-kai — a Yakuza faction — slaughters Yamaguchi Gumi leader, Masahisa Takenaka, creating a bloody gang war.
1986 – Robert Freeman makes his infamous “insider trading” deals relating to Beatrice Foods — trading for Goldman Sachs as well as his own personal accounts, leaving both in deep do-do.
1986 – Sumitomo acquires 12.5% of Goldman Sachs for $500 million.
1986 – The notorious Arkansas Development Finance Authority (ADFA) borrows $5 million from the Chicago branch of Japan’s Sanwa Bank as a part of a $60 million deal to purchase stock in Coral Reinsurance, a Barbados subsidiary of American International Group (AIG). The deal is brokered by Goldman Sachs, whose head at the time was Robert Rubin. An AIG affiliate had also managed over $1 billion worth of ADFA bonds.
1989 – Robert Freeman pleads guilty to one count of insider trading and is later sentenced to one year in prison (with 8 months suspended), and fined $1.1 million.
1990 – Steve Friedman and Robert Rubin are named senior partners and co-chairmen of the management committee of Goldman Sachs.
1992 – Bishop Estate trustees invest $250 million of the trust’s money in Goldman Sachs.
1993 – Robert Rubin, worth an estimated $100 million at the time, resigns Goldman Sachs to join the Clinton administration. Rubin makes a phone call to Bishop Estate and the estate “insures” Rubin’s stake in Goldman Sachs for $100,000 a year — a “sweetheart deal” for Rubin according to some sources. Kenneth Brody, a Goldman Sachs general partner until 1991, is appointed by Clinton to be chairman of the Export-Import Bank.
1994 – Bishop Estate invests another $250 million of the trust’s money in Goldman Sachs.
1994 – The peso crisis in Mexico comes to a head. Robert Rubin had spearheaded Goldman’s move into Mexico, and the firm had steered billions of dollars to that emerging market. Rubin’s one-year recusal from dealing in matters affecting Goldman Sachs had ended. By helping Mexico make good on its commitment to bondholders, the $20 billion portion of the bailout was viewed by some as a publicly-financed insurance policy for Rubin and Goldman Sachs, along with other large investment houses and banks that were highly exposed in Mexico.
1996 – One time king of copper trading, Yasuo Hamanaka, is arrested on charges of forgery relating to the loss of $2.6 billion by Sumitomo Corp. in a decade of fraudulent copper trading.
1996 – Bishop Estate lends $1 million to Charles M. Harmon, Jr., an investment banker and former general partner at Goldman Sachs. Together with Larry L. Landry, chief investment officer of the MacArthur Foundation, and Brad Heppner, a consultant at Bain & Co. and former director of private investments at the MacArthur Foundation, they form The Crossroads Group to purchase Bigler Investment Management, a Connecticut firm that manages fund-of-fund accounts. Bigler’s clients included: Connecticut State Treasury; Massachusetts’ Pension Reserves Investment Management Board; Rhode Island Employees’ Retirement System; City & Co. of San Francisco Retirement System; and the pension funds of E.I. duPont de Nemours & Co.
1997 – Goldman Sachs brings to market Lucent Technologies, the $3 billion spin-off from AT&T, the largest IPO to date.
1997 – August. Hawaii’s Attorney General, Margery Bronster, begins investigation of allegations of fraud and corruption at Bishop Estate.
1998 – April. According to Spotlight, Sanford Weill, the chairman of Travellers Group, the largest US financial services conglomerate, phoned Treasury Secretary Robert Rubin to ask for an urgent meeting. “Why? Do you want to buy the government?” Rubin quipped. “No,” said Weill, “Just the law.” What Weill wanted was not a new law, but “reform” of an old one: Glass-Steagall.
1998 – Two of Japan’s leading banks, Sumitomo Bank and Bank of Tokyo-Mitsubishi (BTM) are implicated in bribery scandals involving officials at Japan’s powerful Ministry of Finance.
1999 – Goldman Sachs goes public. No mention is made in the IPO documents prepared by PricewaterhouseCoopers of the scandals that are plaguing Bishop Estate and Sumitomo Bank.
1999 – Rubin drafts “reform” legislation effectively cancelling Glass-Steagall and pushes it through the US Congress. This allows Travellers Group and Citibank to unite into the world’s largest financial services conglomerate
1999 – Rubin resigns as Treasury Secretary, and joins Citigroup a few months later.
1999 – Bishop Estate trustees Richard Wong and Henry Peters are indicted for fraud. Trustee Lokelani Lindsey is sued by fellow trustees Oswald Stender and Gerard Jervis, who demand her removal for mismanagement. Gerard Jervis is caught having sex with a female subordinate in the men’s restroom of the Hawaii Prince Hotel. The female employee commits suicide the next day. Jervis attempts suicide the next week. The court removes Lindsey as trustee. All trustees are temporarily removed from office after the IRS gives an ultimatum that Bishop Estate will lose its tax-exempt status unless the trustees are removed. All five trustees permanently resign.
1999 – Ashanti Goldfields, a Goldman Sachs client, goes insolvent – allegedly due to fraudulent manipulations of the gold market.
2000 – Lawsuits continue against Bishop Estate, now renamed Kamehameha Schools. Former trustee, Oswald Stender, brings a lawsuit against the State of Hawaii for failure to act earlier to curtail corruption at the estate.
2000 – March. Goldman Sachs takes public World Online International NV, a Dutch Internet access provider. Goldman did not disclose that the internet firm’s chairwoman had sold much of her stock before the IPO. The shares have fallen 65% from their sale price. Litigation is likely.
2000 – April. Goldman Sachs may be disqualified from arranging Nippon Telegraph & Telephone Corp.’s planned $13 billion share sale because of the soured IPO of World Online International NV. Japan’s Ministry of Finance said it may bar Goldman, the No. 1 underwriter of Asian equities during the first quarter, from managing the sale of 1 million shares held by the Japanese government in NTT, in what is set to be one of the world’s largest stock offerings.
2000 – December. The SEC announces that it is investigating possible wrongdoing involving Initial Public Offerings (IPO’s). Goldman Sachs is named as one of the financial firms being investigated.
2001 – February. Goldman Sachs, and PricewaterhouseCoopers, come under fire again for the Robert Maxwell fraud scandals.
2001 – November. The American Stock Exchange announces a $1 million fine against Spear, Leeds & Kellogg LP, a unit of Goldman Sachs, for violating supervisory rules. It is the ASE’s largest fine ever.
2002 – March. Goldman Sachs has sold its 6.3 percent stake in the troubled ResCare, according to U.S. Securities and Exchange Commission filing. The date of the sale is not disclosed.
2002 – May. Goldman Sachs is sued by EToys for alleged misconduct in handling their IPO.
2002 – June. Japan accuses Goldman Sachs of evading taxes by illegally transferring funds to the Cayman Islands.
2003 – November. A former Goldman Sachs’ economist, John Youngdahl, pleads guilty to insider bond trading that gave the firm an eight-minute edge on the market and nearly $4 million in tainted profits. The inside tip came Oct. 31, 2001, (20 days after 9-11), when the government announced it would end sales of its benchmark 30-year Treasury bond. The news triggered the largest single-day rally in the long-term bond since the stock crash of October 1987.
IS SOME OF THE GOLD IN GOLDMAN SACHS NAZI GOLD?
~ ~ ~
The #1 institutional investor in Goldman Sachs is France’s giant AXA FINANCIAL.
After more than a half-century, it was recently disclosed that a sizable amount of AXA’s great wealth may have come from
NAZI Holocaust victims.
* * *
NOW – IF YOU STILL HAVE ANY STOMACH LEFT
TAKE A LOOK BELOW AT JUST SOME OF THE GIANT
FINANCIAL VULTURES THAT NEST WITH GOLDMAN SACHS!
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/
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American International Group – The international insurance giant.
From The Washington Weekly, Mar. 17, 1997:
THE BARBADOS CONNECTION — CORAL REINSURANCE
The link between the Arkansas Development Finance Authority (ADFA) and AIG goes beyond $5 million. An AIG affiliate has managed over one billion dollars worth of ADFA’s bonds, according to the Arkansas Democrat Gazette. An allegation that ADFA launders money for U.S. intelligence has repeatedly surfaced but without any direct documentary evidence to date . . . .
Apart from ADFA, where does AIG get its money to fund, among other things, lobbying on behalf of the Chinese government? The answer is not clear, though some indications are available. (1) In 1995, AIG became the first company to be licensed to sell insurance in China. (2) AIG is a client of Kissinger & Associates.
It was Henry Kissinger, the former Secretary of State, who advised against harsh sanctions after the Tienanmen Square massacre. . . . (3) AIG has also been the focus of SEC and BCCI investigator, Manhattan DA Robert Morgenthau’s attention . . . to explore its ties to the BCCI. (4) And finally, AIG is headed by Maurice Greenberg, one-time chairman of the NY Federal Reserve Bank, and in 1995 a candidate to head the CIA.
Greenberg is chairman of the US-China Business Council and lobbied hard (and successfully) for the Clinton administration to sever the link between China’s human rights record and renewal of China’s Most-Favored-Nation trade status.~ ~ ~
Whatever AIG is, it appears to be tied into that big, bipartisan, ugly network of intelligence, money laundering, Arkansas, and Communist China.
~ ~ ~
On Feb 10, 2000, American International Group reported that its net income for 1999 increased 18.1% to $5.06 billion. AIG Chairman M.R. Greenberg reported, among other things, that during 1999: “… we opened our new life and general insurance branch office in Shenzhen, China, marking the fourth Chinese metropolitan area where AIG has established wholly-owned, full-service insurance operations.”
“During the fourth quarter, we also entered into an agreement to purchase a 70 percent equity interest in a subsidiary of LIPPO LIFE, Indonesia’s leading life insurance company. The new joint venture, renamed AIG Lippo Life, is the largest life company in Indonesia, marketing life, pension and health products through a multi-channel distribution network. . . .”
~ ~ ~
[A Catbird Musing: Now, where have we heard that name LIPPO before? Oh, yeah, wasn’t that the Indonesian/Chinese bunch connected with the 1996 Clinton-Gore campaign scandals? Hmmmm!]
~ ~ ~
For more on Lippo Life, GO TO > > > The Indonesian Connection
For much more on American International Group, GO TO > > > The Un-American Insurance Group
AXA Financial – One of the world’s largest insurance/financial companies, based in France.
June 2, 2000
INSURERS MUST HONOR
POLICIES PAID TO NAZIS
by Joan Gralla, Reuters News
The World Jewish Congress on Friday said European insurers still have to make good on prewar policies sold to Holocaust survivors— even if the policies were cashed-in by Nazis.
Elan Steinberg, executive director for the advocacy group, said this was one issue he would stress on June 21, when the International Commission on Holocaust-era Insurance Claims meets in London. The WJC is a member of the commission, which is auditing Europe’s insurers to see if they cheated Holocaust families by failing to honor prewar policies.
“It is grotesque to describe a policy paid to a murderer as a paid policy,” Steinberg told Reuters. He explained that it was common practice for the Nazis to set up so-called blocked accounts— accounts held in the name of the recipient that could only be tapped by the Nazis.
“I have actually heard insurance representatives claim that since they paid those policies out they want blocked accounts considered paid claims,” he said. . . .
Germany’s Allianz, France’s AXA, Italy’s General Assicurazioni, and Swiss insurers Wintherthur and Zurich Allied, which participate in the commission, had all agreed to use relatively undemanding standards of proof because of the special nature of Holocaust claims.
In an internal document obtained by Reuters, the Washington, D.C.-based commission has accused the five insurers of wrongly rejecting some claims from Holocaust families by asking for documents that they cannot possibly supply. Few, if any, survivors walked out of concentration camps with insurance documents, bank books or other financial records.
* * *
So, just where did the billions of dollars in Holocaust victims’ money go over the past half-century? Well, only the Third Reich and Robert Rubin may ever really know, but here are some possibilities:
AXA Financial is the 8th largest institutional investor in Columbia/HCA; the 7th largest in Barclays Bank; the 4th largest in Bank of America; the 3rd largest in Citigroup; the 3rd largest in American International Group; the 3rd largest in Merrill Lynch; and last but not least, the
(…drum-roll…)
#1 INVESTOR … in … LORAL SPACE … and … GOLDMAN SACHS ! ! !
~ o ~
Charles M. Harmon, Jr. – Sometime in 1996, Hawaii’s wealthy charitable trust, Bishop Estate, loaned approximately $1 million to Charles Harmon, Jr., an investment banker and former general partner of Goldman, Sachs & Co.
The 08/12/96 issue of Pacific Business News reported that Bishop Estate had “quietly purchased the majority interest of a Connecticut specialized advisory business that manages almost $1 billion in assets. . . . Royal Hawaiian Shopping Center, Inc., a for-profit subsidiary of Bishop Estate, is a co-investor in the purchase of Bigler Investment Management, a Farmington, Conn., firm that manages fund-of-fund accounts. . . .
The purchasing entity, called The Crossroads Group, is expected to take on a much more aggressive money-management outlook. . . . other investors in The Crossroads Group are parties that have had ‘long relationships’ with Royal Hawaiian . . .
Massachusetts equity analyst Steven P. Galante said his own research found Bishop Estate purchased about a 60 percent stake in The Crossroads Group. The management team and others own the remaining interest. . . .
According to Galante . . . principals of The Crossroads Group are: Charles M. Harmon, Jr., an investment banker and former general partner at Goldman, Sachs & Co. in New York; Larry I. Landry, chief investment officer of John D. & Catherine T. MacArthur Foundation in Chicago; and Brad Heppner, a consultant at Bain & Co. in Dallas and former director of private investments at the MacArthur Foundation.
All have prior experience with Bishop Estate. In 1993, the MacArthur Foundation, along with Duke University’s endowment fund, backed the formation of a Boston merchant bank called Orion Capital Partners LP. . . .
Harmon is familiar with Bishop Estate because the Hawaii trust owns 10 percent of Goldman Sachs. . . .
For more, GO TO > > > A Connecticut Yankee in King Kamehameha’s Court
Coral Reinsurance – A suspicious Barbados-based reinsurance company
From: The Strange Clinton – Rubin – Insurance Industry Connection. 6/13/97:
As American Deposit Corp. learned the hard way … strong ties exist between Clinton, Secretary of Treasury Robert Rubin and the insurance industry.
Insurance industry representatives secretly approached the IRS to issue damaging proposed regulations to the Retirement CD and the Treasury Department pressured the IRS to acquiesce. Some say that campaign fund contributions were at the source of this action. . .
But was this the first time Clinton, Rubin and the insurance industry acted together for a dubious project? Apparently not. A strange and convoluted story begins in Arkansas in 1987.
In that year American International Group, Inc., headed by Maurice Greenburg, founded an offshore reinsurance company in Barbados. For several years, AIG denied being affiliated with Coral Reinsurance, as it was named. . . .
While Bill Clinton was governor of Arkansas, he founded the Arkansas Development Finance Authority, a government agency empowered to issue industrial bonds. The ADFA came to the attention of the Arkansas Committee, a group investigating rumors of drug trafficking out of the Mena, Arkansas airport.
Observing the adage, “follow the money,” they were lead to the ADFA. And the ADFA had some strange dealings. . . .
The ADFA borrowed $5 million from the Chicago branch of Sanwa Bank. It then purchased slightly over $5 million in stock of Coral Reinsurance, the Barbados insurance company founded by AIG. Coral then deposited the $5 million, along with $55 million in other investors’ stock purchase funds, in Sanwa Bank. The net result was the bank loaned the money and got it all back in days. . . .
This strange deal was the scheme on Goldman Sachs, headed at the time by Robert Rubin.
Goldman also provided guarantees to ADFA, such a put agreement should ADFA not be permitted to own the stock. (It is against the Arkansas Constitution for the government to own stock in corporations.) . . .
Some reporters draw inferences from several facts: Barbados has lax banking regulations and tight corporate secrecy laws preventing outsiders from learning corporate ownership; and when ADFA was set up, the legislation prohibited the state auditors from examining the agency.
* * *
March 17, 1997
THE BARBADOS CONNECTION:
CORAL REINSURANCE
The Washington Weekly
After Reps. Spencer Bachus (R-Ala) and Henry Bonilla (R-Texas) voted to extend Most-Favored-Nation trade status for China last year, they received an invitation from the China Government to tour major cities in Red China. And who paid for their trip?
Not only the Chinese Government, but also American International Group, with money laundered through the National Committee on United States-China Relations and the Freeman Foundation, reported the newspaper Roll Call last week….
American International Group is headquartered in Barbados and operates Coral Reinsurance.
Where have we heard that name before? Oh yes! In Arkansas. In 1986 the notorious Arkansas Development Finance Authority borrowed $5,000,000 from a Japanese bank’s Chicago branch as part of a $60,000,000 deal to purchase stock in Coral Reinsurance.
The deal was brokered by Goldman Sachs, whose head Robert Rubin is now Treasury Secretary.
On the board of directors of AIG is one Lloyd Bentson, former Treasury Secretary….
For more on the AIG-Chubb Group-Goldman Sachs connection, GO TO > > > Allied World Assurance
Henry M. Paulson, Jr. – From The Nature Conservancy website:
LEADERSHIP
Chairman of the Board of Directors,
The Nature Conservancy
Henry M. Paulson, Jr.
Chairman and Chief Executive Officer, The Goldman Sachs Group Inc.
Henry M. Paulson, Jr. (Hank) is Chairman and Chief Executive Officer of The Goldman Sachs Group Inc. Hank joined Goldman Sachs in 1974 in the Chicago Office, and became a partner in 1982…. In 1998 he was named Co-Senior Partner, and with the Firm’s Public Offering in 1999, became Chairman and CEO.
Prior to joining Goldman Sachs, Hank was a member of the White House Domestic Council, serving as Staff Assistant to the President from 1972 to 1973, and as Staff Assistant to the Assistant Secretary of Defense at the Pentagon from 1970 to 1972. Hank serves on the Boards of Catalyst, the J.L. Kellogg Graduate School of Management at Northwestern University, and is a member of the board of the Dean’s Advisors of the Harvard Business School.
Hank’s other personal interests and philanthropic activities have long centered around education and environmental conservation. He was the founding Chairman of the Advisory Board of the School of Economics and Management of Tsinghua University in Beijing, and continues to serve on the Board, which among other things, implemented an executive education program. He is a past Chairman of the Peregrine Fund, and remains on the Board.
Hank is a member of the Board of Directors of The Nature Conservancy and Co-Chairman of its Asia Pacific Council. In that role he is supporting the establishment of a large national park and conservation project in the Yunnan province of China, in cooperation with the Chinese government….
http://nature.org/pressroom/leadership/art11950.html
For more, GO TO > > > The Peregrine Gallery presents Henry Paulson; Woo vs. Harmon Witness Henry Paulson
Investcorp – A leading global investment group with offices in London, New York and Bahrain. Since 1982, it has completed transactions in North America and Western Europe, with a total acquisition value of approximately $19 billion.
Investcorp and its clients have investments in U.S. companies including Stratus Technologies, The William Carter Company, Jostens, Inc., Werner Holdings, TelePacific Communications and Independent Wireless One.
U.S. investments that have been taken public by Investcorp include Prime Service, Tiffany & Co., Circle K Corporation, Saks Fifth Avenue and CSK Auto Corporation.
In Europe, Investcorp and its clients currently have investments in Avecia (formerly Zeneca Specialties), Gerresheimer Glas, Polestar, Welcome Break, CityReach, and Helly Hansen.
(www.Investcorp.com).
For much more, GO TO > > > APCOA: Nests in the Parking Lot; Investigating Investcorp; The Nests of Osama bin Laden
Loral Space Systems – From Year of the Rat, by Edward Timperlake and William C. Triplett II:
In the early morning hours of February 15, 1996, a Chinese Long March 3B space launch rose a short distance off the launch pad and then fell over onto a local village with an incredible explosion. According to an Israeli engineer who witnessed the disaster, “thousands of corpses were loaded in dozens of trucks and buried in mass graves.”
A COSTIND spokeswoman denied the Israeli’s charge. . . . But an American aerospace official we interviewed at the time confirmed the Israeli’s account….
Loral Space Systems, the builder of the February 15 satellite, had a problem. So did the Chinese launchers, who had such a poor reputation for reliability that they were uninsurable. Without insurance, Loral and the other U.S. firms could not use Chinese rockets to launch their satellites. Something had to be done to make the Chinese rockets more reliable if the satellite makers were going to save a dollar or two on launch fees….
On April 14, 1998, the New York Times ran a major story by investigative reporter, Jeff Gerth — “Grand Jury Probes 2 Firms’ Ties to China Missile Program” — that linked Loral and its partner, Hughes Electronics, to China….
* * *
NOW, IF THIS IS NOT ENOUGH TO RUFFLE YOUR FEATHERS — ARE YOU AWARE OF THE FACT THAT FRANCE’S AXA FINANCIAL COMPANY IS THE #1 INSTITUTIONAL INVESTOR IN LORAL SPACE AND COMMUNICATIONS?
~ ~ ~
AND THAT, AFTER MORE THAT A HALF-CENTURY, IT HAS FINALLY BEEN DISCLOSED THAT AXA FINANCIAL MAY HAVE OBTAINED MUCH OF ITS WEALTH AT THE EXPENSE OF NAZI HOLOCAUST VICTIMS!
~ ~ ~
AND DID YOU KNOW THAT AXA FINANCIAL IS ALSO THE #1 INVESTOR IN GOLDMAN SACHS ?
* * *
For more >>> The Donkey Nests
For more >>> Tenacious Tentacles
For more >>> Could a Traitor Do Any Worse Than Clinton?
For more >>> Dan Burton’s Committee on Government Reform – Pled or Fled List
For more >>> John Chung Tells of Chinese Donations
For more >>> Tripping with Secretary Ron Brown
For more >>> China Working Group
Lucent Technologies – A telecom equipment maker in deep do-do.
February 9, 2001
LUCENT TARGETED BY SEC
CNN.com
Lucent Technologies is cooperating with a Securities and Exchange Commission investigation of possible fraudulent accounting practices during its last fiscal year, the company said Friday.
The SEC probe is focusing on whether Lucent improperly booked $679 million in revenue during its 2000 fiscal year, the Wall Street Journal reported…
Lucent in December adjusted its revenue statement for the fiscal fourth-quarter, deducting the $679 million, after its own investigation….
Shares of Lucent, which have been on a steady downslide since last summer, were down $1.93 at $14.96 . . . Over the past year, Lucent’s shares have underperformed the S&P’s 500 index by about 70 percent….
John Hynie, an SEC spokesman, declined comment on the newspaper’s report….
PricewaterhouseCoopers, which is the company’s auditor, also declined comment….
On top of earnings warnings, Lucent has faced job cuts, profit shortfalls and product development missteps in the past year.
* * *
Press Release, 3/12/97:
Lucent provides equipment for military communications upgrade in Hawaii . . . Lucent Technologies announced today it has sold $16 million in network switching equipment to Wheat International for an upgrade of military communications systems in Hawaii….
Lucent Technologies was formed as a result of AT&T’s restructuring and became a fully independent company, separate from AT&T, on Sept 10, 1996….
* * *
From The Honolulu Advertiser, 2/16/01: Bush May Stop VIP Cruises – The search for survivors and the quest for answers continued yesterday from Oahu to the Pentagon.
It prompted President Bush to suggest that the military review its practice of allowing civilians to ride aboard sophisticated warships like the submarine that sank a Japanese fishing vessel seven days ago….
At the Pentagon, Pietropaoli confirmed earlier reports that retired Adm. Richard Macke of Honolulu had helped arrange for “individuals for the Missouri Battleship Memorial Association” to tour the sub while on its training maneuvers. He said 14 of the 16 guests were involved with the Missouri association.
Yesterday, retired Adm. Robert Kihune, vice chairman and president of the USS Missouri Memorial Association, said he had not seen the guest list and therefore did not know whether any of the association’s more than 3,000 members were involved….
* * *
Wheat International – Profiles: Richard Macke, Senior Vice President – Professional Background: Commander in Chief, U.S. Pacific Command …
* * *Multex Market Guide, 2/9/01: Lucent Technologies, Inc. – 52 Week High: $75.38 … Recent Price: $15.36
#1 Top Institutional Holder: Barclays Global Investors International – Shares held: 96,482,718 … Position Value: $2,948,753,000
Other Top Institutional Holders: Teachers Insurance & Annuity Association; Fidelity Mgmt & Research Co; Deutsche Bank Trust; State Street Global Advisors; Smith Barney; J. P. Morgan; Vanguard Group; Morgan Stanley Dean Witter; Putnam Investment Mgmt (Marsh & McLennan); Invesco Inc; and Goldman Sachs….
Directors and Officers worthy of note:
Paul A. Allaire, a Director of Lucent since 1996. Mr. Allaire is also Chairman (since 1991) and CEO (since May 2000, and 1990-1999) of Xerox Corp.
Carla A. Hills, a Director of Lucent since 1996. Chairman and Chief Executive Officer of Hills & Company (international consultants) since 1993. U.S. Trade Representative (1989-1993). Director of American International Group; Chevron Corp; and Time Warner Inc.
Deborah C. Hopkins, Executive Vice President, Chief Financial Officer from April 21, 2000. Ms. Hopkins joined Lucent after serving as Sr. V.P. and CFO of the Boeing Co. since 1998. She also served as Chairman of Boeing Capital Corporation. Prior to her tenure at Boeing, she served as CFO of General Motors Europe from 1997 to 1998 and as General Auditor from 1995 to 1997. For the Fiscal Year ending 9/30/00, Ms. Hopkins received a salary of $287,083 and a Bonus of $4,650,000, plus other compensation of $228,215, for a total annual compensation of $5,165,298.…
For more, GO TO > > > The Sinking of the Ehime Maru
Robert J. Hurst – Goldman Sachs V.P.
JTS Press Release: 5/23/00
GOLDMAN SACHS VEEP ROBERT J. HURST TO RECEIVE LOUIS MARSHALL AWARD at JTS DINNER JUNE 19
NEW YORK, NY – May 23, 2000–The Jewish Theological Seminary will honor Robert J. Hurst, vice president of the Goldman Sachs Group, Inc., with the distinguished Louis Marshall Award on Monday, June 19, 2000 at 6:30 pm at the Pierre, Fifth Avenue and 61st Street.
Joan and Sanford I. Weill are honorary chairs of the evening and Alan Levine is chair. The event raises funds for students scholarships and other vital programs.
The Louis Marshall Award, established in 1958, honors men and women who demonstrate a concern for social justice and outstanding qualities of ethics and communal service.
It is named for Louis Marshall, the legendary constitutional lawyer who served as chairman of the JTS board of directors for twenty-five years, from 1904 until his death in 1929; and who served as a member of the American Jewish delegation to Versailles in 1919, fighting for the inclusion and rights of racial, religious and linguistic minorities.
Joining Alan Levine of Kronish Leib Weiner & Hellman are dinner co-chairs: Robert Benmosche, Met Life; Leon Black, Apollo Management; James Gordon, Edgewater Private Equity Funds; JTS chairman Gerson Kekst, Kekst and Company; Martin Lipton, Wachtell, Lipton, Rosen and Katz; Nancy and Jeffrey Marcus, Marcus and Partners LP; Richardo Mestres, Sullivan & Cromwell; Jeff Tarr, Junctions Advisors Inc.; Karen and Gary Winnick, Global Crossing; Bernard Goldberg, Diane and Tom Tuft and Barbara and Roy Zuckerberg.
Reservations for the Louis Marshall Award Dinner can be made, beginning at $1000, by calling (212) 678-8805.
Robert J. Hurst is vice chairman of the Goldman Sachs Group, Inc. and a member of its board of directors. He was head of the firm’s investment banking division from 1990 to 1999. A partner since 1980, he became a member of the management committee in 1990.
A graduate of the Wharton School where he received an MBA in 1968, Mr. Hurst was a vice president at Merrill Lynch prior to joining Goldman Sachs in 1974. He is a director of VF Corporation and IDB Holding Corporation; he is a member of the board of overseers at the Wharton School and is a member of the Council on Foreign Relations and the Committee for Economic Development. He is chairman of the board of the Jewish Museum and a trustee and vice president of the Whitney Museum of American Art.
Founded in 1886, the Jewish Theological Seminary is the academic and spiritual center of Conservative Judaism, granting undergraduate, graduate and professional degrees through its five schools and offering enriching programs for the Jewish community in the US, Israel and around the world.
Robert Maxwell – A publisher and media mogul, Robert Maxwell was born 6/10/23 in Slatinske Dooly, Czech Republic.
He fled the Nazi invasion of Czecholovakia in 1939 and settled in Britain, though most of his family was killed in the Holocaust. Maxwell fought in World War II in the British army, then began a career in publishing. He soon owned a controlling share in Pergamon Press, which he built into a successful publishing house specializing in trade journals and technical and scientific books.
Based partly on this success, Maxwell won a seat in Parliament, serving as a Labour MP (1964––70). He diversified his publishing interests through leveraged purchases of the Mirror Newspaper Group, Macmillan (a U.S. publisher), and The New York Daily News.
Financial scandals plagued Maxwell throughout his career and even after his death. In 1969 he was forced to surrender control of Pergamon in a financial scandal that also cost him his political career, and in 1991 he was forced to seek public funds through a stock offering to keep the Mirror Group afloat.
On Nov 5, 1991, Maxwell drowned under mysterious circumstances while boating off the Canary Islands. Upon his death, investigators found that Maxwell had been secretly diverting millions of dollars from two of his companies and from employee pension funds in an effort to keep the corporation solvent.
The effort failed and in 1992, Maxwell’s companies were forced to file for bankruptcy protection in Great Britain and the United States.
* * *
From MediaGuardian.co.uk by Jill Treanor and Charlotte Denny, Monday February 12, 2001:
MAXWELL SCANDAL REIGNITES
DTI report into former MGN owner will
unsettle top City and political figures
The Department of Trade and Industry’s potentially explosive report into the collapse of Robert Maxwell’s business empire will be published by the end of next month, reopening the controversy sparked by the sudden death of the former owner of the Mirror newspaper.
Almost a decade after Mr Maxwell disappeared off his yacht, the inspectors recruited by the DTI to examine his complicated web of companies are finalising their detailed inquiry, which many figures in the City and in politics would probably prefer to keep away from the printing presses.
The inspectors, according to a report this weekend, highlight the iron fist with which Robert Maxwell controlled his business empire, looting money from the Mirror Group Newspaper’s pension fund soon after taking over the paper in 1984. It outlines the role played by the then investment bank Samuel Montagu, which floated MGN on the stock market in 1991, and Coopers & Lybrand, which acted as accountants to the Maxwell empire.
While the inspectors conclude that some of the firms involved could have blown the whistle on Maxwell, they also argue that he was often the only person who really knew what was going on inside his sprawling business empire. The report is said to give details of money channelled from MGN and private Maxwell companies. It is also said to show deals Robert Maxwell conducted by using the assets of the Mirror’s pension funds to trade in shares and channel the profits into his own company….
The investigators are reported to have concluded that companies and executives dealing with Robert Maxwell, who was also investigated by the DTI 30 years ago, should have treated him with caution. He is also said to have courted politicians in a bid to boost his credibility.
Leading investment bank Goldman Sachs is said by the report to have played a crucial part in ensuring that the flotation of one of Maxwell’s other companies was a success. Coopers & Lybrand, now part of PricewaterhouseCoopers, has already been fined by the accountancy profession’s policing body for its role in the Maxwell affair.
Goldman Sachs was unavailable for comment while HSBC, now owner of the former Samuel Montagu, was unable to comment.
PricewaterhouseCoopers also declined to say anything….
* * *
GOVT REPORT ON MAXWELL’S FRAUD
Goldman Sachs to come under fire
LONDON – Investment bank Goldman Sachs is likely to come in for embarrassing criticism when a British government report on the late Robert Maxwell’s business empire is published this week.
The final draft report seen by the Financial Times concludes that Goldman bears a ‘substantial responsibility’ for allowing Mr Maxwell to manipulate the London market via illicit share purchases in Mirror Group Newspapers (MGN).
The inspectors describe how the failings of several financial institutions helped enable Mr Maxwell to commit one of the biggest series of misappropriations of funds in the 20th century, including raiding the pension fund of a public company for his own use.
The report will conclude that while Mr Maxwell bore huge responsibility for what happened, the conduct of several of his City advisers fell well short of good practice.
Government officials said on Wednesday any criticism in the draft would remain in the final report, due to be published yesterday or today.
The draft report concludes that Mr Maxwell made secret purchases of MGN shares in breach of undertakings in the prospectus prepared for the company’s flotation in 1991.
It is believed the purchases were part of an attempt to prop up the price of Mr Maxwell’s shares in MGN, which he had pledged to banks in exchange for loans to his private companies.
The report is believed to describe how the purchases were made through entities that were ostensibly independent of Mr Maxwell.
Goldman was the broker for some businesses in Mr Maxwell’s web of companies, although it was not an adviser on the MGN flotation.
It carried out sizeable share transactions for Mr Maxwell and acted as underwriter on the flotation of other companies.
Goldman has steadfastly denied any complicity in Mr Maxwell’s fraud.
– Financial Times
For more, GO TO > > > Of Daisies & Vampires; What Price Waterhouse?
Robert Rubin – Former co-chairman of Goldman Sachs, former U.S. Treasury Secretary; current co-chairman of Citigroup.
From The Buying of the President by Charles Lewis and the Center for Public Integrity:
With the pressing need to maintain the trust and confidence of Wall Street, a significant force in the new education of Bill Clinton in late 1992 and early 1993 was Robert Rubin, a man worth an estimated $100 million who resigned as co-chairman of Goldman Sachs to join the Clinton administration. Rubin and his wife made a $275,000 contribution from their personal foundation to the New York Host Committee to the Democratic National Convention.
Goldman Sachs helped to fund the Clinton campaign for the presidency, with its officers contributing more than $100,000 in so-called “bundled” money. “Bundled” is the term applied to the aggregate contributions of multiple employees of a single company….
Rubin, Goldman Sachs, and the Clinton crowd go way back.
Rubin has known longtime friend and White House counselor Mack McLarty for a decade, and in the late 1980s, Goldman Sachs helped to underwrite $400 million in bonds for the Arkansas Development Finance Authority (ADFA).
* * *
August 8, 2002
Lawmaker Seeks Inquiry of
Rubin Intervention for Enron
Fox News
WASHINGTON —— A House Republican lawmaker is seeking an investigation into phone calls made on behalf of Enron Corp. to the Bush administration by former Treasury Secretary Robert Rubin.
Rep. Mark Foley, R-Fla., wants the Securities and Exchange Commission to look into the phone call, alleging that Rubin was attempting to tamper with Enron’s credit rating.
“A former Treasury Secretary should not be soliciting financially-beneficial favors from colleagues at an agency that he once led,” Foley wrote in a letter to SEC Chairman Harvey Pitt.
“I would ask that you would investigate all equity trades submitted by Citigroup or its subsidiaries and their clients in the two weeks preceding Mr. Rubin’s call to Mr. Fisher as well as the two weeks following the call,” the letter reads.
In his capacity as head of Citigroup, Rubin allegedly called Treasury Undersecretary of Domestic Finance Peter Fisher last November to see whether Fisher thought it would be a good idea for the Treasury Department to call bond rating agencies to halt an expected reduction in Enron’s credit rating.
Former energy giant Enron declared bankruptcy last December after it revealed that it had been using capital accounts to cover for losses in its operating accounts. Its collapse was the first in a string of corporate scandals that has claimed Tyco International, Global Crossing, WorldCom and others.
Enron’s credit rating and condition was very much on the minds of Citigroup because Enron is a huge client of the bank. Citigroup has millions of dollars of loans with Enron, and such an intervention on behalf of the Treasury to bolster Enron would have benefited both the bank and the energy firm.
The Treasury Department did nothing about the call, but Foley told Fox News that he wants to know whether Rubin or anyone else at Citigroup profited from insider knowledge of Enron’s imminent demise.
“That’s the timing issue that’s critical, people were caught in the exits trying to sell their shares, there was no market. I want to make sure the fat cats, if you will, didn’t prematurely sell their shares knowing of the deteriorating conditions,” Foley said, adding that he is not alleging that Rubin participated in any criminal wrongdoing.
Senate Democrats have called Citigroup officials to testify about the relationship between the bank and the energy giant, but have not called Rubin specifically.
Democrats ask if Rubin is so important, why have Republicans who lead the House not bothered to call him to testify. Republicans say they will leave that open as an option.
Fox News’ Major Garrett contributed to this report.
* * *
From The American Populist Review –
America’s Financial Hoodlums: . . .
On March 4, 1933, Franklin Roosevelt was sworn in as US President. The financial oligarchs (for the time being!) had had their day. The Fletcher-Pecora hearings were set up. These disclosed elements of the Goldman Sachs misadventure and shed light on the danger of a single institution mingling the activities of commercial banks with those of an investment/brokerage company and that of the insurance industry.
The Banking Act of 1933, more popularly known as the Glass-Steagall Act, was introduced, stipulating that no single institution or bank holding company could engage in both commercial banking and brokerage/investment banking. No commercial banks could own an investment/brokerage company or engage in insurance–
The Glass-Steagall Act now brings us up to Robert Rubin, former vice-chairman of Goldman Sachs, later chosen by Clinton as his Treasury Secretary and economic czar. According to the US populist Spotlight, in April 1988, Sanford Weill, the multibillionaire corporate raider and chairman of Travellers Group, the largest financial services conglomerate, phoned Treasury Secretary Rubin, to ask for an urgent meeting.
“Why? Do you want to buy the government?” Rubin quipped.
“No,” said Weill, “just the law.” What Weill wanted was not a new law, but “reform” of an old one: Glass-Steagall.
Spotlight then interjects with remarks from Holt Cogswell, a veteran and well-known New York bond trader: “Rubin has a long and dirty rap sheet. It goes back to the 1980s, to the smash-and-grab days of former junk bond king Mike Milken.” Rubin was then amassing his first $100 million as vice chairman of Goldman Sachs.
When Rubin became entangled in the mammoth Milken scandal– “Milken pleaded guilty to a string of felony frauds. That’s well known. What’s less well known is that so did Robert Freeman, who served as Rubin’s deputy and right hand man at Goldman Sachs. The consensus on Wall Street was that Freeman took the fall for Rubin.”
It was, says Spotlight, not the first time Rubin had bought himself out of trouble. “Rubin was personal banker to Robert Maxwell, the international con man, Israeli agent and thieving media mogul whose corporate empire – energised by embezzlement and excess – was based in Britain.
When Maxwell’s billion-dollar pyramid of fraud and deceit collapsed with his mysterious death at sea in 1991, Britain’s Serious Fraud Squad opened a criminal investigation into Rubin’s links to the financial scandal.
But the inquiry was cut short when Rubin agreed to pay $250 million – all of it Goldman Sachs money – in restitution to a group of elderly British pensioners mercilessly mulcted by Maxwell.
Between 1993 and 1994, Goldman Sachs made fat profits underwriting some $5 billion in Mexican debt issues. When the deal was threatened by the collapse of the Mexican economy, Rubin left his $26 million-a-year job at Goldmans to help straighten out the Mexican mess.
When the US Congress stalled a $40 billion Mexican bailout, Rubin launched an (illegal) $50 billion package falsely represented as the “financial rescue of our troubled southern neighbor.”
In fact, the bailout (grand larceny would be a more appropriate term) was set up entirely to save the profits of Goldman Sachs, Citibank, Chase Manhattan, and their associated Mexican bankers.
On Rubin’s concealed initiative, $20 billion came from the obscure US Exchange Stabilisation Fund, the designated purpose of which was to prop up the US dollar in any currency crisis. It was not a rescue but an outright scam.
Now we return to Sanford Weill’s interest in Glass-Steagall and his desire to kill this old Act. In response, Rubin duly drafted “reform” legislation effectively cancelling Glass-Steagall and pushed it through the US Congress. This was primarily done to allow Travellers Group and Citibank, the leading US commercial money centre, to unite into the world’s largest financial services conglomerate, to be known as Citigroup.
The Glass-Steagall Act had been placed on the books to prohibit just such speculative merging of insurance, banking and stock market activities under a single corporate roof. But, thanks directly to Robert Rubin, insurance companies can now again own banks. Banking institutions can sell insurance and speculate on the stock exchange with their depositors money.
In November, with the merger of Citibank and Travellers now legalised, it was announced that Rubin, who quit his Treasury post last June, was to take over co-chairmanship of the new Citigroup conglomerate. Reward for services rendered?
Said Cogswell: “If an almanac of high-level corruption is ever compiled, I’m sure Rubin’s career will be included as a text book case.”
Still wondering why the US is in such deep and desperate trouble?
* * *
From Dacor.net 5/12/99: Buh-bye, Rubin! . . . The forced resignation of disgraced Clinton Treasury secretary Robert Rubin may have been a result of imminent further exposure of a vast array of corrupt activities, from Treasury’s attempted coercion of U.S. Secret Service agents to lie during their Filegate testimony in 1996, and the agents’ criminal prosecution as a result of that testimony, to today’s New York Times story “CHINA SENT CASH TO U.S. BANK, WITH SUSPICIONS SLOW TO RISE.” . . .
Treasury was looking the other way and suppressing reports by its Comptroller of the Currency (which regulates national banks) unit as the Central Bank of Communist China illegally moved tens of millions of dollars into a California bank for illegal political and intelligence purposes.
However, the final straw that broke Rubin’s back could well have been a brilliant investigative journalism article by USA TODAY’s Tom Lowry on May 3, 1999, “Trust Scandal Haunts Goldman/Sullied Bishop Estate owns 10% of Bank/Highly Paid Trustees Facing Accusations, Charges.”
Mr. Lowry exhaustively details the utterly corrupt activities of Hawaii’s giant Bishop Estate in general, and a highly suspect transaction between the Bishop Estate and the personal financial account of Robert Rubin in particular. Rubin is also a former chairman of Goldman Sachs and whose Treasury department regulates both the Bishop Estate and Goldman Sachs, with full awareness of his massive conflicts involving his personal investments, the Treasury department, the Internal Revenue Service, Goldman Sachs, and the Bishop Estate. . . .
Mr. Lowry wrote: . . . Treasury Secretary Robert Rubin, who was Goldman Sach’s chairman when the firm first approached the estate about an investment, disclosed several years ago that he entered into a business agreement with the estate. He pays the trust more that $100,000 a year, and in return, the estate guarantees that when Rubin leaves government office, the value of his partnership stake in Goldman will not be any less than when he joined the Clinton administration in 1993. . . .
Randall Roth, a University of Hawaii law professor who sparked the state’s review of the estate with a 1997 essay in the Honolulu Star-Bulletin, says the investment just “looks terrible for Goldman Sachs with this monstrosity of a charity with these huge problems.” . . .
After the publication of Mr. Lowry’s USA Today article, I phoned Clinton Treasury department spokesman Howard Schloss, and my call was taken by a spokeswoman. I asked if Mr. Rubin or Treasury had issued any public statement in response to the charges leveled against Rubin by the USA Today article, and I was told no such statement had been made, other than to say that there would be no comment. I pressed the spokeswoman for the actual terms, the written instrument of the highly suspect put warrant contracts between the Bishop Estate and Rubin, and I was told they were not available. . . .
I then began to contact conservative political leaders around the country, and had compiled a list of about 20 leaders of the Congressional majority, conservative media, and conservative investigative entities and foundations. I sent a number of pages of documents on the matter (including the 05/03/99 Lowry USA Today article) . . . to only approximately seven of them, including my making a presentation in person, with documentation, to a powerful conservative member of Congress in Chicago Monday night, May 10.
Two days later, Rubin has resigned. I was only just getting warmed up! . . .
I commented in my 05/05/99 FreeRepublic article that:
“. . . Clinton apologist and treasury secretary Rubin is entangled in a tortured web of conflicts of interest among his secretary of the treasury office, his giant financial transaction with the Bishop Estate, his huge investment in Goldman Sachs, and his oversight of the IRS, including its supervision of the Bishop Estate. Both Chairman Jim Leach of the U.S. House Banking Committee and Chairman Phil Gramm of the U.S. Senate Banking Committee should open investigations and hold hearings on the matter. Their Committees should subpoena Rubin and compel him to testify about his personal dealings retarding the Bishop Estate, his involvement with Goldman Sachs’ transactions with Bishop, and his supervision of the Internal Revenue Service’s handling of its Bishop Estate tax status investigation.”…
~ ~ ~
June 12, 1995: Labor Secretary Robert Reich and some congressional Democrats, reacting to Republican demands for welfare and Medicare reform, call for more scrutiny of “corporate welfare.” Their sincerity will be tested in the next few weeks with a classic case of corporate shenanigans – if not out-and-out malfeasance – in the business world.
Ironically, it involves the largest charity in the country and a growing scandal that could involve Treasury Secretary Robert Rubin and cost the Democratic Party its 50-year hold on the 50th state, Hawaii….
~ ~ ~
Rubin already is besieged by lawmakers who want to know more about his role in the Mexico bailout, a $20 billion deal that royally benefitted his former investment bank, Goldman, Sachs & Co. Rubin was a principal partner at the time Goldman, Sachs invested in Mexico, underwriting billions of dollars worth of bonds and other financial instruments. Of the $5.2 billion already expended to bolster the Mexican economy, a reputed $4 billion was used to pay New York-based firms for their losses….
Recently, however, another intriguing facet of the Mexico deal surfaced. Upon joining the Clinton administration, Rubin sought to protect both his investments and his ethics by establishing a blind trust with Hawaii’s Bishop Estate, an asset-rich charitable organization. Under the agreement, Rubin pays the Bishop Estate an estimated several hundred thousand dollars, whereupon the Estate promises to cover any losses to Rubin’s multimillion-dollar interest in Goldman, Sachs. While Rubin was co-chairman of Goldman Sachs, the Bishop Estate invested $250 million in Goldman, Sachs, about half of its total investment in the firm….
The Honolulu Advertiser values the Bishop Estate assets at a whopping $10 billion, 337,000 acres of land in Hawaii, the premier property under the Royal Hawaiian and Sheraton hotels in Waikiki, and part of the Robert Trent Jones Golf Club outside Washington, where President Clinton plays. The Bishop Estate, the wealthiest charitable organization in the country, enjoys close connections to the Democratic power elite in Hawaii and long has been a source of public controversy. Estate trustees are appointed by the Democratic-controlled state Supreme Court and are paid as much as $925,000 a year in commissions, testing an IRS prohibition against excessive personal benefit for nonprofit executives….
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While the estate was set up for the sole benefit of Hawaiian schoolchildren and now enjoys an endowment larger than Harvard and Yale’s combined, it often is faulted for educating only 3,000 full-time students. According to the April 25 Wall Street Journal, only one-third of the Estate’s $244 million fiscal 1993 earnings went toward education, while the trust, thanks to its Democratic friends in Congress, has drawn $30 million in federal subsidies for native Hawaiians since 1987….
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The Honolulu Advertiser reported that four Estate trustees made personal investments of $4 million in a Houston-based energy project (McKenzie Methane) in which the Estate had invested some $85 million, despite having told state-appointed trust overseers that they had not undertaken any transactions with family member, business associates or employees of the Estate . . .
Rep. Spencer Bachus, an Alabama Republican and chairman of the House Banking subcommittee on General Oversight and Investigations, has said that if necessary, he would subpoena Rubin about his ties to the Bishop Estate and Goldman, Sachs. Fueling congressional suspicion is the estate’s withholding of a financial statement on the specious claim that its dissemination could lead to “competitive disadvantage and loss to the estate.”
The statement in question covers July 1, 1992 to June 30, 1993, the same period during which the estate was investing hundreds of millions in Goldman, Sachs.
The estate, by law, must disclose its financial records annually with the state Probate Court. Why should a tax-exempt charity arrogantly refuse to divulge information to the public, information that is critical to the state’s certification that the estate is being run properly as a charitable trust? . . .
At the very least, the House Banking Committee should compel the release of the requisite financial records of America’s richest nonprofit and examine the propriety of the Treasury Secretary’s insurance deal with the estate and his involvement in protecting Goldman, Sachs against heavy losses in Mexico….
Stephen Friedman – a senior principal of Marsh & McLennan Capital, Inc..
In 1994, Mr. Friedman retired as chairman of Goldman, Sachs & Co. He was co-chairman or sole chairman from 1990-1994, and from 1987-1990 he served as co-chief operating officer. He joined Goldman, Sachs in 1966 having previously held a position as a law clerk to a federal district court judge and as an attorney in New York City (1963-1966).
Mr. Friedman holds a B.A. from Cornell University (1959) and an LL.B. (Law Review) from Columbia Law School (1962). He is a Trustee of Columbia University (Chairman, Board of Trustees); Chairman of the Executive Committee of The Brookings Institution; Trustee of Memorial Sloan-Kettering Cancer Center and member of the Executive Committee.
He serves as a director of: Fannie Mae, Wal-Mart Stores, Inc., the National Bureau of Economic Research and the Concord Coalition.
Mr. Friedman is also a member of the President’s Foreign Intelligence Advisory Board and a director of In-Q-Tel, Inc.
He is a former member of the Aspin/Brown Commission on the Roles and Capabilities of the U.S. Intelligence Community and the Jeremiah Panel on the National Reconnaissance Office.
* * *
STATEMENT BY WARREN B. RUDMAN,
CHAIRMAN OF THE PRESIDENT’S
FOREIGN INTELLIGENCE ADVISORY BOARD (PFIAB)
In response to the President’s request for the PFIAB to undertake a review of the security and counterintelligence threat to the Department of Energy’s weapons labs, I am pleased to announce that I have asked PFIAB Members Ms. Ann Caracristi and Dr. Sidney Drell to join me on a special panel of the Board to conduct this inquiry. In addition, the President (Clinton) recently has announced his intent to appoint Mr. Stephen Friedman to the PFIAB, and I intend to ask Mr. Friedman to become a panel member immediately upon his appointment.
Ms. Caracristi, as esteemed intelligence veteran, was Deputy Director of the National Security Agency (NSA) from 1980 to 1982. . . . She currently serves on the Board of Visitors of the Joint Military Intelligence College ans as a Consultant to the NSA Scientific Board. Ms. Caracristi also sits on the Intelligence Oversight Board, a standing committee of the PFIAB that advised the President on the legality of US foreign intelligence activities.
Dr. Drell, a world-renowned physicist and arms control specialist, is Professor Emeritus of Theoretical Physics at the Stanford University Linear Accelerator Center and a Senior Fellow at the Hoover Institute, Stanford University. . .
Mr. Friedman, a highly-respected and successful businessman, was for years a General Partner of Goldman, Sachs & Co., and retired as its Chairman in 1994. He is Chairman of the Board of Trustees of Columbia University, Chairman of the Executive Committee of the Brookings Institution, and a member of the Executive Committee of the Memorial Sloan-Kettering Cancer Center. Mr. Friedman served on the Commission of the Roles and Capabilities of the US Intelligence Community and on the Jeremiah Panel, which reviewed the National Reconnaissance Office. He currently is a Senior Principal of Marsh & McLennan Capital, Inc. . . .
For more on the ‘highly-respected’ Mr. Friedman, GO TO > > > The Stephen Friedman Flock
Sumitomo Bank – This Japanese financial giant pumped around $500 million into Goldman Sachs in 1986. After Goldman’s IPO in 1999, Sumitomo held about a 6% interest in Goldman. In Hawaii, Sumitomo formerly owned the majority interest in Central Pacific Bank.
* * *
From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin:
INSIDER STOCK SWINDLE FOR
“THE CAUSE”
I’d like to interject at this point the infamous case of the Peruvian Gold Certificate Scam, engineered in 1988 by George Bush, Sr.
George, himself, was involved, and so was his counsel C. Boyden Gray. Helping in this fraud was George’s personal friend and very loyal Republican scamskateer, then Nevada Secretary of State, Frankie Sue DelPapa….
This is the famous case of that Peruvian gold certificate which was one of the unusual gold certificates issued by the Trans-Continental Agreement between the United States and certain South American countries in 1875, wherein the United States agreed to support certain South American countries which were then in some financial difficulty, including Peru.
The United States Treasury issued a limited number of high-value gold certificates based on its own deposits. Simply put, these were then hypothecated by South American central banks, which could then be used to borrow bullion against the U.S. Treasury.
Almost all of these certificates were redeemed in 1913 and 1914. However, one certificate was left outstanding, which it’s believed was an oversight at the time. These certificates were compounded in perpetuity, that is, they had no limitation.
The interest was payable in gold … And the compounding of said gold payment was accrued at a fixed price of $20 an ounce.
Now what happened, therefore, is that this one remaining certificate consequently became worth a fortune.
Although it had been technically listed as canceled by the United States Treasury after the expiration of the redemption period in 1914, George Bush was able to get a waiver (as he knew he would, given his position) from the U.S. Treasury, indicating that this was still a valid and negotiable instrument….
This certificate, through a long series of transactions, ultimately winds up in the hands of a retired Secret Service agent, Mr. Durham, who at one time … had worked with one of George Bush’s Secret Service security details.
Through some underhandedness, Bush was able to garner control of this instrument through essentially out-and-out fraud committed by Frankie Sue DelPapa regarding a Nevada corporation, which had been formed by Mr. Durham and others to hold this certificate and the rights thereunto, called the Cosmos Investment Corporation.
DelPapa essentially switched all the officers and principals and directors of the Cosmos Corporation into another corporation that had been formed by George Bush and some others known as the Hellenic Investment Holding Group, Limited.
It was absolutely a blatant fraud.
Durham subsequently died. His widow tried to pound the drum on this thing for a long time, but couldn’t get anywhere with it. Simply put, the mainstream media … considered it too old and too conspiratorial to touch.
But I have a lot of the documents….
It’s interesting to note the route that this certificate takes once it gets in the hands of George Bush. It winds up getting hypothecated at both Sumitomo and Daiwa Banks in Tokyo. It is re-hypothecated at Jarlska Bank of Copenhagen. Re-hypothecated again through the Greek National Bank.
Papandreou was still in power. Papandreou and George Bush Sr had been involved in many marginal business transactions involving the surreptitious hypothecation of gold bullion at the Bank of Greece through the Union Bank of Switzerland and Credit Lyonnais in France and Bank Paribas….
You can see through the continuation of this deal a pattern where new fraud has to be committed to pay back old fraud and so on.
I think what frightened the mainstream media is the incredible sums of money that are involved. And ultimately, a Peruvian gold certificate turned out to be the seed or germination of a series of transactions that ultimately forced Daiwa and Sumitomo to create fictitious trading losses in order to cover losses incurred in a series of fraudulently obtained, politically related loans…
It was only in recent years, in 1995, that I was again retained by representatives of the original owner, or his widow, should I say, in an effort to negotiate with Bush…
So I talked to an attorney who had previously represented me in Miami, Neil Lewis, who is very closely aligned with Republican interests in Miami and is a personal friend of both Neil and Jeb Bush….
After a few days, Neil Lewis got back to me and said that the Bushes feel that there are so many layers of protection between them and this transaction that nobody will ever be able to uncover it and they simply did not wish to deal.
So, that ended that….
* * *
Organized Crime Registry: Who Got Yakuza Into Our Banking System? Business Week carried a feature story in its Jan 29, 1996 edition with the headline, “The Yakuza and the Banks” . . . The main focus of the parliamentary debate begun recently is whether tax money should be used to bail out the special housing loan companies, “jusen,” whose management collapsed under the weight of trillions of yen in bad loans. . . .
The seven failed jusen companies have a combined total of claims amounting to 13.2 trillion yen, at least half of which was lent to the yakuza (organized crime)-related companies at the peak of the economic bubble. . .
* * *
From www.aci.net/kalliste: How to Launder Money in the Copper Market: (Yasuo) Hamamada would often enter the copper market with large-size trades, and slam the copper price in this direction or that. The logic of the pattern of trading would often appear mystifying, creating paranoid uncertainty as to Sumitomo’s intentions in the minds of its competitors and counterparties.
But it all makes a little more sense when you realize Hamanaka was not only meeting the considerable copper-trading needs of the Sumitomo empire, but also conducting a major money-laundering operation for funds arising from the Southeast Asian heroin trade.
The press has lumped this affair into the convenient category of that of one more rogue trader operating without proper management supervision. This in itself is nonsense.
First of all, the operating assumption of both the press and the investigating authorities should be that upper management knew very well what was going on, as is usually the case.
Second of all, the “trading losses” are related to missing heroin money.
Sumitomo is not about to announce that “a large sum of heroin money entrusted to our care is missing.”…
So the loyal Hamanaka takes the fall for “copper-trading losses.”
* * *
From Rueter’s News Service, 02/16/98:
Sumitomo Bank and Bank of Toyko-Mitsubishi (BTM)
Linked to Bribery Scandal
Two of Japan’s leading banks, Sumitomo and Bank of Tokyo-Mitsubishi, were implicated on Monday in a widening bribery scandal involving officials at Japan’s powerful Ministry of Finance (MoF). . .
Tokyo prosecutors on Monday issued a fresh arrest warrant against two MoF inspectors . . . on suspicion of receiving bribes from Sumitomo Bank and Bank of Tokyo-Mitsubishi, as well as Sanwa Bank, in exchange for confidential information…. Many of them were encroached by Kanto-based yakuza, incurring massive losses in failed stock and land speculation….
The article by Insider said: “MOF at the end of 1984, through the underground connections of former officials, requested the then leader of Yamahuchi Gumi, the late Takenaka Masahisa, to come to Tokyo and help kick out Kanto-based yakuza from Sogo banks.”…
At the time, Yamaguchi Gumi was in the midst of an internal breakup, and Takenaka needed money. He immediately complied with the request and went to Tokyo to start talks with the Kanto-based yakuza. But immediately after, he was killed by an unknown assassin.
However, taking advantage of this situation, Yamaguchi Gumi not only expanded its business territory but also started interacting openly with the bank’s top management with the consent of the Ministry.
For instance, Sumitomo Bank, originally headquartered in Osaka and weak in Tokyo, acquired a Tokyo-based Sogo bank, Heiwa Sogo Bank, from 1985 to 86. Through the acquisition, the Sumitomo offices in Tokyo increased, leading to their ascent to the number one position in the nation’s banking industry.
That was made possible by the Ministry and then Finance Minister Takeshita Noboru at the front, and Yamaguchi Gumi in the back….
See also: Yakuza
Triads – From The Laundrymen: . . . The Triads are the most notorious of the Chinese mobs — a blood brotherhood that materialized in the seventeenth century to overthrow the Ching Dynasty. When their rebellion ultimately failed two centuries later, many of their members fled to Hong Kong, Indochina, and North America.
Independent units linked by an oath of fraternity, the Triads do everything from drug trafficking and money laundering to business extortion and burglary.
They are the primary force within Southeast Asia’s Golden Triangle. Spanning the mountains and valleys that cut across the borders of Laos, Thailand, and Myanmar — which used to be called Burma — the region produces anywhere from 60 to 120 tons of heroin annually. A kilo of this Triad-distributed drug wholesales between $400,000 and $600,000. Cut to 6-percent purity, the street value can easily reach $10 million.
Triad is unquestionably the most powerful force in the world’s heroin trade….
~ ~ ~
Police in Hong Kong have identified 57 active Triad organizations, which have offshoots in Taiwan, the Philippines, Vietnam, and Australia.
But their real future lies in North America. . . .
Today, Chinese gangs are securely established in San Francisco, Los Angeles, New York, Toronto, and Vancouver. They have long had a presence in London, and are now beginning to show up in places where they have no traditional ties, such as Germany.
Police there recently raided ninety Chinese restaurants, questioned 653 people, arrested 102 of them, and seized 24 false passports, more than $1 million in cash, large amounts of cocaine and heroin, and several weapons.
They also uncovered evidence of what the police described as “Mafia-type” money laundering schemes. . . .
* * *
From Year of the Rat: . . . Our Tale of Three Cities — Macao, Los Angeles, and Phnom Penh (the capital of Cambodia) — explains how ethnic Chinese criminal gangs, called Triads, created their own money conduit to the Clinton White House, for their own benefit and for their business partners in Beijing. They visited the White House many times, made illegal contributions to the Clinton-Gore reelection campaign, and were photographed at the place of honor beside the president and vice president of the United States. . . .
The Chinese Triads and the Sicilian Mafia share certain characteristics— they’re in the same lines of business. A 1998 U.S. Justice Dept report listed Triad business as “narcotics trafficking, money laundering, contract murders, illegal gambling, loansharking, extortion, interstate prostitution rings and alien smuggling.” . . .
As the Canadians point out, since a major goal of the Triads is to infiltrate legitimate business, their own appearance of legitimacy is important:
“Triad members work very hard at ingratiating themselves with police, government officials and politicians. The easiest way for them is by making substantial donations to charitable organizations, joining service clubs, donating funds to universities, sometimes obtaining honorary doctorate degrees, or contributing to political parties … Public photographs of Triad figures with politicians is another favorite technique.” . . .
As early as 1982, Triad leaders were trying to buy access to the Democratic Party. Before he fled the country for South America, New York City Triad leader Eddie Chan was bragging about his political contributions to former Congresswoman Geraldine Ferraro’s (D-NY) reelection campaign. The amount of money he actually contributed wasn’t really that high— $1,000 according to the New York Times— but it’s useful to show intent.
A decade later— the Clinton-Gore era— the money would really begin to roll in….
Turnstone Systems, Inc. – An illustrative story of the rise and fall of IPO stocks; starring Goldman Sachs, Credit Suisse First Boston, Putnam, Kamehameha Schools, Eric Yeaman, and a cast of thousands of investors filing class action suits:
Go to: The Turnstone Birds
Winstar Communications, Inc. – A broadband equipment giant (before the fall.
Winstar Falls From The Sky
By Jim Wagner and Ryan Naraine, www.internews.com
Officials at Winstar Communications, Inc. announced early this week that the broadband backbone-building company could aggregate interest payment on $75 million in senior debt securities, which were due at the close of business Monday….
With mounting debt and creditors lining up with outstretched hands, Winstar Wednesday filed a $10 billion lawsuit against Lucent Technologies for allegedly violating a vendor financing agreement….
Winstar charged that Lucent, which faces regulatory scrutiny over its accounting practices regarding equipments sales, has some questions to answer regarding its vendor-financing transactions….
www.isp-planet.com/news/2001/winstar_falls.html
* * *
For more on the Goldman Sachs connection, and the bankruptcy judge in this case, GO TO > > > Woo vs. Harmon – Witness Judge Lloyd King
Yakuza – The Japanese Sopranos.
From tripod.com:
Yakuza Stretch Tentacles Overseas
… Like most growth-oriented enterprises, the yakuza have not confined their illegal — and legal — business activities to Japan. In the late 1960’s the Japanese mob took advantage of the sharp rise in Japanese tourism and began organizing “sex tours” to various countries in Southeast Asia.
The yakuza also began to recruit — or, more probably, to coerce — women from the Philippines, Taiwan, South Korea and other Southeast Asia countries to work as “hostesses” in mob-controlled brothels in Japan. The overseas push proved similarly lucrative for drug trading — primarily of Korean, Taiwanese and other sources of methamphetamine (known as “speed” on U.S. streets).
Gunrunning also evolved into a profitable activity since the sale of guns is controlled so strictly in Japan that the black market price for handguns can be as much as $5,000 to $7,000. Gangsters typically have bought the guns abroad, mostly from criminal elements in China, Taiwan, Hong Kong, the Philippines and the United States, and sold for exorbitant prices on the black market back home….
American law enforcement officials maintain that until 1974 yakuza activities in the U.S. were relatively limited, both in nature and scope. Not surprisingly, given its geographic proximity and brisk tourist trade, Hawaii initially attracted Japanese gangsters. Their focus there was on fleecing their own countrymen on yakuza-organized tours that included patronizing yakuza-run bars, restaurants, brothels and other entertainment.
As the yakuza’s economic power has grown, however, they have focused greater attention on picking other fruits from the U.S. market. In this regard, mobsters found that, partly due to its heavy tourist traffic, the fiftieth state was a prime market for selling Asian-made methamphetamine (usually at a cut-rate price compared to U.S.-made speed) and/or trading these drugs for handguns….
~ ~ ~
FROM ITS HAWAIIAN BEACHHEAD the Japanese mob has moved on to the mainland, stopping first in southern California but continuing its reach up the coast to such cities as San Francisco, Portland, and Seattle. As the yakuza have cultivated ties with other organized crime groups operating in the United States, American law enforcement officials have observed the Japanese mob in gambling centers, such as Las Vegas and Atlantic City, as well as in Newark, New Jersey, New York City and Boston….
While the primary focus of the yakuza’s dealings with other organized crime groups still appears to be the trafficking in drugs and handguns, U.S. officials, aware of the Japanese mob’s expanded activity in the “above-ground” business world in Japan, have become increasingly worried about the extent to which the yakuza have been able to commingle their illicit profits with legitimate Japanese investment in the United States….
* * *
From U.S. News and World Report, 4/13/98, by David Kaplan: Yakuza, Inc. . . . U.S. investors are spending billions of dollars to snap up huge portfolios of bad loans from Japanese banks. What the local banks aren’t telling their new customers is that behind much of their economic woes stand Japan’s wily crime syndicates.
In the late 1980s, the yakuza became major players in the nation’s wildly speculative real-estate market. Japanese crime experts now believe that as much as 40 percent of the banking industry’s bad loans are tied to organized crime, representing a whopping $235 billion . . .
The gangs have played such havoc with efforts to clean up the banking mess that one former top Tokyo cop calls his nation’s economic crisis a “yakuza recession.”…
At the front lines of this crisis, suddenly, are American investors, among them a Who’s Who of equity funds, investment banks, and real estate trusts..
Over the next few years, U.S. financial companies hope to spend more than $20 billion on the bad-loan portfolios, according to real-estate specialists at Ernst & Young.
Goldman Sachs, Merrill Lynch, Morgan Stanley, and others are betting that their experience in liquidating property will pay off big in Japan. The firms are paying as little as 10 cents on the dollar for Japanese properties that range from downtown high-rises to abandoned golf-course developments….
But the risks for U.S. investors are substantial. Yakuza experts warn that Western capital has never before collided with Japanese organized crime in such a major way….
For more, GO TO > > > Yakuza Doodle Dandies
# # #
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