Enemy Of The State – The Catherine Fitts Story (1)
Tuesday, 5 February 2002, 11:18 am
Article: Uri Dowbenko
Editors Note: This is part one of an account of the
extraordinary story of Maverick US Banker Catherine Austin
Fitts, and new occasional contributor to Scoop. See also...
Enemy
Of The State – The Catherine Fitts Story (2) for an
update on what happened next...
BUSHWHACKED
HUD Fraud, Spooks and the Slumlords of
Harvard
by
Uri Dowbenko
First Published In The Conspiracy
Digest
Catherine Austin Fitts is
still trying to figure out what happened.
Her
company, Hamilton Securities, Inc., was the lead financial
advisor to the US Department of Housing and Urban
Development (HUD).
Hamilton was hired to manage the
sales of $10 billion worth of mortgages on houses, apartment
buildings and nursing homes.
By all accounts,
Hamilton's new program was a resounding success.
In
fact, the HUD loan sales program team was even given a
Hammer Award for Excellence in Re-engineering Government by
Vice President Al Gore's Reinventing Government Initiative.
By cutting red tape and improving the resale value of HUD
owned mortgages, Hamilton Securities was a case study of a
public-private partnership that saved US taxpayers lots of
money.
Until...
The firm was ambushed by a
series of lawsuits, audits and unsubstantiated rumors which
destroyed the business.
Catherine Austin Fitts --
Maverick Banker
In the arcane but stodgy world
of investment banking, Catherine Austin Fitts is a
revolutionary.
Before founding her own firm, Fitts,
a Wharton graduate, was the first woman to be promoted to
managing director of Dillon, Read and Co, Inc., the
prototypical elitist men's club Wall Street investment
bank.
To her credit, Fitts was instrumental in
building a new market for Dillon Read. She began
underwriting previously unrated municipal bonds, in essence,
financing large government projects which other Wall Street
firms said couldn't be done.
These novel bond sales
helped revive New York City's crumbling subway system, and
they provided funding for the City University of New York
and other major projects.
The market in unrated and
low-rated muni bonds took off, earning Fitts the title of
"Wonder Woman of Muni Bonds," in a glowing Business Week
article (February 23, 1987).
In 1989, she was asked
to become the Federal Housing Administrator under HUD
Secretary Jack Kemp. Fitts moved to Washington to undertake
the monumental task of reforming the scandal-ridden,
fraud-plagued agency.
After her stint in government,
she was invited to be a Governor of the Federal Reserve
Board. She declined.
Instead she founded Hamilton
Securities Group, an employee-owned investment banking firm,
which created an innovative system for saving taxpayers
billions of dollars in the sale of government-guaranteed
mortgage-loan sales from HUD.
By promoting open
disclosure in the HUD financial transactions, Fitts
undoubtedly, and unknowingly, must have stepped on a lot of
toes.
The Crony Capitalists (or Old Boys' Network --
or the Octopus) must have seen Hamilton's program of
financial transparency as a major threat to their system of
bid rigging and insider trading.
HUD Cost Savings Lead
to Hamilton's Demise
In this extremely complex
case, newly disclosed evidence indicates that powerful
forces conspired to destroy the financial equity of
employee-owned Hamilton Securities, as well as the personal
life savings of the firm's president, Catherine Austin
Fitts.
Why? Because Hamilton Securities had opened
up the market for defaulted HUD mortgages. In simple terms,
the established network of insiders would be susceptible to
-- horrors! -- open competition, not to mention an entire
universe of new bidders.
In fact, Hamilton's plan
for optimization of sales of defaulted mortgages resulted in
a savings of over $2.2 billion for US taxpayers.
The
numbers are staggering. Every year HUD issues about $70
billion of mortgage insurance which guarantees the mortgages
used to finance homes, apartment buildings, nursing homes,
assisted living facilities and hospitals. HUD then pays out
about $6 billion on claims for defaulted mortgages, which
the agency has to then manage at great cost to taxpayers.
Prior to Hamilton's involvement, HUD was recovering about 35
cents on the dollar of mortgage insurance payments made on
defaulted mortgages.
When Hamilton instituted their
new program, HUD's recovery rate soared to about 70 to 90
cents on the dollar. How? Hamilton introduced a proprietary
optimization bidding software and an on-line database of
information, accessible to all investors, so that the
defaulted portfolio could be bid upon in an open auction.
In October 1997, the Chairman of one Congressional oversight
committee referred to the Hamilton-based loan sales at HUD
as generating "eye-popping" yields.
In fact from
1994-97, HUD saved about $2.2 billion in HUD's $12 billion
mortgage portfolio. These savings then allowed HUD to issue
far more new mortgage insurance at a lower cost.
When Hamilton's successful loan sales-auction program was
suspended due to the investigation, the old levels of
government inefficiency and fraud were resumed. Call it
"Business As Usual."
That means HUD is now losing
about $4 billion per year on its $6 billion of defaulted
mortgages -- instead of just $2 billion. That's the
equivalent of 20,000 taxpayers working their whole lives to
pay for this boondoggle for just one year.
Anatomy of
a Corporate Murder
Targeted by criminal elements
in the Department of Justice (DoJ), Housing and Urban
Development (HUD), as well as a cartel of private investment
companies, Hamilton Securities has undergone an onslaught of
unimaginable harassment and intimidation.
There had
been a SWAT-like attack on Hamilton's office in Washington,
19 audits, countless subpoenas as well as ongoing litigation
against HUD to force them to pay monies owed on their
contract. It's been a 4-year long financially and
emotionally draining "investigation." To date, there has
been no evidence of any wrongdoing -- just rumors, innuendo,
and lots of character assassination.
First, in June
1996, a sealed qui tam lawsuit, a phoney whistle-blower
suit, as well as a Bivens action was filed by John Ervin of
Ervin & Associates, Inc., a HUD subcontractor, notorious for
filing nuisance lawsuits and "bid protests" -- 37 of them in
the recent past. In the Bivens suit, he sued HUD itself, as
well as several former HUD officials personally.
In
fact, Ervin's lawsuits have cost a good-sized fortune in
legal fees and overhead, estimated -- from 1995 to date --
to be as high as $40 to $50 million. An insider claims that
during that time Ervin had up to 17 in-house personnel
working full time on mountains of paperwork regarding this
and other cases.
So who's bankrolling Ervin? Nobody
has offered any explanations, but for a small time HUD
sub-contractor like Ervin, this has turned out to be a
serious investment.
Under the False Claims Act, a
private party like Ervin, who files suit on behalf of the
government, can receive 15-30% of any recovery, if the
government's claim is successful. That percentage (15-30%)
would have covered asset seizures of up to $4.7 billion of
loan sales won by Goldman Sachs and its partners.
Is
somebody just playing the odds? In this version of
government "greenmail", or state-sponsored extortion, any
asset seizures could be part of this 15 to 30% bounty.
The Spooky Life of Stanley Sporkin
Then, it just
so happened that the judge presiding over the Hamilton case
was the former CIA Counsel -- Federal Judge Stanley Sporkin
(recently retired).
According to Rodney Stich,
author of "Defrauding America," "Sporkin was involved with
the 1980 October Surprise scheme and his judicial
appointment was probably his reward by the Reagan-Bush
administration for helping carry it out, and to block any
judicial exposure or prosecution action."
(The
October Surprise was the Reagan-Bush black-ops/covert action
to delay the release of the hostages in Iran, resulting in
the electoral victory of Reagan as US President.)
Sporkin was appointed to the bench by Ronald Reagan in 1985.
His spooky roots, however, go back to the days when he was a
director of the SEC's Division of Enforcement, while the
infamous Bill Casey was practicing his Wall Street shakedown
techniques as Chairman of the Securities and Exchange
Commission.
Sporkin's other claim to fame was to
encourage Casey to go after the infamous scamster Robert
Vesco. Was Vesco more competition -- or just another
freelancer?
Casey, who like George H. W. Bush,
neglected or "forgot" to put his assets in a blind trust
later also became director of CIA. His shares -- controlling
stock in Capitol Cities Communications -- were eventually
used to take over ABC in a $3.5 billion merger deal.
In the words of Joseph Persico, author of "Casey", "the
director of the Central Intelligence Agency was soon to be a
substantial shareholder in one of the country's major forums
of free expression, with wondrous opportunity for managing
the news."
Also according to Persico, Casey further
employed Sporkin's specious reasoning by claiming that
killing "suspected terrorists" was not murder.
Reagan's infamous Executive Order 12333 which privatized US
National Security State dirty tricks was ostensibly the
reason.
"Striking at terrorists planning to strike
at you was not assassination," wrote Persico referring to
Sporkin's logic, "it was 'preemptive self-defense.'"
Then Sporkin became the general counsel for the CIA
(1981-86) and his mastery of coverup skills increased
dramatically. For instance, in keeping the Oliver North
Cocaine Trafficking Operation under wraps, it was Sporkin
who invented another ingenious method of lying by
omission.
Persico writes that "North's insistence
that the oversight committees be cut out troubled the CIA
people. But the adroit Sporkin found a loophole. The
President was required to inform the oversight committees of
a covert action presumably in advance of the action, except
when the urgency of the situation required that notification
be delayed." Result? Everybody was notified 48 hours after
the operation.
According to Persico, Sporkin also
perfected the techniques of writing retroactive "findings"
for Congress, so that CIA criminality could always be
disguised or covered up -- after the fact.
Stich
concludes that "to protect the incoming Reagan-Bush teams
and many of the federal officials and others who took part
in October Surprise, the Reagan-Bush team placed people,
including those implicated in the activities, in control of
key federal agencies and the federal courts. Some, like
attorneys Stanley Sporkin, Lawrence Silberman, and Lowell
Jensen were appointed to the federal bench defusing any
litigation arising from the October Surprise or its many
tentacles... Organized crime never had it so good."
Ironic Postscript Dept.: In Feb. 2000, retired spooky judge
Stanley Sporkin (Yale Law School, 1957) joined the global
powerhouse law firm Weil, Gotshal & Manges LLP. The company,
which boasts 750 attorneys in 12 offices worldwide, is
considered one of the leading law firms in the country on
bankruptcy.
The Hamilton Bushwhack
In the
Hamilton Securities case, Sporkin's claim to fame is that he
managed to illegally keep a qui tam lawsuit sealed for
almost 4 years. That could be a "judicial" record.
In August 1996, an investigation against Hamilton was
initiated by HUD Inspector General Susan Gaffney, serving
two subpoenas on the company -- and incidentally failing to
tell Hamilton about the existence of the qui tam as required
by law. The subpoenas demanded hundreds of thousands of
documents, mostly HUD documents that HUD already had, or
that had been supplied to them as part of the ongoing work
-- a clear case of burying Hamilton in paperwork as more
ongoing harassment.
At the same time, a HUD audit
team from Denver had completed a favorable audit of
Hamilton's program. When Fitts asked HUD IG Gaffney whether
she intended to "bury the Denver audit," Gaffney huffed
back, "How dare you suggest that I would do any such thing?
That would be unethical."
In fact, she did exactly
that. Susan Gaffney never allowed the publication of the
Denver Audit team's report which exonerated all of
Hamilton's methodology and results.
Then, at the
same time, a smear campaign against Hamilton was being waged
through a "US News and World Report" hatchet-job article
about HUD Secretary Henry Cisneros and the loan sales
program.
According to Fitts, the lead reporter had
been assured "at the highest levels" of the HUD Inspector
General's office that Hamilton Securities and Fitts were the
subject of a criminal investigation and were guilty of
criminal violations.
There was no evidence, however,
either offered by HUD or published by the magazine, and
these false allegation also died with the passage of
time.
In a bizarre double-bind mentality, HUD and
DoJ -- in a separate court and with a different judge -- had
taken the position that the Ervin lawsuit was without merit
-- even while Hamilton's legal costs climbed into the
millions of dollars.
The Dirty Fingerprints of Lee
Radek
In December 1997, Hamilton wrote a letter
to the President's Council on Integrity & Efficiency (PCIE),
a committee in the Office of Management and Budget (OMB), to
investigate HUD IG Susan Gaffney's conduct.
Hamilton's four-page highly detailed letter to Neil J.
Gallagher, Acting Assistant Director of the FBI's Criminal
Investigative Division and Chairperson of PCIE was blunt.
"The HUD IG has crossed the line in its investigation of
Hamilton, which was begun in response to complaints from
Ervin & Associates, a disgruntled HUD contractor," wrote
Fitts. "The IG's wide-ranging and unfocused "fishing
expedition" against Hamilton has failed to produce findings
of wrongdoing and threatens the survival of the firm. The
repeated leaking to the press of proprietary and
confidential information that only the HUD IG could know and
the intervention of other Federal Agencies [IRS, FDIC] into
Hamilton's affairs constitute a campaign of smear, slander
and intimidation that should be investigated and
stopped."
Fitts wrote about many incidents of
intimidation and harassment which "demonstrate or suggest
that the HUD IG is deliberately leaking information to the
press about its investigation of Hamilton. These leaks
represent serious and persistent breaches of
confidentiality, unethical and unlawful behavior and
violations of Hamilton's constitutional rights."
PCIE declined to investigate. In her next letter to
Gallagher in February 1998, Fitts wrote that "since the
filing of our complaint, the Hamilton Securities Group Inc.
and all of its subsidiaries have been rendered insolvent...
In the face of eighteen months of Inspector General 'lynch
mobbing' we have exhausted our reserves and have no means to
continue an investigation that has no end..."
After
another refusal by PCIE to investigate, Hamilton filed a
Freedom of Information Action (FOIA) for the files.
The files revealed a heavily redacted letter signed by the
Lead Coverup Meister himself -- Lee Radek, head of the
Department of Justice's ironically named "Office of Public
Integrity."
In a letter dated April 3, 1998
addressed to Thomas J. Piccard, Chairman of the Integrity
Committee of the PCIE, Radek wrote "C. Austin Fitts,
President of the Hamilton Securities Group, Inc. sent the IC
a copy of a civil complaint filed by Hamilton Securities
against HUD Secretary Andrew Cuomo, Assistant Secretary
Nicolas Retsinas and Inspector General Susan Gaffney. The
complaint alleged that HUD's OIG investigation of Hamilton
and improper media leaks by the OIG about the investigation
was causing Hamilton to go out of business... After
reviewing the letter and the attachments, the Public
Integrity Section concludes that the allegations in the
complaint do not provide sufficient information to warrant a
criminal investigation."
The rest of the page --
seven inches of what used to be text -- is blacked out.
For the record, US Department of Justice apparatchik Lee
Radek has held a virtual stranglehold on DoJ
"investigations," consistently covering up the criminal
activities of the Clinton Administration. As a linchpin in
the corrupt DoJ, he has had many opportunities to coverup
crimes and block inquiries -- and he has taken full
advantage of his position as a Federal-Mob "enforcer."
It's an ironic twist of fate, then, that Neil Gallagher --
the FBI staff member of PCIE, whose job it was to
investigate allegations against Susan Gaffney -- and Lee
Radek appeared together in May 2000 before a Congressional
hearing -- as antagonists.
Gallagher affirmed in
public testimony that Radek was indeed under pressure from
US Attorney General Janet Reno to stall any investigation
into the Clinton-Gore campaign fund raising scandals.
Unsealing the Lawsuit
Finally in May 2000, US
District Judge Louis F. Oberdorfer unsealed the qui tam
lawsuit against Hamilton -- and surprise! -- the DoJ decided
not to pursue the groundless claims.
The suit was
filed in June 1996, and DoJ's decision not to intervene in
this case came after a 1,400 day so-called "investigation"
-- or 1,340 days longer than the 60 days mandated by the
Federal False Claims Act.
Hamilton Securities
maintained that the allegations in the complaint were not
true, and there was no evidence to support the false
allegations.
In fact, HUD security procedures and
overlapping levels of review associated with the open
bidding process made the alleged bid rigging and insider
trading impossible. This was corroborated by HUD's own
audits.
The sources for the alleged bid rigging in
Ervin's complaint, kept under court seal for almost four
years, included Jeff Parker of the Cargill Group, Terry R.
Dewitt of J-Hawk (First City Financial Corporation of Waco,
Texas, and a Cargill investment and joint venture partner),
and Michael Nathans of Penn Capital Corporation.
The
Waco-Cargill Connection
In retrospect, Hamilton
must have been a major threat to the nation-wide money
laundering and financial fraud network which uses
government-guaranteed mortgages and other programs to scam
US taxpayers. The formerly secret sources of the false
allegations against Hamilton have some interesting
connections.
SEC documents state that First City
Financial Corporation (FCFC) of Waco, Texas started business
in 1986 "purchasing distressed assets from FDIC and RTC."
Another subsidiary, First City Commercial Corp. was used to
"acquire portfolios of distressed loans" -- another hallmark
of the standard money laundry operation.
According
to the Houston Business Journal (Sept. 24, 1999), "First
City Bancorporation, once one of Houston's largest bank
holding companies, was acquired out of bankruptcy in 1995 by
J-Hawk Corp of Waco and renamed First City Financial
Corp."
"FCFC began its relationship with Cargill
Financial Services Corp. in 1991," according to the
company's SEC filings. "Since that time, the Company and
Cargill Financial have formed a series of Acquisition
Partnerships through which they have jointly acquired over
$3.2 billion in Face Value of distressed assets. By the end
of 1994, the Company had grown to nine offices with over 180
professionals and had acquired portfolios with assets in
virtually every state."
But then -- and now comes
the sad part --- the mortgage banking subsidiary of First
City Financial Corporation, Harbor Financial Group Inc.,
filed for bankruptcy (Oct., 1999), just as the notorious
Denver-based money laundry, M&L Business Machines, had done
years before.
The corporate shell game of mergers,
acquisitions and liquidation is obviously in full play in
this scenario.
The other false accuser listed --
Cargill Financial Services Corp., -- on the other hand, is a
subsidiary of Cargill, the Minneapolis-based global
agribusiness cartel and the world's largest privately-held
company.
Cargill is a mega-corporate international
merchant of agricultural, industrial and financial
commodities, and it operates in 59 countries, has 82,000
employees, and about $50 billion in annual sales.
The financial subsidiary, Access Financial Holdings Corp.,
was formed to "manage the housing finance business" and
"provide residential real estate mortgages," an unregulated
arena in which money laundering is often the real
business.
And here's the punch line in this
revolving-door-syndrome joke of the Criminal Big
Government-Big Business Syndicate.
The lead law firm
listed on First City Financial's 1998 registration statement
is Weil Gotshal -- former spooky judge Stanley Sporkin's new
employer.
Whistle-Blower Stew Webb's Perspective
Federal whistle-blower Stewart Webb thinks he knows why
Catherine Austin Fitts and her company, Hamilton Securities,
were bushwhacked. In fact, he believes that her operation
was a direct threat to the "Denver Boys" -- the Bush Crime
Family's money laundering operation based in Denver.
Why was she targeted? "Because she had set up a company
which was showing the government how to save money through
competitive loan sales programs," explains Webb. "It was a
threat to [Leonard] Millman in Denver. Because they were in
control of the mortgage program."
Webb is referring
to the many HUD low-income housing-based frauds and scandals
in Denver. He claims that one of their proxies was John
Ervin himself. "He had his own office in Denver," says Webb.
"One of the biggest supplies of money to these boys is the
money they're stealing from HUD. They are still robbing HUD
like nobody's business."
"That's a massive covert
revenue stream for them," continues Webb. "As of last year,
they became the largest apartment owner in the United
States. AIMCO. That's Millman and Company in Denver."
Apartment Investment and Management Co. (AIMCO) is one of
the largest real estate investment trusts, or REITs, in the
the US with headquarters in Denver, Colorado and 36 regional
offices. AIMCO operates about 1,834 properties, including
about 385,000 apartment units nationwide in every state
except Vermont.
AIMCO is the successor to the
Considine Co,. founded in 1975, by Terry Considine. It was
then re-organized as a real estate investment trust and
became a public company through an initial stock offering in
July 1994.
In an article called "HUD, AIMCO Clash
Over Housing" (Denver Business Journal, May 8, 1998), AIMCO
was excoriated by affordable-housing advocates for taking
90,000 low-income ("affordable housing") apartments --
bought from HUD at below market rates -- and converting them
into higher end properties, thereby displacing poor
renters.
According to the article, "the revamping
also involves upgrading bare-bones properties built with
federal funds two decades ago which will allow AIMCO to
boost rents."
AIMCO has also gobbled up Washington
DC-based apartment manager NHP, Inc., Ambassador Apartments,
a Chicago-based REIT, and the apartment portion of Insignia
Financial Group.
Since AIMCO is the nation's largest
owner of affordable housing and the sole provider of such
homes in many markets, the implications are ominous.
More homeless people on the streets are a sure bet.
The Harvard-Bush Connection
Since historically
the Chinese Opium Trade and the African Slave Trade have
provided the financial foundation for the Boston
"Bluebloods," it should come as no surprise that the Harvard
Endowment Fund and the Harvard Management Corporation are
involved in what can be characterized as shady enterprise at
best -- or criminal activity at worst.
In 1989, the
Harvard Endowment Fund, became the 50% owner of HUD subsidy
(Section 8) and non-subsidy apartment buildings through its
purchase of NHP, an apartment management firm, headed by
Roderick Heller III.
Since their plan was to do an
Initial Public Offering (IPO) or a merger for NHP, they
tried to run up the value by aggressive acquisition of more
apartments, preferably with HUD issued mortgage insurance
which could be defaulted on -- with little or no
consequence.
Unfortunately for Harvard, HUD had
initiated its new open-disclosure and performance-based
auction under the direction of Hamilton Securities. When the
private market firms battled it out, Harvard was outbid by
GE, Goldman Sachs and Black Rock and its sour grapes
apparently turned to vengeance.
In 1996, according
to Fitts, Rod Heller told her that the government had a
"moral obligation" to him and his investors (Harvard
Endowment) to renew or roll over the subsidies with them to
maintain their profits.
In other words, an open
auction-free marketplace was not acceptable to the Harvard
Boys, since they were operating their business of HUD-backed
corporate welfare-subsidies under what Heller claimed was
"an understood handshake."
The HUD portfolio of
distressed properties had traditionally been managed to
derive profits for private business -- like Harvard
Endowment Fund -- and not the US taxpayers. Since Harvard
was used to rigging profits through politics, not fair
business practices, it started losing income because there
were less management fees and the value of its stock started
going down.
In 1991, Harvard and Heller asked Fitts
to do an investment bank with them. At the last minute,
Harvard Management Company honcho Michael R. Eisenson told
her he wanted 20% of her new company's stock, and the deal
was shattered.
On the first large HUD loan sale,
Eisenson complained to Fitts, "I don't like this"
--referring to Hamilton's use of optimization software to
auction HUD mortgages -- "because the only way we can win is
by paying more than our competitors. We prefer a bid process
where we can win by 'gaming it' because we are
'smarter.'"
For those unfamiliar with Soviet (or is
it Harvard-Mob?) terminology, "smarter" is code language for
saying "we can rig it." And "gaming it" means finding a way
of manipulating the players to get control of them, rather
than using the competitive process of free market
capitalism.
Eisenson was obviously quite at home
with the proverbial "fix."
And who is Mike Eisenson?
He was the lead investor who eventually sold Harvard's share
of NHP to the Denver-based AIMCO. His other claim to fame is
that he was on the board of directors of the infamous Harken
Energy which rigged an insider stock deal on behalf of
George W. Bush -- not coincidentally a Harvard grad.
In 1986, a small company called Spectrum 7 (George W. Bush,
Chairman and CEO) was acquired by Harken Energy Corp. After
Bush joined Harken, the largest stock position and seat on
its board was acquired by Harvard Management Co. The oil and
gas, real estate and private equity portion of Harvard
Endowment also acquired. Warren Buffet's position in NHP,
one of the largest owners of HUD Section 8 subsidized
properties in 1989.
Then the Hamilton Securities
initiated HUD loan sales were slowed down and cancelled,
and, of course, Harvard's capital gains were ensured through
an IPO of NHP and through a sale to AIMCO.
The
Harken Board gave the Junior Bush $600,000 worth of company
stock, plus a seat on the board, plus a consultancy worth
$120,000 a year -- despite suffering losses of more than $12
million dollars against revenues of $1 billion in 1989.
In 1987 when creditors were threatening to foreclose, the
Junior Bush himself made a trip to Arkansas to meet
criminal-banking kingpin Jackson Stephens, whose Stephens
Inc. arranged financing for the faltering Harken Energy from
a subsidiary of the Unon Bank of Switzerland (UBS). Stephens
Inc, of course, had ties to the notorious CIA money laundry
bank, the Bank of Credit and Commerce International (BCCI),
where drug trafficking and arms-smuggling profits mingled
freely with looted S&L and fraud-scam proceeds.
Then
1990 Bahrain awarded an exclusive drilling rights contract
to Harken and the Bass brothers added more equity to the
deal. Six months later George Bush Jr. sold off 212,140
shares grossing him $848,560.
When Saddam Hussein
invaded Kuwait the Harken stock dropped suddenly. The SEC
was not notified, and no action for insider trading was
taken against the Junior Bush. Why? SEC chairman Richard
Breeden was a faithful Bush loyalist.
Today
Eisenson, formerly one of the lead investors in NHP and
Harken and one of the primary portfolio managers of Harvard
Management, runs a private equity portfolio called
Charlesbank Capital Partners LLC, Boston which manages $1.4
billion in real estate investments for the Harvard
Endowment.
One of the partners of a company doing
business with NHP, Scott Nordheimer actually admitted to
Fitts in June 1996 -- "We tried to get you fired through the
White House and that didn't work. So now the Big Boys got
together, and you're going to jail." Shortly thereafter the
qui tam lawsuit with the bogus whistle-blower charges was
filed against Hamilton.
In this complicated story,
there's another part of the puzzle which needs exposure. The
Hamilton Bushwhack involved Cargill personnel falsely
accusing the following companies of financial improprieties:
Hamilton Securities, as well as investment bankers Goldman
Sachs and Black Rock Financial, a subsidiary of PNC.
Goldman Sachs has been touted as one of the largest
contributors to the Democratic National Committee and the
Clinton-Gore Presidential Campaign.
Was the Hamilton
Bushwhack just another outward sign of a covert power
struggle? Because of its implications, it had the potential
to lead to Clinton's impeachment on serious fund raising
violations -- a much more significant charge than the Monica
Lewinsky Sexcapades used in the Ken Starr Coverup.
More Spooky Harvard Connections
The key to the
mystery of the Hamilton Bushwhack may ultimately be found in
the relationship between 1) government guaranteed/insured
mortgages, 2) asset seizure/forfeitures, and 3) the private
companies whose profits derive from an inside track with
both government programs.
More lucrative than mere
corporate subsidies, there are entire segments of
mega-business which depend on these government insider
deals.
For example, besides Harvard, the other
primary investor in apartment management company NHP was
Capricorn Investments and Herbert S. "Pug" Winokur, Jr.
Winokur, former Executive Vice President and Director of
Penn Central Corp, CEO of Capricorn Holdings Inc. and
managing partner of three Capricorn Investors Limited
Partnerships, is one of those insiders who may have
benefited from the outrageous assault on Hamilton's open bid
auction for defaulted HUD mortgages.
Not
incidentally, from 1988 to 1997, because of his large
investments, Winokur was also the Chairman and CEO of
DynCorp, a US government contractor whose customers include
Department of Defense, NASA, Department of State, EPA,
Center for Disease Control, National Institute of Health,
the US Postal Service and other US Government agencies.
Most importantly, according to SEC registration documents
(S-1), DynCorp is the prime servicer on the Department of
Justice Asset Forfeiture Fund, having procured a five year
contract with the Department of Justice worth $217 million
from 1993 to 1998. This 1000 person contract required
staffing at over 300 locations in the US and involved
support of DoJ's drug-related asset seizure program.
According to SEC documents, DynCorp's personnel supports "US
Attorney Offices that are responsible for administering the
federal asset forfeiture laws."
In other words,
DynCorp could have profited first from a successful seizure
of HUD loan sales. Then, DynCorp could have also profited
from HUD "Operation Safe Home" seizures, which target
low-income tenants, mortgage holders and apartment owners.
And, since the company has the expertise and personnel,
DynCorp could also have targeted these communities with
private surveillance teams and non-lethal weapons to effect
asset seizures using the phoney War on Drugs as a
rationale.
By all accounts, there is at least a
major conflict of interest in Winokur's investments in HUD
low income housing and his role in Department of Justice
seizures.
Imagine -- if you're Winokur, you can make
money on defaulted HUD mortgages, guaranteed by US
taxpayers, as well as by kicking out low-income housing
tenants because of drug-related "asset seizures." The
criminal-corporate-government scams don't get any better.
In the case of Hamilton's open-bid auction process on
defaulted HUD mortgages, the potential $4.7 billion seizure
of HUD loan sales would have been a major plum for DynCorp
as the prime servicer of the DoJ Asset Forfeiture Fund.
By the way, Winokur also had the "foresight" not to board
the ill-fated flight to war-torn Yugoslavia, which took
Secretary of Commerce Ron Brown's life.
There are
other spooky connections. According to Newsweek (Feb. 15,
1999), Reston, Virginia based DynCorp is a $1.3 billion
firm, which also trains police in Haiti and works on coca
eradication in Colombia, where three of its American pilots
have died since 1997.
Reliable sources allege this
shadowy outfit may be a CIA-military proprietary, in other
words, a privatized entity useful for "plausible
deniability." At any rate, it also provides "Yankee
Mercenaries" for the Colombian campaign against drug
trafficking. Employing about 30 US Vietnam War veterans,
DynCorp has a $600 million contract to run and maintain the
planes and helicopters used in "anti-drug" efforts in Peru,
Bolivia and Colombia, according to the World Press Review
(Nov. 1, 1998).
Postscript: Who says (corporate)
crime doesn't pay? According to the Harvard University
Gazette, in June 2000, Herbert S. Winokur Jr. was named to
join the seven-member Harvard Corporation, the University's
executive governing board.
Doing Business with the
Feds
Imagine having to wait more than 4 years to
get paid on an invoice.
For more than $2 million.
From the US Government.
That, in short, is what
happened to Hamilton Securities.
Doing business with
the US Federal Government should come with a warning
label.
WARNING: Saving money for the taxpayers can be
hazardous to your health.
"HUD is withholding
about $2 million of funds owed to Hamilton for services
performed for HUD," says Hamilton's President Catherine
Austin Fitts. "We also understand that this with-holding is
at the request of the Justice Department and the HUD
Investigator General."
"As the lead investment
banker on $10 billion of loan sales, we have been able to
preserve the integrity of these transactions. We intend to
take whatever steps necessary to recover our shareholders"
and employees value as we have done for the US taxpayers.
The unsealing of the qui tam lawsuit should free HUD to meet
its outstanding contractual obligations to Hamilton as
quickly as possible."
Toward a Positive Future
And what is Catherine Austin Fitts doing now?
Besides trying to recover her life, she's moving ahead with
her new company called Solari Inc., and her vision, the
Solari Investment Model, community-based programs for local
equity building and investment.
"Solari is an
investment advisory service, which plans to re engineer
investment and financial structures at a local level, so
that new technology can be integrated into communities to
increase jobs and ownership," says Fitts.
"Over the
last ten years, we have prototyped a substantial number of
transactions, venture capital and portfolio strategy to
determine the ideal way to refinance communities in the
stock market," she continues. "Our intention is to create a
fund which can finance local development -- and maintain
local control -- through an investment model geared for
breakthrough transformations with individual, organizational
and community change."
Her far-reaching vision is an
inspiration. "By creating one or two Solari Stock
Corporations (one for real estate and one for venture
capital) through a community offering, and swapping
non-voting stock for outstanding debt," says Fitts, "the
community can lower short term debt service and realign
interests between numerous constituents who can be
positioned in a win-win financial model."
The
problem, in one sense, is simple. The old model -- the
Soviet-inspired centralized command & control system which
rules Washington, its agencies and the beltway bandits
feeding at the trough of corporate subsidies -- must give
way to the new paradigm of the neighborhood investment
model. It's a foregone conclusion: the corrupt system which
guarantees profits to insiders will be swept into the ashcan
of history, just as the Soviet Union and its proxies' brand
of communism has been discredited forever. It's just a
matter of time.
In the end -- by building an
alignment between spirituality and the material world --
Catherine Austin Fitts believes that "everyone can prosper
through actions which integrate our spiritual principles in
the material world in which we live and work."
For
more information of the Solari Model of Investment and
community-based profitability, click on
http://www.solari.com.
Copyright 2000 Uri
Dowbenko.
All Rights Reserved.
Posts
Trial
lawyers making sexual abuse allegations against Catholic priests can
count on explosive national media coverage. This lawyer cannot. There is
virtual silence. None of the broadcast or cable news networks is
reporting on this lawsuit. The Los Angeles Times and New York Times
reports have been brief. USA Today and The Washington Post haven’t
located the story at all.
