The Silence of the
Sightings from The Catbird Seat
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November 01, 2009 Issue
Copyright © 2009 The American Conservative
Who’s Afraid of Sibel Edmonds?
The gagged whistleblower goes on the record.
Sibel Edmonds and Philip Giraldi
Sibel Edmonds has a story to tell.
She went to work as a Turkish and Farsi translator for the FBI five days after 9/11. Part of her job was to translate and transcribe recordings of conversations between suspected Turkish intelligence agents and their American contacts. She was fired from the FBI in April 2002 after she raised concerns that one of the translators in her section was a member of a Turkish organization that was under investigation for bribing senior government officials and members of Congress, drug trafficking, illegal weapons sales, money laundering, and nuclear proliferation. She appealed her termination, but was more alarmed that no effort was being made to address the corruption that she had been monitoring.
A Department of Justice inspector general’s report called Edmonds’s allegations “credible,” “serious,” and “warrant[ing] a thorough and careful review by the FBI.” Ranking Senate Judiciary Committee members Pat Leahy (D-Vt.) and Chuck Grassley (R-Iowa) have backed her publicly. “60 Minutes” launched an investigation of her claims and found them believable. No one has ever disproved any of Edmonds’s revelations, which she says can be verified by FBI investigative files.
John Ashcroft’s Justice Department confirmed Edmonds’s veracity in a backhanded way by twice invoking the dubious State Secrets Privilege so she could not tell what she knows. The ACLU has called her “the most gagged person in the history of the United States of America.”
But on Aug. 8, she was finally able to testify under oath in a court case filed in Ohio and agreed to an interview with The American Conservative based on that testimony. What follows is her own account of what some consider the most incredible tale of corruption and influence peddling in recent times. As Sibel herself puts it, “If this were written up as a novel, no one would believe it.”...
CONTINUED AT ... http://sites.google.com/site/cv0500030justicevsharmon/home/cvo5-00030---witness-index/witness-sibel-edmonds
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October 5, 2009
FBI Veteran Executive Calls For Special Counsel Investigation, Prosecutions in Sibel Edmonds Case
Details panic inside the Bureau, executive effort to 'keep this whole thing quiet' when matter first came to light in 2002, further confirms FBI translator/whistleblower's allegations, credibility...
By Brad Friedman
An 18-year Counterintelligence and Counterterrorism Manager for the FBI has called for a Special Counsel to be appointed to investigate the allegations of FBI translator-turned-whistleblower Sibel Edmonds. John M. Cole, who now works as an intelligence contractor for the Air Force, made his comments during an audio interview released late last week with radio journalist Peter B. Collins.
He also offered a detailed insider's look at the concerns among high-level officials inside the Bureau as Edmonds' disturbing allegations began coming to light back in 2002, before they would be quashed for seven long years by the Bush Administration's unprecedented use of the so-called "State Secrets Privilege" to gag her.
Earlier last week, following the publication of a remarkable American Conservative magazine cover story interview with Edmonds --- detailing a broad bribery, blackmail, and espionage conspiracy said to have been carried out between current and former members of the U.S. Congress, high-ranking State and Defense Department officials and covert operatives from Turkey and Israel, resulting in the theft and sale of nuclear weapons technology on the foreign black market --- Cole had been quoted by the magazine confirming one of Edmonds' key allegations.
"I am fully aware of the FBI's decade-long investigation of" Marc Grossman, he said in response to the AmCon article/interview. Grossman had served as the third-highest ranking official in the Bush State Department and was alleged by Edmonds in the interview, and in a sworn, video-taped deposition a month earlier, to have been the U.S. ringleader for a massive Turkish espionage scandal reaching through the halls of power and into top-secret nuclear facilities around the country to the benefit of allies and enemies alike. Cole said that the FBI's counterintelligence probe "ultimately was buried and covered up," and that he believes it is "long past time" for an investigation of the case to "bring about accountability."
In his subsequent interview with Collins last week (audio and text excerpts posted below) Cole elaborated on those comments in much greater detail, noting that Edmonds has been "one hundred percent right on the money, on the mark" and confirming the existence of an "ongoing and detailed effort by Turkey to develop influence in the United States" through various illegal activities.
"Yes, I can confirm that," Cole told Collins, "That's true."
The FBI veteran executive also offered an insider's account of the panic that ensued inside the highest echelons of the bureau following Edmonds' first disclosure of information in 2002, recounting how an executive assistant director admitted to him at the time, just after the story first broke, "Well, all I know is that everything that Sibel is stating is true. I read her file. Everything she stated is, in fact, accurate."
"Everybody at headquarters level at the bureau knew that what she was saying was extremely accurate. ... They were trying to figure out ways of keeping this whole thing quiet, because they didn't want Sibel to come out."
Cole further describes how the concerns about Edmonds ultimately led to the Bush Administration's two-time use of the Draconian "State Secrets Privilege" in hopes of keeping her extraordinary information from becoming public. "Everybody at headquarters level at the bureau knew that what she was saying was extremely accurate."
"I know they didn't want her to go out and speak about it at all," Cole revealed, "and I know they were trying to figure out ways of keeping this whole thing quiet, because they didn't want Sibel to come out."
He also offered information which directly counters one of the criticisms of Edmonds' allegations as frequently offered by skeptics. Namely, that as a short time FBI contract translator --- even though she was tasked to review some seven years of counterintelligence wiretaps made from 1996 to 2002 --- she couldn't have had enough understanding of the full scope of the investigations to understand what was really going on.
"The thing is," Cole explained to Collins, "the position that Sibel was in, she had access to extremely sensitive information. The translators have access to some of the most sensitive information that we receive."
He detailed how first-hand information goes first from the translators to the investigators who then act on it, as some of the most important information collected by FBI language specialists could have "implications that may affect even the White House, or policy."
"So what I'm saying is, I know she had access to some very sensitive stuff, and I could see why the Bureau would squirm over her coming out and speaking about some of the things that were going on."
The interview concluded with Cole's reiteration of both his confidence in Edmonds' credibility, and his call for accountability.
"I would love to see, especially with the allegations that Sibel has come out with, her allegations --- which I believe are in fact true, I have no reason to doubt what she's saying --- I would love to see somebody take that, a Special Counsel or whatever, some group of people that you could trust, have them investigate those allegations and have people's feet held to the fire. Have them be held accountable for their actions --- and prosecuted if they've done wrong."
"You know, no one's above the law, and no one should be above the law," he added, along with one more chilling thought: "You know, it really irritates me that people are getting away with murder, in some cases. They should not be allowed to get away with that. There needs to be accountability. And that's what I'd love to see."
September 2, 2009
Kabul U.S. Embassy Guard: Sexual
Deviancy Required for Promotion
Whistleblower Says Bosses Required Sex Acts
for Guards Seeking Best shift, Promotion
By BRIAN ROSS, RHONDA SCHWARTZ and KIRIT RADIA
Private security guards at the U.S. Embassy in Kabul were pressured to participate in naked pool parties and perform sex acts to gain promotions or assignment to preferable shifts, according to one of 12 guards who have gone public with their complaints.
In an interview with ABC News for broadcast tonight on the "World News with Charles Gibson," the guard, a U.S. military veteran, said top supervisors of the ArmorGroup were not only aware of the "deviant sexual acts" but helped to organize them.
"It was mostly the young guys fresh from the military who were told they had to participate," said the guard, who talked on a phone hook-up arranged by the Project on Government Oversight, which first revealed photographs of the parties.
They were not gay but they knew what it took to get promoted," said the guard, spoke on condition that ABC News not publish his name.
The State Department said it was investigating the allegations and the circumstances surrounding the photographs which show naked and barely clothed men fondling one another. The guard who spoke with ABC News said the drunken parties had been held regularly for at least a year and a half.
The State Department renewed its contract with ArmorGroup to provide security at the Kabul embassy last month even though there have been a series of complaints about its performance.
In June 2007, the State Department warned "the security of the US embassy in Kabul is in jeopardy" because of "deficiencies" on the part of ArmorGroup.
Similar complaints were raised at a Senate hearing in June 2009 by Sen. Claire McCaskill (D-MO).
Sam Brinkley, vice-president of the ArmorGroup's corporate parent Wackenhut Services, defended the company's performance in Kabul.
"We are a guard company that prides itself in doing missions well," Brinkley testified.
Wackenhut did not immediately return requests for comment.
August 11, 2009
Boeing to pay $2 million in
BY GUILLERMO CONTRERAS, SAN ANTONIO EXPRESS-NEWS
The Boeing Co. has agreed to pay $2 million to the Justice Department to settle a whistleblower's claims that the contractor cheated taxpayers by falsifying billing records at a San Antonio plant that maintains Air Force planes.
The litigation, filed in 2006 by former Boeing employee Edward Quintana, claims Boeing manipulated records to show more people had been making repairs or maintenance on KC-135 tankers when it was usually just one person -- Quintana.
The lawsuit had been kept secret for three years as the Justice Department looked into his allegations, and then joined the suit.
Federal law requires such "qui tam" lawsuits to proceed under seal until the government feels they are ready to be made public. The suit was unsealed by the U.S. attorney's office after Assistant U.S. Attorney Harold Brown Jr. helped negotiate the settlement.
Quintana, under federal law, is entitled to 15 percent to 25 percent of the $2 million payout, according to his lawyers, Glenn Grossenbacher and John Clark.
Despite settling, Boeing denies the allegations and is separately fighting Quintana over his claims that he was wrongly terminated.
"We cooperated fully with the government during the course of the negotiations with this settlement," Boeing spokeswoman Deborah Vannierop said. "In the negotiations, Boeing denied it had made any false claims. The settlement is consistent with Boeing's denial. Further, we have taken action to correct internal charging issues. In no time was readiness compromised during the internal charging issue ... We continue to support the war fighter by keeping the KC-135 mission-ready."
Quintana claims Boeing made false claims at what was formerly known as the Boeing Logistics Support System at then-KellyUSA in San Antonio. The former Air Force base is now called Port San Antonio and the maintenance facility is now known as Boeing's Global Services and Support San Antonio Facility.
The suit alleges that, for at least three years -- from 2002 to 2005 -- that Boeing plant inflated its estimates of how many labor hours were required to do "non-routine" repairs and maintenance tasks on the KC-135, and then falsified the records to inflate the number of workers who did the repairs.
The work Quintana did involved maintenance of horizontal stabilizers on the KC-135 tankers, including removing paint, primer, coatings, corrosion, resurfacing, and, when necessary, fabricating and installing titanium alloy shims and bushings.
But while it took Quintana eight or nine hours alone to do the work, the billing records were changed to show "people who had never been near the plane," Grossenbacher said.
The change allowed Boeing to keep charging that amount as it renegotiated the contract.
"They didn't want anybody to get the idea that this job could be done in smaller numbers of hours," said Clark, a former U.S. attorney in San Antonio.
Boeing started working on the KC-135 program depot maintenance in 1998. In September 2007, Boeing was awarded a 10-year contract, but competitors have protested that award. Boeing continues to perform the work under a "bridge" contract while it is put up for bid, Vannierop said. She declined to specify how much the contract award is for.
Vannierop also declined to address Quintana's claims that Boeing retaliated and fired him because he reported the violations, citing ongoing litigation on those issues. But she said the company encourages employees to report wrongdoing.
©1996-2009 Seattle Post-Intelligencer
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KARL ROVE & THORNS IN THE ROSE GARDEN
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February 24, 2009
Calling All Whistleblowers! The SEC Wants You
By Robert Chew
From "Sir" Allen Stanford's recent alleged $8 billion CD sticky wicket to Bernie Madoff's $50 billion decades-long lie, it seems each new day brings another round of financial madness, and yet no one person or government agency seems to be moving fast to find a cure. But the Securities and Exchange Commission's Inspector General, David Kotz, is all ears for one group with answers: Wall Street's whistleblowers.
Kotz is the man saddled with the responsibility for uncovering why the SEC missed Madoff's $50 billion Ponzi. He's also putting together reports later this year that will make recommendations for agency reforms. "We hope to have a Madoff investigation report completed by the end of summer," says Kotz. "We expect to have the audit report recommendations shortly thereafter." (Follow Madoff's downfall in pictures.)
To accomplish all that, Kotz and his team are listening carefully to whistleblowers like Harry Markopolos, the private securities fraud investigator who dogged Madoff for years and whistled loudly, and to others, both inside and outside the agency. "Harry has been helpful for two reasons; he has specifics on how Madoff operated and how he claims the SEC failed in listening to him. We are also listening to his recommendations for change within the agency."
"We're going outside the agency for ideas," said Kotz. "It's good to have a different perspective."
How important are whistleblowers in catching investor fraud? According to Stephen Obie, acting director of the division of enforcement at the Commodity Futures Trading Commission, over 50% of Ponzi schemes and other frauds he investigates come to him through whistleblowers and investor complaints. The CFTC is the sister agency of the SEC, handling commodities, futures, and foreign currency fraud.
Even the SEC's new chairman, Mary L. Schapiro, in a recent speech said she wants to improve the SEC's "handling of tips and whistleblower complaints," though an SEC spokesman said it has no plans in the works.
Obie and his team have uncovered seven new Ponzi schemes this year alone, the most recent being this week's $4.4 million affinity Ponzi hitting Hawaii's deaf community and, though not officially called a Ponzi, the SEC's alleged $8 billion CD fraud by R. Allen Stanford, the globe-trotting financier and cricket impresario.
Markopolos has made several recommendations to the SEC, including moving the commission to the financial centers in New York and Boston, finding more trained "foxes" who know the business, the creation of a "super agency" that would have teeth, or the total disbanding of the agency and turning things over the New York Attorney General's Office and the Massachusetts Securities Division, which have "done a fantastic job and at an unbelievably low cost."
Then there's Laura Goldman, another lone voice in the wilderness of Wall Street enforcement. Goldman, who blew whistles on such notable investment frauds as First Jersey Securities, Bayou Hedge Fund and Lydia Capital, among others, now has the full attention of SEC Inspector Kotz's office. In all, Goldman says she has alerted the SEC over 30 times and, despite its cold shoulder, through one means or another she has seen 25 of those tips lead to fraud charges being filed.
"I wish the SEC had listened to me earlier; I could have saved a lot of people a lot of pain and suffering," the Wharton School of Business-trained Goldman said from her home in Tel Aviv, where she runs her own money management firm, LSG Capitol. In her 25-year career she's worked at Merrill Lynch and Paine Webber.
After she talked about Madoff's operations on a Fox News TV show in mid-January (as an investment adviser, Goldman knew of Madoff but did not do business with him,) Kotz's office contacted her to ask her about Madoff, she says. Kotz and his staff also asked her for any suggestions she might have to fix things at the commission.
In early February, Goldman provided Kotz's office with a list of 11 recommendations to fix the agency, including a 10% bounty on uncovering fraud, a retail-broker-trained commissioner, greater authority to jail or to levy severe financial penalties, and an online clearinghouse for complaints. In response, Heidi Steiber, senior counsel to Kotz, told Goldman that "many ideas were worthy of consideration."
It's not just lip service either. One central theme Kotz is working on for his recommendation reports is creating new fraud-finder incentives, both monetary and other.
"It looks like a big focus will be in creating a new incentive structure so folks will come forward to the SEC when they know something," says Kotz. "We know people knew things about Madoff, but we don't know why they don't come to us."
Imagine getting 10% for blowing the whistle on Madoff's $50 billion scam. "It's a simple thing that will stop a lot of fraud fast," says Goldman.
Kotz said his reports will have comprehensive recommendations, but warned that doesn't mean the agency will implement them. And though some fixes, a proposed rule to separate custodian accounts for hedge fund assets, may make it harder for thieves, smart fraudsters "will just begin to work in pairs; one will run the scam and the other will run the custodian operation," says Goldman.
In the end, people like Markopolos and Goldman may have more answers than Kotz and his staff want to hear, but they are at least taking notes. "If Markopolos approached me, I might have thought he was a nut case," says Goldman, "But when you read his presentation, you would be forced to change your mind. It's very persuasive. People like us are different, that's why we do what we do. We are a little crazy, but we see harmful things and we want them stopped."
(See the top 25 people to blame for the financial collapse)
February 6, 2009
Halliburton Whistleblower Requests Your Help To Protect Taxpayers
From: "National Whistleblowers Center - Bunny Greenhouse" firstname.lastname@example.org
To: “Bobby N. Harmon”
Personal Letter From Bunny Greenhouse
Take Action! Please Urge Your Senators To Support Taxpayers!
Dear Action Alert Member:
My name is Bunny Greenhouse. I am the former Procurement Executive and highest-ranking Army Corps of Engineers civilian procurement official.
Today I am asking you to contact your Senators and Representatives to demand, in the strongest possible terms, that employees who disclose fraud in federal contracting are fully and properly protected in the 800 billion dollar stimulus package that Congress is currently debating.
Shortly before the Iraq War commenced, I blew the whistle on improper contracting concerning the award of a multi-billion dollar no-bid, cost plus contract to Halliburton / KBR for the reconstruction of Iraq.
I was concerned that improper contracting activity would cost the taxpayers billions – and it did. The contract should not have been awarded. From my inside prospective, it was clear that the “fix was in” – the contract was going to be awarded to Halliburton no matter what I said or did.
Those who should have protested the contract remained silent. And their silence is not surprising because, as federal employees, we have no meaningful whistleblower protection! We can be fired for reporting fraud. We can lose our careers simply for doing our job and trying to protect the taxpayer.
I know this is true. It happened to me. The top brass demanded that I drop my protests. I refused. The top brass – many of whom had longstanding relations with government contractors – retaliated. They removed me from the Senior Executive Service and from anything having to do with contract oversight. When I went to federal court to demand protection the judge dismissed my case because as a federal employee I had no protection.
The bottom line is that without access to independent courts, real judges and juries, whistleblowers don’t stand a chance, and fairness and transparency will not see the light day.
Only Congress can fix this. The House of Representatives has already acted decisively by adding H.R. 985 to the stimulus bill, by a unanimous voice vote (now called H.R. 1, Section IV). President Obama's presidential campaign is on record as supporting the same whistleblower protections now found in House version of the stimulus bill.
So, the buck stops with the Senate. I urge you to contact your Senators and let them know that whistleblower protection is a critical part of the stimulus package for protection of the public trust. I urge you to contact your Representatives and tell them to hold strong -- and refuse to cut whistleblower protections from the bill. Federal employees, like me, who risk their careers to protect taxpayer money need to be protected.
Please act now! Pass this letter to your friends! Pass this letter to your co-workers! Pass this letter to your family! Send a letter to your Senator Now!
Billions of taxpayer dollars are at stake and it is up to the Senate to do the right thing.
Very truly yours,
Bunnatine H. Greenhouse
Former Procurement Executive
Army Corps of Engineers
National Whistleblower Center Action Alert
February 04, 2009
Bravo Harry Markopolos! The Man Who Unmasked Madoff
By The Greek
While every other Congressman mispronounced his name, Harry Markopolos turned out to be a hero on a grand scale. Harry testified before a House panel today on his long-unheralded but finally understood unveiling of Bernie Madoff. The details of his heroic effort were broadcast in living color to the masses today.
The lengths to which this man went for the sake of righteousness are unheard of in today's dirty society. His selflessness and concern are as rare to find in today's society as we suspect it is to find a pilot who can successfully land an airplane on a river without any engine power. It's good to know that in this world of greed ridden thieves and selfish heartlessness, there are still heroes as well.
Harry Markopolos told the House Financial Services Committee today that it took him about five hours to figure out that Bernie Madoff was a fraud. He said it was plainly evident, but he did some financial modeling to prove it. Markopolos noted the hardest evidence was found in the Wall Street Journal options section; you could match up his options holdings to the WSJ's accounting of the open interest on these securities.
He said, you would clearly see that Madoff was claiming to own more options than even existed on the market for some securities. Of course, we also know that Madoff's holdings list included a mutual fund that had ceased to exist. Harry agreed he probably put a hundred hours (or so) into evidence compilation, all for the sake of justice and "for the American flag," as he put it.
The Congressmen commended Harry, and even offered him a key job at the SEC. He responded in what is now understood as classic Harry selfless manner, that family obligations would keep him from taking such a job for at least the next two years. This was reminiscent to me of a rumor I heard about his initial response to film producer inquiries.
When asked about movie rights and such, he responded that he had no interest; that Hollywood would just pervert the story with sex and drugs.
You watched the man on C-SPAN, and you thought to yourself, is he real? Is this possible? Can someone like this still exist in today's day and age? Yes he is for real! When God looks at Harry on his C-SPAN in the sky, we suspect he likes what he sees.
During his testimony, Mr. Markopolos even noted that he offered to go undercover for the sake of justice, something far and beyond the call of duty of a private citizen of this country. The story seems made for film, no doubt, as it included real cloak and dagger. Mr. Markopolos said he discerned there was a good chance Eliot Spitzer might be a Madoff investor. Thus, he submitted his information to the New York Attorney General's office in a manner worthy of James Bond. He insured there was not a trace of his finger prints on the document, and kept his name relatively unknown to the group. He went even farther than this, offering his services to the SEC, to go undercover, keeping his identity unknown to all in order to bring Madoff to justice. I must admit that it seems a bit much when watching it from the comfort of your living room, but try to imagine how far someone who was in as deep as Madoff might go to ensure his theft remained under the radar.
Relative to this concern, Congressman Ackerman asked Harry exactly why he feared for his life. He then noted Harry's mention of mafia funds invested through Madoff's offshore feeder funds. Ackerman sought to tie the two together in asking if there was some unreported threat against Markopolos. Harry comically, while at the same time very seriously, noted directly to the "Russian mobsters and Latin American drug cartels" that might be watching, that he was acting on their behalf, to save their money from Madoff's theft of them. Gee wiz... if there were ever a good reason to keep Madoff locked away in isolation, and not roaming freely on the Upper East Side, it would seem a vengeful mafia interest would be adequate enough.
When asked by Congressman Ackerman if Madoff could have acted alone, Markopolos sternly responded, "No!" Harry said "he had a lot of help," specifically a robust IT department making sure all the false transactions added up. He noted that the people handling the wire transfers of incoming and outgoing funds must have had dirty hands as well.
Madoff cunningly kept under the radar by "auditor shopping." According to Markopolos, Madoff had three different auditors from three different countries for the year end reporting of 2004, 2005 and 2006. Auditor shopping is something a reporting firm might do to best ensure it received a favorable opinion, and changing auditors each year might have occurred in order to keep any one auditor from gaining too much familiarity with Madoff's operations.
The auditors likely viewed association with Madoff as a great testament to their own businesses and a useful marketing tool, at least when signing on. In any event, the auditors come into question now, since they either failed due to incompetence or due to participation.
One Congressman, who seemed a huge fan of this analytical hero, asked him how he knew exactly where the money was. Markopolos strongly replied, "My team was out there in the field talking to the Madoff feeder funds and identifying who they were...we identified 14 feeder funds, of which only two have come public. There are twelve more out there hiding in the weeds." This man, who is quickly becoming a legend of modern financial market history, is turning over a list of these funds to the SEC Inspector General on Thursday.
The House Committee apologized to Markopolos for failing him, and for the SEC's failure of him. The story of the many failures of the Securities and Exchange Commission is a long one, and destined for its own article here. This piece is meant to shed light on one of this generation's heroes, and to remind the world that good men still exist. Harry's day must have offered one of those moments most of us experience at some point in our lives; it's when our efforts are finally understood, that moment when we can exhale.
God bless you Harry.
You can exhale now.
December 17. 2008
SEC Chairman says agency failed to investigate Madoff
Associated Press - Yahoo News
WASHINGTON – Securities and Exchange Commission chairman Christopher Cox said Tuesday his agency repeatedly failed for at least a decade to pursue allegations of wrongdoing by Wall Street figure Bernard L. Madoff, the alleged perpetrator of a $50 billion Ponzi scheme.
Cox ordered a probe by the SEC's inspector general, saying the agency's staff had never brought the Madoff matter to the attention of commissioners.
Since the SEC staff never recommended that the commission open a formal investigation, subpoena power was not used to obtain information and the staff relied on information voluntarily produced by Madoff and his firm.
"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them," Cox said in a statement.
In a forceful condemnation of the SEC staff, Cox said there had been credible and specific allegations regarding Madoff's financial wrongdoing going back to at least 1999.
The SEC chairman's criticism of his own agency marks only the latest instance in which federal regulators have overlooked clear warning signs of possible fraud.
Its oversight of the Wall Street investment houses drew significant criticism. A review by the SEC inspector general determined that the agency's monitoring of the five biggest Wall Street firms, which included Bear Stearns, was lacking.
Cox's statement on Madoff was a stunning declaration in a scandal that has produced a series of dramatic developments.
Shock waves from the Madoff affair have radiated around the globe as the number of prestigious charitable foundations, big international banks and individual investors said to have fallen victim to an unprecedented fraud has grown. U.S. investigators are laboring to deconstruct the scheme.
The SEC chairman alleged that Madoff kept several sets of books and false documents, and provided false information involving his advisory activities to investors and to regulators.
Cox also ordered the removal from the ongoing investigation of any SEC staff members who have had contact with Madoff or his family.
Madoff remains free on $10 million bail.
Since his arrest on Thursday, the SEC has been under increasing pressure to explain why it didn't uncover the prominent Wall Street figure's criminal activity years ago.
Hours before Cox denounced his own staff, a former SEC chief accountant, Lynn Turner, said that "I can't comprehend how a well-run investigation would have missed a fraud of this magnitude."
Another expert agreed. "The fact that that this could go on for so long with someone who was known to the agency raises questions of the effectiveness of our regulatory scheme," said Charles Elson, the director of the Weinberg Center for Corporate Governance at the University of Delaware.
The SEC's enforcement division looked into Madoff's business in 2007. The agency did not refer the matter to commissioners for legal action. What did the investigators find and why didn't they look harder? Until Tuesday night, the SEC had refused to say anything beyond a brief statement it issued Friday revealing the 2007 probe.
Cox himself has come in for strong criticism.
In March, a few days before Bear Stearns nearly collapsed into bankruptcy, Cox told reporters the agency was closely monitoring the five firms and had "a good deal of comfort" in their capital levels. Then as federal officials orchestrated the rescue, Bear Stearns was bought by rival JPMorgan Chase with a $29 billion government backstop.
The chairman of the Senate Banking panel that oversees the SEC, Sen. Jack Reed, D-R.I., said in an interview Tuesday that the Madoff affair "illustrates the lack of credible enforcement over several years by the SEC." He criticized the agency's "lack of a strong commitment to be vigilant."
In the Madoff case, a securities executive, Harry Markopolos, complained to the SEC's Boston office in May 1999. Markopolos told the SEC staff they should investigate Madoff because he felt it was impossible for the kind of profit he was making to have been gained legally.
But the SEC's Boston office has itself been accused in the past of brushing off a whistle-blower's legitimate complaints, in a case that led the head of that office to resign in 2003. The whistle-blower, Peter Scannell, eventually persuaded state regulators and the SEC to act against mutual fund giant Putnam Investments, where Scannell worked.
"It's flabbergasting that nobody can nail the bums in the SEC who turn their back on and/or aid and abet people who defraud investors," Scannell said in a telephone interview Monday.
Before Tuesday, Cox said that his agency had taken decisive actions in response to the market turmoil, including an unprecedented temporary ban this fall on short-selling of stocks of financial companies. The SEC also has procured billions of dollars in settlements with big investment banks that have agreed to buy back auction-rate securities from investors hurt by the collapse of that market in February. Auction rate securities are debt instruments, typically issued by a municipality, in which the yield is reset on each payment date via a Dutch auction, a method of selling in which the price is reduced until a buyer is found.
December 16, 2008
THE FINTAG NEWSLETTER
Madoff part 2.
Last Thursday the news broke and it hardly registered a blip on the news radar. Today we face financial meltdown of the hedge fund industry and the loss of tens of billions of dollars and the destruction of livelihoods.
Yesterday I looked critically at the investors who had not read the prospectuses or carried proper due diligence. The problem with Madman Madoff's funds is you could only touch them by investing through feeder funds. These feeder funds were promoted by interested parties who put layers of fees on top and sold them as proper fund of funds.
Take the Fairfield Sentry fund. It has a proper Auditor - PWC, an administrator and a custodian - Citco. It is a BVI fund and is managed by a well known Investment Manager. So far, so good. Ok, the custodian only looks after 5% of the assets (the other 95% are looked after by Madoff) but unless you like reading small print it looks like fine.
The biographies of the managers are respectable, including Jeffrey Tucker who used to work as a lawyer for the SEC. The fund has a board including 2 directors located in risk adverse Switzerland. One of the directors is not paid which is strange but I guess he must be paid elsewhere. Thankfully, Goldman Sachs is a sub custodian although I think Refco must have been a misprint.
The Investment objective is "The Fund seeks to obtain capital appreciation of its assets principally through the utilization of a nontraditional options trading strategy described as "split strike conversion", to which the Fund allocates the predominant portion of its assets. This strategy has defined risk and profit parameters, which may be ascertained when a particular position is established ..." and sounds quite convincing.
I am not so sure about the Investment Restrictions including "e) no more than 10 percent of the Net Asset Value of the Fund may be invested in securities of countries where immediate repatriation rights are not available;" but I like the fact US citizens are excluded - "The Fund will require as a condition to the acceptance of a subscription that the subscriber represent and warrant that he has a net worth in excess of U.S. $1,000,000 and is not a U.S. person".
The 13 year track record averages in excess of 10% a year and its volatility is very low indeed. The fund has grown and subscriptions exceed redemptions so it must be a popular.
Excellent. So where did it go wrong? Well PWC have some explaining to do. It looks like they never validated the underlying investments. Madoff obviously just gave them the NAVs and they took them as red. Citco's care of duty is to look after the assets and it has done so. Shame it only looked after 5% but that is better than nothing. The manager should perhaps have carried out some proper due diligence on the underlying but then it made so much in fees it got a bit punch drunk.
So there you go. A sound investment run by people who didn't quite do their jobs. I take back all my negative posturing and instead tell you how I see it through a slew of crap cartoons and virals....
Date: Thu, 5 Jun 2008 10:51:02 -0400 (EDT)
From: "Public Citizen" <email@example.com>
Subject: Whistleblowers still at risk
Tell Congress to stop dragging its feet and protect government employees who risk their jobs to expose wrongdoing.
It's not too late to contact your members of Congress to protect government whistleblowers!
When scientific research is altered or suppressed, government contractors waste millions of taxpayer dollars, or national security documents are falsified, witnesses need to know that they can blow the whistle without reprisals endangering their careers and their lives.
Last year, strong whistleblower protection bills were passed in both houses of Congress. Now it's time for Congress to finish the job by passing a final bill.
We will continue to push for strongest possible protections for government employees who blow the whistle on waste, fraud and abuse -- and you can still make a difference.
TAKE ACTION: Demand that Congress pass the strongest possible bill for consumers!
Daniel De Bonis
DOJ Whistleblower Spotlighted on "This American Life"
Posted on June 3, 2008 by Marshall Chriswell
Last week on "This American Life," Chicago Public Radio's overwhelmingly popular radio show, thousands of listeners heard the riveting story of DOJ whistleblower Rick Convertino.
Mr. Convertino is a former top United States Prosecutor who successfully prosecuted the first terrorist case after 9/11. After winning the case, he blew the whistle to the U.S. Senate about serious DOJ misconduct in the war on terror. He was severely retaliated against and lost his career. In an unprecedented act of vengeance, the DOJ indicted him for obstruction of justice. A jury of his peers found him not guilty on all counts.
Mr. Convertino is currently pursuing a privacy act violation case against the Department of Justice.
Click here for the podcast.
FBI Whistleblower's Testimony Spurs Congressional Action
Posted on May 28, 2008 by Marshall Chriswell
Last week Supervisory Special Agent Bassem Youssef testified before members of the House Judiciary Committee, telling them that two of every three positions in the FBI's critical counterterrorism units have remained unstaffed since 9/11. He also explained that, of the agents who are currently working counterterrorism, few have the expertise or the training required to do the job correctly.
In a extraordinarily positive step, House and Senate leaders have taken notice of Mr. Youssef's forthright testimony, and a bi-partisan group of lawmakers is now calling for the GAO to conduct an independent "review of the FBI’s human capital management strategy."
For further information, see this article in Congressional Quarterly
The National Whistleblower Center has issued an Action Alert on this issue , urging supporters to help protect Mr. Youssef from retaliation by emailing the Attorney General.
April 3, 2008
FAA Whistleblower Says
He Was Threatened
(CBS/AP) A House committee reported the findings of its investigation into the Federal Aviation Agency's safety oversight Thursday and heard testimony from airline safety inspectors and the Transportation Department's inspector general.
The whistleblowers who exposed maintenance and inspection problems at Southwest Airlines told Congress their jobs were threatened and their reports of noncompliance were ignored for years by their superiors.
FAA inspector Douglas Peters choked up Thursday at the hearing and needed a few sips of water to tell lawmakers about how a former manager came into his office, commented on pictures of Peters' family being most important, and then said his job could be jeopardized by his actions.
Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee, said FAA managers' actions displayed "malfeasance bordering on corruption," adding that if presented to a grand jury, the evidence would result in an indictment.
The Minnesota Democrat led Thursday's hearing.
The FAA last month took the rare step of ordering the audit of maintenance records at all domestic carriers following reports of missed safety inspections at Dallas-based Southwest. The airline was hit with a record $10.2 million fine for continuing to fly dozens of Boeing 737s that hadn't been inspected for cracks in their fuselages.
Both FAA whistleblowers - Charalambe Boutris and Peters - said the agency views the airlines as its "customers" instead of companies to be regulated. They said the FAA's chief maintenance inspector at Southwest, Douglas T. Gawadzinski, knowingly allowed Southwest to keep planes flying that put passengers at risk, and that another inspector knew of the problem and did nothing.
Gawadzinski is still employed by the FAA, but has no responsibility for safety decisions, said Nicholas Sabatini, the agency's associate administrator for aviation safety. The FAA will "take whatever action the law will allow" when the investigation into the Southwest episode is complete, he added.
Gawadzinski was not asked to testify at Thursday's hearing because he was considered to be a hostile witness who would most likely refuse to answer questions that could have incriminated himself, according to a spokesman for the House Transportation and Infrastructure Committee.
Chairman Oberstar said as long as the FAA views the airlines as customers "that culture of safety will not take hold and is not going to permeate the organization."
Southwest is not the only carrier that has benefited from a "cozy" relationship with regulators, said Tom Brantley, president of the Professional Aviation Safety Specialists union that represents FAA inspectors.
In testimony prepared for the hearing, Brantley details maintenance and safety issues at United, Continental Airlines Inc., Northwest Airlines Corp., Hawaiian Airlines Inc. and elsewhere where the carriers were given great leeway by the FAA to correct problems that inspectors on the ground said merited more serious attention. Financial penalties for infractions suggested by inspectors against United and other carriers also were ignored or significantly reduced by the time they were assessed, he added.
Adding to the airline industry's problems is the growing number of U.S. air travelers who have endured longer lines, more delays and the loss of amenities like meals and blankets.
And now they are getting hit with a wave of schedule disruptions caused by airlines scrambling amid increased regulatory scrutiny to ensure that the expanding air transport system stays safe.
The latest complication came Wednesday, when United Airlines temporarily grounded dozens of Boeing 777s to test their cargo fire-suppression systems.
United said it canceled 41 flights and delayed dozens of others as it carried out work on the long-haul jets after a review of maintenance records showed that a test on a bottle in the fire suppression system hadn't been performed.
The move affected thousands of passengers around the world, as United's 777s mostly fly international routes from its major hubs. Among those grounded was a 777 used by many members of the White House press corps, who were traveling with President Bush in Romania - though it wasn't set to fly again until Friday....
The FAA said Wednesday that four U.S. airlines are under investigation for failing to comply with federal aviation regulations, but would not name the carriers. Officials said three airlines had missed inspection deadlines and that penalties could be levied, though it would be several months before the probe was complete....
The last U.S. crash of a jumbo jet was Nov. 12, 2001, when American Airlines Flight 587 lost part of its tail and plummeted into a New York City neighborhood, killing 265 people.
August 24, 2007
Whistleblowers on Fraud
By DEBORAH HASTINGS, Associated Press
One after another, the men and women who have stepped forward to report corruption in the massive effort to rebuild Iraq have been vilified, fired and demoted.
For daring to report illegal arms sales, Navy veteran Donald Vance says he was imprisoned by the American military in a security compound outside Baghdad and subjected to harsh interrogation methods.
There were times, huddled on the floor in solitary confinement with that head-banging music blaring dawn to dusk and interrogators yelling the same questions over and over, that Vance began to wish he had just kept his mouth shut.
He had thought he was doing a good and noble thing when he started telling the FBI about the guns and the land mines and the rocket-launchers - all of them being sold for cash, no receipts necessary, he said. He told a federal agent the buyers were Iraqi insurgents, American soldiers, State Department workers, and Iraqi embassy and ministry employees.
The seller, he claimed, was the Iraqi-owned company he worked for, Shield Group Security Co.
"It was a Wal-Mart (nyse: WMT - news - people ) for guns," he says. "It was all illegal and everyone knew it."
So Vance says he blew the whistle, supplying photos and documents and other intelligence to an FBI agent in his hometown of Chicago because he didn't know whom to trust in Iraq.
For his trouble, he says, he got 97 days in Camp Cropper, an American military prison outside Baghdad that once held Saddam Hussein, and he was classified a security detainee.
Also held was colleague Nathan Ertel, who helped Vance gather evidence documenting the sales, according to a federal lawsuit both have filed in Chicago, alleging they were illegally imprisoned and subjected to physical and mental interrogation tactics "reserved for terrorists and so-called enemy combatants."
Corruption has long plagued Iraq reconstruction. Hundreds of projects may never be finished, including repairs to the country's oil pipelines and electricity system. Congress gave more than $30 billion to rebuild Iraq, and at least $8.8 billion of it has disappeared, according to a government reconstruction audit.
Despite this staggering mess, there are no noble outcomes for those who have blown the whistle, according to a review of such cases by The Associated Press.
"If you do it, you will be destroyed," said William Weaver, professor of political science at the University of Texas-El Paso and senior advisor to the National Security Whistleblowers Coalition.
"Reconstruction is so rife with corruption. Sometimes people ask me, `Should I do this?' And my answer is no. If they're married, they'll lose their family. They will lose their jobs. They will lose everything," Weaver said.
They have been fired or demoted, shunned by colleagues, and denied government support in whistleblower lawsuits filed against contracting firms.
"The only way we can find out what is going on is for someone to come forward and let us know," said Beth Daley of the Project on Government Oversight, an independent, nonprofit group that investigates corruption. "But when they do, the weight of the government comes down on them. The message is, 'Don't blow the whistle or we'll make your life hell.'
"It's heartbreaking," Daley said. "There is an even greater need for whistleblowers now. But they are made into public martyrs. It's a disgrace. Their lives get ruined."
Bunnatine "Bunny" Greenhouse knows this only too well. As the highest-ranking civilian contracting officer in the U.S. Army Corps of Engineers, she testified before a congressional committee in 2005 that she found widespread fraud in multibillion-dollar rebuilding contracts awarded to former Halliburton (nyse: HAL - news - people ) subsidiary KBR (nyse: KBR - news - people ).
Soon after, Greenhouse was demoted. She now sits in a tiny cubicle in a different department with very little to do and no decision-making authority, at the end of an otherwise exemplary 20-year career.
People she has known for years no longer speak to her.
"It's just amazing how we say we want to remove fraud from our government, then we gag people who are just trying to stand up and do the right thing," she says.
In her demotion, her supervisors said she was performing poorly. "They just wanted to get rid of me," she says softly. The Army Corps of Engineers denies her claims.
"You just don't have happy endings," said Weaver. "She was a wonderful example of a federal employee. They just completely creamed her. In the end, no one followed up, no one cared."
But Greenhouse regrets nothing. "I have the courage to say what needs to be said. I paid the price," she says.
Then there is Robert Isakson, who filed a whistleblower suit against contractor Custer Battles in 2004, alleging the company - with which he was briefly associated - bilked the U.S. government out of tens of millions of dollars by filing fake invoices and padding other bills for reconstruction work.
He and his co-plaintiff, William Baldwin, a former employee fired by the firm, doggedly pursued the suit for two years, gathering evidence on their own and flying overseas to obtain more information from witnesses. Eventually, a federal jury agreed with them and awarded a $10 million judgment against the now-defunct firm, which had denied all wrongdoing.
It was the first civil verdict for Iraq reconstruction fraud.
But in 2006, U.S. District Judge T.S. Ellis III overturned the jury award. He said Isakson and Baldwin failed to prove that the Coalition Provisional Authority, the U.S.-backed occupier of Iraq for 14 months, was part of the U.S. government.
Not a single Iraq whistleblower suit has gone to trial since.
"It's a sad, heartbreaking comment on the system," said Isakson, a former FBI agent who owns an international contracting company based in Alabama. "I tried to help the government, and the government didn't seem to care."
One way to blow the whistle is to file a "qui tam" lawsuit (taken from the Latin phrase "he who sues for the king, as well as for himself") under the federal False Claims Act.
Signed by Abraham Lincoln in response to military contractors selling defective products to the Union Army, the act allows private citizens to sue on the government's behalf.
The government has the option to sign on, with all plaintiffs receiving a percentage of monetary damages, which are tripled in these suits.
It can be a straightforward and effective way to recoup federal funds lost to fraud. In the past, the Justice Department has joined several such cases and won. They included instances of Medicare and Medicaid overbilling, and padded invoices from domestic contractors.
But the government has not joined a single quit tam suit alleging Iraq reconstruction abuse, estimated in the tens of millions. At least a dozen have been filed since 2004.
"It taints these cases," said attorney Alan Grayson, who filed the Custer Battles suit and several others like it. "If the government won't sign on, then it can't be a very good case - that's the effect it has on judges."
The Justice Department declined comment.
Most of the lawsuits are brought by former employees of giant firms. Some plaintiffs have testified before members of Congress, providing examples of fraud they say they witnessed and the retaliation they experienced after speaking up.
Julie McBride testified last year that as a "morale, welfare and recreation coordinator" at Camp Fallujah, she saw KBR exaggerate costs by double- and triple-counting the number of soldiers who used recreational facilities.
She also said the company took supplies destined for a Super Bowl party for U.S. troops and instead used them to stage a celebration for themselves.
"After I voiced my concerns about what I believed to be accounting fraud, Halliburton placed me under guard and kept me in seclusion," she told the committee. "My property was searched, and I was specifically told that I was not allowed to speak to any member of the U.S. military. I remained under guard until I was flown out of the country."
Halliburton and KBR denied her testimony.
She also has filed a whistleblower suit. The Justice Department has said it would not join the action. But last month, a federal judge refused a motion by KBR to dismiss the lawsuit.
Donald Vance, the contractor and Navy veteran detained in Iraq after he blew the whistle on his company's weapons sales, says he has stopped talking to the federal government.
Navy Capt. John Fleming, a spokesman for U.S. detention operations in Iraq, confirmed the detentions but said he could provide no further details because of the lawsuit.
According to their suit, Vance and Ertel gathered photographs and documents, which Vance fed to Chicago FBI agent Travis Carlisle for six months beginning in October 2005. Carlisle, reached by phone at Chicago's FBI field office, declined comment. An agency spokesman also would not comment.
The Iraqi company has since disbanded, according the suit.
Vance said things went terribly wrong in April 2006, when he and Ertel were stripped of their security passes and confined to the company compound.
Panicking, Vance said, he called the U.S. Embassy in Baghdad, where hostage experts got on the phone and told him "you're about to be kidnapped. Lock yourself in a room with all the weapons you can get your hands on.'"
The military sent a Special Forces team to rescue them, Vance said, and the two men showed the soldiers where the weapons caches were stored. At the embassy, the men were debriefed and allowed to sleep for a few hours. "I thought I was among friends," Vance said.
The men said they were cuffed and hooded and driven to Camp Cropper, where Vance was held for nearly three months and his colleague for a little more than a month. Eventually, their jailers said they were being held as security internees because their employer was suspected of selling weapons to terrorists and insurgents, the lawsuit said.
The prisoners said they repeatedly told interrogators to contact Carlisle in Chicago. "One set of interrogators told us that Travis Carlisle doesn't exist. Then some others would say, 'He says he doesn't know who you are,'" Vance said.
Released first was Ertel, who has returned to work in Iraq for a different company. Vance said he has never learned why he was held longer. His own interrogations, he said, seemed focused on why he reported his information to someone outside Iraq.
And then one day, without explanation, he was released.
"They drove me to Baghdad International Airport and dumped me," he said.
When he got home, he decided to never call the FBI again. He called a lawyer, instead.
"There's an unspoken rule in Baghdad," he said. "Don't snitch on people and don't burn bridges."
For doing both, Vance said, he paid with 97 days of his life.
~ ~ ~
See also: http://www.veteransforcommonsense.org/ArticleID/8324
For more, GO TO > > > Leahy Targets Corruption
May 10, 2007
Expand Whistleblower Protections
Your help is needed to protect whistleblowers
When courageous people risk their careers to bring about a more honest and accountable government, they should be protected.
In 2004, Dr. David Graham blew the whistle on the government's inability to protect the public from dangerous drugs. He testified before the U.S. Senate about Vioxx, which caused between 88,000 and 139,000 heart attacks in his 5-year study. Graham's supervisors tried to suppress the study and muzzle the truth. While the FDA tried to discredit him, Merck pulled Vioxx off the market.
Next week, more than 40 public interest groups and hundreds of whistleblowers will gather for an unprecedented event to highlight the need to strengthen whistleblower protections.
If you will be near Washington, D.C. next week or know someone who will, please join us for "Washington Whistleblower Week."
Public Citizen President Joan Claybrook is the keynote speaker for the kickoff event. Learn more and get the details here.
The week's events could not be timelier. The "Whistleblower Protection Enhancement Act of 2007" (H.R. 985) just passed the U.S. House in a 331 to 94 landslide and would better protect federal government contractors and federal employees who work in national security and scientific areas.
Your help is needed to make this bill law. It has yet to be debated by the Senate and faces a possible veto from President Bush. Take action by telling your senators to pass strong whistleblower protections like those passed in the House.
Whistleblowers are true heroes. They stand up to the tyranny of entrenched interests and expose fraud and abuse, often at a terrible personal cost. Please take this chance now to stand up for them.
Daniel De Bonis
Public Citizen's Congress Watch
December 22, 2006
AIG Sues Former Worker for Extortion
Forbes, Associated Press
American International Group Inc. sued a former accounting vice president Friday, alleging she has refused to return company computers and confidential information and has attempted to "harass, extort and injure" the insurer.
The insurance company filed its breach-of-contract claim against Dong "Dee" Chung in federal court in Manhattan on Friday, saying she made allegations of accounting improprieties at the company after being terminated earlier this month for "performance deficiencies and rank insubordination."
AIG said in its lawsuit that Chung, who worked for the insurer for less than a year, has a history of "harassing her former employers and lodging baseless allegations."
"AIG committed to investigate her allegations - which, AIG determined, related to issues that had previously been surfaced and shared with appropriate regulators - but refused her demand for a settlement," the lawsuit says.
Chung responded with "what has become an escalating campaign of harassment and intimidation" that included sending privileged and confidential company legal memoranda to competitors and litigation adversaries and a "daily barrage of emails from numerous changing email aliases to AIG directors, officers and employees," according to the lawsuit.
The complaint alleges that Chung also has ignored AIG's demand that she return a BlackBerry e-mail pager and two company laptops issued to her.
Chung, a U.S. citizen who is believed to be living in Hong Kong, couldn't immediately be located for comment on Friday.
Last year, New York-based AIG announced it would restate more than four years of its earnings and said, without naming its former Chairman Maurice "Hank" Greenberg directly, that former executives at times were able to "circumvent internal controls over financial reporting." Greenberg retired from AIG last year.
Earlier this year, AIG agreed to pay more than $1.6 billion to settle accounting fraud allegations by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. Spitzer, who was recently elected as New York's governor, is pursuing a civil action against Greenberg.
"The complaint speaks for itself," said Chris Winans, an AIG spokesman, on Friday.
Chung joined AIG's New York office in January as a vice president and assistant director for accounting policy in its Comptroller Division and was assigned to be the company's Hong Kong designate in its Office of Accounting Policy in June, according to the lawsuit.
AIG said Chung was "unwilling to cooperate with others at AIG or take direction" from her superiors after her hiring and received a verbal warning in July that her performance was deficient.
The lawsuit says Chung didn't respond to a request for a meeting with her new supervisor in November and didn't report to the office for an 11-day period in late November, even though her supervisor hadn't approved her request for leave.
She also refused a request in early December to work from a new office in Hong Kong and ignored additional requests to meet with her new supervisor, according to the complaint. Chung was terminated on Dec. 6, according to the lawsuit.
"Defendant, in response, alleged that AIG had engaged in accounting irregularities," the lawsuit says. "Defendant concluded her remarks by demanding to know what her 'settlement' would be. Defendant was informed that she would not receive any 'settlement' and that she should raise any concerns about purported improprieties through appropriate channels."
In its complaint, AIG also said that Chung, who was acting as her own legal representative, harassed her former employee, KPMG LLP, in a prior lawsuit and was sanctioned by an appellate court in Chicago.
In an order in June 2004, the 7th Circuit Court of Appeals admonished and reprimanded Chung for "abuse of the court system through frivolous and vexatious litigation."
"Any further such abuse will result in the imposition against her of a bar to further access to the federal courts, except in criminal cases and applications for writs of habeas corpus," the appeals court found.
November 24, 2006
Whistle-blowers tell of cost of conscience
By Catherine Rampell, USA TODAY
He knew there were problems. He didn't think he was one of them.
In 2002, decorated FBI Special Agent Mike German was investigating meetings between terrorism suspects. When he discovered other officers had jeopardized the investigation by violating wiretapping regulations, he reported what he found to his supervisors, in accordance with FBI policy.
At the time, Colleen Rowley, the FBI agent who had raised concerns about how the pre-9/11 arrest of al-Qaeda conspirator Zacarias Moussaoui was handled, was being hailed as a national hero. German says he had also just received a mass e-mail from FBI Director Robert Mueller, urging other whistle-blowers to come forward.
"I was assuming he'd protect me," German says.
Instead, German says his accusations were ignored, his reputation ruined and his career obliterated. Although the Justice Department's inspector general confirmed German's allegations that the FBI had "mishandled and mismanaged" the terrorism investigation, he says he was barred from further undercover work and eventually compelled to resign. FBI spokesman Bill Carter declined to comment.
The experience is familiar to other government employees who have blown the whistle on matters of national security since 9/11.
Since the terrorist attacks on Sept. 11, 2001, the average number of employees filing whistle-blower disclosures with the government has risen 43%, from an average of 376 annually in the four years before the attacks to 537 annually after. The statistics are kept by the Office of the Special Counsel, an independent federal investigative agency that handles whistle-blower cases if employees prefer not to directly confront their bosses about suspicions of wrongdoing.
An increasing number of whistle-blowers allege that rather than being embraced, they're being retaliated against for coming forward.
In the four years before the terrorist attacks, whistle-blowers filed an average of 690 reprisal complaints with the OSC annually. Since the attacks, an average of 835 complaints have been filed each year, a 21% increase.
The number of whistle-blower reprisal complaints is higher than the number of whistle-blower disclosure complaints because employees can file reprisal complaints with the OSC even if they had not previously filed their disclosure with the OSC.
"The sad reality is that rather than learning lessons from 9/11, the government appears to have become more thin-skinned and sensitive," says Tom Devine, legal director of the Government Accountability Project, a non-profit group that offers legal aid to whistle-blowers.
Even advocates have begun to dissuade some government employees from coming forward.
"When I get calls from people thinking of blowing the whistle, I tell them 'Don't do it,' " says William Weaver, a professor at the University of Texas at El Paso and a senior adviser to the National Security whistle-blowers Coalition. "Most of the time they go ahead and do it anyway and end up with their lives destroyed."
Those who come forward often face harassment, investigation, character assassination and firing — not to mention the toll their whistle-blowing takes on their families, Weaver and Devine say.
Lack of protection
For those who are fired or have their security clearances revoked — tantamount to firing in the intelligence agencies — there is little recourse.
Most national security whistle-blowers are not protected from retaliation by law. That's because the intelligence-gathering agencies are exempted from the 1989 whistle-blower Protection Act, which guarantees investigations into disclosures made by federal employees and protects whistle-blowers from retaliation.
Whistle-blowers employed by these agencies must seek recourse within the same agency they are blowing the whistle on. And even if the investigators within their own agency confirm reprisal allegations, the investigators have no power to remedy the situation.
Devine says the U.S. Court of Appeals for the Federal Circuit has ruled against whistle-blowers in 125 of 127 of the reprisal cases seen by the court since 1994. "They've gutted the law," Devine says, "and it's degenerated into a rubber stamp for retaliation."
Lawmakers recently considered two sets of legislation that would affect whistle-blowers. One attempted to extend the whistle-blower Protection Act to cover intelligence agency employees through amendments to the 2007 Defense Authorization Bill.
In October, a conference committee removed the whistle-blower amendments from the final version of the bill.
The other bill that might affect whistle-blowers stiffens penalties for knowingly leaking classified information to those not authorized to receive it. That bill was introduced by Sen. Kit Bond, R-Mo., in response to recent leaks to the media about national security programs, says Bond's press secretary, Rob Ostrander.
"When classified information is printed in the newspapers, it's not just Americans who read it," Ostrander says. "It's also America's enemies."
Bond's legislation would make prosecuting leakers easier by eliminating the need to prove the disclosure damaged national security. The measure would subject those who leak classified information to a fine and up to three years in prison. It would apply to those who signed a non-disclosure agreement, regardless of their job at the time of the leak.
The bill uses language identical to that in a 2000 bill — dubbed the "Official Secrets Act," after a similar British law — that was vetoed by President Clinton. It has been endorsed by the Association of Intelligence Officers, a 31-year-old group of 4,500 current and former intelligence officers.
Bond's legislation has been referred to the Senate Judiciary Committee. If it does not make it to a floor vote by the end of this session, he will have to resubmit it when the next session begins in January.
The National Security whistle-blowers Coalition, the Government Accountability Project and various media organizations have criticized the legislation and claimed it would deter whistle-blowers from coming forward.
Ostrander says, "There are adequate opportunities for whistle-blowers to contact superiors and the federal inspector general's office or their own representatives" without leaking classified information to outside sources.
National security whistle-blowers who have come forward since 9/11 aren't so sure.
Many had been star employees at the top of the pay scale and had spent decades in civil service before blowing the whistle. The median number of years of government service for National Security whistle-blowers Coalition members is 22 years, says Sibel Edmonds, an FBI whistle-blower who founded the coalition. Edmonds and others worry that fear of committing career suicide may dissuade others from coming forward.
"I'm one of the last people who survived," says Rowley, the former FBI whistle-blower and Time magazine "Person of the Year" who recently lost her bid for a U.S. congressional seat in Minnesota. She says widespread, favorable media coverage saved her FBI career
"But is that the important story here — that one person in the country has been fired or is not being used to their fullest potential?" she asks. "It's the country that's going to suffer from a lack of whistle-blower protections."
August 28, 2006
HURRICANE EXPERT THREATENED
FOR PRE-KATRINA WARNINGS
A Greg Palast special investigation for Democracy Now!
DON'T blame the Lady. Katrina killed no one in this town. In fact, Katrina missed the city completely, going wide to the east.
It wasn't the hurricane that drowned, suffocated, de-hydrated and starved 1,500 people that week. The killing was done by a deadly duo: a failed emergency evacuation plan combined with faulty levees. Behind these twin failures lies a tale of cronyism, profiteering and willful incompetence that takes us right to the steps of the White House.
Here's the story you haven't been told. And the man who revealed it to me, Dr. Ivor van Heerden, is putting his job on the line to tell it.
Van Heerden isn't the typical whistleblower I usually deal with. This is no minor player. He's the Deputy Director of the Louisiana State University Hurricane Center. He's the top banana in the field -- no one knew more about how to save New Orleans from a hurricane's devastation. And no one was a bigger target of an official and corporate campaign to bury the information.
Here's what happened. Right after Katrina swamped the city, I called Washington to get a copy of the evacuation plan.
Funny thing about the murderously failed plan for the evacuation of New Orleans: no one can find it. That's right. It's missing. Maybe it got wet and sank in the flood. Whatever: no one can find it.
That's real bad. Here's the key thing about a successful emergency evacuation plan: you have to have copies of it. Lots of copies -- in fire houses and in hospitals and in the hands of every first responder. Secret evacuation plans don't work.
I know, I worked on the hurricane evacuation plan for Long Island New York, an elaborate multi-volume dossier.
Specifically, I'm talking about the plan that was written, or supposed to have been written two years ago by a company called, "Innovative Emergency Management."
Weird thing about IEM, their founder Madhu Beriwal, had no known experience in hurricane evacuations. She did, however, have a lot of experience in donating to Republicans.
IEM and FEMA did begin a draft of a plan. The plan was that, when a hurricane hit, everyone in the Crescent City would simply get the hell out in their cars. Apparently, the IEM/FEMA crew didn't know that 127,000 people in the city didn't have cars. But Dr. van Heerden knew that. It was his calculation. LSU knew where these no-car people were -- they mapped it -- and how to get them out.
Dr. van Heerden offered this life-saving info to FEMA. They wouldn't touch it. Then, a state official told him to shut up, back off or there would be consequences for van Heerden's position. This official now works for IEM.
So I asked him what happened as a result of making no plans for those without wheels, a lot of them elderly and most of them poor.
"Fifteen-hundred of them drowned. That's the bottom line." The professor, who'd been talking to me in technicalities, changed to a somber tone. "They're still finding corpses."
Van Heerden is supposed to keep his mouth shut. He won't. The deaths weigh on him. "I wasn't going to listen to those sort of threats, to let them shut me down."
Van Heerden had other disturbing news. The Hurricane Center's computer models showed the federal government had built the levees around the city a foot-and-a-half too short.
After Katrina, the Hurricane Center analyzed the flooding and found that, had the levees had just that extra 18 inches, they would have been "overtopped" for only an hour and a half, not four hours. In that case, the levees would have held, and the city would have been saved.
He had taken the warning about the levees all the way to George Bush's doorstep. "I myself briefed senior officials including somebody from the White House." The response: the university's trustees threatened his job.
While in Baton Rouge, I dropped in on the headquarters of IEM, the evacuation contractors. The assistant to the CEO insisted they had "a lot of experience with evacuation" -- but couldn't name a single city they'd planned for when they got the Big Easy contract. And still, they couldn't produce the plan.
An IEM press release in June 2004 boasted legendary expert James Lee Witt as a member of their team. That was impressive. It was also a lie. In fact, Witt had nothing to do with it. When I asked IEM point blank if Witt's name was used as a fraudulent hook to get the contract, their spokeswoman said, weirdly, "We'll get back to you on that."
Back at LSU, van Heerden astonished me with the most serious charge of all. While showing me huge maps of the flooding, he told me the White House had withheld the information that, in fact, the levees were about to burst and by Tuesday at dawn the city, and more than a thousand people, would drown.
Van Heerden said, "FEMA knew on Monday at 11 o'clock that the levees had breached… They took video. By midnight on Monday the White House knew. But none of us knew ...I was at the State Emergency Operations Center." Because the hurricane had missed the city that Monday night, evacuation effectively stopped, assuming the city had survived.
It's been a full year now, and 73,000 New Orleanians remain in FEMA trailers and another 200,000, more than half the city's former residents, remain in temporary refuges. "The City That Care Forgot" -- that's their official slogan -- lost a higher percentage of homes than Berlin lost in World War II. It would be more accurate to call it, "The City That Bush Forgot."
Should they come home? Rebuild? Is it safe? Team Bush assures them there's nothing to worry about: FEMA won't respond to van Heerden's revelations. However, the Bush Administration has hired a consulting firm to fix the failed evacuation plan. The contractor? A Baton Rouge company named "Innovative Emergency Management." IEM.
August 20, 2006
Whistleblowers say ordeal
not worth it
By Rob Perez, Honolulu Advertiser
George Smith Jr. wouldn't do it again.
Neither would Kenneth Mersburgh, Solomon Silva, Norman Salsedo nor Charles Wiggins.
All five were Hawai'i whistleblowers whose reports of wrongdoing the past several years led to criminal prosecutions of fellow government workers for charges ranging from theft to bribery.
While cracking down on illegal activities was a positive outcome, the five said the retaliation they suffered for stepping forward was so great that they would keep their mouths shut if faced with similar circumstances again.
"It's sad to say (that), but it just wasn't worth what I went through and what my family went through," said Wiggins, a former Honolulu Liquor Commission investigator whose testimony helped convict eight fellow investigators but who eventually left the state because of the fallout.
Smith, who suffered retaliation after disclosing abuses at Kailua Wastewater Treatment Plant, said the stress contributed to health problems and became a major drag on his life. "You end up bringing your problems home. You don't sleep at night. It snowballs right to the bottom of whatever you're involved with," he said.
As the state and city in recent years have taken steps to encourage more people to report fraud and other wrongdoing, Smith, Wiggins and others who have gone through the process say it generates so much strain at work and home that they would advise others to think twice about stepping forward.
Not even the prospect of a sizeable financial award would be enough to tilt the balance, they say.
Two other whistleblowers said they would do it again, either because they were obligated as law enforcement officers to do so or because they believed people were being physically harmed. But even they advised caution, noting the constant harassment they endured.
If government insiders are reluctant to blow the whistle, the public can pay a hefty price. Fraud and waste can go unchecked.
Had two whistleblowers not stepped forward, for instance, to disclose billing irregularities at the state's largest long-term-care provider, Hale Nani Rehabilitation and Nursing Center, the state may not have reached a 2003 settlement that resulted in more than $1 million in penalties and reimbursements going to the government.
The two Hale Nani whistleblowers split a $250,000 reward.
ADVICE: DON'T DO IT
The fallout that whistleblowers tend to suffer is not a problem unique to Hawai'i. No matter the setting, those who go public with charges of wrongdoing often are branded as snitches or troublemakers, bucking in some cases an accepted workplace culture.
Stepping forward can be so traumatic that the Government Accountability Project, a national nonprofit group that defends whistleblowers, doesn't advise people to do it.
"It weighs so heavily on a person's life that we don't actively encourage it," said Dylan Blaylock, the project's communication director. "We leave that decision to the person."
Two recent cases in which Honolulu government workers won their whistleblower lawsuits underscore the difficulties such tipsters can face — even when they prevail at trial, which is rare. Most cases are resolved before going to trial.
Howard Tom Sun, a city painter, alleged that he was written up in 2000 by his supervisor, isolated, not given job duties and denied leave after he reported concerns about workplace hazards, including discovering a punctured gasoline tank at the Pali Municipal Golf Course. At one point, Tom Sun said in a sworn affidavit, a supervisor called Tom Sun's co-workers to a meeting and threatened them if they helped with his whistleblower case.
A year ago, a federal jury found in favor of Tom Sun and awarded him $1.5 million in damages. At the time, Tom Sun said the jury was sending a message to the city that it should be more concerned about its workers and the public.
But U.S. Magistrate Judge Barry Kurren several months later virtually wiped out the award, reducing the amount to $1. Although Kurren upheld the jury's findings that Tom Sun's constitutional rights were violated after he spoke out, the judge ruled that Tom Sun failed to prove any actual damages and therefore was entitled to only a nominal award of $1. Kurren also denied Tom Sun's request that the city pay his attorney fees, which totaled more than $147,000, according to court records.
In his January written ruling, the judge noted that Tom Sun continued to work as a city painter, that his duties and work conditions appeared to be unchanged and that the city's policies for painters essentially remained the same.
"In short, this litigation accomplished little beyond giving to the plaintiff the satisfaction of having a court recognize that his constitutional rights were violated," Kurren wrote.
Venetia Carpenter-Asui, Tom Sun's attorney, argued that the court denied her client the opportunity at trial to provide evidence regarding damages. In a court filing, she asked for a new trial, but Kurren denied that request as well.
Carpenter-Asui and Tom Sun did not respond to Advertiser requests for comment.
Although favorable jury verdicts for plaintiffs are rare in whistleblower cases in Hawai'i — only a few have been reported over the past decade — a second one came in May.
A state jury found that the city retaliated against Smith, Silva and Salsedo, who at one time all worked at the Kailua sewage treatment plant, for reporting suspected wrongdoing several years ago. The jury awarded each $25,000 in damages.
The jury did not find in favor of Mersburgh, another plant worker and the fourth plaintiff in the lawsuit. Mersburgh was the first to report suspected wrongdoing to police and prompted the other three to come forward.
Their whistle-blowing led to an investigation that resulted in one Kailua plant supervisor, Harry Hauck, pleading guilty in 2004 to theft, and another supervisor, Jay Gonsalves, pleading no contest last year to theft.
Silva and Salsedo told police they were taken by Hauck to work on a sprinkler system at the home of Gonsalves' relative while on overtime with the city. Hauck and Gonsalves were friends. Salsedo told police in one instance in 2002 he spent more than four hours at the private residence.
Yet after the wrongdoing came to light, both supervisors were promoted while the four rank-and-file employees suffered retaliation, the workers said.
"The system is a failure," Silva said.
In court documents, Hauck's attorney even cited the fact that his client was promoted after being disciplined to argue that the criminal charges should be dismissed because the case was old. Two bribery charges subsequently were dropped.
For at least three of the four whistleblowers, their lives have since taken a turn for the worse. Mersburgh is on unpaid leave, and Smith is fighting the city over compensation issues for a planned retirement he said was hastened by the retaliation. Silva was fired for allegedly threatening a supervisor. The jury ruled the firing did not violate his rights, but Silva said the incident happened because of the retaliation.
Only Salsedo, a mechanic now working at the city's Sand Island treatment plant, has fared better on the job, having been promoted twice. But even he believes the system leaves whistleblowers unprotected from harassment. He said he was the target of threatening and intimidating comments, sometimes even getting calls at home.
Asked if he would ever blow the whistle again, Salsedo didn't hesitate with a reply: "I wouldn't even think twice about opening my mouth. I would just look the other way."
The city declined to answer questions about this case or others because they involved personnel matters, which are confidential.
Rodney Ching, Hauck's attorney, said his client accepted responsibility for what he did but isn't the criminal some people might make him out to be. He noted that Hauck's guilty plea was deferred, and the city promoted him because his bosses recognized the incident was a minor blip in an otherwise stellar career.
Gonsalves' attorney didn't respond to requests for comment.
ROUGH ROAD TO COURT
It is unusual for whistleblower cases to enter the court arena, partly because attorneys are reluctant to take them on unless the potential for damages is enough to justify filing a lawsuit.
Over the past 12 years, the city has handled only 14 such lawsuits, according to city figures. Five, including the Tom Sun and Kailua sewage-worker cases, resulted in financial settlements or jury verdicts against the city. The settlements and verdicts totaled nearly $1.2 million. Seven of the lawsuits are still pending, while two were dismissed.
Employees can avoid the potential fallout from blowing the whistle if they do so anonymously. But workers say that usually doesn't result in a serious investigation. Anonymity also tends to make investigating a case more difficult because investigators can't ask follow-up questions.
While Hawai'i whistleblowers say they weren't afforded adequate protection from retaliation, the state's Whistleblower Protection Act is considered a strong one.
"I think Hawai'i has as broad protections as anywhere," said attorney David Simons, who represents whistleblowers.
The law basically prohibits employers from retaliating against an employee who reports or is about to report a suspected violation of law or regulation. In 2002 it was strengthened to broaden the circumstances under which the law applies and to lengthen the statute of limitations to two years, instead of 90 days.
The problem, according to those who have gone through the process, is that the law doesn't prevent the many different ways, sometimes subtle, sometimes indirect, that a person can be harassed and intimidated before and even after a lawsuit is brought.
Detective Kenneth Kamakana, a highly decorated Honolulu Police Department officer who received $650,000 from the city in 2003 to settle a whistleblower case, said he was subject to constant harassment, had his car vandalized, was shunned by other officers and given the least desirable assignments after reporting to the FBI about alleged wrongdoing in HPD's elite Criminal Intelligence Unit.
"It was like hell," Kamakana said.
In a recent interview over breakfast, Kamakana said he still suffers nightmares because of the horrible experiences. Yet he said he would report suspected wrongdoing again if faced with similar circumstances because "that's my job. If you can't do your duty, you don't belong in this occupation."
Dr. Terry Allen, a former Hawai'i prison physician, likewise said he would blow the whistle again, although he probably wouldn't pursue a civil lawsuit.
Allen was awarded $110,000 in damages from the state in 1999 for retaliation he suffered after publicly disclosing inmate abuse.
The state appealed the federal court decision, but the 9th Circuit Court of Appeals upheld the ruling in 2002. Allen's attorney fees, which the state also had to pay, totaled more than $500,000.
Allen, now a Washington state resident, said the system is not designed so the typical worker can fight back. The tremendous amount of time and cost involved in taking such a fight to court — with no guarantee of winning — makes the process beyond the reach of most people, he said.
'DAVID VS. GOLIATH'
Attorney Michael Lilly, a former state attorney general, said he's turned down hundreds of people who had meritorious whistleblower or wrongful termination cases over the years, not because they lacked merit but because the potential damages didn't justify pursuing litigation.
"We're talking about in most cases David vs. Goliath," Lilly said. "Those employees are taking on a gorilla who has most of the evidence" and tremendous resources to devote to a case.
Many people don't even bother to call attorneys, let alone report their concerns to superiors.
Randy Perreira, deputy executive director of the Hawai'i Government Employees Association, said he hears about cases in which workers are reluctant to speak up because of retaliation fears.
"That feeling is very real," he said.
Perreira noted that the union in a few cases in recent years has pursued grievances on behalf of employees who alleged they were retaliated against.
To encourage people to report fraud against the government, the state enacted a law in 2001 that allows whistleblowers to get a percentage of money recovered by the government.
Attorney Tom Grande, who has represented clients using that statute, believes it has had a major effect on not only recovering money for the government but stopping practices that hurt the delivery of healthcare to seniors and the poor.
In one such case, the state reached a $4 million settlement in a medical-fraud lawsuit in 2001, and the two pharmaceutical company employees who disclosed the illegal recycling of prescription drugs split $750,000.
TREATED LIKE 'A PARIAH'
The city encourages workers to report misconduct and provides a variety of ways, including a complaint line, to make such reports.
Whenever a city employee files a complaint about another worker, both parties are reminded that retaliation is prohibited, according to city spokesman Bill Brennan.
When the whistleblower law works, the wrongdoing is identified, corrected and no retaliation occurs, Brennan said.
He questioned the notion that few cases come to light because employees are afraid to report suspected wrongdoing. "In the end, there may not be anything about which to 'blow the whistle,' " Brennan said in a written response.
Wiggins, the former city liquor inspector, said the city didn't seem to welcome his stepping forward. The city never even thanked him for his role in helping federal authorities get convictions of the other liquor inspectors, he said.
"The city treated me like I was a pariah, (like) I was the bad guy," he said.
In 2003, Wiggins settled his whistleblower lawsuit against the city for $387,500. The government did not admit liability.
But even after Wiggins moved to the Mainland, the case continued to haunt him.
Wiggins said he was turned down for numerous law enforcement jobs after the agencies learned he was a whistleblower. "No one wants to hire one," he said. "It was like poison."
Only three months ago, Wiggins landed his first job in law enforcement since leaving Hawai'i. He was hired as an investigator for the Virginia public defender's office. But Wiggins said his nine years with HPD and his nine years with the liquor commission were not counted toward his salary, essentially meaning he is getting rookie pay.
Despite all that has happened, Wiggins doesn't regret blowing the whistle. But he said his experience sends a clear message to others contemplating blowing the whistle. "What it says is you're better off keeping your mouth shut," he said.
For more, GO TO > > > Confessions of a Whistleblower
August 16, 2006
FBI probes bank over
alleged fraud cover-up
By Rick Daysog, Honolulu Advertiser
The FBI is investigating claims that American Savings Bank officials tried to cover up theft, including one case in which a bank employee allegedly took several hundred thousand dollars from a 91-year-old customer.
FBI agents interviewed the bank's former security director Bert Corniel yesterday after he charged in a lawsuit that the bank asked him to stop reporting fraud cases to federal and state officials, said John Perkin, Corniel's attorney.
Assistant U.S. Attorney Ron Johnson, who prosecutes federal crimes in Hawai'i, said yesterday he could not confirm or deny that an investigation is under way. A person at the Honolulu FBI office said late yesterday the bureau had no immediate comment.
The bank said the charges are false and it is cooperating with the FBI investigation.
"Although we cannot comment on the investigation, we can say that we have and will continue to cooperate and provide investigators with all the relevant information as it is requested," said American Savings Bank in a written statement. "Mr. Corniel's concerns ... were thoroughly investigated and found to be without merit."
Corniel and bank customer Ada Lim, 91, alleged in separate lawsuits filed on Aug. 2 that a manager at a bank branch took hundreds of thousands of dollars from Lim.
Lim deposited more than $600,000 into her American Savings account in 2004, only to have most of the money siphoned out of her account by the bank employee, who was helping to manage Lim's finances, the lawsuits allege. The bank employee opened an account with Bank of Hawaii and deposited various sums from Lim totalling $304,000, according to Lim's lawsuit. The bank employee bought a condominium using $110,000 of Lim's money, the suit claims.
Corniel said in January 2005, when he was investigating the Lim case, the bank employee confessed to him that she took the money. American Savings officials said the transfer was a loan from Lim to the employee, Corniel said.
Corniel said American Savings officials told him not to report the fraud as required by law to federal regulators and law enforcement agencies such as the FBI, Office of Thrift Supervision and the Federal Deposit Insurance Corp.
For more, GO TO > > > American Savings Bank: Behind the Blinds
June 23, 2006
Message from a 9-11 Whistle-blower
From 8th Estate Public Media & Research:
My name is Richard Grove ...
In the summer of 2001, I was terminated from my job for raising questions about “anomalous” fiscal transactions.
On August 21st, 2001, I was bribed by my ex-employer to “keep quiet”.
On September 7th, 2001, I contacted ex-coworkers and was urged to present my evidence in a staff meeting the following Tuesday morning.
The staff meeting, which I was to join during a break, was interrupted; and I never made it there. I was in traffic in Lower Manhattan on the morning of September 11th, 2001; and the meeting I was to attend was on the 96th floor of WTC 1 (the North Tower) at Marsh & McLennan, the company for whom my ex-employer had been staffing a software project.
There I sat in traffic, watching black smoke pour out of the hole in the side of the building- directly where my ex-coworkers and I were to confront a certain Marsh Executive involved with the anomalous financial activity that triggered my untimely termination.
As I’ve learned more, and more about what happened that day, I’ve focused less on the controversial “How” (i.e. HOW the real terrorists perpetrated a multi-dimensional plan through which they would simultaneously undermine the Constitution, steal hundreds of billions of dollars, profitably solve an “unsolvable” real-estate crises, and launch a never-ending crusade throughout the globe in the name of the terrorist attacks that they themselves created).
Instead I’ve focused on the “Who” and “Why”, as the financial records left in the wake of their exodus following their crimes is much easier to prove in Court- specifically Marsh’s involvement in betting against American Airlines pre-9-11… a clear indicator of foreknowledge, as the insider trading of the airline stocks was clearly a pre-meditative strategy, determined to profit from the mass murder...
To summarize, what I’ve discovered ... based on my own personal experiences and research, not based on what the mass media and traditional newspapers have programmed me to repeat:
1. The events of September 11th, 2001(as extensive research and factual documentation depict) do not resemble in any way, shape, or form, what has been faithfully recited ad nauseam by the mainstream media and press within the United States.
2. The aforementioned mainstream media and press are very much aware at the helms of all organizations, and are provably complicit to the state sponsored terrorism that affects each and every one of us...
3. The evidence reflects that people who we trust and revere as “leaders”, specifically: Rudolph Guiliani (ex-New York Mayor, 2008 Presidential hopeful), George Pataki (current Governor of New York), Eliot Spitzer (New York State Attorney General, running for New York State Governor), and of course, the 1970’s White House “Team B” (now known as neo-cons – or “new-cons”, Cheney, Rumsfeld, and Wolfowitz) right up through George H.W. Bush, and the current President George W. Bush… are in fact working on the Terrorists behalf, if they are not the Terrorists themselves (and at the very least, are all professional gangsters).
4. In order for 9-11 to be perpetrated, the Terrorists needed control of elements of the highest echelons of the Intelligence Community and the Defense Department...
5. In order for 9-11 to be “successful” in the eyes of the Terrorists, total control of the U.S. Media Markets was necessary....
6. Critical Elements of the Intelligence Community of the United States, as well as the U.S. Military, in association with NATO, have been strictly controlling and manipulating Black Markets, Arms Markets, and, specifically in reference to 9-11, the Global Illicit Drug Market.
7. American International Group, a.k.a. AIG (is the world’s largest insurance company). Until recently AIG’s CEO (as you will soon learn elsewhere throughout 8thestate.com) was Maurice “Hammerin’ Hank” Greenberg; ex-Chairman of the Federal Reserve Bank of New York, and ex-Chairman of the Council on Foreign Relations (CFR). AIG’s foundation grew out of Cornelius V. Starr’s “insurance work” between China and the U.S. in 1919. AIG since the 1950’s has been a front created by U.S. Intelligence interests for the purpose of laundering drug money, under the ruse of Insurance, and noting that C.V. Starr’s career in Intelligence and AIG’s ties to the “Air America” Military Drug Caravan were not coincidental.
8. The “Terrorists” are those who participate in and profit from the Global Illegal Drug Market, and the people who are in the front lines of controlling this market are Politicians, Media Moguls, Military Officers, Intelligence Directors, Insurance Companies, and the Counter Terrorist “Experts” themselves....
The hundreds of billions of dollars in illegal drug money that is annually laundered via this scheme is then “processed” through the U.S. Stock Market, and aggregated by companies like AIG and Marsh & McLennan (the world’s largest Insurance Broker, which until Eliot Spitzer’s pseudo-investigation had Jeff Greenberg, Hank’s son, as it’s CEO) with the help of companies like Kroll Associates (Private Intelligence Firm responsible for World Trade Center Security from 1993 to 2001, coincidentally owned by AIG and sold to Marsh in 2004… Kroll CEO Michael Cherkasky became Marsh CEO in response to Spitzer’s “investigation” into AIG and Marsh).
Who is Michael Cherkasky? Great question. He brought Eliot Spitzer into the NY City District Attorney’s Office way back when, and is a contributor to Spitzer’s campaign to become New York Governor....
We’re ALL affected by 9-11 in ways that most people never take time to fathom… but there are SOLUTIONS, and yes, even a panacea.
It’s called Communication...
The 8th Estate is the state of being where one thinks for themselves, and enjoys the state of infinite possibility and hope…
Richard Andrew Grove
Richard Andrew Grove has extensively documented massive fraud and conspiracy which compromises the very foundation of American's financial institutions. He names names and spotlights 2.3 trillion of taxpayers money, a trillion in gold bullion and hundreds of billions in pre-911 stock market trades which records were conveniently covered-up in the collapse of the WTC. This is the whistleblower that will collapse the 911 fraud! - and the largest single theft and continuous theft in known history. FOLLOW THE MONEY!
For more, GO TO > > > The Eagle Hooded - Part III
~ ~ ~
Get your FREE DOWNLOAD of Richard Grove’s revealing book
by clicking here
Sibel Dinez Edmonds, a Turkish-American, was "hired as a translator by the FBI shortly after the terrorist attacks of September 11, 2001 because of her knowledge of Middle Eastern languages. She was fired less than a year later in March 2002 for reporting shoddy work and security breaches to her supervisors that could have prevented those attacks." 
"On January 14, 2004, the Justice Department's Office unclassified summary of the Justice Department's Inspector General's report on Edmonds found that many of her claims 'were supported, that the FBI did not take them seriously enough, and that her allegations were, in fact, the most significant factor in the FBI's decision to terminate her services.'" 
On April 21, 2005, a "day after taking the extraordinary step of ordering a secret hearing," the Washington, D.C., U.S. Court of Appeals "denied pleas to open the former FBI translator's First Amendment case to the public," taking what James Ridgeway called "another twist..., as the government continued its seemingly endless machinations to shut her up." 
Edmonds' March 2, 2005, Testimony
After the Department of Justice succeeded in April 2004 to quash her testimony in "a class action lawsuit over the Sept. 11 terrorist attacks," on March 2, 2005, Sibel Edmonds made her Statement Before the House Committee on Government Reform, Subcommittee on National Security, Emerging Threats and Internal Relations. The essence of Edmond's opening statement was "Emerging Threats: Overclassification and Pseudo-classification."
Background: FBI Whistleblower
On July 13, 2003, CBS News' posted an October 2002 interview by Ed Bradley with Edmonds. The introduction states that:
"This is the story of hundreds, if not thousands, of foreign language documents that the FBI neglected to translate before and after the Sept.11 attacks because of problems in its language department - documents that detailed what the FBI heard on wiretaps and learned during interrogations of suspected terrorists."
Edmonds said that "the documents weren't translated because the divison was riddled with incompetence and corruption."
The Department of Justice "has taken the unusual step of retroactively classifying information it gave to Congress nearly two years ago regarding a former F.B.I. translator who charged that the bureau had missed critical terrorist warnings, officials said [May 19, 2004]."
"Law enforcement officials say the secrecy surrounding the translator, Sibel Edmonds, is essential to protecting information that could reveal intelligence-gathering operations. But some members of Congress and Congressional aides said they were troubled by the move, which comes as critics have accused the Bush administration of excessive secrecy." 
The Independent UK's Andrew Buncombe reported on April 26, 2004, that the Bush administration's Department of Justice is seeking to keep Edmonds from "providing evidence about 11 September intelligence failures to a group of relatives and survivors who have accused international banks and officials of aiding al-Qa'ida." 
"Sibel Edmonds was subpoenaed by a law firm representing more than 500 family members and survivors of the attacks to testify that she had seen information proving there was considerable evidence before September 2001 that al-Qa'ida was planning to strike the US with aircraft. The lawyers made their demand after reading comments Mrs Edmonds had made to The Independent." 
DOJ "is seeking to stop her from testifying, citing the rarely used 'state secrets privilege' ... senior government lawyers will try to gag Mrs Edmonds, claiming that disclosure of her evidence 'would cause serious damage to the national security and foreign policy interests of the United States'." 
Tom Flocco wrote April 27, 2004, that Edmonds "did not back down regarding reported evidence she uncovered implicating espionage in the FBI and State Department when we recently asked whether she thought the explosive information would ever see the light of day." 
"'As you know, I cannot say much about that'," Edmonds said, "'but why do you think Attorney General John Ashcroft asserted State Secret Privilege in my case when I decided to go public with what I had found in the translations?' ... Justice Department lawyers at the request of FBI Director Robert Mueller invoked the arcane legal procedure which even allows the withholding of evidence documents from the judge," Flocco wrote. 
"The translator alluded to additional but more volatile allegations in a phone call on Friday night to Kyle Hence, cofounder of 9-11 Citizens Watch, who said in a widely distributed email that Edmonds told him 'if what she knows is revealed, it could lead to charges of treason being leveled against officials at top levels of the U.S. government,'" Flocco wrote. 
"Hence added, 'If that is the case, then all those who have been involved in keeping this information from getting to the public are complicit in this treason.'" 
Flocco cautioned that "Americans might not have to wait too long to find out," as in a Washington, DC courtroom on April 27, 2004, "FBI attorneys will appear before Judge Reginald Walton in an attempt to block attorney Ronald Motley's subpoena request to depose Edmonds as a witness for his $1 trillion lawsuit on behalf of 9-11 families to tell what she knows about prior warnings of the attacks." 
In "DOJ Asked FBI Translator To Change Pre 9-11 Intercepts," Tom Flocco wrote March 24, 2004:
"Attorney General John Ashcroft told me 'he was invoking State Secret Privilege and National Security' when I told the FBI I wanted to go public with what I had translated from the pre 9-11 intercepts".
Edmonds said, "My translations of the pre 9-11 intercepts included [terrorist] money laundering, detailed and date specific information enough to alert the American people, and other issues dating back to 1999 which I won't go into right now."
Incredibly, Edmonds said "The senate Judiciary Committee, and the 911 Commission have heard me testify for lengthy periods of time (3 hours) about very specific plots, dates, airplanes used as weapons, and specific individuals and activities."
This explosive information has been kept under wraps by the White House, CIA, FBI, and DOJ since Edmond's 60 Minutes interview segment.
In the "Sept. 11 commission cites intelligence agency failures," Chris Strohm wrote March 24, 2004:
Edmonds said that the FBI had "real, specific" information relating to the Sept. 11 attacks before they happened. Sibel Edmonds worked for the agency working from Sept. 20, 2001 to March 2002.
"Edmonds said she was hired to retranslate material that was collected prior to Sept. 11 to determine if anything was missed in the translations that related to the plot. In her review, Edmonds said the documents clearly showed that the Sept. 11 hijackers were in the country and plotting to use airplanes as missiles. The documents also included information relating to their financial activities. Edmonds said she could not comment in detail because she has been under a Justice Department gag order since October 2002.
"Edmonds has testified before the Sept. 11 commission, the Senate Judiciary Committee and the Senate Select Intelligence Committee."
Wrongful Dismissal Suit
Edmonds sued in July 2002 to contest her firing from the FBI. However, the suit was dismissed in July 2004 by Judge Reggie Walton in the U.S. District Court for the District of Columbia, after Attorney General John Ashcroft invoked a rarely used power and declared the case as falling under "state secret" privilege.
The A.C.L.U. joined her cause in January 2005, when it asked the United States Court of Appeals for the District of Columbia Circuit to reinstate her suit against the government. 
In February 2005, lawyers for the government said in a brief filed with the court that the suit could not continue without "disclosing privileged and classified information", and would therefore cause "significant damage to the national security and foreign policy of the United States." 
Reclassification of Testimony
"The Project on Government Oversight (POGO) sued the Justice Department and Attorney General John Ashcroft in June 2004 claiming the retroactive classification of Edmond's testimony was a violation of the First Amendment." 
Related SourceWatch Resources:
9-11 Truth Movement links to other 9/11 investigation pages
For more > > > Office of the U.S. Trustee vs. Harmon - Witness: Sibel Edmonds; The Freedom To Sing; The Secret Nests: The FBI; Harmon’s Claims to the FBI
March 23, 2005
Israel Trying to Gag
Institute for Public Accuracy
Vanunu exposed the Israeli nuclear weapons arsenal in 1986. He was released from prison in April 2004 after serving an 18-year sentence, most of it in solitary confinement.
Since then, Israeli authorities have placed numerous restrictions on his activities and attempted to prevent him from speaking to non-Israelis or media. Last week, a Knesset committee hearing on his case was abruptly cancelled and Vanunu was indicted for violating the Israeli government restrictions. The charges include speaking to various media and attempting to attend Christmas Eve Mass in Bethlehem. [The charge sheet is available online.]
Despite the prospect of being taken to prison again, Vanunu is continuing to speak to journalists. Reached yesterday by the Institute for Public Accuracy, Vanunu said: "The charges against me are another total failure of Israeli democracy. They are not ready to admit that I am alive, free and have survived 17 and a half years of barbaric treatment. They are unable to respect my most elementary rights of freedom of speech."
March 4, 2005
Coleen Rowley: FBI missed chance
to unravel 9-11 Plot
Former FBI whistleblower Coleen Rowley once wrote a blistering memo accusing the FBI of squandering a chance to unravel the September 11th plot.
Just three weeks before 9-11, agents in Rowley’s office uncovered that Islamic extremist Zacarias Moussaoui had paid for lessons to fly a Boeing 747. They arrested him, but her superiors at FBI headquarters refused to let them seek a warrant to search his laptop computer, a move that may have changed the course of history.
Her view from inside America’s war on terror has given her a unique perspective finding the balance between fighting terrorism effectively and maintaining civil liberties. "We saw a need for the Patriot Act after 9/11, some things needed to change. But, that doesn't mean it is now considered an inviolate, perfect law," she says.
"Where is the pro-active nature now on protection of civil liberties, and putting those structures in place that will prevent a future abuse?"
November 20, 2003
The guy who blew the whistle on Putnam
By Jayne O’Donnell, USA Today
WEYMOUTH, Mass - When he started working at Putnam Investment’s Quincy, Mass. call center in March 2000, Peter Scannell had only a layman’s knowledge of how a mutual fund company works.
But he knew from his days working at a casino in Lake Tahoe how to tell the good guys from the bad. And it wasn’t long before Scannell decided the good guys weren’t necessarily the ones who signed his checks.
Scannell caught onto efforts by outside investors, first from an electrical trades union and later a boilermakers union, to make rapid trades in and out of Putnam (Parent MMC) funds - a practice known as market timing.
Alarmed, Scannell blew the whistle to the Securities and Exchange Commission, which didn’t act, and then to Massachusetts regulators, who did. What they heard led to state civil fraud charges against Putnam, the resignation of its CEO, Lawrence Lasser, and the withdrawal of more than $20 billion from its funds.
It also helped train a spotlight on market timing, which has ensnared eight of the USA’s mutual fund companies in probes and charges.
“This would not have started without him,” says Matthew Nestor, Massachusetts’ director of securities. “We owe him a debt of gratitude.”
In five hours of interviews over two days, Scannell, 47, said he turned in the big guys to help the little guys everywhere. Mutual fund and retirement plan participants who watched their holdings plummet while others got rich. In retaliation, he says, he was attacked by a brick-wielding assailant allegedly wearing a boilermakers union sweatshirt and is being trailed almost constantly....
The Massachusetts U.S. Attorney’s office is investigating possible criminal securities fraud violations at Putnam, relating to market-timed trades by its managers. Scannell met for two hours Tuesday with the office. The FBI is also investigating, say two people involved in the matter....
Last Jan. 30, Scannell says he told his bosses he would no longer accept transfers from known market timers. The next day, he took home the information he had compiled because he planned to alert securities regulators. “I drove home looking over my shoulder,” Scannell wrote in the report....
The guy who blew the whistle on Putnam
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For more, GO TO > > > www.senate.gov/~govt-aff/_files/012704scannell.pdf
August 21, 1997
Keeping lawsuits mum
exposes estate, says
former Bishop official
The trust is vulnerable to millions
in damage claims and legal fees
By Bruce Dunford, Associated Press
The $10 billion Bishop Estate trust that supports Kamehameha Schools is exposed to hundreds of millions of dollars in damage claims and millions of dollars in legal fees because trustees wanted to keep a lid on embarrassing lawsuits, according to a former executive of the trust.
Failure to disclose details of these lawsuits to insurance companies jeopardized insurance coverage of damage judgments or settlements as well as legal fees in defending against them, said Bobby Harmon, who headed the estate's insurance program until last year.
Harmon, who was fired last November as president of the estate's for-profit captive insurance subsidiary, P&C Insurance Co. Inc., has been talking to state attorneys investigating allegations of irregularities in the management of Bishop Estate by its five trustees.
Gov. Ben Cayetano ordered the probe.
The Bishop Estate won't respond to Harmon's specific allegations but is prepared to challenge them in court, said estate spokeswoman Elisa Yadao.
The estate's 1989 $85 million investment in McKenzie Methane Inc., a Houston-based energy venture in which several trustees and estate executives piggybacked another $3 million of personal investment, resulted in a $2.3 billion lawsuit brought in Texas in 1993 against the trustees, the Bishop Estate and other investors.
The venture went into bankruptcy, whittling Bishop Estate's investment down to some $20 million, according to attorneys in Texas.
The estate, its involved subsidiaries, the trustees and estate officers were entitled to legal defense under United Educators Insurance Co., which carries the estate's legal liability policy, Harmon said.
Despite repeated efforts of the insurance company's claims manager to get details on the lawsuit from Bishop Estate's top attorney, Nathan Aipa, no information was provided and the company closed its files, not paying some $500,000 in legal fees that would have been covered, Harmon said.
It could also foreclose the insurance company paying for a settlement or judgment, he said.
Another $500,000 was spent defending against a $86.7 million lawsuit brought in 1995 by movie producer Fredrick Field stemming from his partnership with Bishop Estate in investments dating to 1984, Harmon said.
Actor Wayne Rogers, an investment partner with Bishop Estate and several trustees in Kona Enterprises, filed a lawsuit in North Carolina in 1993 that was not reported to United Educators, which therefore paid no defense costs, Harmon said.
Although a subsequent lawsuit filed in Utah was reported to the insurance company, the company disallowed many of the legal fees due to noncompliance with the policy terms, he said.
U.S. District Judge David Ezra dismissed Rogers' lawsuit last year, but his ruling was reversed on appeal, and the case remains pending.
Total costs of defending Rogers' lawsuit could have been limited to Bishop Estate's $250,000 self-insured retention, Harmon said.
While the total costs of the defense covered by insurance are not yet known, one Honolulu firm, Cades Shutte Fleming & Wright, had billed the estate more than $750,000 as of September of last year, he said.
A lawsuit was brought in March of 1996 by members of the exclusive Robert Trent Jones Golf Club near Washington, D.C., in which Bishop Estate was a development partner and guarantor on a $40 million loan.
Bishop Estate trustee Henry Peters became a director and trustee of the golf club and negotiated the sale of the golf course and adjacent residential property to club members, according to the lawsuit, which has since been settled.
The lawsuit says those buying memberships were not informed that the club was stuck with the $33 million development loan from Bishop Estate.
Harmon said he doesn't know who paid for the legal defense fees in that case or how much they totaled.
Yadao said Harmon was fired last year for work-associated misconduct and therefore was denied unemployment compensation....
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For more, GO TO > > > Broken Trust: The Book; Confessions of a Whistleblower
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American Savings Bank: Behind the Blinds
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First Hawaiian Bank: Conquered by the French in ‘98
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The SEC: Garbage In / Garbage Out
Sukamto Sia: The Indonesian Connection
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Originally posted: August 20, 2006
Last Update November 18, 2009, by The Catbird
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