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maynard

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Gangster Bankers: Too Big to Jail
How HSBC hooked up with drug traffickers and terrorists. And got away with it
by: Matt Taibbi
banks too big to jail
Illustration by Victor Juhasz

The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice. Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks' profit – but they didn't extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.

People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often cease to amaze. But the HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­ with Wall Street. In this case, the bank literally got away with murder – well, aiding and abetting it, anyway.

Daily Beast: HSBC Report Should Result in Prosecutions, Not Just Fines, Say Critics

For at least half a decade, the storied British colonial banking power helped to wash hundreds of millions of dollars for drug mobs, including Mexico's Sinaloa drug cartel, suspected in tens of thousands of murders just in the past 10 years – people so totally evil, jokes former New York Attorney General Eliot Spitzer, that "they make the guys on Wall Street look good." The bank also moved money for organizations linked to Al Qaeda and Hezbollah, and for Russian gangsters; helped countries like Iran, the Sudan and North Korea evade sanctions; and, in between helping murderers and terrorists and rogue states, aided countless common tax cheats in hiding their cash.

"They violated every goddamn law in the book," says Jack Blum, an attorney and former Senate investigator who headed a major bribery investigation against Lockheed in the 1970s that led to the passage of the Foreign Corrupt Practices Act. "They took every imaginable form of illegal and illicit business."

That nobody from the bank went to jail or paid a dollar in individual fines is nothing new in this era of financial crisis. What is different about this settlement is that the Justice Department, for the first time, admitted why it decided to go soft on this particular kind of criminal. It was worried that anything more than a wrist slap for HSBC might undermine the world economy. "Had the U.S. authorities decided to press criminal charges," said Assistant Attorney General Lanny Breuer at a press conference to announce the settlement, "HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized."

It was the dawn of a new era. In the years just after 9/11, even being breathed on by a suspected terrorist could land you in extralegal detention for the rest of your life. But now, when you're Too Big to Jail, you can cop to laundering terrorist cash and violating the Trading With the Enemy Act, and not only will you not be prosecuted for it, but the government will go out of its way to make sure you won't lose your license. Some on the Hill put it to me this way: OK, fine, no jail time, but they can't even pull their charter? Are you kidding?

But the Justice Department wasn't finished handing out Christmas goodies. A little over a week later, Breuer was back in front of the press, giving a cushy deal to another huge international firm, the Swiss bank UBS, which had just admitted to a key role in perhaps the biggest antitrust/price-fixing case in history, the so-called LIBOR scandal, a massive interest-rate­rigging conspiracy involving hundreds of trillions ("trillions," with a "t") of dollars in financial products. While two minor players did face charges, Breuer and the Justice Department worried aloud about global stability as they explained why no criminal charges were being filed against the parent company.

"Our goal here," Breuer said, "is not to destroy a major financial institution."

A reporter at the UBS presser pointed out to Breuer that UBS had already been busted in 2009 in a major tax-evasion case, and asked a sensible question. "This is a bank that has broken the law before," the reporter said. "So why not be tougher?"

"I don't know what tougher means," answered the assistant attorney general.

Also known as the Hong Kong and Shanghai Banking Corporation, HSBC has always been associated with drugs. Founded in 1865, HSBC became the major commercial bank in colonial China after the conclusion of the Second Opium War. If you're rusty in your history of Britain's various wars of Imperial Rape, the Second Opium War was the one where Britain and other European powers basically slaughtered lots of Chinese people until they agreed to legalize the dope trade (much like they had done in the First Opium War, which ended in 1842).

A century and a half later, it appears not much has changed. With its strong on-the-ground presence in many of the various ex-colonial territories in Asia and Africa, and its rich history of cross-cultural moral flexibility, HSBC has a very different international footprint than other Too Big to Fail banks like Wells Fargo or Bank of America. While the American banking behemoths mainly gorged themselves on the toxic residential-mortgage trade that caused the 2008 financial bubble, HSBC took a slightly different path, turning itself into the destination bank for domestic and international scoundrels of every possible persuasion.

Three-time losers doing life in California prisons for street felonies might be surprised to learn that the no-jail settlement Lanny Breuer worked out for HSBC was already the bank's third strike. In fact, as a mortifying 334-page report issued by the Senate Permanent Subcommittee on Investigations last summer made plain, HSBC ignored a truly awesome quantity of official warnings.

In April 2003, with 9/11 still fresh in the minds of American regulators, the Federal Reserve sent HSBC's American subsidiary a cease-and-desist­ letter, ordering it to clean up its act and make a better effort to keep criminals and terrorists from opening accounts at its bank. One of the bank's bigger customers, for instance, was Saudi Arabia's Al Rajhi bank, which had been linked by the CIA and other government agencies to terrorism. According to a document cited in a Senate report, one of the bank's founders, Sulaiman bin Abdul Aziz Al Rajhi, was among 20 early financiers of Al Qaeda, a member of what Osama bin Laden himself apparently called the "Golden Chain." In 2003, the CIA wrote a confidential report about the bank, describing Al Rajhi as a "conduit for extremist finance." In the report, details of which leaked to the public by 2007, the agency noted that Sulaiman Al Rajhi consciously worked to help Islamic "charities" hide their true nature, ordering the bank's board to "explore financial instruments that would allow the bank's charitable contributions to avoid official Saudi scrutiny." (The bank has denied any role in financing extremists.)

In January 2005, while under the cloud of its first double-secret­-probation agreement with the U.S., HSBC decided to partially sever ties with Al Rajhi. Note the word "partially": The decision­ would only apply to Al Rajhi banking and not to its related trading company, a distinction that tickled executives inside the bank. In March 2005, Alan Ketley, a compliance officer for HSBC's American subsidiary, HBUS, gleefully told Paul Plesser, head of his bank's Global Foreign Exchange Department, that it was cool to do business with Al Rajhi Trading. "Looks like you're fine to continue dealing with Al Rajhi," he wrote. "You'd better be making lots of money!"

But this backdoor arrangement with bin Laden's suspected "Golden Chain" banker wasn't direct enough – many HSBC executives wanted the whole shebang restored. In a remarkable e-mail sent in May 2005, Christopher Lok, HSBC's head of global bank notes, asked a colleague if they could maybe go back to fully doing business with Al Rajhi as soon as one of America's primary banking regulators, the Office of the Comptroller of the Currency, lifted the 2003 cease-and-desist order: "After the OCC closeout and that chapter is hopefully finished, could we revisit Al Rajhi again? London compliance has taken a more lenient view."

After being slapped with the order in 2003, HSBC began blowing off its requirements both in letter and in spirit – and on a mass scale, too. Instead of punishing the bank, though, the government's response was to send it more angry letters. Typically, those came in the form of so-called "MRA" (Matters Requiring Attention) letters sent by the OCC. Most of these touched upon the same theme, i.e., HSBC failing to do due diligence on the shady characters who might be depositing money in its accounts or using its branches to wire money. HSBC racked up these "You're Still Screwing Up and We Know It" orders by the dozen, and in just one brief stretch between 2005 and 2006, it received 30 different formal warnings.

Nonetheless, in February 2006 the OCC under George Bush suddenly decided to release HSBC from the 2003 cease-and-desist­ order. In other words, HSBC basically violated its parole 30 times in just more than a year and got off anyway. The bank was, to use the street term, "off paper" – and free to let the Al Rajhis of the world come rushing back.

After HSBC fully restored its relationship with the apparently terrorist-friendly Al Rajhi Bank in Saudi Arabia, it supplied the bank with nearly 1 billion U.S. dollars. When asked by HSBC what it needed all its American cash for, Al Rajhi explained that people in Saudi Arabia need dollars for all sorts of reasons. "During summer time," the bank wrote, "we have a high demand from tourists traveling for their vacations."

The Treasury Department keeps a list compiled by the Office of Foreign Assets Control, or OFAC, and American banks are not supposed to do business with anyone on the OFAC list. But the bank knowingly helped banned individuals elude the sanctions process. One such individual was the powerful Syrian businessman Rami Makhlouf, a close confidant of the Assad family. When Makhlouf appeared on the OFAC list in 2008, HSBC responded not by severing ties with him but by trying to figure out what to do about the accounts the Syrian power broker had in its Geneva and Cayman Islands branches. "We have determined that accounts held in the Caymans are not in the jurisdiction of, and are not housed on any systems in, the United States," wrote one compliance officer. "Therefore, we will not be reporting this match to OFAC."

Translation: We know the guy's on a terrorist list, but his accounts are in a place the Americans can't search, so screw them.

Remember, this was in 2008 – five years after HSBC had first been caught doing this sort of thing. And even four years after that, when being grilled by Michigan Sen. Carl Levin in July 2012, an HSBC executive refused to absolutely say that the bank would inform the government if Makhlouf or another OFAC-listed name popped up in its system – saying only that it would "do everything we can."

The Senate exchange highlighted an extremely frustrating dynamic government investigators have had to face with Too Big to Jail megabanks: The same thing that makes them so attractive to shady customers – their ability to instantaneously move money around the world to places like the Cayman Islands and Switzerland – makes it easy for them to play dumb with regulators by hiding behind secrecy laws.

When it wasn't banking for shady Third World characters, HSBC was training its mental firepower on the problem of finding creative ways to allow it to do business with countries under U.S. sanction, particularly Iran. In one memo from HSBC's Middle East subsidiary, HBME, the bank notes that it could make a lot of money with Iran, provided it dealt with what it termed "difficulties" – you know, those pesky laws.

"It is anticipated that Iran will become a source of increasing income for the group going forward," the memo says, "and if we are to achieve this goal we must adopt a positive stance when encountering difficulties."

The "positive stance" included a technique called "stripping," in which foreign subsidiaries like HSBC Middle East or HSBC Europe would remove references to Iran in wire transactions to and from the United States, often putting themselves in place of the actual client name to avoid triggering OFAC alerts. (In other words, the transaction would have HBME listed on one end, instead of an Iranian client.)

For more than half a decade, a whopping $19 billion in transactions involving Iran went through the American financial system, with the Iranian connection kept hidden in 75 to 90 percent of those transactions. HSBC has been headquartered in England for more than two decades – it's Europe's largest bank, in fact – but it has major subsidiary operations in every corner of the world. What's come out in this investigation is that the chiefs in the parent company often knew about shady transactions when the regional subsidiary did not. In the case of banned Iranian transactions, for instance, there are multiple e-mails from HSBC's compliance head, David Bagley, in which he admits that HSBC's American subsidiary probably has no clue that HSBC Europe has been sending it buttloads of banned Iranian money.

"I am not sure that HBUS are aware of the fact that HBEU are already providing clearing facilities for four Iranian banks," he wrote in 2003. The following year, he made the same observation. "I suspect that HBUS are not aware that [Iranian] payments may be passing through them," he wrote.

What's the upside for a bank like HSBC to do business with banned individuals, crooks and so on? The answer is simple: "If you have clients who are interested in 'specialty services'­ – that's the euphemism for the bad stuff – you can charge 'em whatever you want," says former Senate investigator Blum. "The margin on laundered money for years has been roughly 20 percent."

Those charges might come in many forms, from upfront fees to promises to keep deposits at the bank for certain lengths of time. However you structure it, the possibilities for profit are enormous, provided you're willing to accept money from almost anywhere. HSBC, its roots in the raw battlefield capitalism of the old British colonies and its strong presence in Asia, Africa and the Middle East, had more access to customers needing "specialty services" than perhaps any other bank.

And it worked hard to satisfy those customers. In perhaps the pinnacle innovation in the history of sleazy banking practices, HSBC ran a preposterous offshore operation in Mexico that allowed anyone to walk into any HSBC Mexico branch and open a U.S.-dollar account (HSBC Mexico accounts had to be in pesos) via a so-called "Cayman Islands branch" of HSBC Mexico. The evidence suggests customers barely had to submit a real name and address, much less explain the legitimate origins of their deposits.

If you can imagine a drive-thru heart-transplant clinic or an airline that keeps a fully-stocked minibar in the cockpit of every airplane, you're in the ballpark of grasping the regulatory absurdity of HSBC Mexico's "Cayman Islands branch." The whole thing was a pure shell company, run by Mexicans in Mexican bank branches.

At one point, this figment of the bank's corporate imagination had 50,000 clients, holding a total of $2.1 billion in assets. In 2002, an internal audit found that 41 percent of reviewed accounts had incomplete client information. Six years later, an e-mail from a high-ranking HSBC employee noted that 15 percent of customers didn't even have a file. "How do you locate clients when you have no file?" complained the executive.

It wasn't until it was discovered that these accounts were being used to pay a U.S. company allegedly supplying aircraft to Mexican drug dealers that HSBC took action, and even then it closed only some of the "Cayman Islands branch" accounts. As late as 2012, when HSBC executives were being dragged before the U.S. Senate, the bank still had 20,000 such accounts worth some $670 million – and under oath would only say that the bank was "in the process" of closing them.

Meanwhile, throughout all of this time, U.S. regulators kept examining HSBC. In an absurdist pattern that would continue through the 2000s, OCC examiners would conduct annual reviews, find the same disturbing shit they'd found for years, and then write about the bank's problems as though they were being discovered for the first time. From the 2006 annual OCC review: "During the year, we identified a number of areas lacking consistent, vigilant adherence to BSA/AML policies. . . . Management responded positively and initiated steps to correct weaknesses and improve conformance with bank policy. We will validate corrective action in the next examination cycle."

Translation: These guys are assholes, but they admit it, so it's cool and we won't do anything.

A year later, on July 24th, 2007, OCC had this to say: "During the past year, examiners identified a number of common themes, in that businesses lacked consistent, vigilant adherence to BSA/AML policies. Bank policies are acceptable. . . . Management continues to respond positively and initiated steps to improve conformance with bank policy."

Translation: They're still assholes, but we've alerted them to the problem and everything'll be cool.

By then, HSBC's lax money-laundering controls had infected virtually the entire company. Russians identifying themselves as used-car salesmen were at one point depositing $500,000 a day into HSBC, mainly through a bent traveler's-checks operation in Japan. The company's special banking program for foreign embassies was so completely fucked that it had suspicious-activity­ alerts backed up by the thousands. There is also strong evidence that the bank was allowing clients in Sudan, Cuba, Burma and North Korea to evade sanctions.

When one of the company's compliance chiefs, Carolyn Wind, raised concerns that she didn't have enough staff to monitor suspicious activities at a board meeting in 2007, she was fired. The sheer balls it took for the bank to ignore its compliance executives and continue taking money from so many different shady sources­ while ostensibly it had regulators swarming­ all over its every move is incredible. "You can't make up more egregious money-laundering that permeated an entire institution," says Spitzer.

By the late 2000s, other law enforcement agencies were beginning to catch HSBC's scent. The Department of Homeland Security started investigating HSBC for laundering drug money, while the attorney general's office in West Virginia snooped around HSBC's involvement in a Medicare-fraud case. A federal intra-agency meeting was convened in Washington in September 2009, at which it was determined that HSBC was out of control and needed to be investigated more closely.

The bank itself was then notified that its usual OCC review was being "expanded." More OCC staff was assigned to pore through HSBC's books, and, among other things, they found a backlog of 17,000 alerts of suspicious activity that had not been processed. They also noted that the bank had a similar pileup of subpoenas in money-laundering cases.

Finally it seemed the government was on the verge of becoming genuinely pissed off. In March 2010, after seeing countless ultimatums ignored, they issued one more, giving HSBC three months to clear that goddamned 17,000-alert backlog or else there would be serious consequences. HSBC met that deadline, but months later the OCC again found the bank's money-laundering controls seriously wanting, forcing the government to take, well . . . drastic action, right?

Sort of! In October 2010, the OCC took a deep breath, strapped on its big-boy pants and . . . issued a second cease-and-desist order!

In other words, it was "Don't Do It Again" – again. The punishment for all of that dastardly defiance was to bring the regulatory process right back to the same kind of double-secret-probation­ order they'd tried in 2003.

Not to say that HSBC didn't make changes after the second Don't Do It Again order. It did – it hired some people.

In the summer of 2010, 25-year-old Everett Stern was just out of business school, fighting a mild case of wanderlust and looking for a job but also for adventure. His dream was to be a CIA agent, battling bad guys and snatching up Middle Eastern terrorists. He applied to the agency's clandestine service, had an interview even, but just before graduation, the bespectacled, youthfully exuberant Stern was turned down.

He was crushed, but then he found an online job posting that piqued his interest. HSBC, a major international bank, was looking for people to help with its anti-money-laundering program. "I thought this was exactly what I wanted to do," he says. "It sounded so exciting."

Stern went up to HSBC's offices in New Castle, Delaware, for an interview, and that October, just days after the OCC issued the second Don't Do It Again letter, he started work as part of HSBC's "expanded" anti­money-laundering program.

From the outset, Stern knew there was something weird about his job. "I had to go to the library to take out books on money-laundering," Stern says now, laughing. "That's how bad it was." There were no training courses or seminars on money-laundering­ – what it was, how to detect it. His work mainly consisted of looking up the names of unsavory characters on the Internet and then running them through the bank's internal systems to see if they popped up on any account names anywhere.

Even weirder, nobody seemed to care if anybody was doing any actual work. The Delaware office was mostly empty for a long while, just a giant unpainted room with a few hastily arranged cubicles and only a dozen or so people in it, and nobody really watching any of the workers. Stern and a fellow co-worker­ would routinely finish all their work by 10:30 in the morning, then spend a few hours throwing rocks into a quarry located behind the bank offices. Then they would go back to their cubicles and hang out until 3 p.m. or so, or until it was at least plausible that they'd put in a real workday. "If we asked for any more work," Stern says, "they got angry."

Stern earned a starting salary of $54,900.

Soon enough, though, out of boredom and also maybe a little bit of patriotism, Stern started to sift through some of the backlogged alerts and tried to make sense of them. Almost immediately, he found a series of deeply concerning transactions. There was an exchange company wiring large sums of money to untraceable destinations in the Middle East. A Saudi fruit company was sending millions, Stern found with a simple Internet search, to a high-ranking figure in the Yemeni wing of the Muslim Brotherhood. Stern even learned that HSBC was allowing millions of dollars to be moved from the Karaiba chain of super­markets in Africa to a firm called Tajco, run by the Tajideen brothers, who had been singled out by the Treasury Department as major financiers of Hezbollah.

Every time Stern brought one of these discoveries to his bosses, they rolled their eyes at him, if not worse. When he alerted his boss that a shipping company with ties to Iran was doing a lot of business with the bank, he blew up. "You called me over for this?" the boss snapped.

Soon after, the empty office started to fill up. What HSBC did in the way of hiring new staff was actually pretty clever. It liqui­dated its credit-card-collections unit and moved the bulk of the employees over to the anti-money-laundering department. Again, without really training anyone at all, it put hundreds of loud, gum-chewing, mostly uneducated, occasionally rowdy call-center workers on a new gig, turning them into money-laundering investigators.

Stern says his co-workers not only sucked at their jobs, they didn't even know what their jobs were. "You could walk into that building today," he says, "and ask anyone there what money­laundering is – and I guarantee you, no one will know."

When something fishy pops up in connection with a bank account, the bank generates an alert. An alert can be birthed by almost anything, from someone wiring $9,999 (to keep under the $10K reporting level) to someone wiring large sums in round numbers to someone else opening an account with a phony-sounding name or address.

When an alert gets generated, the bank is supposed to promptly investigate the matter. If the bank doesn't clear the alert, it creates a "Suspicious Activity Report," which is handed over to the Treasury Department to be investigated.

Stern then found himself in the middle of a perverse sort-of anti­compliance mechanism. HSBC had "complied" with the government's Don't Do It Again, Again order by hiring hundreds of bodies whom it turned into an army for whitewashing suspicious transactions. Remember, the complaint against HSBC was not so much that it had specifically allowed terrorist or drug money through, but that it had allowed suspicious accounts to pile up without being checked.

The boss at Stern's Delaware office gave his new team goals: Everyone was to try to clear 72 alerts a week. For those of you keeping score at home, that's nearly two alerts investigated and cleared every hour. According to Stern, almost any kind of information was good enough to clear an alert. "Basically, if a company had a website, you could clear them," he says.

Soon enough, HSBC's compliance executives were circulating cheery e-mails. "Great job by some Delaware professionals in the early part of the week," wrote Stern's boss on June 30th, 2011. The e-mail was subject-lined, "The 60-plus crowd," signifying accolades to employees who had cleared more than 60 suspicious transactions that week.

After trying in vain to convince his bosses to at least let him do his job and look for money-laundering, Stern decided to turn whistle-blower, telling the FBI and other agencies what was going on at the bank. He left work at HSBC in 2011, fully expecting that the government would drop the hammer on his former employers.

By that time, numerous agencies, including the Department of Homeland Security, had crawled all the way up HSBC's backside, among other things examining it as part of a major international narcotics investigation. In one four-year period between 2006 and 2009, an astonishing $200 trillion in wire transfers (including from high-risk countries like Mexico) went through without any monitoring at all. The bank also failed to do due diligence on the purchase of an incredible $9 billion in physical U.S. dollars from Mexico and played a key role in the so-called Black Market Peso Exchange, which allowed drug cartels in both Mexico and Colombia to convert U.S. dollars from drug sales into pesos to be used back home. Drug agents discovered that dealers in Mexico were building special cash boxes to fit the precise dimensions of HSBC teller windows.

Former bailout inspector and federal prosecutor Neil Barofsky, who has helped secure numerous foreign money-laundering indictments, points out that the people HSBC was doing business with, like Colombia's Norte del Valle and Mexico's Sinaloa cartels, were "the worst trafficking organizations imaginable" – groups that don't just commit murder on a mass scale but are known for beheadings, torture videos ("the new thing now," he says) and other atrocities, none of which happens without money launderers. It's for this reason, Barofsky says, that drug prosecutors are not shy about dropping heavy prison sentences on launderers. "Frankly, our view of money-laundering was that it was on par with, and as significant as, the traffickers themselves," he says.

Barofsky was involved in the first extradition of a Colombian national (Pablo Trujillo, a member of the same cartel that HSBC moved money for) on money­laundering charges. "That guy got 10 years," says Barofsky. "HSBC was doing the same thing, only on a much larger scale than my schmuck was doing."

Clearly, HSBC had violated the 2010 Don't Do It Again, Again order. Everett Stern saw it with his own eyes; so did the OCC and the U.S. Senate, whose Permanent Subcommittee on Investigations decided to target the company for a yearlong investigation into global money-laundering. The bank itself, in response to the Senate investigation, acknowledged that it had "sometimes failed to meet the standards that regulators and customers expect." It would later go on to say that it was even "profoundly sorry."

A few days after Thanksgiving 2012, Stern heard that the Justice Department was about to announce a settlement. Since he'd left HSBC the year before,­ he'd had a rough time. Going public with his allegations had left him emotionally and financially devastated. He'd been unable to find a job, and at one point even applied for welfare. But now that the feds were finally about to drop the hammer on HSBC, he figured he'd have the satisfaction of knowing that his sacrifice had been worthwhile.

So he went to New York and sat in a hotel room, waiting for reporters to call for his comments. When he heard the news that the "punishment" Breuer had announced was a deferred prosecution agreement – a Don't Do It Again, Again, Again agreement, if you will – he was flabbergasted.

"I thought, 'All that, for nothing?' " he says. "I couldn't believe it."

The writer Ambrose Bierce once said there's only one thing in the world worse than a clarinet: two clarinets. In the same vein, there's only one thing worse than a totally corrupt bank: many corrupt banks.

If the HSBC deal showed how much dastardly crap the state could tolerate from one bank, Breuer was back a week later to show that the government would go just as easy on banks that team up with other banks to perpetrate even bigger scandals. On December 19th, 2012, he announced that the Justice Department was essentially letting Swiss banking giant UBS off the hook for its part in what is likely the biggest financial scam of all time.

The so-called LIBOR scandal, which is at the heart of the UBS settlement, makes Enron look like a parking violation. Many of the world's biggest banks, including Switzerland's UBS, Britain's Barclays and the Royal Bank of Scotland, got together and secretly conspired to manipulate the London Interbank Offered Rate, or LIBOR, which measures the rate at which banks lend to each other. Many, if not most, interest rates are pegged to LIBOR. The prices of hundreds of trillions of dollars of financial products are tied to LIBOR, everything from commercial loans to credit cards to mortgages to municipal bonds to swaps and currencies.

If you can imagine executives at Ford, GM, Mitsubishi, BMW and Mercedes getting together every morning to fix the prices of aluminum and stainless steel, you have a rough idea of what the LIBOR scandal is like, except that in the car-company analogy, you'd be dealing with absurdly smaller numbers. These are the world's biggest banks getting together every morning to essentially fix the price of money. Low LIBOR rates are an indicator that banks are strong and healthy. These banks were faking the results of their daily physicals. In banking terms, they were juicing.

Two different types of manipulation took place. In 2008, during the heat of the global crash, banks artificially submitted low rates in order to present an image of financial soundness to the markets. But at other times over the course of years, individual traders schemed to move rates up or down in order to profit on individual trades.

There is nobody anywhere growing weed strong enough to help the human mind grasp the enormity of this crime. It's a conspiracy so massive that the lawyers who are suing the banks are having an extremely difficult time figuring out how to calculate the damage.

Here's how it works: Every morning, 16 of the world's largest banks submit numbers to a London­based panel indicating what interest rates they're charging other banks to borrow money and what they themselves are charged. The LIBOR panel then takes those 16 different interest rates, tosses out the four highest and the four lowest, and averages out the remaining eight to create that day's LIBOR rates – the basis for interest rates almost everywhere in the world.

The fact that the LIBOR panel tosses out the four highest and lowest numbers every day is an important detail, because it means that it is difficult to artificially influence the final rate unless multiple banks are conspiring with each other. One bank lying its ass off and reporting that banks are lending money to each other basically for free doesn't move the needle much. To really be sure you're creating an artificially low or high interest rate, you need a bunch of banks on board – and it turns out that they were.

For perhaps as far back as 20 years, banks have been submitting phony numbers, often in concert with other banks. They did it for a variety of reasons, but the big one, typically, is that a bank trader is holding some investment tied to LIBOR – bundles of currencies, municipal bonds, mortgages, whatever – that would earn more money if the interest rate was lower. So what would happen is, some schmuck trader at Bank X would call the LIBOR submitter and offer him cash, booze, a blow job or just a pat on the back to get him to submit a fake number that day.

The scandal first blew up last year when the British megabank Barclays admitted to its part in the fixing of LIBOR rates. British regulators released a cache of disgusting e-mails showing traders from many different banks cheerfully monkeying around with your credit-card bills, your mortgage rates, your tax bill, your IRA account, etc., so that they could make out better on some sordid trade they had on that day. In one case, a trader from an unnamed bank sent an e-mail to a Barclays trader thanking him for helping to fix interest rates and promising a kickass bottle of bubbly for his efforts:

"Dude. I owe you big time! Come over one day after work, and I'm opening a bottle of Bollinger."

UBS was the next bank to confess, and its settlement – $1.5 billion in fines – was much the same, only the e-mails released were, if anything, more disgusting and damning. The British Financial Services Authority – equivalent to our SEC – discovered thousands of requests to fudge rates over a period of years involving dozens of different individuals and multiple banks. In many cases, the misdeeds were committed more or less openly, in writing, with traders and brokers baldly offering bribes in texts and e-mails with an obvious unconcern for punishment that later, sadly, proved justified.

"I will fucking do one humongous deal with you," begged one UBS trader who wanted a broker to fix the rate. "I'll pay, you know, $50,000, $100,000."

British regulators aren't hiding the size of the scandal. The UBS settlement demonstrated, without a doubt, that the LIBOR scandal involved more than just one or two banks, and probably involved hundreds of people at many of the world's largest and most prestigious financial institutions – in other words, a truly epic case of anti-competitive collusion that called into question whether the world's biggest banks are innovating a new, not-entirely capitalist form of high finance. "We have said there are five further institutions under investigation," says Christopher Hamilton of the FSA. "And there is a large number of individuals as well." (At press time, another bank, the Royal Bank of Scotland, also settled for LIBOR-related offenses.)

This dovetailed with what Bob Diamond, the former head of Barclays, told the British Parliament the day after he stepped down last year. "There is an industrywide problem coming out now," he said. Michael Hausfeld, a famed class-action lawyer who is suing the banks over LIBOR on behalf of cities like Baltimore whose investments lost money when interest rates were lowered, says the public still hasn't grasped the importance of comments like Diamond's. "Diamond essentially said, 'This is an industrywide problem,'" Hausfeld says. "But nobody has defined what this is yet."

Hausfeld's point – that Diamond's "industrywide problem" might be more than just a few guys messing with rates; it could be a systemic effort to pervert capitalism itself – underscores the extreme miscalculation of both recent no-prosecution deals.

At HSBC, the bank did more than avert its eyes to a few shady transactions. It repeatedly defied government orders as it made a conscious, years-long effort to completely stop discriminating between illegitimate and legitimate money. And when it somehow talked the U.S. government into crafting a settlement over these offenses with the lunatic aim of preserving the bank's license, it succeeded, finally, in making crime mainstream.

UBS, meanwhile, was a similarly elemental case, in which the offenses­ didn't just violate the letter of the law – they threatened the integrity of the competitive system. If you're going to let hundreds of boozed-up bankers spend every morning sending goofball e-mails to each other, giving each other super­hero nicknames while they rigged the cost of money (spelling-challenged UBS traders dubbed themselves, among other things, "captain caos," the "three muscateers" and "Superman"), you might as well give up on capitalism entirely and just declare the 16 biggest banks in the world the International Bureau of Prices.

Thus, in the space of just a few weeks, regulators in Britain and America teamed up to declare near-total surrender to both crime and monopoly. This was more than a couple of cases of letting rich guys walk. These were major policy decisions that will reverberate for the next generation.

Even worse than the actual settlements was the explanation Breuer offered for them. "In the world today of large institutions, where much of the financial world is based on confidence," he said, "a right resolution is to ensure that counter-parties don't flee an institution, that jobs are not lost, that there's not some world economic event that's disproportionate to the resolution we want."

In other words, Breuer is saying the banks have us by the balls, that the social cost of putting their executives in jail might end up being larger than the cost of letting them get away with, well, anything.

This is bullshit, and exactly the opposite of the truth, but it's what our current government believes. From JonBenet to O.J. to Robert Blake, Americans have long understood that the rich get good lawyers and get off, while the poor suck eggs and do time. But this is something different. This is the government admitting to being afraid to prosecute the very powerful – something it never did even in the heydays of Al Capone or Pablo Escobar, something it didn't do even with Richard Nixon. And when you admit that some people are too important to prosecute, it's just a few short steps to the obvious corollary – that everybody else is unimportant enough to jail.

An arrestable class and an unarrestable class. We always suspected it, now it's admitted. So what do we do?

This story is from the February 28th, 2013 issue of Rolling Stone.





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http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214

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A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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5 Outrageous Revelations from Matt Taibbi's Takedown on HSBC's Drug Money Laundering
In the latest issue of Rolling Stone, Taibbi takes on the most criminal bank yet.
February 15, 2013 |





Matt Taibbi’s most recent Rolling Stonearticle unpacks one of last year’s most shocking bank cases in our era of “Too Big to Jail.” In December, HSBC was punished with a $1.9 billion settlement on drug laundering charges, the largest in American history, yet only five weeks worth of profits for the world’s third largest bank.

U.S. Assistant Attorney Lanny Breuer was uncharacteristically candid when explaining why he refused to pursue criminal charges: “HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized."

People were rightfully outraged when not a single HSBC banker went to jail for a decades’ worth of federal crimes, including money-laundering linked to drug cartels, terrorists and oppressive regimes. Taibbi dove deep into HSBC’s case and history, revealing that the bank’s crimes were even worst than we thought. Here are five shockers from his article:

1. By HSBC’s December settlement, the bank had already received two cease-and-desist letters.

First, in 2003, the Federal Reserve sent a cease-and-desist letter to HSBC demanding the bank take strict precaution not to do business with criminals and terrorists. The letter came after revelations that HSBC had opened accounts for shady characters like Sulaiman bin Abdul Aziz Al Rajhi, one of the “20 early financiers of Al Qaeda.”

Essentially, the Feds caught HSBC engaged in criminal activity and told the bank to stop. But they didn’t. After the first cease-and-desist letter, the bank received dozens of warnings from the OCC, which they continued to ignore.

The second cease-and-desist order came in 2010, after the OCC determined HSBC’s money-laundering controls to be weak. Instead of prosecuting the bank after it had ignored countless warnings, the OCC gave HSBC a second chance.

Taibbi compares the leniency given to HSBC compared to victims of the outrageous “three-strikes” rule: “Three-time losers doing life in California prisons for street felonies might be surprised to learn that the no-jail settlement Lanny Breuer worked out for HSBC was already the bank's third strike.”

2. HSBC covered its tracks when helping oppressive regimes avoid sanctions

Taibbi reports that HSBC used a technique called “stripping” to avoid detection when they did business with countries under U.S. sanction. In particular, HSBC sought to increase its profits by laundering cash for Iran. The author quotes a memo from HSBC’s Middle East subsidiary, HBME:

"It is anticipated that Iran will become a source of increasing income for the group going forward," the memo says, "and if we are to achieve this goal we must adopt a positive stance when encountering difficulties."

To do this, the “bank would remove references to Iran in wire transactions to and from the United States, often putting themselves in place of the actual client name to avoid triggering OFAC alerts,” explains Taibbi.

Taibbi further reports that there is evidence linking HSBC to a slew of other sanctioned countries like, Sudan, Cuba, Burma and North Korea.

3. HSBC ran offshore branches designed specifically for money laundering

In what Taibbi calls the “pinnacle innovation in the history of sleazy banking practices,” HSBC created a so-called “Cayman islands” branch in Mexico that let customers sidestep routine screening when opening accounts. The writer says clients “barely had to submit a real name and address, much less explain the legitimate origins of their deposits.” A 2002 audit revealed that 41 percent of accounts didn’t have complete client information.

When it turned out that American companies used these accounts to sell aircraft to drug cartels, HSBC Mexico finally shutout some of the “Cayman islands branch” clients—but not all of them. Taibbi notes that, “As late as 2012, when HSBC executives were being dragged before the U.S. Senate, the bank still had 20,000 such accounts worth some $670 million.”

4. HSBC did direct business with “the worst trafficking organizations imaginable.”

A part of a major narcotics investigation, federal agents discovered a ton of evidence that implicated HSBC in widespread money laundering. For example, Taibbi reports the bank “played a key role in the so-called Black Market Peso Exchange, which allowed drug cartels in both Mexico and Colombia to convert U.S. dollars from drug sales into pesos to be used back home.” And the dealers HSBC did business with were some of the most violent in the world.

Former federal prosecutor Neil Barofsky told Rolling Stone HSBC worked for Colombia's Norte del Valle and Mexico's Sinaloa cartels — “groups that don't just commit murder on a mass scale but are known for beheadings, torture videos and other atrocities, none of which happens without money launderers.”

Barofsky says he once put a Notre del Valle cartel member behind bars for 10 years on money laundering charges far smaller than what HSBC was involved with.

5. An entire HSBC department was tasked with quickly clearing suspicious behavior

After the OCC sent HSBC its second cease-and-desist letter, the bank hired a bunch of unqualified workers to “investigate” suspicious alerts. In reality, the Delaware-based department was tasked with clearing out skeletons from HSBC’s closet. Taibbi quotes damning emails from HSBC bosses pressuring workers to clear as many alerts as possible, and praising the entire Delaware office when it erased 60 suspicious transactions in a week.

Taibbi interviewed one of these “investigators,” Everett Stern, who described laughably low criteria for clearing an alert.

"Basically, if a company had a website, you could clear them," he told Rolling Stone.

Stern found a slew of suspicious transactions that he was hired to scrub away, including exchanges tied to Hezbollah, Iran and the Muslim Brotherhood. He decided to turn whistleblower and alert the FBI.

After that, Lanny Breur slapped HSBC with a deferred prosecution agreement.

"I thought, 'All that, for nothing?' " Stern told Rolling Stone. "I couldn't believe it."

Steven Hsieh is an editorial assistant at AlterNet and writer based in Brooklyn. Follow him on Twitter @stevenjhsieh.
http://www.alternet.org/news-amp-politics/5-outrageous-revelations-matt-taibbis-takedown-hsbcs-drug-money-laundering?paging=off

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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maynard

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Thursday, Feb 14, 2013 09:00 PM UTC
Taibbi: HSBC got away with murder
The bank laundered money for drug traffickers and terrorist groups and received a slight slap on the wrist
By Natasha Lennard

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Topics: Matt Taibbi, HSBC, drug trafficking, Terrorism, Rolling Stone, Banking, Department of Justice, Wall Street, Business News, News
Taibbi: HSBC got away with murderEnlarge(Credit: AP)

In the latest issue of Rolling Stone, Matt Taibbi takes the Justice Department to task over settling with HSBC late last year in the “largest drug-and-terrorism money-laundering case ever.”

“The HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­with Wall Street,” he writes, “In this case, the bank literally got away with murder – well, aiding and abetting it, anyway.”

The lengthy post details how the bank again and again flouted cease-and-desist orders from the Office of the Comptroller of the Currency to cut ties with Islamist militant groups and drug trafficking operations in Mexico. For years, the OCC did not more than the “take deep breath, strap on its big-boy pants and . . . issue a second cease-and-desist order!”

Taibbi notes why the eventual criminal investigation ended with a fine (of “$1.9 billion, or about five weeks’ profit”) and not any jail time or fines for individuals involved:

What is different about this settlement is that the Justice Department, for the first time, admitted why it decided to go soft on this particular kind of criminal. It was worried that anything more than a wrist slap for HSBC might undermine the world economy. “Had the U.S. authorities decided to press criminal charges,” said Assistant Attorney General Lanny Breuer at a press conference to announce the settlement, “HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized.”

During a Democracy Now! appearance Thursday, Taibbi said, “What HSBC has now admitted to is more or less the worst behavior that any bank can possibly be guilty of.”

Natasha Lennard is an assistant news editor at Salon, covering non-electoral politics, general news and rabble-rousing. Follow her on Twitter @natashalennard, email nlennard@salon.com. More Natasha Lennard.
http://www.salon.com/2013/02/14/taibbi_hsbc_got_away_with_murder/

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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maynard

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Outrageous HSBC Settlement Proves the Drug War is a Joke

POSTED: December 13, 3:25 PM ET
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Lanny Breuer
Assistant US Attorney General Lanny Breuer
Ramin Talaie/Getty Images

If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."

This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows. Tony Montana's henchmen marching dufflebags of cash into the fictional "American City Bank" in Miami was actually more subtle than what the cartels were doing when they washed their cash through one of Britain's most storied financial institutions.

Though this was not stated explicitly, the government's rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a "systemically important institution" in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:

Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

It doesn't take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC's Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn't protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most "reputable" banks may in fact be captured institutions whose senior executives are in the employ of (this can't be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department's response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap. You'll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it's a joke. Some of the penalties involved will literally make you laugh out loud. This is from Breuer's announcement:

As a result of the government's investigation, HSBC has . . . "clawed back" deferred compensation bonuses given to some of its most senior U.S. anti-money laundering and compliance officers, and agreed to partially defer bonus compensation for its most senior officials during the five-year period of the deferred prosecution agreement.

Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you fucking kidding me? That's the punishment? The government's negotiators couldn't hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them "partially" wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department's opening offer – asking executives to restrict their Caribbean vacation time to nine weeks a year?

So you might ask, what's the appropriate financial penalty for a bank in HSBC's position? Exactly how much money should one extract from a firm that has been shamelessly profiting from business with criminals for years and years? Remember, we're talking about a company that has admitted to a smorgasbord of serious banking crimes. If you're the prosecutor, you've got this bank by the balls. So how much money should you take?

How about all of it? How about every last dollar the bank has made since it started its illegal activity? How about you dive into every bank account of every single executive involved in this mess and take every last bonus dollar they've ever earned? Then take their houses, their cars, the paintings they bought at Sotheby's auctions, the clothes in their closets, the loose change in the jars on their kitchen counters, every last freaking thing. Take it all and don't think twice. And then throw them in jail.

Sound harsh? It does, doesn't it? The only problem is, that's exactly what the government does just about every day to ordinary people involved in ordinary drug cases.

It'd be interesting, for instance, to ask the residents of Tenaha, Texas what they think about the HSBC settlement. That's the town where local police routinely pulled over (mostly black) motorists and, whenever they found cash, offered motorists a choice: They could either allow police to seize the money, or face drug and money laundering charges.

Or we could ask Anthony Smelley, the Indiana resident who won $50,000 in a car accident settlement and was carrying about $17K of that in cash in his car when he got pulled over. Cops searched his car and had drug dogs sniff around: The dogs alerted twice. No drugs were found, but police took the money anyway. Even after Smelley produced documentation proving where he got the money from, Putnam County officials tried to keep the money on the grounds that he could have used the cash to buy drugs in the future.

Seriously, that happened. It happens all the time, and even Lanny Breuer's own Justice Deparment gets into the act. In 2010 alone, U.S. Attorneys' offices deposited nearly $1.8 billion into government accounts as a result of forfeiture cases, most of them drug cases. You can see the Justice Department's own statistics right here:
Justice Department’s own statistics        
Justice Department
If you get pulled over in America with cash and the government even thinks it's drug money, that cash is going to be buying your local sheriff or police chief a new Ford Expedition tomorrow afternoon.

And that's just the icing on the cake. The real prize you get for interacting with a law enforcement officer, if you happen to be connected in any way with drugs, is a preposterous, outsized criminal penalty. Right here in New York, one out of every seven cases that ends up in court is a marijuana case.

Just the other day, while Breuer was announcing his slap on the wrist for the world's most prolific drug-launderers, I was in arraignment court in Brooklyn watching how they deal with actual people. A public defender explained the absurdity of drug arrests in this city. New York actually has fairly liberal laws about pot – police aren't supposed to bust you if you possess the drug in private. So how do police work around that to make 50,377 pot-related arrests in a single year, just in this city? Tthat was 2010; the 2009 number was 46,492.)

"What they do is, they stop you on the street and tell you to empty your pockets," the public defender explained. "Then the instant a pipe or a seed is out of the pocket – boom, it's 'public use.' And you get arrested."

People spend nights in jail, or worse. In New York, even if they let you off with a misdemeanor and time served, you have to pay $200 and have your DNA extracted – a process that you have to pay for (it costs 50 bucks). But even beyond that, you won't have search very far for stories of draconian, idiotic sentences for nonviolent drug crimes.

Just ask Cameron Douglas, the son of Michael Douglas, who got five years in jail for simple possession. His jailers kept him in solitary for 23 hours a day for 11 months and denied him visits with family and friends. Although your typical non-violent drug inmate isn't the white child of a celebrity, he's usually a minority user who gets far stiffer sentences than rich white kids would for committing the same crimes – we all remember the crack-versus-coke controversy in which federal and state sentencing guidelines left (predominantly minority) crack users serving sentences up to 100 times harsher than those meted out to the predominantly white users of powdered coke.

The institutional bias in the crack sentencing guidelines was a racist outrage, but this HSBC settlement blows even that away. By eschewing criminal prosecutions of major drug launderers on the grounds (the patently absurd grounds, incidentally) that their prosecution might imperil the world financial system, the government has now formalized the double standard.

They're now saying that if you're not an important cog in the global financial system, you can't get away with anything, not even simple possession. You will be jailed and whatever cash they find on you they'll seize on the spot, and convert into new cruisers or toys for your local SWAT team, which will be deployed to kick in the doors of houses where more such inessential economic cogs as you live. If you don't have a systemically important job, in other words, the government's position is that your assets may be used to finance your own political disenfranchisement.

On the other hand, if you are an important person, and you work for a big international bank, you won't be prosecuted even if you launder nine billion dollars. Even if you actively collude with the people at the very top of the international narcotics trade, your punishment will be far smaller than that of the person at the very bottom of the world drug pyramid. You will be treated with more deference and sympathy than a junkie passing out on a subway car in Manhattan (using two seats of a subway car is a common prosecutable offense in this city). An international drug trafficker is a criminal and usually a murderer; the drug addict walking the street is one of his victims. But thanks to Breuer, we're now in the business, officially, of jailing the victims and enabling the criminals.

This is the disgrace to end all disgraces. It doesn't even make any sense. There is no reason why the Justice Department couldn't have snatched up everybody at HSBC involved with the trafficking, prosecuted them criminally, and worked with banking regulators to make sure that the bank survived the transition to new management. As it is, HSBC has had to replace virtually all of its senior management. The guilty parties were apparently not so important to the stability of the world economy that they all had to be left at their desks.

So there is absolutely no reason they couldn't all face criminal penalties. That they are not being prosecuted is cowardice and pure corruption, nothing else. And by approving this settlement, Breuer removed the government's moral authority to prosecute anyone for any other drug offense. Not that most people didn't already know that the drug war is a joke, but this makes it official.
http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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The Untouchables: How the Obama administration protected Wall Street from prosecutions

A new PBS Frontline report examines a profound failure of justice that should be causing serious social unrest

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Glenn Greenwald
Glenn Greenwald
guardian.co.uk, Wednesday 23 January 2013 12.27 GMT
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Eric Holder Breuer
Eric Holder talks to DOJ Criminal Chief Lanny Breuer in 2010. Photograph: Jason Reed/Reuters

(updated below - Update II)

PBS' Frontline program on Tuesday night broadcast a new one-hour report on one of the greatest and most shameful failings of the Obama administration: the lack of even a single arrest or prosecution of any senior Wall Street banker for the systemic fraud that precipitated the 2008 financial crisis: a crisis from which millions of people around the world are still suffering. What this program particularly demonstrated was that the Obama justice department, in particular the Chief of its Criminal Division, Lanny Breuer, never even tried to hold the high-level criminals accountable.

What Obama justice officials did instead is exactly what they did in the face of high-level Bush era crimes of torture and warrantless eavesdropping: namely, acted to protect the most powerful factions in the society in the face of overwhelming evidence of serious criminality. Indeed, financial elites were not only vested with immunity for their fraud, but thrived as a result of it, even as ordinary Americans continue to suffer the effects of that crisis.

Worst of all, Obama justice officials both shielded and feted these Wall Street oligarchs (who, just by the way, overwhelmingly supported Obama's 2008 presidential campaign) as they simultaneously prosecuted and imprisoned powerless Americans for far more trivial transgressions. As Harvard law professor Larry Lessig put it two weeks ago when expressing anger over the DOJ's persecution of Aaron Swartz: "we live in a world where the architects of the financial crisis regularly dine at the White House." (Indeed, as "The Untouchables" put it: while no senior Wall Street executives have been prosecuted, "many small mortgage brokers, loan appraisers and even home buyers" have been).

As I documented at length in my 2011 book on America's two-tiered justice system, With Liberty and Justice for Some, the evidence that felonies were committed by Wall Street is overwhelming. That evidence directly negates the primary excuse by Breuer (previously offered by Obama himself) that the bad acts of Wall Street were not criminal.
breuer frontline

Numerous documents prove that executives at leading banks, credit agencies, and mortgage brokers were falsely touting assets as sound that knew were junk: the very definition of fraud. As former Wall Street analyst Yves Smith wrote in her book ECONned: "What went on at Lehman and AIG, as well as the chicanery in the CDO [collateralized debt obligation] business, by any sensible standard is criminal." Even lifelong Wall Street defender Alan Greenspan, the former Federal Reserve Chair, said in Congressional testimony that "a lot of that stuff was just plain fraud."

A New York Times editorial in August explained that the DOJ's excuse for failing to prosecute Wall Street executives - that it was too hard to obtain convictions - "has always defied common sense - and all the more so now that a fuller picture is emerging of the range of banks' reckless and lawless activities, including interest-rate rigging, money laundering, securities fraud and excessive speculation." The Frontline program interviewed former prosecutors, Senate staffers and regulators who unequivocally said the same: it is inconceivable that the DOJ could not have successfully prosecuted at least some high-level Wall Street executives - had they tried.

What's most remarkable about all of this is not even Wall Street had the audacity to expect the generosity of largesse they ended up receiving. "The Untouchables" begins by recounting the massive financial devastation the 2008 crisis wrought - "the economy was in ruins and bankers were being blamed" - and recounts:

"In 2009, Wall Street bankers were on the defensive, worried they could be held criminally liable for fraud. With a new administration, bankers and their attorneys expected investigations and at least some prosecutions."

Indeed, the show recalls that both in Washington and the country generally, "there was broad support for prosecuting Wall Street." Nonetheless: "four years later, there have been no arrests of any senior Wall Street executives."

In response to the DOJ's excuse-making that these criminal cases are too hard to win, numerous experts - Senators, top Hill staffers, former DOJ prosecutors - emphasized the key point: Obama officials never even tried. One of the heroes of "The Untouchables", former Democratic Sen. Ted Kaufman, worked tirelessly to provide the DOJ with all the funds it needed to ensure probing criminal investigations and even to pressure and compel them to do so. Yet when he and his staff would meet with Breuer and other top DOJ officials, they would proudly tout the small mortgage brokers they were pursuing, in response to which Kafuman and his staff said: "No. Don't show me small-time mortgage guys in California. This is totally about what went on in Wall Street. . . . We are talking about investigating senior level Wall Street executives, even at the Board level". (The same Lanny Breuer was recently seen announcing that the banking giant HSBC would face no criminal prosecution for its money laundering of funds for designated terrorist groups and drug networks on the ground that the bank was too big to risk prosecuting).

As Kaufman and his staffers make clear, Obama officials were plainly uninterested in pursuing criminal accountability for Wall Street. One former staffer to both Biden and Kaufman, Jeff Connaughton, wrote a book in 2011 - "The Payoff: Why Wall Street Always Wins" - devoted to alerting the nation that the Obama DOJ refused even to try to find criminal culprits on Wall Street. In the book, this career-Democratic-aide-turned-whistleblower details how the levers of Washington power are used to shield and protect high-level Wall Street executives, many of whom have close ties to the leaders of both parties and themselves are former high-level government officials. This is a system, he makes clear, that is constituted to ensure that those executives never face real accountability even for their most egregious and destructive crimes.

The reason there have been no efforts made to criminally investigate is obvious. Former banking regulator and current securities Professor Bill Black told Bill Moyers in 2009 that "Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong." In the documentary "Inside Job", the economist Nouriel Roubini, when asked why there have been no such investigations, replied: "Because then you'd find the culprits." Underlying all of that is what the Senate's second-highest ranking Democrat, Dick Durbin, admitted in 2009: the banks "frankly own the place".

The harms from this refusal to hold Wall Street accountable are the same generated by the general legal immunity the US political culture has vested in its elites. Just as was true for the protection of torturers and illegal eavesdroppers, it ensures that there are no incentives to avoid similar crimes in the future. It is an injustice in its own right to allow those with power and wealth to commit destructive crimes with impunity. It subverts democracy and warps the justice system when a person's treatment under the law is determined not by their acts but by their power, position, and prestige. And it exposes just how shameful is the American penal state by contrasting the immunity given to the nation's most powerful with the merciless and brutal punishment meted out to its most marginalized.

The real mystery from all of this is that it has not led to greater social unrest. To some extent, both the early version of the Tea Party and the Occupy movements were spurred by the government's protection of Wall Street at the expense of everyone else. Still, Americans continue to be plagued by massive unemployment, foreclosures, the threat of austerity and economic insecurity while those who caused those problems have more power and profit than ever. And they watch millions of their fellow citizens be put in cages for relatively minor offenses while the most powerful are free to commit far more serious crimes with complete impunity. Far less injustice than this has spurred serious unrest in other societies.

[The one-hour Frontline program can be viewed in its entirety here.]
New feature

We're going to institute a new feature tomorrow (Thursday), beginning at 10:00 am EST: a live question-and-answer session between myself and readers regarding columns I've written over the last month. At that time tomorrow morning, a column will be posted here in which readers can leave questions, and from 2:00 pm to 4:00 pm EST, I'll be here live to answer selected ones. The exchange will then be posted in a form similar to this one previously done by the Guardian with Clay Shirky. The Guardian has several really good ideas for maximizing the involvement of and interaction with readers in the journalism that it does - a goal that has been important to me since I first began writing about politics online - and this is the first of the features we'll try in pursuit of that end. I hope everyone inclined to do so is able to participate.
UPDATE

The New York Times' Dealbook section hosted a Q-and-A today with Martin Smith, the producer of "The Untouchables". Here is one quite revealing exchange from that (via @QuietAmerican55):
dealbook untouchables

The Obama administration is not accustomed to actual adversarial journalism that sheds light on their malfeasance. They do not like it. And when they see it, they respond about as petulantly as possible: we will never cooperate with you again! It's not Frontline's fault that the Obama administration actively shielded Wall Street from all forms of criminal accountability. If, as seems to be the case, that fact embarrasses them, they should blame those responsible (themselves), not those reporting it.
UPDATE II

The Washington Post is reporting this afternoon that Breuer is planning to leave the DOJ. Don't worry: he'll be fine. Given how valiantly he protected Wall Street and HSBC, one need not be Nate Silver to predict with a fair degree of confidence that he'll land on his feet. When public officials use their government power to serve the interests of private sector elites, they are often lavishly rewarded by the faction they served upon leaving government. That's one of the key dynamics greasing the sleazy revolving door of Washington. Beyond that, Breuer's contacts in and influence with the DOJ will be in high demand by corporations, banks and other assorted oligarchs seeking to exercise the legal immunity which US political culture has bestowed on them.


http://www.guardian.co.uk/commentisfree/2013/jan/23/untouchables-wall-street-prosecutions-obama

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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Bank of America: Too Crooked to Fail
The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out?
by: Matt Taibbi
bank of america
Illustration by Victor Juhasz

At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard.

It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers. It brought tens of thousands of Americans to foreclosure court using bogus, "robo-signed" evidence – a type of mass perjury that it helped pioneer. It hawked worthless mortgages to dozens of unions and state pension funds, draining them of hundreds of millions in value. And when it wasn't ripping off workers and pensioners, it was helping to push insurance giants like AMBAC into bankruptcy by fraudulently inducing them to spend hundreds of millions insuring those same worthless mortgages.

But despite being the very definition of an unaccountable corporate villain, Bank of America is now bigger and more dangerous than ever. It controls more than 12 percent of America's bank deposits (skirting a federal law designed to prohibit any firm from controlling more than 10 percent), as well as 17 percent of all American home mortgages. By looking the other way and rewarding the bank's bad behavior with a massive government bailout, we actually allowed a huge financial company to not just grow so big that its collapse would imperil the whole economy, but to get away with any and all crimes it might commit. Too Big to Fail is one thing; it's also far too corrupt to survive.

All the government bailouts succeeded in doing was to make the bank even more prone to catastrophic failure – and now that catastrophe might finally be at hand. Bank of America's share price has plunged into the single digits, and the bank faces battles in courtrooms all over America to avoid paying back the hundreds of billions it stole from everyone in sight. Its credit rating, already downgraded to a few rungs above junk status, could plummet with the next bad analyst report, causing a frenzied rush to the exits by creditors, investors and stockholders – an institutional run on the bank.

They're in deep trouble, but they won't die, because our current president, like the last one, apparently believes it's better to project a false image of financial soundness than to allow one of our oligarchic banks to collapse under the weight of its own corruption. Last year, the Federal Reserve allowed Bank of America to move a huge portfolio of dangerous bets into a side of the company that happens to be FDIC-insured, putting all of us on the hook for as much as $55 trillion in irresponsible gambles. Then, in February, the Justice Department's so-called foreclosure settlement, which will supposedly provide $26 billion in relief for ripped-off homeowners, actually rewarded the bank with a legal waiver that will allow it to escape untold billions in lawsuits. And this month the Fed will release the results of its annual stress test, in which the bank will once again be permitted to perpetuate its fiction of solvency by grossly overrating the mountains of toxic loans on its books. At this point, the rescue effort is so sweeping and elaborate that it goes far beyond simply gouging the tax dollars of millions of struggling families, many of whom have already been ripped off by the bank – it's making the government, and by extension all of us, full-blown accomplices to the fraud.

Anyone who wants to know what the Occupy Wall Street protests are all about need only look at the way Bank of America does business. It comes down to this: These guys are some of the very biggest assholes on Earth. They lie, cheat and steal as reflexively as addicts, they laugh at people who are suffering and don't have money, they pay themselves huge salaries with money stolen from old people and taxpayers – and on top of it all, they completely suck at banking. And yet the state won't let them go out of business, no matter how much they deserve it, and it won't slap them in jail, no matter what crimes they commit. That makes them not bankers or capitalists, but a class of person that was never supposed to exist in America: royalty.

Self-appointed royalty, it's true – but just as dumb and inbred as the real thing, and every bit as expensive to support. Like all royals, they reached their position in society by being relentlessly dedicated to the cause of Bigness, Unaccountability and the Worthlessness of Others. And just like royals, they spend most of their lives getting deeper in debt, and laughing every year when our taxes go to covering their whist markers. Two and a half centuries after we kicked out the British, it's really come to this?

Bank of America started out in San Francisco in 1904 as an emblem of American capitalism. Founded by a first-generation Italian-American named Amadeo Giannini – it was even originally called the Bank of Italy – the bank set out to serve immigrants denied credit by other banks, and it was instrumental in helping to rebuild the city after the devastating earthquake of 1906.

But like many of the truly bad ideas in history, the present-day version of Bank of America was the product of a testosterone overdose. The concept of an overmassive, acquiring-everything-in-sight, bicoastal megabank was hatched in the terminal inferiority complex of a greed-sick asshole – actually two greed-sick assholes, both of them CEOs of Southern regional banks, who launched a cartoonish arms race of bank acquisitions that would ultimately turn the American business world upside down.

The antagonists were Hugh McColl Jr. and Ed Crutchfield, the respective leaders of North Carolina National Bank (which would take over Bank of America) and First Union (which turned into Wachovia), both based in Charlotte, North Carolina. Obsessed with each other, these two men transformed their personal competition into one of the most ridiculous and elaborate penis-measuring contests in the history of American business – even engaging in the garish Freudian spectacle of vying to see who would have the tallest skyscraper in Charlotte. First Union kicked things off in 1971 by erecting the 32-story Jefferson First Union Tower, then the biggest building in town – until McColl's bank built the 40-story NCNB Plaza in 1974. Then, in the late Eighties, Crutchfield topped McColl with the city's first post­modern high-rise, One First Union Center, at 42 stories. That held the prize until 1992, when McColl went haywire and put up the hideous 60-story Bank of America Corporate Center, a giant slab of gray metal affectionately known around Charlotte as the "Taj McColl." When asked by reporters if he was pleased that his 60-story monster overwhelmed his rival's 42-story weenie, McColl didn't hesitate. "Do I prefer having the tall one?" he said. "Yes."

For a time, this ridiculous rivalry between two strutting Southern peacocks was restrained by the law – specifically, the McFadden-Pepper Act of 1927 and the Douglas Amendment to the Bank Holding Company Act of 1956. These two federal statutes, which made it illegal for a bank holding company to own and operate banks in more than one state, were effectively designed to prevent exactly the Too Big to Fail problem we now find ourselves faced with. The goal, as Sen. Paul Douglas explained at the time, was "to prevent an undue concentration of banking and financial power, and instead keep the private control of credit diffused as much as possible."

But these laws didn't sit well with Hugh McColl. To him, size was everything. "We realized that if we didn't leave North Carolina," he explained later in his career, "we would never amount to anything – that we would not be important." Note that he didn't say the ban on expansion prevented him from turning a profit or earning good returns for his shareholders – only that it put a limit on his sense of self-importance. So McColl and his banking minions set out to break down the interstate banking laws. First, in 1981, they used a legal loophole in Florida law to buy a bank branch there – evading the federal ban on out-of-state owners. Then, following a Supreme Court decision in 1985 that allowed banks to cross state lines within a designated region, he and Crutchfield went on a conquering spree worthy of a Mongol horde, buying up a host of banks in other Southern states. McColl, a silver-haired ex-Marine who would eventually be celebrated for bringing a "military approach" to his business, went to ridiculous lengths to play up the manly conquest aspect of his bank's merger frenzy, rewarding key employees with crystal hand grenades. By 1995, McColl had acquired more than 200 banks and thrifts across the South, while Crutchfield had snapped up 50.

A few years later, after Congress repealed most of the barriers to interstate banking, McColl took over Bank of America, realizing his dream of creating what one trade publication called "the first ocean-to-ocean bank in the nation's history." Later, after McColl retired, his successors kept up his acquisitive legacy, buying notorious mortgage lender Countrywide Financial in 2008, and using some of the $25 billion in federal bailout funds they received to acquire dying investment bank Merrill Lynch. Both firms were infamous for their exotic gambles and their systematic cutting of regulatory corners – meaning that the shopping spree had burdened Bank of America with a huge portfolio of doomed trades and criminal conspiracies.

But to McColl, it was all worth it – because he would never have been important if he hadn't also been big. "I have no regrets about building it large," he said in 2010, when asked if he considered all the monster consolidations a mistake in light of the crash of 2008. "I may have some regrets about not building it larger."

This deeply American terror of not always having the absolutely hugest dick in the room is what put us in the inescapable box called Too Big to Fail. When the bailouts were dreamed up to save Bank of America, the government was essentially committing public resources to preserve this lunatic spending spree – which means two successive presidential administrations have now spent nearly half a decade and hundreds of billions of tax dollars defending the premise that Hugh McColl should always be allowed to have the "taller one."

And why? The rationale for allowing that merger spree in the first place was based on a phony assumption: that big banks would somehow be more efficient and more profitable than small ones. "The whole premise of a Citibank or a Chase or a Bank of America is wrongheaded," says Susan Webber, an analyst who writes one of the most popular and respected financial blogs under the pseudo­nym Yves Smith. "Studies consistently show that after a certain size threshold, bank efficiency taps out. In fact, it turns out that all those cost savings the banks were supposed to enjoy from being bigger were actually based on cutting corners and fraud."

And man, what a lot of fraud!

In the end, it all comes back to mortgages. Though Bank of America would ultimately be charged with committing a dizzyingly diverse variety of corporate misdeeds, the bulk of the trouble the bank is in today arises from the Great Mortgage Scam of the mid-2000s, which caused the biggest financial bubble in history.

The shorthand version of the scam is by now familiar: Banks and mortgage lenders conspired to create a gigantic volume of very risky home loans, delivering outsize mortgages to dubious borrowers like immigrants without identification, the unemployed and people with poor credit histories. Then the banks took those dicey home loans and sprinkled them with bogus math, using inscrutable financial gizmos like collateralized mortgage obligations to rechristen the risky home loans as high-grade, AAA-rated securities that could be sold off to unions, pensioners, foreign banks, retirement funds and any other suckers the banks could find. In essence, America's financial institutions grew vast fields of cheap oregano, and then went around the world marketing their product as high-grade weed.

The holy trinity of Bank of America, Countrywide and Merrill Lynch represented the worst conceivable team of financial powers to get hold of this scam. It was a little like the Wall Street version of Michael Bay's nonclassic Con Air, in which the world's creepiest serial killer, most demented terrorist and most depraved redneck are all thrown together on the same plane. In this case, it was the most careless mortgage lender (the spray-tanned huckster Angelo Mozilo from Countrywide, who was named the second-worst CEO of all time by Portfolio magazine), the most dangerous mortgage gambler (Merrill, whose CEO was the self-worshipping jerkwad John Thain, the ex-Goldman banker who bought himself an $87,000 area rug as his company was cratering in 2008) and the most relentless packager of mortgage pools (Bank of America), all put together under one roof and let loose on the world. These guys were so corrupt, they even shocked one another: According to a federal lawsuit, top executives at Countrywide complained privately that Bank of America's "appetite for risky products was greater than that of Countrywide."

The three lenders also pioneered ways to sell their toxic pools of mortgages to suckers. Bank of America's typical marketing pitch to a union or a state pension fund involved a double or even triple guarantee. First, it promised, in writing, that all its loans had passed due diligence tests and met its high internal standards. Next, it promised that if any of the loans in the mortgage pool turned out to be defective or in default, it would buy them back. And finally, it assured customers that if all else failed, the pools of mortgages were all insured, or "wrapped," by bond insurers like AMBAC and MBIA.

It sounded like a can't-lose deal. Not only did the bank offer a written guarantee of the high quality of the loans it was selling, it also promised to buy back any bad loans, which were often insured to boot. What could go wrong?

As it turned out, everything. From tits to toes, the mortgage pools created, packaged and sold by Countrywide, Merrill Lynch and Bank of America were a complete sham: worthless and often falling apart virtually from the day they were delivered.

First of all, despite the fact that the banks had promised that all the loans in their pools met their internal lending standards, that turned out to be completely untrue. An SEC­ investigation later found out, for instance, that Countrywide essentially had no standards for whom to lend to. As a federal judge put it, "Countrywide routinely ignored its official underwriting guidelines to such an extent that Countrywide would underwrite any loan it could sell." Translation: Countrywide gave home loans to anything with a pulse, provided they had a sucker lined up to buy the loan.

How did they make these loans in the first place? By committing every kind of lending fraud imaginable – particularly by entering fake data on home loan applications, magically turning minimum-wage janitors into creditworthy wage earners. In 2006, according to a report by Credit Suisse, a whopping 49 percent of the nation's subprime loans were "liar's loans," meaning that lenders could state the incomes of borrowers without requiring any proof of employment. And no one lied more than Countrywide and Bank of America. In an internal e-mail distributed in June 2006, Countrywide's executives worried that 40 percent of the firm's "reduced documentation loans" potentially had "income overstated by more than 10 percent... and a significant percent of those loans would have income overstated by 50 percent or more."

"What large numbers of Countrywide employees did every day was commit fraud by knowingly making and approving loans they knew borrowers couldn't repay," says William Black, a former federal banking regulator. "To do so, it was essential that the loans be made to appear to be relatively less risky. This required pervasive documentation fraud."

So what happened when institutional investors realized that the loans they had bought from Countrywide were nothing but shams? Instead of buying back the bad loans as promised, and as required by its own contracts, the bank simply refused to answer its phone. A typical transaction involved U.S. Bancorp, which in 2005 served as a trustee for a group of investors that bought 4,484 Countrywide mortgages for $1.75 billion – only to discover their shiny new investment vehicle started throwing rods before they could even drive it off the lot. "Soon after being sold to the Trust," U.S. Bancorp later observed in a lawsuit, "Countrywide's loans began to become delinquent and default at a startling rate." The trustees hired a consultant to examine 786 loans in the pool, and found that an astonishing two-thirds of them were defective in some way. Yet, confronted with the fraud, Countrywide failed to repurchase a single loan, offering "no basis for its refusal."

And what about that ostensible insurance that Bank of America sold with its bundles of mortgages? Well, those policies turned out not to be worth very much, since so many of the loans defaulted that they blew the insurers out of business. If you went bust buying bad mortgages from Bank of America, chances are, so did your insurer. At best, you two could now share a blanket in the poorhouse.

Many of the nation's largest insurers, in fact, are now suing the pants off Bank of America, claiming they were fraudulently induced to insure the bank's "high lending standards." AMBAC, the second-largest bond insurer in America, went bankrupt in 2010 after paying out some $466 million in claims over 35,000 Countrywide home loans. After analyzing a dozen of the mortgage pools, AMBAC found that a staggering 97 percent of the loans didn't meet the stated underwriting standards. That same year, the Association of Financial Guaranty Insurers, a trade group representing firms like AMBAC, told Bank of America that it should be repurchasing as much as $20 billion in defective mortgages.

Some of these institutional investors were at least partial accomplices to their own downfall. In the boom era of easy money, financial professionals everywhere were chasing the lusciously high yields offered by these bundles of subprime mortgages, and everyone knew the deals weren't exactly risk-free. But ultimately, Bank of America was knowingly selling a defective product – and down the road, that product was bound to blow up on somebody innocent. "A teacher or a fireman goes to work and saves money for their retirement via their pensions," says Manal Mehta, a partner at the hedge fund Branch Hill Capital who spent two years researching Bank of America. "That pension fund buys toxic securities put together by Wall Street that were designed to fail. So when that security blows up, wealth flows directly from that pension fund into the hands of a select few."

This is the crossroads where Bank of America now lives – trying to convince the government to allow it to remain in business, perhaps even asking for another bailout or two, while it avoids paying back untold billions to all of the institutional customers it screwed, the list of which has grown so long as to almost be comical. Last year, the bank settled with a group of pension and retirement funds, including public employees from Mississippi to Los Angeles, that charged Bank of America and Merrill with misrepresenting the value of more than $16 billion in mortgage-backed securities. In the end, the bank paid only $315 million.

In the first half of last year, Bank of America paid $12.7 billion to settle claims brought by defrauded customers. But countless other investors are still howling for Bank of America to take back its counterfeit product. Allstate, the maker of those reassuring Dennis Haysbert-narrated commercials, claims it got stuck with $700 million in defective mortgages from Countrywide. The states of Iowa, Oregon and Maine, as well as the United Methodist Church, are suing Bank of America over fraudulent deals, claiming hundreds of billions in collective losses. And there are similar lawsuits for nonmortgage-related securities, like a revolting sale of doomed municipal securities to the state of Hawaii and Maui County. In that case, Merrill Lynch brokers allegedly dumped $944 million in auction-rate securities on the Hawaiians, even though the brokers knew that the auction-rate market was already going bust. "Market is collapsing," a Merrill executive named John Price admitted in an internal e-mail, before joking about having to give up pricey dinners at a fancy Manhattan restaurant. "No more $2K dinners at CRU!!"

In the end, says Mehta, Bank of America's fraud resulted in "one of the biggest reverse transfers of wealth in history – from pensioners to financiers. What the 99 percent should understand is that Wall Street knowingly inflated the bubble by engaging in rampant mortgage fraud – and then profited from the collapse of their own exuberance by devising a way to shift the losses to countless pension funds, endowments and other innocent investors." The assembled worldwide collection of swindled pensioners and unions and investors is a little like the crowd that storms the basketball court in the Will Ferrell movie Semi-Pro when the home team's owner welshes on his promise to hand out free corn dogs if the score tops 125 points. Corn dogs, Bank of America! Where are the freaking corn dogs!

Incredible as it sounds, owing practically everyone in the world billions of dollars apiece is only half of Bank of America's problem. The bank didn't just flee the scene of its various securities rip-offs. It also made a habit out of breaking the law and engaging in ethical lapses on a grand scale, all over the globe. Once your money ends up in their pockets, they just slither off into the night, no matter their legal or professional obligations.

Case in point: With all those hundreds of thousands of mortgages the bank bought, it simply stopped filing basic paperwork – even the stuff required by law, like keeping chains of title. A blizzard of subsequent lawsuits from pissed-off localities reveals that the bank used this systematic scam to avoid paying local fees. Last year, a single county – Dallas County in Texas – sued Bank of America for ducking fees since 1997. "Our research shows it could be more than $100 million," Craig Watkins, the county's district attorney, told reporters. Think of that next time your county leaves a road unpaved, or is forced to raise property taxes to keep the schools open.

But the lack of paperwork also presented a problem for the bank: When it needed to foreclose on someone, it had no evidence to take to court. So Bank of America unleashed a practice called robo-signing, which essentially involved drawing up fake documents for court procedures. Two years ago, a Bank of America robo-signer named Renee Hertzler gave a deposition in which she admitted not only to creating as many as 8,000 legal affidavits a month, but also to signing documents with a fake title.

Yet here's how seriously fucked the financial markets are: Even the most vocal critics of Bank of America consider the mass, factory-style production of tens of thousands of fake legal documents per month not that big a deal. "Robo-signing is like focusing on Bernie Madoff's accountant," quips April Charney, a well-known foreclosure lawyer who has spent large chunks of the past two decades in battle with Bank of America.

Robo-signing is not the disease – it's a symptom of Bank of America's entire attitude toward the law. A bank that's willing to commit whole departments to inventing legal affidavits might also, for instance, intentionally ding depositors with bogus overdraft fees. (A class action suit accused Bank of America of heisting some $4.5 billion from its customers this way; the bank settled the suit for a mere 10 cents on the dollar.)

Or it might give up trying to win government contracts honestly and get involved with rigging municipal bids – a mobster's crime, for which the accused used to do serious time, back when the bids were for construction and garbage instead of municipal bonds, and the defendants were Eye-talians in gold chains instead of Ivy Leaguers in ties and Chanel glasses. We now know that Bank of America routinely conspired with other banks to make sure it paid low prices for the privilege of managing the moneys of various cities and towns. If the city of Baltimore or the University of Mississippi or the Guam Power Authority issued bonds to raise money, the bank would huddle up with the likes of Bear Stearns and Morgan Stanley and decide whose "turn" it was to win the bid. Bank of America paid a $137 million fine for its sabotage of the government-contracting process – and in an attempt to avoid prosecution, it applied to the Justice Department's corporate leniency program, essentially confessing its criminal status: As plaintiff attorneys noted, the application "means that Bank of America is an admitted felon." Think about that when you hear about all the bailouts the bank has gotten in the past four years. A street felon who gets out of jail can't even vote in some states – and yet Bank of America is allowed to receive billions in federal aid and dominate the electoral process with campaign contributions?

Some of the bank's other collusive schemes are even more ambitious. Last year, the bank was sued, alongside some of its competitors, for conspiring to rig the London Interbank Offered Rate. Many adjustable-rate financial products are based on LIBOR – so if the big banks could get together and artificially lower the rate, they would pay out less to customers who bought those products. "About $350 trillion worth of financial products globally reference LIBOR," says one antitrust lawyer familiar with the case. "Which means," she adds in a striking understatement, "that the scale of this conspiracy is extremely large."

What's most striking in all of these scams is the corporate culture of Bank of America: These guys are just dicks. Time and again, they go out of their way to fleece their own customers, without a trace of remorse. In classic con-artist behavior, Bank of America even tried to rip off homeowners a second time by gaming President Obama's HAMP program, which was designed to aid families who had already been victimized by the banks. In a lawsuit filed last year, homeowners claim they were asked to submit a mountain of paperwork before receiving a modified loan – only to have the bank misplace the documents when it was time to pay up. "The vast majority tell us the same thing," says Steve Berman, an attorney for the plaintiffs. "Bank of America claims to have lost their paperwork, failed to return phone calls, made false claims about the status of their loans and even took actions toward foreclosure without informing homeowners of their options." The scheme allowed the bank to bleed struggling homeowners for a few last desperate months by holding out the carrot of federal aid they would never receive.

Even when caught red-handed and nailed by courts for behavior like this, Bank of America has remained smugly unrepentant. As part of an $8.4 billion settlement it entered into with multiple states over predatory lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise rates on borrowers. But no sooner was the deal signed than the bank "materially and almost immediately violated" the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes helping a victim get a loan modification.

The bank's list of victims goes on and on. The disabled? Just a few weeks ago, the government charged Bank of America with violating the Fair Housing Act by illegally requiring proof of disability from people who rely on disability income to make their mortgage payments. Minorities? Last December, the bank settled with the Justice Department for $335 million over Countrywide's practice of dumping risky subprime loans on qualified black and Hispanic borrowers. The poor? In South Carolina, Bank of America won a contract to distribute unemployment benefits through prepaid debit cards – and then charged multiple fees to jobless folk who had the gall to withdraw their money from anywhere other than a Bank of America ATM. Seriously, who hasn't this bank conspired to defraud? Puppies? One-eyed Sri Lankans?

Bank of America likes to boast that it has changed its ways, replacing many of the top executives who helped create the mortgage bubble. But the man promoted from within to lead the new team, CEO Brian Moynihan, is just as loathsome and tone-deaf as his previous bosses. As befits a new royal, Moynihan defended a plan to gouge all debit-card users with $5 fees by citing his divine privilege: "We have a right to make a profit." And despite the bank's litany of crimes, Moynihan seems to think we're just overreacting. After all, he gives to charities! "I get a little incensed when you think about how much good all of you do, whether it's volunteer hours, charitable giving we do, serving clients and customers well," he told employees last October. Then, addressing would-be protesters: "You ought to think a little about that before you start yelling at us."

In sum, Bank of America torched dozens of institutional investors with billions in worthless loans, repeatedly refused to abide by contractual obligations to buy them back, evaded hundreds of millions in local fees and taxes, pushed tens of thousands of people into foreclosure using phony documents, ignored multiple court orders to stop its illegal robo-signing, and exploited President Obama's signature mortgage-relief program. The bank fixed the bids on bonds for schools and cities and utilities all over America, and even conspired to try to game the game itself – by fixing global interest rates!

So what does the government do about a rogue firm like this, one that inflates market-wrecking bubbles, commits mass fraud and generally treats the law like its own personal urinal cake? Well, it goes without saying that you rescue that "admitted felon" at all costs – even if you have to spend billions in taxpayer money to do it.



Bank of America should have gone out of business back in 2008. Just as the mortgage market was crashing, it made an inconceivably stupid investment in subprime mortgages, acquiring Countrywide and the billions in potential lawsuits that came with it. "They tried to catch a falling knife and lost their hand and foot in the process," says Joshua Rosner, a noted financial analyst. It then spent $50 billion buying a firm, Merrill Lynch, that was rife with billions in debts. With those two anchors on its balance sheet, Hugh McColl's bicoastal dream bank should have gone the way of the dinosaur.

But it didn't. Instead, in the midst of the crash, the government forked over $45 billion in aid to Bank of America – $20 billion as an incentive to bring its cross-eyed bride Merrill Lynch to the altar, and another $25 billion as part of the overall TARP bailout. In addition, the government agreed to guarantee $118 billion in Bank of America debt.

So what did the bank do with that money? First, it sat by while lame-duck executives at Merrill paid themselves $3.6 billion in bonuses – even though Merrill lost more than $27 billion that year. In all, 696 executives received more than $1 million each for helping to crash the storied firm. (The bank wound up hit with a $150 million fine for its failure to inform shareholders about the Merrill losses and bonuses.) Bank of America, meanwhile, paid out more than $3.3 billion in bonuses to itself, including more than $1 million each to 172 executives.

In fact, the real bailouts of Bank of America didn't even begin until well after TARP. In the years since the crash, the bank has issued more than $44 billion in FDIC-insured debt through a little-known Federal Reserve plan called the Temporary Liquidity Guarantee Program. The plan essentially allows companies whose credit ratings are fucked to borrow against the government's good name – and if the loans aren't paid back, the government is on the hook for all of it. Bank of America has also stayed afloat by constantly borrowing billions in low-­interest emergency loans from the Fed – part of $7.7 trillion in "secret" loans that were not disclosed by the central bank until last year. When the data was finally released, we found out that, on just one day in 2008, Bank of America owed the Fed a staggering $86 billion.

That means that when you take out a credit card or a mortgage or a refinancing from Bank of America, you're essentially borrowing from the state; the "private" bank is simply taking a cut as a middleman. "For banks, the cost of capital is the key to success," says former New York governor Eliot Spitzer. "So by lowering their cost of capital to almost zero, the Fed has almost guaranteed that the banks will make big profits."

Another public lifeline is Fannie Mae and Freddie Mac, the giant, nationalized mortgage lenders. Need to make some cash? Toss a bunch of home loan applications onto a city street, then sell the resulting mortgages to Fannie and Freddie, which are basically a gigantic pile of public money guarded by second-rate managers. Just like the state pensions in Iowa and Maine and Missis­sippi, Fannie and Freddie were targeted for sales of toxic mortgages, and just like those entities, they have sued Bank of America, claiming they were suckered into buying more than $30 billion in shitty securities. But unlike those other suckers, Fannie and Freddie continued to buy crap loans from Bank of America even after it was clear they'd been hoodwinked. Last year, the bank created more than $156 billion in mortgages – nearly $38 billion of which were bought by Fannie. Having the government as an ever-ready customer, standing by to buy mortgages at full retail prices, has always been an ongoing hidden bailout to the banks.

But even the government has its limits. In February, Fannie announced it would no longer keep blindly buying mortgages from Bank of America. Why? Because the bank, already slow to buy back its defective mortgages, had gotten even slower. By the end of last year, the government reported, more than half of all the crappy loans that Fannie wanted to return came from a single bad bank – Bank of America.

But if you think that Fannie cutting off the bank is good news, think again. If it can't get the money it's owed from Bank of America, it'll just go begging to the Treasury. Fannie has already asked for $4.5 billion to cover losses this year – and if Bank of America doesn't pony up, it'll have to reach even deeper into our pockets, making for yet another shadow bailout to the firm.

It gets worse. Last fall, some of the bank's biggest creditors and counterparties started to get nervous about the mountain of toxic bets still sitting on Merrill Lynch's books – a generation of ill-considered, complex, exotic derivative trades, bets on bets on bets on shaky subprime mortgages, sitting there on the company balance sheet, waiting to explode. Nobody felt good lending Bank of America money with that dangerous shitpile lying there. So they asked the bank to move a chunk of that mess from Merrill Lynch onto Bank of America's own balance sheet. Why? Because Bank of America is a federally insured depository institution. Which means that the FDIC, and by extension you and me, is now on the hook for as much as $55 trillion in potential losses. Black, the former regulator, calls the transfer an "obscenity. As a regulator, I would have never allowed it. Transferring risk to the insured institution crosses the reddest of red lines."

But by far the biggest bailout to Bank of America has come via the sweetheart deals it cut to settle the massive lawsuits filed against it. Some of the deals, which were brokered by the Justice Department and state attorneys general, allowed the bank to get away with paying pennies on the dollar on its mountains of debt. Worst of all was the recent $26 billion foreclosure settlement involving Bank of America and four other major firms. The deal, in which the banks agreed to pay cash to screwed-over homeowners in exchange for immunity from federal prosecution on robo-signing issues, was hailed as a big multibillion-dollar bite out of the banks. President Obama was all but strutting over his beatdown of Wall Street. "We are Americans, and we look out for one another; we get each other's backs," he declared. "We're going to make sure that banks live up to their end of the bargain."

In fact, the government has a lousy track record when it comes to enforcing settlements. The foreclosure deal arrives on the heels of an $8.4 billion investor settlement, whose provisions Bank of America had already been accused of violating, raising rates and abusing homeowners as soon as the deal was struck. The bank also violated a previous settlement with the Federal Trade Commission, illegally slapping $36 million in fees on struggling homeowners after specifically agreeing not to do so. So Bank of America's reward for blowing off its previous settlements for mistreating homeowners was to get another soft-touch deal from the government, which they will presumably be just as free to ignore. Why? Because while state officials have ultimate enforcement authority over the foreclosure settlement, the early enforcement reviews will be handled by "internal quality control groups." In other words, Bank of America itself will be grading its own compliance!

Even if Bank of America coughs up its share of the $26 billion settlement, the deal is woefully inadequate to address the wider fraud that went on in creating and pooling mortgages. "It's like handing a box of tissues to someone whose immune system has been destroyed by AIDS," says Rosner. "It doesn't come close to addressing the scale of the problem." Many Wall Street observers think that without the waiver from federal prosecution provided by the settlement, Bank of America would have faced billions in lawsuits for robo-signing offenses alone.

Oh, and one more thing, since we're talking about avoiding bills: Bank of America didn't pay a dime in federal taxes last year. Or the year before. In fact, they got a $1 billion refund last year. They claimed it was because they had pretax losses of $5.4 billion in 2010. They paid out $35 billion in bonuses and compensation that year. You do the math.

And here's the biggest scam of all: After all that help – all the billions in bailouts, the tens of billions in Fed loans, the hundreds of billions in legal damages made to disappear, the untold billions more of unpaid bills and buybacks – Bank of America is still failing. In December, the bank's share price dipped below $5, and after being cut off by Fannie in February, the bank announced a truly shameless plan to jack up fees for depositors by as much as $25 a month – what one market analyst called a "measure of last resort."

The company reported positive earnings last year, with net income of $84 million, but analysts aren't convinced. David Trainer, a MarketWatch commentator, switched his rating of Bank of America to "very dangerous" in part because its accounting is wildly optimistic. Among other things, the bank's projections assume a growth rate of 20 percent every year for the next 18 years. What's more, the bank has set aside only $8.5 billion for buybacks of those crap corn-dog loans from enraged customers – even though some analysts think the number should be much higher, perhaps as high as $27 billion. Because more lawsuits are so likely, says Mehta, it's "virtually impossible to decipher if Bank of America requires more equity, or even another tax­payer bailout."

But the only number that really matters is this one: $37 billion. That's the total bonus and compensation pool this broke-ass, state-dependent, owing-everybody-in-sight bank paid out to its employees last year. This, in essence, is the business model underlying Too Big to Fail: massive growth based on huge volumes of high-risk loans, coupled with lots of fraud and cutting corners, followed by huge payouts to executives. Then, with the company on the verge of collapse, the inevitable state rescue. In this whole picture, the only money that's ever "real" is the fat bonuses the executives cash out of the bank at the end of each year. "Fraud is a sure thing," says Black. "The firm fails, unless it is bailed out, but the controlling officers walk away wealthy."

The Dodd-Frank financial reform approved by Congress last year was supposed to fix the problem of Too Big to Fail, giving the government the power to take over and disband troubled megafirms instead of bailing them out. "The way to cut our Gordian financial knot is simple," MIT economist Simon Johnson wrote in The New York Times. "Force the big banks to become smaller." But few in the financial community believe that will ever happen. "If Bank of America crashes, the first thing that would happen is Dodd-Frank would be revealed as a fraud," says Rosner. "The Fed and the Treasury would ask Congress for a bailout to 'save the economy.' It's the worst-kept secret on Wall Street."

In a pure capitalist system, an institution as moronic and corrupt as Bank of America would be swiftly punished by the market – the executives would get to loot their own firms once, then they'd be looking for jobs again. But with the limitless government support of Too Big to Fail, these failing financial giants get to stay undead forever, continually looting the taxpayer, their depositors, their shareholders and anyone else they can get their hands on. The threat posed by Bank of America isn't just financial – it's a full-blown assault on the American dream. Where's the incentive to play fair and do well, when what we see rewarded at the highest levels of society is failure, stupidity, incompetence and meanness? If this is what winning in our system looks like, who doesn't want to be a loser? Throughout history, it's precisely this kind of corrupt perversion that has given birth to countercultural revolutions. If failure can't fail, the rest of us can never succeed.

Related
• J.P. Morgan Chase's Ugly Family Secrets Revealed


This story is from the March 29th, 2012 issue of Rolling Stone.



http://www.rollingstone.com/politics/news/bank-of-america-too-crooked-to-fail-20120314

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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The Scam Wall Street Learned From the Mafia
How America's biggest banks took part in a nationwide bid-rigging conspiracy - until they were caught on tape
by: Matt Taibbi
national affairs
Illustration by Victor Juhasz

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo.

But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.

More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.

But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America's gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show.

1. THE SCAM
This was no trial scene from popular lore, no Inherit the Wind or State of California v. Orenthal James Simpson. No gallery packed with rapt spectators, no ceiling fans set whirring to beat back the tension and the heat, no defense counsel's resting a sympathetic hand on the defendant's shoulder as opening statements commence. No, the setting for USA v. Carollo reflected the bizarre alternate universe that exists on Wall Street. Like so many court cases involving big banks, the proceeding looked more like a roomful of expensive lawyers negotiating a major corporate merger than a public search for justice.

The trial began on April 16th in a federal court in Lower Manhattan. The courtroom, an aerielike setting 23 stories up, offered a panoramic view of the city and the East River. Though the gallery was usually full throughout the three-plus weeks of testimony, the spectators were not average citizens come to witness how they had been robbed blind by America's biggest banks. Instead, there were row after row of suits – other lawyers eager to observe a long-awaited case, one that could influence the outcome in a handful of civil suits pending across the country. In fact, the defendants themselves, whom the trial would reveal as easily replaceable cogs in a much larger machine of corruption, were barely visible from the gallery, obscured by the great chattering congress of prosecution and defense attorneys.

Only the presence of the mostly nonwhite and elderly jury, which resembled the front pew of a Harlem church, served as a reminder that the case had any connection to the real world. Even reporters from most of the major news outlets didn't bother to attend. The judge in the trial, the right honorable and amusingly cantankerous Harold Baer, acknowledged that the case was not likely to set the public's pulse racing. "It is unlikely, I think, that this will generate a lot of media publicity," Baer sighed to the jury in his preliminary instructions.

Once opening statements began, it was easy to see why the press might stay away. One of the main lines of defense for corrupt Wall Street institutions in recent years has been the extreme complexity of the infrastructure within which these crimes are committed. In order for prosecutors to win convictions, they have to drag ordinary Americans, people who watch and enjoy reality TV, up the steepest of learning curves, coaching them into game shape with regard to obscure financial vehicles like swaps and CDOs and, in this case, Guaranteed Investment Contracts.

So it was no surprise that both the prosecution and the defense began their opening remarks to the jury by apologizing for the hellishly dull maze of "convoluted" and "boring" and "tedious" financial transactions they were about to spend weeks hearing about. Only Wendy Waszmer, the feisty federal prosecutor with straight brown hair and an elfin build who presented the government's case, succeeded in cutting through the mountainous dung heap of acronyms and obfuscations and explaining what the case was about. "Even though some aspects of municipal bond finance are complex, the fraud here was simple," she told the jurors. "It was about lying and cheating cities and towns in a bidding process that was in place to protect them."

The "simple fraud" Waszmer described centered around public borrowing. Say your town wants to build a new elementary school. So it goes to Wall Street, which issues a bond in your town's name to raise $100 million, attracting cash from investors all over the globe. Once Wall Street raises all that money, it dumps it in a tax-exempt account, which your town then uses to pay builders, plumbers, the chalkboard company and whoever else winds up working on the project.

But here's the catch: Most towns, when they raise all that money, don't spend it all at once. Often it takes years to complete a construction project, and the last contractor isn't paid until long after the original bond is issued. While that unspent money is sitting in the town's account, local officials go looking for a financial company on Wall Street to invest it for them.

To do that, officials hire a middleman firm known as a broker to set up a public auction and invite banks to compete for the town's business. For the $100 million you borrowed on your elementary school bond, Bank A might offer you 5 percent interest. Bank B goes further and offers 5.25 percent. But Bank C, the winner of the auction, offers 5.5 percent.

In most cases, towns and cities, called issuers, are legally required to submit their bonds to a competitive auction of at least three banks, called providers. The scam Wall Street cooked up to beat this fair-market system was to devise phony auctions. Instead of submitting competitive bids and letting the highest rate win, providers like Chase, Bank of America and GE secretly divvied up the business of all the different cities and towns that came to Wall Street to borrow money. One company would be allowed to "win" the bid on an elementary school, the second would be handed a hospital, the third a hockey rink, and so on.

How did they rig the auctions? Simple: By bribing the auctioneers, those middlemen brokers hired to ensure the town got the best possible interest rate the market could offer. Instead of holding honest auctions in which none of the parties knew the size of one another's bids, the broker would tell the pre­arranged "winner" what the other two bids were, allowing the bank to lower its offer and come in with an interest rate just high enough to "beat" its supposed competitors. This simple but effective cheat – telling the winner what its rivals had bid – was called giving them a "last look." The winning bank would then reward the broker by providing it with kickbacks disguised as "fees" for swap deals that the brokers weren't even involved in.

The end result of this (at least) decade-long conspiracy was that towns and cities systematically lost, while banks and brokers won big. By shaving tiny fractions of a percent off their winning bids, the banks pocketed fantastic sums over the life of these multimillion-dollar bond deals. Lowering a bid by just one-100th of a percent, called a basis point, could cheat a town out of tens of thousands of dollars it would otherwise have earned on its bond deposits.

That doesn't sound like much. But when added to the other fractions of a percent stolen from basically every other town in America on every other bond issued by Wall Street in the past 10 to 15 years, it starts to turn into an enormous sum of money. In short, this was like the scam in Office Space, multiplied by a factor of about 10 gazillion: Banks stole pennies at a time from towns all over America, only they did it a few hundred bazillion times.

Given the complexities of bond investments, it's impossible to know exactly how much the total take was. But consider this: Four banks that took part in the scam (UBS, Bank of America, Chase and Wells Fargo) paid $673 million in restitution after agreeing to cooperate in the government's case. (Bank of America even entered the Justice Department's leniency program, which is tantamount to admitting that it committed felonies.) Since that settlement involves only four of the firms implicated in the scam (a list that includes Goldman, Transamerica and AIG, as well as banks in Scotland, France, Germany and the Netherlands), and since settlements in Wall Street cases tend to represent only a tiny fraction of the actual damages (Chase paid just $75 million for its role in the bribe-and-payola scandal that saddled Jefferson County, Alabama, with more than $3 billion in sewer debt), it's safe to assume that Wall Street skimmed untold billions in the bid-rigging scam. The UBS settlement alone, for instance, involved 100 different bond deals, worth a total of $16 billion, over four years.

Contracting corruption has been around since the construction of the Appian Way. The difference here is the almost unimaginable scope of the crime – and the fact that it's mobsters from Wall Street who are getting in on the action. Until recently, such activity has traditionally been the almost­exclusive domain of the Mafia. "When I think of bid rigging, I think of the convergence of organized crime and the government," says Eliot Spitzer, who prosecuted two bid-rigging cases in his career as a New York prosecutor, one involving garbage collection, the other a Garment District case involving the Gambino family. The Mafia moved into bid rigging, he says, because it observed over time that monopolizing public contracts offers a far more lucrative business model than leg­breaking. "Organized crime learned their lessons from John D. Rockefeller," Spitzer explains. "It's much more efficient to control a market and boost the price 10 percent than it is to run a loan-sharking business on the street, where you actually have to use a baseball bat and collect every week."

What Spitzer saw was gangsters moving in the direction of big business. When I ask him if he is surprised by the current bid-rigging case, which looks more like big business moving in the direction of gangsters, he laughs. "The urge to become a monopolist," he says, "is as old as capitalism."

2. THE TAPES
The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked together at GE, which was competing for bond business against banks like Chase, Wells Fargo and Bank of America. Carollo was the boss of Goldberg and Grimm, who handled the grunt work, submitting bids. Between August 1999 and November 2006, the three executives participated in countless rigged bids by telephone, conspiring with middleman brokers like Chambers, Dunhill and Rubin. We know this because prior to the start of the Carollo trial, 12 other individuals, including several brokers from CDR, had already pleaded guilty in a wide-ranging federal investigation.

How did the government manage to make a case against so many Wall Street scam artists? Hubris. As was the case in Jefferson County, Alabama, where Chase executives blabbed criminal conspiracies on the telephone even though they knew they were being recorded by their own company, the trio of defendants in Carollo wantonly fixed bond auctions despite the fact that their own firm was taping the conversations. Defense counsel even made an issue of this at trial, implying to the jury that nobody would be dumb enough to commit a crime by phone when "there was a big sticker on the phones that said all calls are being recorded," as Grimm's counsel, Mark Racanelli, put it. In fact, Racanelli argued, the conversations on the tapes hardly suggested a secret conspiracy, because "no one was whispering."

But the reason no one was whispering isn't that their actions weren't illegal – it's because the bid rigging was so incredibly common the defendants simply forgot to be ashamed of it. "The tapes illustrate the cavalier attitude which the financial community brought toward this behavior," says Michael Hausfeld, a renowned class-action attorney whose firm is leading a major civil suit against Bank of America, Wells Fargo, Chase and others for this same bid-rigging scam. "It became the predominant mode of transacting business."

How and when the government got hold of those tapes is still unclear; the prosecution is not commenting on the case, which remains an open investigation. But we do know that in November 2006, federal agents raided the offices of CDR, the broker firm that was working with Carollo, Goldberg and Grimm. Caught red­handed, many of the firm's top executives agreed to turn state's witness. One after another, these hangdog, pasty-faced men were led up to the stand by prosecutors and forced to recount how they'd been snatched up in the raid, separated and blitz-interviewed by FBI agents, and plunged into years of nut-crushing negotiations, which resulted in almost all of them pleading guilty. Prosecutors would eventually accumulate 570,000 recorded phone conversations, and to decipher them they worked these cooperating witnesses like sled dogs, driving them in for dozens of meetings and grilling them about the details of the scam.

The state's first witness, confusingly, was a CDR broker named Doug Goldberg (no relation to the defendant Steven Goldberg). Almost every executive involved in the trial was absurdly young; many were just out of college when the bid-rigging scam started in the late Nineties. Doug Goldberg graduated from USC in 1993, and his fellow CDR executive Evan Zarefsky still looks to be about 15 years old, suggesting a suit-and-tie version of Napoleon Dynamite. The extreme youth of some of the conspirators was an obvious subtext of the trial, underscoring the fact that far more senior executives from bigger banks like Chase and Bank of America had been permitted by the government to evade testifying.

Right off the bat, in fact, Doug Goldberg explained that while at CDR, he had routinely helped the cream of Wall Street rig bids on municipal bonds by letting them take a peek at other bids:

Q: Who were some of the providers you gave last looks to?
A: There was a whole host of them, but GE Capital, FSA, J.P. Morgan, Bank of America, Société Générale, Lehman Brothers, Bear. There were others.

Goldberg went on to testify that he repeatedly rigged auctions with the three defendants. Sometimes he gave them "last looks" so they could shave basis points off their winning bids; other times he asked them to intentionally submit losing offers – called cover bids – to allow other firms to win. He told the court he knew he was being recorded by GE. When asked how he knew that, he drew one of the trial's rare laughs by answering, "Either they told me or some of them, like Société Générale, you can hear the beeping."

Because of the recordings, he went on, he and the defendants used "guarded language."

"I might tell him, if I'm looking for an intentionally losing bid, 'I need a bid,' or something like that," he said.

Q: With whom specifically did you use this guarded type of language?
A: With Steve Goldberg and others.
Q: In your dealings with Steve Goldberg, what, if any, language or other signal did he use that you understood as a request for a last look?
A: He might ask me where I "saw the market," or he might ask me for, as I mentioned, an "indication of where the market is," an "idea of the market."

The broker went on to detail how he had worked with the GE executives to manipulate a number of auctions. In several cases, he was pushed to make deals with GE by his boss at CDR, Stewart Wolmark, who seemed smitten with GE's Steve Goldberg; jurors listening to the tapes couldn't miss the pair's nauseatingly tight, cash-fueled bromance. In December 2000, for instance, Wolmark helped Goldberg win a rigged bid for a bond in Onondaga County, New York. After the auction, he calls his buddy Steve:

WOLMARK: Hey, congratulations. You got another one.
GOLDBERG: Yeah. Yeah, thank you. Thank you.
WOLMARK: You're hot!
GOLDBERG: I'm hot? Hot with your help, sir.

Later on, Wolmark basically tells Goldberg he owes a service to his fellow gangster. "I deserve the big lunch now," Wolmark chirps.

"Yeah," says Goldberg. "I owe you something, huh?"

A few months later, in March 2001, Wolmark and Goldberg do another deal, this time for a $219 million construction bond for the Port Authority of Allegheny County, Pennsylvania. Wolmark rings up his payola paramour and scolds him for not calling him during a recent trip to Vegas, where Goldberg doubtless spent a nice chunk of the money Wolmark had helped him steal from places like Onondaga County.

"Good time in Vegas, you can't even call me back?" Wolmark laments.

"I don't have time to sleep in Vegas," Goldberg says suggestively.

"There's sleeping," Stewart Wolmark chides, "and there's Stewart."

From there, the clothes just start flying off as the pair jump into a steamy negotiation over the monster Allegheny deal. "I'm all set with $200 million," Goldberg says. "Everything's ready to go."

Then Wolmark asks if GE is ready to pay CDR its bribe. "You got some swaps coming up?"

Goldberg assures him they do. Wolmark then passes the deal off to his own Goldberg, Doug, who handles the actual auction.

When prosecutors tried to explain these telephone auctions at trial, projecting the transcripts of the calls on a huge movie screen set up across the courtroom from the jury, you could see the sheer bewilderment on the jurors' faces. The men on the tapes seemed to be speaking a language from another planet – an insanely dry and boring planet, where there's no color and no adverbs, maybe, and babies are made by rubbing two calculators together. One of the jurors, an older white man, spent the first few days of the trial yawning repeatedly, fighting a heroic battle to stay awake in the face of all the mind-numbing jargon about Guaranteed Investment Contracts. "Who needs Lunesta," joked one lawyer who attended the proceedings, "when you can hear a lawyer talk about GICs right out of the gate?"

The language of the auctions was a kind of intellectual camouflage. If you didn't listen closely, you'd have thought the two Goldbergs were a couple of airmen exchanging weather balloon data, rather than two Wall Street executives plotting a crime to rip off the good citizens of Allegheny County. In that deal, Steve Goldberg of GE originally bid "503, 4" on the $219 mil­lion bond, only to be guided downward by Doug Goldberg of CDR. The broker explained in court:

Q: Can you explain what you understood Mr. Goldberg to say when he was saying 503, 4? What was he bidding?
A: That was the rate he was willing to bid on this investment agreement.
Q: How much was it?
A: 5.04 percent.
Q: What did you do as a response to his bid of 5.04 percent?
A: I brought his bid down to 5.00 percent.

In other words, even though GE was willing to pay an interest rate of 5.04 percent, Allegheny County ended up earning just 5.00 percent on its $219 million bond. How much money that amounted to is difficult to calculate, given the way the bond account diminished each year as the county used it to pay contractors; even Doug Goldberg couldn't put a number on the scam. But if the account was full at the start of the deal, GE may have cheated the county out of as much as $87,600 a year to start.

In any case, GE certainly chiseled the Pennsylvanians out of a sizable sum, because soon after, the company paid CDR a kickback of $57,400 in the form of "fees" on a swap deal. The whole deal pleased CDR's higher-ups. "I went to Stewart Wolmark and told him that not only did Steve Goldberg win but that I was able to reduce his rate down four basis points," said Doug Goldberg. "Stewart was very happy and excited."

Over and over again, jurors heard cooperating witnesses translate the damning audiotapes. In one lurid sequence, the bat-eared, bespectacled CDR broker Evan Zarefsky explained how he helped the GE defendant Peter Grimm win a bid for a bond put out by the Utah Housing Authority. The pair had apparently reamed Utah so many times that it had become a sort of inside joke between the two of them. From a call in August 2001:

GRIMM: Utah, let's see, how we look on that?
ZAREFSKY: Good old Utah!

Grimm complains about how much he'll have to pay to win the deal. "These levels are really shitty," he says.

Zarefsky comforts him. "Well, I can probably save you a couple of bucks here," he says.

From there, Grimm rattles off numbers, ultimately settling on a bid of 351 – 3.51 percent. Zarefsky, in almost motherly fashion, guides the manic Grimm downward, telling him, in code, that his bid is 10 basis points too high. "You actually got like a dime in there," Zarefsky says. "You want to come down a dime?"

So Grimm comes back with a bid of 3.41 percent, which turned out to be the winning bid. Utah lost out on 10 basis points, GE bilked the state out of untold sums, and CDR got another nice kickback.

This, basically, is how a lot of the calls went. The provider would tentatively offer a number, and the broker would guide him to a new bid. "You have a little bit of room there," he might say, or "That's gonna put you about a nickel short." Guiding the bidders to the lowest possible bid was called "figuring out the level" or being "in the market"; obtaining information about other bids was called "giving an indicative" or "seeing the market."

The brokers and providers used a dizzying array of methods for rigging deals. In some cases, the broker helped the "winner" by simply excluding other bidders, who may or may not have been in on the scam. In one hilarious sequence that sounds like something out of a wiretap of a Little Italy social club, CDR executive Dani Naeh tells GE's Steve Goldberg that he's not sure he can guarantee a win on a bid for a New Jersey hospital bond. There were too many triple-A-rated companies interested in the bond, Naeh explains, and he couldn't control their bids the way he could those of the lesser, double-A-rated companies he usually did business with. "It would be easier for us to contact other providers who were rated double-A and ask them to submit an intentionally losing bid," Naeh testified. He sounded exactly like a mobster, talking about "our guys" and "our friends."

In some of the calls, jurors could hear the entirety of the dirty deals negotiated, including the bribe paid back to the broker. In one deal involving a bond for the Port of Oakland, California, Steve Goldberg of GE starts to ask his pal Stewart Wolmark of CDR what kind of kickback the broker wants for rigging the deal. Such conversations about payoffs were so commonplace that Wolmark doesn't even have to wait for Goldberg to finish the question:

GOLDBERG: What are we building in here for the...
WOLMARK: Swap.

In his testimony, Wolmark explained that he was asking for a swap deal in return for rigging the bid. "He wanted to know what we were going to get paid on the back end," Wolmark explained.

In the call, Wolmark and Goldberg start haggling over the price of CDR's kickback. Wolmark tells Goldberg he only wants what's fair. "Listen, I'm not a chazzer," Wolmark says.

Fans of the movie Scarface will remember Tony Montana's inspired translation of this Yiddish term: "Thas a pig that don' fly straight."

Wolmark reassures Goldberg that as pigs go, he's a straight flier. "You see the kind of mensch I am," he says.

Negotiations ensue. Goldberg tells Wolmark that he can pay him more on the bribe – the swap deal – if Wolmark can help GE save money on the Port of Oakland deal. "I'd like to see if we can pull a nickel out of that swap," Wolmark says. Translation: He wants to boost CDR's take on the kickback by five basis points.

"If I could get to the right level," Goldberg answers, referring to the Port of Oakland deal. Translation: Goldberg will help Wolmark get his "nickel" on the swap deal if Wolmark can help GE "get to the right level" on the bid.

3. THE POLITICIANS
The Carollo case provides far more than a detailed look at the mechanics and pervasiveness of bid rigging; it offers a clear and unvarnished blueprint of the architecture of American financial and political corruption. In an attempt to discredit the CDR witnesses, defense counsel hounded them about other revelations that surfaced in the government's investigation, particularly those that involved bribery, illegal campaign contributions and pay-for-play schemes.

The defense's cross-examinations were surreal. It was ­certainly true that some of the government's cooperating witnesses had dubious résumés, so it may have made sense to highlight their generally duplicitous history of tax evasion or lying to investigators. But in their zeal, defense counsel went far beyond simply discrediting the witnesses, spending an inordinate amount of time eliciting even more details about the grotesque corruption scheme their own clients had taken part in. The result was a rare and somewhat confusing spectacle: high-octane lawyers from Wall Street working to rip the lid off Wall Street corruption in open court.

Defense counsel showed us, for instance, how CDR employees were routinely directed by their boss, David Rubin, to make political contributions to select candidates, only to be reimbursed by Rubin for those contributions later on. This kind of corporate skirting of campaign finance limits is something we've always suspected goes on, but we rarely get to see direct evidence of it.

More interesting, though, were the stories about political payoffs. In 2001, CDR hired a consultant named Ron White, a Philadelphia bond attorney who happened to be the chief ­fundraiser for then-mayor John Street. CDR gave White two tickets to the 2003 Super Bowl in San Diego plus a limo – a gift worth $10,000. As his "guest," White took Corey Kemp, the city treasurer for Philadelphia, who, 16 days later, awarded CDR a $150,000 contract to advise the city on swap deals. But that wasn't the end of the gravy train: CDR doled out those swap deals to selected banks, who in return kicked back $515,000 to CDR for steering city business their way.

So a mere $10,000 bribe to a politician – a couple of Super Bowl tickets and a limo – scored CDR a total of $665,000 of the public's money. If you want to know why Wall Street has been enjoying record profits, here's your answer: Corruption is a business model that brings in $66 for every dollar you invest.

Even more startling was the way that a notorious incident involving former New Mexico governor and presidential candidate Bill Richardson resurfaced during the trial. Barack Obama, you may recall, had nominated Richardson to be commerce secretary – only to have the move blow up in his face when tales of Richardson accepting bribes began to make the rounds. Federal prosecutors never brought a case against Richardson: In 2009, an inside source told the AP that the investigation had been "killed in Washington." Obama himself, after Richardson bowed out, praised the former governor as an "outstanding public servant."

Now, in the Carollo trial, defense counsel got Doug Goldberg, the CDR broker, to admit that his boss, Stewart Wolmark, had handed him an envelope containing a check for $25,000. The check was payable to none other than Moving America Forward – Bill Richardson's political action committee. Goldberg then went to a Richardson fundraiser and handed the politician the envelope. Richardson, pleased, told Goldberg, "Tell the big guy I'm going to hire you guys."

Goldberg admitted on the stand that he understood "the big guy" to mean Wolmark. After that came this amazing testimony:

Q: Soon after that, New Mexico hired CDR as its swap and GIC adviser on a $400 million deal, right?
A: Yes.
Q: You learned later that that check in that envelope was a check for $25,000, right?
A: Yes. I learned it later.
Q: You also learned later that CDR gave another $75,000 to Gov. Richardson, right?
A: Yes.
Q: CDR ended up making about a million dollars on this deal for those two checks?
A: Yes.
Q: In fact, New Mexico not only hired CDR, they hired another firm to do the actual work that they needed done?
A: For the fixed-income stuff, yes.

What we get from this is that CDR paid Bill Richardson $100,000 in contributions and got $1.5 million in public money in return. And not just $1.5 million, but $1.5 million for work they didn't even do – the state still had to hire another firm to do the actual job. Nice non-work, if you can get it.

To grasp the full insanity of these revelations, one must step back and consider all this information together: the bribes, yes, but also the industrywide, anti-competitive bid-rigging scheme. It turns into a kind of unbroken Möbius strip of corruption – the banks pay middlemen to rig auctions, the middlemen bribe politicians to win business, then the politicians choose the middlemen to run the auctions, leading right back to the banks bribing the middlemen to rig the bids.

When we allow Wall Street to continually raid the public cookie jar, we're not just enriching a bunch of petty executives (Wolmark's income in 2008, two years after he was busted in the FBI raid, was $2,464,210.18) – we're effectively creating an alternate government, one in which money lifted from the taxpayer's pocket through mob-style schemes turns into a kind of permanent shadow tax, used to maintain the corruption and keep the thieves in place. And that cuts right to the heart of what this case is all about. Wall Street is tired of making money by competing for business and weathering the vagaries of the market. What it wants instead is something more like the deal the government has – regularly collecting guaranteed taxes. What's crazy is that in order to justify that dream of regular, monopolistic tribute, they've begun to see themselves as a type of shadow government, watching out for the rest of us. Amazingly enough, this even became a defense at trial.

4. THE DEFENSE
There were times, sitting in the courtroom, when I wondered, How did this case even go to trial? What defense attorney would look at the thousands of recorded phone calls, the parade of cooperating witnesses, the stacks of falsified documents, and conclude that airing all of this in court was a smart play? Listening to tape after damning tape played in open court while the defendants cringed in a corner seemed increasingly like a gratuitous ass-kicking, one that any smart defense lawyer would have made a deal to avoid.

But as the weeks passed, I started to get a feel for the defense strategy, which made a kind of demented sense. The lawyers for Carollo, Goldberg and Grimm didn't even bother trying to argue the facts of the case. Instead, in one cross-examination after another, they kept hitting the same theme. Despite the fact that the rigged bids resulted in lower returns, wasn't it true that the cities and towns still received, technically speaking, the highest bid? If a town received a 5.00 percent return on a $219 million bond instead of 5.04 percent, who's to say that wasn't a good price?

John Siffert, the gray-faced and unlikable attorney for Steve Goldberg, put it this way in his cross-examination of CDR executive Stewart Wolmark. Asking about the Allegheny deal, he boomed: "Isn't it fair to say that you believed that by lowering... Steve's bid to 5 percent, Steve's bid was still a fair price to pay?"

Wolmark's answer was both quick and sensible: "I don't determine the fair price," he replied. "The market does." GE was supposed to pay the highest price the market would pay. It wasn't a competitive auction, as required by law.

But Siffert had made his point, and his rhetoric got right to the heart of the defense, which was going to center around the definition of the word "fair." The men and women who run these corrupt banks and brokerages genuinely believe that their relentless lying and cheating, and even their anti-competitive cartel­style scheming, are all legitimate market processes that lead to legitimate price discovery. In this lunatic worldview, the bid­rigging scheme was a system that created fair returns for everyone. If a bunch of Pennsylvanians got a 5.00 percent return on their money instead of 5.04 percent, and GE and CDR just happened to split the extra .04 percent, that was a fair outcome, because that's what the parties negotiated. True, the Pennsylvanians had no idea about the extra .04 percent, and true, they had hired CDR precisely to make sure they got that extra 0.4 percent. But hey, it's not like they were complaining: Until someone told them they were being brazenly cheated, they were happy with their bond service. And besides, it's not like ordinary people understand this stuff anyway. So how is it the place of some busybody federal prosecutor to waltz in here and say what's a fair price?

Walter Timpone, who represented Carollo, tried to lay this outrageous load of balls on the jury using a faux-folksy analogy. "When your refrigerator breaks down, if you're not mechanically inclined, you're at the mercy of that repair person," he told the jury. "And if he repairs the refrigerator, makes it work well, charges you a fair price, you're likely to call on him again when the stove breaks." What he was essentially telling jurors was: This shit is complicated, so best just to leave it to the experts. Whether they're fixing a fridge or fixing a bond rate, they get to set the price, because we're all morons who are dependent on them to make our world work. Timpone, in his lawyerly way, was actually telling us an essential economic truth: You're at the mercy of that repair person.

This incredible defense, which the attorneys for all three defendants led with, perfectly expresses the awesome arrogance of the modern-day aristocrats who run our financial services sector. Corrupt or not, they built this financial infrastructure, and it's producing the prices they genuinely think are fair for us – and for them. And fair to them is the customer getting the absolute bare minimum, while they get instant millions for work they didn't do. Moreover – and this is the most important part – they believe they should get permanent protection from the ravages of the market, i.e., from one another's competition. Imagine Jack Nicholson on the witness stand, dressed in a repairman's uniform and tool belt. Who's gonna fix those refrigerators? You? You, Lieutenant Weinberg? You can't handle the truth!

That, ultimately, is what this case was about. Capitalism is a system for determining objective value. What these Wall Street criminals have created is an opposite system of value by fiat. Prices are not objectively determined by collisions of price information from all over the market, but instead are collectively negotiated in secret, then dictated from above.

"One of the biggest lies in capitalism," says Eliot Spitzer, "is that companies like competition. They don't. Nobody likes competition."

To the great credit of the jurors in the Carollo case, they didn't buy Wall Street's ludicrous defense. On May 11th, nearly a month after the trial began, they handed down convictions to all three defendants. Carollo, Goldberg and Grimm, who will be sentenced in October, face as many as five years in jail.

There are some who think that the government is limited in how many corruption cases it can bring against Wall Street, because juries can't understand the complexity of the financial schemes involved. But in USA v. Carollo, that turned out not to be true. "This verdict is proof of that," says Hausfeld, the antitrust attorney. "Juries can and do understand this material."



In the end, though, the conviction of a few bit players seems like far too puny a punishment, given that the bid rigging exposed in Carollo involved an entrenched system that affected major bond issues in every state in the nation. You find yourself thinking, America's biggest banks ripped off the entire country, virtually every day, for more than a decade! A truly commensurate penalty would be something like televised stonings of the top 10 executives of every guilty bank, or maybe the forcible resettlement of every banker and broker in Lower Manhattan to some uninhabited Andean wasteland... anything to address the systemic nature of the crime.

No such luck. Instead of anything resembling real censure, a few young executives got spanked, while the offending banks got off with slap-on-the-wrist fines and were allowed to retain their pre-eminent positions in the municipal bond market. Last year, the two leading recipients of public bond business, clocking in with more than $35 billion in bond issues apiece, were Chase and Bank of America – who combined had just paid more than $365 million in fines for their role in the mass bid rigging. Get busted for welfare fraud even once in America, and good luck getting so much as a food stamp ever again. Get caught rigging interest rates in 50 states, and the government goes right on handing you billions of dollars in public contracts.

Over the years, many in the public have become numb to news of financial corruption, partly because too many of these stories involve banker-on-banker crime. The notorious Abacus deal involving Goldman Sachs, for instance, involved a hedge-fund billionaire ripping off a couple of European banks – who cares? But the bid-rigging scandal laid bare in USA v. Carollo is a totally different animal. This is the world's biggest banks stealing money that would otherwise have gone toward textbooks and medicine and housing for ordinary Americans, and turning the cash into sports cars and bonuses for the already rich. It's the equivalent of robbing a charity or a church fund to pay for lap dances.

Who ultimately loses in these deals? Well, to take just one example, the New Jersey Health Care Facilities Finance Authority, the agency that issues bonds for the state's hospitals, had their interest rates rigged by the Carollo defendants on $17 million in bonds. Since then, more than a dozen New Jersey hospitals have closed, mostly in poor neighborhoods.

As Carollo showed us, in open court, this is what Wall Street learned from the Mafia: how to reach into the penny jars of dying hospitals and schools and transform their desperation and civic panic into fat year-end bonuses and the occasional "big lunch." Unlike the Mafia, though, they were smart enough to do their dirt without anyone noticing for a very long time, which is what defense counsel in this case were talking about when they argued that towns and cities "were not harmed" by the rigged bids. No harm, to them, means no visible harm, i.e., that what taxpayers didn't know couldn't hurt them. This is logical thinking, to the sociopath – like saying it's not infidelity if your wife never finds out. But we did find out, and the scale of betrayal unveiled in Carollo was epic. It was like finding out your husband didn't just cheat, but had a frequent-flier account with every brothel in North America for the past 10 years. At least now we know how bad it was. The trick is to find a way to make the cheaters pay.

Editor's Note: Due to a mislabeling in the court transcript, we misidentified the attorney who used the refrigerator analogy in his opening statement. The online version of the story has been corrected.

This story is from the July 5th, 2012 issue of Rolling Stone.
http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620?print=true

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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John Kerry and Me
Thirty Years Ago, a Young Community Organizer Learned Electoral Politics from the New US Secretary of State

By Al Giordano
Part I of an Occasional Series

January 29, 2013

Author’s note: After various months of researching and writing a book about my earliest adventures in community organizing and media during my teens and early twenties, came the news that one of the people I’ve been writing about, John Kerry, was nominated by President Barack Obama as the next US Secretary of State. Today, the US Senate foreign relations committee confirmed his nomination. I’ve known Kerry through three decades, worked for him twice, covered him as a reporter, argued and fought with him – including many times when he was a guest on my talk radio show – when I thought him wrong and have also had his back when he’s done the right thing. The following text is excerpted and adapted from the still untitled book. My main motive for these writings is to share lessons learned about organizing and media, strategy and tactics, and the experiences that taught those lessons, with the next generations of organizers and journalists. I’d also like to express my profound appreciation to my book editor, Katherine Faydash, for cleaning this chapter up so skillfully and ahead of schedule. – Al Giordano.

http://narconews.com/Issue67/article4644.html




US Training of Mexican Troops Has Escalated in Step With Mexico’s Murder Rate
Posted by Bill Conroy - February 17, 2013 at 10:53 pm

Boots-On-The-Ground Instruction Carried Out by US Military in Mexico City, Campeche and Chiapas — Home of the Zapatistas

US training of Mexican military forces spiked in fiscal years 2010 and 2011, coinciding with a sharp rise in drug-war homicides in Mexico, an analysis of records made public under the Foreign Assistance Act show.

The training in those two years, funded by the US Department of Defense, and to a lesser extent by the US Department of State, covered a wide range of military skill sets and involved hundreds of training programs offered in the US to Mexican forces as well as dozens (at least 60) provided inside Mexico.

http://narcosphere.narconews.com/notebook/bill-conroy/2013/02/us-training-mexican-troops-has-escalated-step-mexico-s-murder-rate



Big Media Discovers US Special Ops are Targeting Mexican Crime Organizations
Posted by Bill Conroy - January 21, 2013 at 2:30 pm

Unlike Wine, Old News Doesn’t Improve With Age

Earlier this week, the Washington Post and a series of other mainstream media outlets breathlessly reported that the Pentagon has set up a US-based special operations center that is focused on helping the Mexican government track down “cartels.”

http://narcosphere.narconews.com/notebook/bill-conroy/2013/01/msm-finally-discovers-us-special-ops-are-targeting-mexican-cartels




__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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http://www.motherjones.com/mojo/2013/01/when-john-kerry-secretary-of-state-1980s-hero


When John Kerry Was a Lone Hero in Congress

—By David Corn
| Thu Jan. 24, 2013 8:20 AM PST



Harry E. Walker/Mct/ZUMAPress

Thursday was a big day for Sen. John Kerry, the Massachusetts Democrat. The son of a foreign-service officer, he was appearing before the Senate foreign relations committee (which he used to chair) as President Barack Obama's pick to be secretary of state. Though Kerry failed in 2004 to win the nation's highest job, becoming the country's top diplomat is a tremendous accomplishment and marvelous capstone for his decades-long public career, which began when he returned from service in Vietnam a war hero and led the movement against that war.

Over the years, it has been easy for some to poke fun at Kerry for his sometimes stodgy senatorial ways and for his occasional lapses, such as his 2002 vote authorizing President George W. Bush to invade Iraq. But those who weren't around Washington in the 1980s or who have short memories might not realize that Kerry has been one of the more courageous members of the Senate. Back in 2004, when Kerry was running for president and some progressives were grumbling about him, I wrote an article for The Nation reminding folks of the gutsy actions Kerry had taken in the dark days of the Reagan-Bush era, when Republicans in the White House were cozying up to dictators, the CIA was using assets tied to drug smuggling to prosecute its secret wars, and Democrats were nervous about probing international banks with shady ties (that in several instances implicated Democrats). As Kerry reaches the pinnacle of the foreign-policy world, it's an appropriate time to recall his years of noncombat bravery. Here's the bulk of that article:


In the heat of battle, with his campaign crumbling, Howard Dean lashed out at John Kerry. First, he called the leader in the Democratic presidential race a "Republican." Then he said, "When Senator Kerry's record is examined by the public at a more leisurely time…he's going to turn out to be just like George Bush."

Just like George Bush? It is true that Kerry, another Yalie and Skull and Bones alum, has voted in favor of NAFTA and other corporate-friendly trade pacts, that he once raised questions about affirmative action (while still supporting it), that he has, like almost every Democratic senator, accepted contributions from special-interest lobbyists (while being one of the few to eschew political action committee donations), that he voted to grant Bush the authority to invade Iraq. But this hardly makes him Bush lite. There is, as evidence, his nineteen-year Senate record, during which he has voted consistently in favor of abortion rights and environmental policies, opposed Bush's tax cuts for the wealthy, led the effort against drilling in the Alaskan wilderness, pushed for higher fuel economy standards, advocated boosting the minimum wage and pressed for global warming remedies. But what distinguishes Kerry's career are key moments when he displayed guts and took tough actions that few colleagues would imitate. One rap on Kerry is that he is overly cautious and conventional. He's no firebrand on the stump, nor does he come across as the most passionate and exciting force for change. But his history in Washington includes episodes in which he demonstrated a willingness to confront hard issues, to challenge power, to pursue values rather than political advantage, to take risks for the public interest.

Kerry arrived in the Senate in 1985. This Vietnam War hero turned antiwar leader had been lieutenant governor of Massachusetts. But he entered the body more as the prosecutor he had been in the late 1970s after graduating from Boston College law school. In early 1986 Kerry's office was contacted by a Vietnam vet who alleged that the support network for the CIA-backed Nicaraguan contras (who were fighting against the socialist Sandinistas in power) was linked to drug traffickers. Kerry doubted that the Reagan Administration, obsessed with supporting the contras, would investigate such charges. He pushed for a Senate inquiry and a year later, as chairman of a Foreign Relations subcommittee, obtained approval to conduct a probe.

It was not an easy ride. Reagan Justice Department officials sought to discredit and stymie his investigation. Republicans dismissed it. One anti-Kerry effort used falsified affidavits to make it seem his staff had bribed witnesses. The Democratic staff of the Senate Iran/contra committee—which showed little interest in the contra drug connection—often refused to cooperate. "They were fighting us tooth and nail," recalls Jack Blum, one of Kerry's investigators. "We had the White House and the CIA against us on one side and our colleagues in the Senate on the other. But Kerry told us, 'Keep going.' He didn't let this stuff faze him."

Kerry's inquiry widened to look at Cuba, Haiti, the Bahamas, Honduras and Panama. In 1989 he released a report that slammed the Reagan Administration for neglecting or undermining anti-drug efforts in order to pursue other foreign policy objectives. It noted that the government in the 1970s and '80s had "turned a blind eye" to the corruption and drug dealing of Panamanian dictator Manuel Noriega, who had done various favors for Washington (including assisting the contras). The report concluded that "individuals who provided support for the contras were involved in drug trafficking…and elements of the contras themselves knowingly received financial and material assistance from drug traffickers." And, it added, US government agencies—meaning the CIA and the State Department—had known this.

This was a rather explosive finding, but the Kerry report did not provoke much uproar in the media, and the Democratic leadership on Capitol Hill did little to support Kerry and keep the matter alive. His critics derided him as a conspiracy buff. Yet a decade later the CIA inspector general released a pair of reports that acknowledged that the agency had worked with suspected drug smugglers to support the contras. Kerry had been right.

After the contra investigation, Kerry next turned to a far more sensitive target: a bank connected to a prominent Democratic Party fundraiser. During their investigation of Noriega, Kerry's staff discovered that the Bank of Credit and Commerce International had facilitated Noriega's drug trafficking and money laundering. This led to an inquiry into BCCI, a worldwide but murky institution more or less controlled by the ruling family of Abu Dhabi. BCCI was a massive criminal enterprise, although this was not yet publicly known. It had engaged in rampant fraud and money laundering (to help out, among others, drug dealers, terrorists and arms traffickers) around the world. Its tentacles ran everywhere. Its political connections reached around the globe. Jimmy Carter and Henry Kissinger both became involved in the scandal. When banking regulators finally shut down BCCI in 1991, an estimated 250,000 creditors and depositors from forty countries were out billions of dollars.

One key issue was whether BCCI had secretly and illegally acquired control of First American bank in Washington, DC. The top officials of First American were Clark Clifford, a longtime Democratic graybeard and a party fundraiser, and Robert Altman, his protégé. Democratic senators grumbled about Kerry's crusade, which put Clifford in the cross-hairs. "This really pissed people off," Blum says. BCCI hired from both Democratic and Republican quarters an army of lawyers, PR specialists and lobbyists (including former members of Congress) to thwart the investigation. The Justice Department of the first Bush Administration did not respond to information on BCCI uncovered by Kerry's staff. So Blum took the material to New York District Attorney Robert Morgenthau, who then commenced an investigation of BCCI that led to indictments. And Kerry again found himself tussling with the CIA, for the agency had been using the services of BCCI even after it had learned that the bank was crooked and in league with terrorists (including Abu Nidal).

In the fall of 1992 Kerry released a report on the BCCI affair. It blasted everyone: Justice, Treasury, US Customs, the Federal Reserve, Clifford and Altman (for participating in "some of BCCI's deceptions"), high-level lobbyists and fixers, and the CIA. The report noted that after the CIA knew the bank was "a fundamentally corrupt criminal enterprise, it continued to use both BCCI and First American…for CIA operations." The report was, in a sense, an indictment of Washington cronyism. In the years since, there's been nothing like it. Senator Hank Brown, the ranking Republican on Kerry's subcommittee, noted, "John Kerry was willing to spearhead this difficult investigation. Because many important members of his own party were involved in this scandal, it was a distasteful subject for other committee and subcommittee chairmen to investigate. They did not. John Kerry did."

While Kerry was in the middle of the BCCI muck, Senate majority leader George Mitchell asked him to assume another difficult task: investigate the unaccounted-for Vietnam POWs and MIAs. For years so-called POW advocates, like billionaire Ross Perot, had claimed American GIs were still being held in Vietnam, and the highly charged POW/MIA issue was the main roadblock to normalizing relations. Working closely with Senator John McCain, a Republican who had been a POW, Kerry got the Pentagon to declassify 1 million pages of records. His committee chased after rumors of American soldiers being held. He took fourteen trips to Vietnam. This was a hard mission: How could his committee say there were absolutely no POWs still captive in Vietnam? Yet anything less could keep the POW controversy alive.

On one trip to Hanoi, as Douglas Brinkley notes in Tour of Duty: John Kerry and the Vietnam War, Kerry insisted that he be allowed to inspect the catacombs beneath Ho Chi Minh's tomb, where, according to a persistent rumor, the remaining POWs were being held. Permission was granted, and with conservative Republican Bob Smith by his side, he inspected the tunnels and found no signs of POWs. In January 1993 Kerry's POW/MIA committee released a 1,223-page report concluding that there was "no compelling evidence that proves any American remains alive in captivity in Southeast Asia." Some POW die-hards howled. (Journalist Sydney Schanberg has accused Kerry of covering up and destroying evidence that POWs were left behind.) But the report mostly settled the issue. President Bill Clinton was able to drop the Vietnam trade embargo and normalize relations.

Investigations were not the only notable moments in Kerry's Senate career. On September 10, 1996, as he was in a tight re-election contest against William Weld, the popular Republican governor of Massachusetts, Kerry voted against the Defense of Marriage Act, which would deny federal benefits to same-sex couples and permit states to not recognize same-sex marriages conducted in other states. He was one of only fourteen senators to oppose the measure. Several leading Senate liberals—including Paul Wellstone, Tom Harkin and Pat Leahy—had voted for it. But on the floor of the Senate that day, Kerry, who noted that he did not support same-sex marriage, said, "I am going to vote against this bill…because I believe that this debate is fundamentally ugly, and it is fundamentally political." He refused to pretend that the bill was not a wedge-issue trap devised by conservative Republicans. The legislation, he charged, was "meant to divide Americans," and he argued fiercely that it was unconstitutional. "If this were truly a defense of marriage act," he said, "it would expand the learning experience for would-be husbands and wives. It would provide for counseling for all troubled marriages, not just for those who can afford it. It would provide treatment on demand for those with alcohol and substance abuse…It would guarantee daycare for every family that struggles and needs it."

It's hard to think of a presidential appointee who deserved his position more.

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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maynard

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Jan 30,2013

Secretary Kerry
By Charles P. Pierce
at 9:15AM

Brendan Hoffman/Getty Images News

The only things keeping the nomination of John Kerry as the next Secretary Of State from being unanimous were the votes of the toweringly embarrassing senatorial delegation from the state of Texas, and the dumber half of the senatorial delegation from Oklahoma, which, incidentally, makes the delegation from Texas look like the Congress of Vienna. That he failed to convince John Cornyn, Ted Cruz, and James Inhofe of his qualifications as the country's top diplomat is no disgrace. In fact, it's the strongest argument in favor of Kerry's getting the hell out of Dodge after 28 years in the Senate. Even negotiating with armed lunatics around the world has got to be easier than trying to treat with the many odd critters cavorting through the Inhofe cabeza.

It is a capital mistake to look at Kerry's ascent to his new job as some kind of redemption play. He lost the presidency in 2004 because his campaign was not quite good enough to overcome the natural inertial force of an incumbent, even the worst one who ever stood for re-election, some organized national gay-baiting, and, let's be honest, some wholesale (and still largely unplumbed) chicanery in the state of Ohio. He did not run a bad campaign, just the wrong one, at the time. He has nothing to come back from, except on the idiotic scoreboard that the Beltway wiseguys and the courtier press keep in their minds.

And, of course, it is a job to which he was born. He's the son of a diplomat. He remembers riding his bicycle through the bombed-out streets of Berlin in the aftermath of World War II. And in the Senate, he's always had one foot overseas. We have an embassy in Vietnam right now because John Kerry (and, to be fair, John McCain) got the United States to look at Vietnam as a country, and not simply as a war. (If people had done that same thing in, say, 1965, neither Kerry nor McCain might be in the Senate right now, and millions of other people would still be alive.) But, if you ask me about Kerry's qualifications as Secretary Of State, I will answer in an acroynym — BCCI.

Back in the 1980s, the Bank Of Commerce and Credit International was a kind of laundromat for cleaning the money of almost every bad operator on the world stage. It got away with it because it was wired into the political elite in every country in which it did business, including this one. (Recently, HSBC got fined some pocket change for having washed billions in drug money. People raised the appropriate hell over letting the management of HSBC slide without prison time, Trust me on this. BCCI made HSBC look like your local credit union.) Back in 2004, in a profile for this magazine, I talked about what the investigation of BCCI said about John Kerry.

In the Senate, throughout the 1980s, Kerry made his mark spelunking down the darkest caverns of what had become a reinvigorated secret government. He chased the illicit aid to the contra rebels in Nicaragua and the byzantine operations of a bank called BCCI, a sort of international ATM for black ops. And he did so alone, as far outside in the clubby world of the Senate as he ever had been in Massachusetts. "This was a bad case of bubonic plague," says Jack Blum, Kerry's investigator through those years. One prominent Democratic senator tried to sabotage Kerry's investigations, and the Republicans, riding Ronald Reagan's popularity, went after him as harshly as the Nixon people ever did. In fact, it is a kind of unprecedented historical parlay that John Kerry's name appears both on Nixon's White House tapes and in the notebooks of Oliver North. For Kerry, the investigations were pure reform politics, but they also were leavened with a respect for what happens when people are tricked away from their investment in their government. "It's antithetical to everything we are," he explains. "A government with secrets is accountable; a secret government is not. And when that happens, the American people are cheated of what is rightly theirs."

For all the talk about how stiff and cold he is, there is in Kerry a very nimble mind and a remarkable ability to think outside the box. It took a nimble mind to become the spokesman for veterans who came home to protest against the war in which they had fought, and in which their brothers were still fighting. "How do you ask a man to be the last man to die for a mistake?" is a question from the deepest part of the imagination because it connects so solidly with the deepest part of the imagination of the people to whom it is asked. Who will be that last man? Your brother? Your cousin? The kid you played football with in high school? When he went after BCCI, he did so against the advice of almost everyone else in Washington. who didn't want their secrets revealed or the bodies dug up. For his entire career, Kerry's political imagination has encompassed the possibilty that his own government may have been complicit in crimes, and that has made people very nervous.

His passage into his new job — and, with any luck, Chuck Hagel's subsequent confirmation as Secretary Of Defense — represents the clearest indication yet that the Vietnam generation is being allowed at last into the upper reaches of the one branch of government that has eluded it. This country has yet to elect a president who served in that war. (Yeah, C-Plus Augustus was in the National Guard. Excuse me for a moment because I seem to have common sense caught in my throat here.) Neither has it elected anyone who was a highly visible member of the opposition to that war. (Bill Clinton's antiwar activities comprised slipping past the draft here and protesting in England. His entire political career consisted of distancing the Democratic party from George McGovern.) Kerry, of course, was both, and he lost the presidency to a guy who, when Kerry was driving boats up the inland waterways of the Mekong, couldn't seem to find Alabama. In terms of the executive branch of the government, power skipped that generation.

This may make the biggest difference going forward. Kerry's political imagination is global; he is likely to treat climate change as part of his portfolio as Secretary of State the way he treated BCCI as part of his portfolio as a senator. (The worst thing you can do if you want John Kerry to ignore something is to tell him it's none of his business.) He knows better than most the limits of American power because he was there when they were tested and found criminally wanting, and he was there to test them himself when he came home. Throughout his careers, he has been manifestly distrustful of the culture of secrecy bred by the national security state. He has questioned its operations and its operatives. He has tried to chase down its crimes. He has followed its money. He may not be willing or able to keep this president from tip-toeing right up to the line of covert savagery, but there is nobody more capable of explaining the consequences, or of laying out, in detail, what might come next. John Kerry knows how black ops can turn blood-red, how covert activities become overt combat. He is an expert on how countries delude themselves into wars. That may be enough.

Read more: The Confirmation of John Kerry - Secretary Kerry - Esquire http://www.esquire.com/blogs/politics/The_Confirmation_Of_John_Kerry

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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maynard

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UPDATE: Jeremy Renner’s ‘Kill The Messenger’ Acquired By Focus Features For WW Distribution On Journo Gary Webb Saga
By MIKE FLEMING JR | Deadline.com – Tue, Feb 5, 2013 12:30 PM EST

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UPDATE: Jeremy Renner’s ‘Kill The Messenger’ Acquired By Focus Features For WW Distribution On Journo Gary Webb SagaView Photo

UPDATE: Jeremy Renner’s ‘Kill The Messenger’ Acquired By Focus Features For WW Distribution …

EXCLUSIVE UPDATE, 9:30 AM: Just after Jeremy Renner and Homeland exec producer/director Michael Cuesta came aboard Kill The Messenger, the film has formalized a deal for Focus Features to take worldwide rights. Focus will distribute in the U.S., and Focus Features International’s Allison Thompson will sell foreign in Berlin this week. This development isn’t a shock, considering that Scott Stuber set it up years ago at his home studio Universal, and it is an excellent fit at Focus. The film is about journalist Gary Webb and how his mostly accurate investigative report on how the CIA helped introduce crack to California got the journalist smeared and fired. He eventually committed suicide.

EARLIER, JANUARY 31 PM: The movie packages are coming together on the eve of next week’s Berlin film market. Hansel & Gretel: Witch Hunters star Jeremy Renner has been set to star in Kill The Messenger, a thriller that Michael Cuesta will direct that is based on the tragic tale of a journalist who committed suicide after being smeared by the CIA. The script was written by Peter Landesman. Cuesta seems perfect for this; he’s an exec producer and has directed numerous episodes of Homeland and has been integral in establishing the visual look of that show. He also helmed the pilots for Dexter and Elementary.

Scott Stuber, who set up this project eight years ago as producer at Universal, will be joined by Renner and Don Handfield, and it will be a co-production between Stuber’s Bluegrass and Renner’s The Combine. Naomi Despres is also producing. The film begins production in the summer.

This is a project that has been in the works for several years, and most recently it had been at Universal with Stuber. If the CIA mostly wears a white hat in Zero Dark Thirty for its dogged efforts to track and kill Osama bin Laden, the agency wears a decidedly black lid here. Kill The Messenger is based on the true story of Gary Webb, a San Jose Mercury News reporter who committed suicide after being the target of a smear campaign when he linked the CIA to a scheme to arm Contra rebels in Nicaragua and import cocaine into California.

Landesman (who is right now making his directorial debut on the JFK assassination pic Parkland) put the script together with source material from two books: Dark Alliance: The CIA, The Contras, And The Crack Cocaine Explosion, by Webb, and Nick Schou’s Kill The Messenger: How The CIA’s Crack-Cocaine Controversy Destroyed Journalist Gary Webb.

After he published his 1996 three-part series Dark Alliance, and implied that the CIA was a catalyst for the crack cocaine scourge in California, Webb was excoriated by colleagues in the press. The film will posit that Webb was mostly right, and that the CIA sought to smear him to conceal a scandal. The agency, in essence, concealed a deal with the devil that it made for what was believed at the time to be for the greater good. As a result of the smear campaign, Webb was destroyed; what should have been a careermaking expose turned out to be a career-ending debacle. Webb was jobless and in a spiral of depression when he ended his life in 2004.

CAA, which represents Renner and Stuber, will co-represent the film’s domestic distribution rights with WME, which represents Cuesta. The agencies will bring the project to Berlin. Renner is managed by Untitled’s Beth Holden.

Renner next stars in the Abscam drama that David O Russell is directing with Christian Bale and Bradley Cooper.
Related stories


http://movies.yahoo.com/news/jeremy-renner-ready-kill-messenger-berlin-bound-film-222227439.html

__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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maynard

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Reply with quote  #12 
Actor Jeremy Renner
https://en.wikipedia.org/wiki/Jeremy_Renner
will portray Gary Webb in the movie "Killing The Messenger"

http://www.imdb.com/title/tt1216491/
scheduled to begin filming this summer. The film will be distributed by Universal.

This is a major production folks!

http://www.jeremyleerenner.com/news/jeremy-renner-ready-to-kill-the-messenger-in-berlin-bound-film-package-about-cia-smeared-journo-gary-webb/

Feb 1 2013
Jeremy Renner Ready To ‘Kill The Messenger’ In Berlin-Bound Film Package About CIA-Smeared Journo Gary Webb

The movie packages are coming together on the eve of next week’s Berlin film market. Hansel & Gretel: Witch Hunters star Jeremy Renner has been set to star in Kill The Messenger, a thriller that Michael Cuesta will direct that is based on the tragic tale of a journalist who committed suicide after being smeared by the CIA. The script was written by Peter Landesman. Cuesta seems perfect for this; he’s an exec producer and has directed numerous episodes of Homeland and has been integral in establishing the visual look of that show. He also helmed the pilots for Dexter and Elementary.

Scott Stuber, who set up this project eight years ago as producer at Universal, will be joined by Renner and Don Handfield, and it will be a co-production between Stuber’s Bluegrass and Renner’s The Combine. Naomi Despres is also producing. The film begins production in the summer.

This is a project that has been in the works for several years, and most recently it had been at Universal with Stuber. If the CIA mostly wears a white hat in Zero Dark Thirty for its dogged efforts to track and kill Osama bin Laden, the agency wears a decidedly black lid here. Kill The Messenger is based on the true story of Gary Webb, a San Jose Mercury News reporter who committed suicide after being the target of a smear campaign when he linked the CIA to a scheme to arm Contra rebels in Nicaragua and import cocaine into California.

Landesman (who is right now making his directorial debut on the JFK assassination pic Parkland) put the script together with source material from two books: Dark Alliance: The CIA, The Contras, And The Crack Cocaine Explosion, by Webb, and Nick Schou’s Kill The Messenger: How The CIA’s Crack-Cocaine Controversy Destroyed Journalist Gary Webb.

After he published his 1996 three-part series Dark Alliance, and implied that the CIA was a catalyst for the crack cocaine scourge in California, Webb was excoriated by colleagues in the press. The film will posit that Webb was mostly right, and that the CIA sought to smear him to conceal a scandal. The agency, in essence, concealed a deal with the devil that it made for what was believed at the time to be for the greater good. As a result of the smear campaign, Webb was destroyed; what should have been a careermaking expose turned out to be a career-ending debacle. Webb was jobless and in a spiral of depression when he ended his life in 2004.

CAA, which represents Renner and Stuber, will co-represent the film’s domestic distribution rights with WME, which represents Cuesta. The agencies will bring the project to Berlin. Renner is managed by Untitled’s Beth Holden.

Renner next stars in the Abscam drama that David O Russell is directing with Christian Bale and Bradley Cooper.



http://movies.yahoo.com/news/jeremy-renner-ready-kill-messenger-berlin-bound-film-222227439.html

http://www.hollywoodreporter.com/news/berlin-jeremy-renners-gary-webb-420342

http://insidemovies.ew.com/2013/02/05/focus-features-kill-the-messenger/


__________________
A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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hannah

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Reply with quote  #13 
HSBC Gets Away With Laundering Money For Mexican Cartels and Islamic Terror States
Posted by servingdope1 ⋅ December 12, 2012 ⋅ 4 Comments
Filed Under Bank Secrecy Act, HSBC, Norte del Valle, Sinaloa, U.S. Justice Department

hsbc darkUncle Sam had a chance to deal a major blow to the white-collar bankers who handle cash for narco-traffickers and terrorists who threaten the American way of life. The U.S. Justice Department had damning evidence that British company HSBC, one of the world’s largest banking institutions, was laundering money for Mexican and Colombian cartels, as well as intentionally allowing illegal transactions with countries under economic sanctions, including Iran, Libya, Sudan, and Burma.

But no executive from HSBC is facing criminal charges. Instead, HSBC simply agreed to pay a $1.9 million settlement with the United States government for violating the Bank Secrecy Act. The fine is a trickle compared to the hundreds of billions in blood money the bank laundered and allowed to enter the United States. How can the Justice Department go easy on an international bank working with enemies of the United States? HSBC should be kicked out of the country and the executives who put America’s national security at risk should stand trial for their crimes. But that’s not how the War on Drugs works. The only villains who get to experience the full force of the federal hammer are cartel members hiding out in the jungles of Central and South America and street hustlers slanging product in the inner cities of America.

The Associated Press asserts that by accepting the settlement, HSBC avoids a legal battle that would further sully the bank’s reputation and undermine confidence in the global banking system. Well, God forbid that happen. Apparently, that’s more important that holding HSBC accountable for willfully failing to establish and maintain an effective anti-money laundering program. Cartel profits have a way making safeguards disappear.

.According to the Justice Department statement of facts, HSBC “ignored the money laundering risks associated with doing business with certain Mexican customers and failed to implement” an anti-money laundering program “that was adequate to monitor suspicious transactions from Mexico” from 2006 through 2010.

In fact, the bank became the preferred bank for the cartels, allowing traffickers to circumvent monitoring methods with major cash deposits and inadequetely staff its anti-money laundering unit. Banks are supposed to try to mitigate money-laundering risks by monitoring wire transfers. According to federal documents, HSBC allegedly used an internal system that would trigger a review of wire transfers based on the amount of the transaction and the type and location of the customer.

The Justice Department found that transactions in Mexico weren’t subject to HSBC’s automated monitoring unless customers were classified as high risk. The low ranking allowed $670 billion in wire transfers from Mexico to by-pass the bank’s internal reviews between 2006 and 2009, as well as failing to monitor $9.4 billion in purchases of U.S. dollars from HSBC’s Mexico operations over the same period.

Here are the relevant findings from the U.S. Justice Department report:

HSBC’s U.S. division let $881 million in drug proceeds from the Sinaloa Cartel in Mexico and the Norte del Valle Cartel in Colombia pass through without being detected by the bank, the Justice Department alleged.
HSBC failed to monitor over $200 trillion in wire transfers between 2006 and 2009 from countries that HSBC’s U.S. unit deemed to be “standard” or “medium” risk.
HSBC’s U.S. Banknotes division was a natural high-risk for money laundering because it involved currency transactions.
Between 2006 and 2009, the unit had only one or, at times two, compliance officers responsible for reviewing transactions of between 500 and 600 customers.
In 2007, HSBC senior executives allegedly instructed its anti-money laundering departments to “freeze” staffing levels as part of a bank-wide effort to “cut costs and increase the bank’s return on equity.”
HSBC handled 25,000 Iranian transactions, totaling over $19 billion, in a week’s time into the US.

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hannah

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Reply with quote  #14 
HSBC, too big to jail, is the new poster child for US two-tiered justice system
DOJ officials unblinkingly insist that the banking giant is too powerful and important to subject to the rule of law
Glenn Greenwald
guardian.co.uk, Wednesday 12 December 2012 10.14 GMT
http://www.guardian.co.uk/commentisfree/2012/dec/12/hsbc-prosecution-fine-money-laundering

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hannah

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Reply with quote  #15 
Joaquin “El Chapo” Guzman Allegedly Betrayed His Top Hitman
Posted by servingdope1 ⋅ February 21, 2013 ⋅ 1 Comment
Filed Under Joaquin "El Chapo" Guzman, Jonathan Salas Aviles, Sinaloa Cartel
Jonathan Salas Aviles, aka, El Fantasma

Jonathan Salas Aviles, aka, El Fantasma

According to RioDoce, an investigative news outlet in Sinaloa, Mexico, drug crime boss Joaquin “El Chapo” Guzman gave up his most favored hitman, Jonathan Salas Aviles, alias “El Fantasma,” which means “The Ghost.” The report notes that no one in Salas’ inner circle, from his body guards to the cops in his pocket to his jefe, tipped him off to the fact that Mexican military forces were hot on his trail. They nabbed El Fantasma on February 9.

About 200 soldiers and three marine helicopters descended on Salas’ hideout, a house 30 minutes from the Sinaloa capital of Culiacan. Authorities apprehended Salas without firing a single shot.

RioDoce claims that his capture may have been the result of a pact between Guzman’s lethal Sinaloa Cartel and the Mexican goverbment. Salas earned his nickname due to the stealthy precautions he took to protect his identity. He had escaped two previous attempts to capture him. RioDoce argues that El Chapo viewed Salas as an operational risk due to his reputation as a violent and volatile gunman who was being tracked by the military for months.

He allegedly terrorized the people in the small towns outside of Culiacan, beating up civilians and municipal police officers and interrupting private parties while brandishing weapons. By giving up Salas, Guzman and his cartel were living up to a deal with the Mexican government to minimize the violence in Sinaloa. According to RioDoce, the cartel promised it would only respond to attacks launched by rivals such as the Beltran Leyva Organization and the group run by drug trafficker Fausto Isidro Meza Flores, alias “Chapito Isidro.”
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"There's a war out there, old friend. A world war. And it's not about who's got the most bullets. It's about who controls the information.... it's all about the information!"
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maynard

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Reply with quote  #16 
http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104


Secrets and Lies of the Bailout
The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come
Comment
552        
By Matt Taibbi
January 4, 2013 4:25 PM ET

Read more: http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104


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A TAINTED DEAL http://www.motherjones.com/politics/1998/06/tainted-deal

 LA DEA; Murder of Kiki Camarena http://www.laweekly.com/news/how-a-dogged-la-dea-agent-unraveled-the-cias-alleged-role-in-the-murder-of-kiki-camarena-5750278  

"Several informed sources have told me that an appendix to this Report was removed at the instruction of the DOJ at the last minute. This appendix is reported to have information about a CIA officer, not agent or asset, but officer, based in the LA Station, who was in charge of Contra related activities. According to these sources, this individual was associated with running drugs to South Central L.A., around 1988. Let me repeat that amazing omission. The recently released CIA Report Vol II contained an appendix, which was pulled by the DOJ, that reported a CIA officer in the LA Station was hooked into drug running in South Central Los Angeles." Maxine Waters Oct, 1998
https://fas.org/irp/congress/1998_cr/h981013-coke.htm   

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hannah

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Reply with quote  #17 
http://www.scribd.com/doc/131345354/NYSE-Chief-Richard-Grasso-Meets-Rebels-in-Colombia-to-Encourage-Investment-in-the-USA
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"There's a war out there, old friend. A world war. And it's not about who's got the most bullets. It's about who controls the information.... it's all about the information!"
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hannah

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Reply with quote  #18 
http://www.scribd.com/doc/131256455/THE-CRIMES-OF-PATRIOTS-A-TRUE-TALE-OF-DOPE-DIRTY-MONEY-AND-THE-CIA-BY-JOHNATHAN-KWITNY-1987

NUGAN HAND BANK

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"The world isn't run by weapons anymore, or energy, or money. It's run by little ones and zeroes......"



"There's a war out there, old friend. A world war. And it's not about who's got the most bullets. It's about who controls the information.... it's all about the information!"
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