Tag Archives: Kleptocracy

Policing Wall Street…

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From Black Star News:

“In the 1980s there was one great stock fraud, which captured the imagination of the American public. That stock fraud involved a chain of electronics stores, which went by the name of “Crazy Eddie.”  These stores were founded by Eddie Antar (“Crazy Eddie”) of Brooklyn.  “Crazy Eddie” used radio advertising to hype his stores.  In the end the retail chain of “Crazy Eddie” went bankrupt; a $300 million fraud.

At the center of this fraud was Sam E. Antar, a cousin of “Crazy Eddie” Antar and the Chief Financial Officer of the “Crazy Eddie” retail chain. Currently Sam E. Antar has publicly stated that he has reformed and is now lecturing, without charge, on the “dangers” of crime. It is strange that Sam E. can afford this largesse because he filed for bankruptcy several years ago. He claims to be supported by the real estate interests of his wife’s family.

Recently he was the focus of an article, “Crazy like a fox,” by Aaron Elstein, which appeared in the October 4, 2009 issue of Crain’s New York Business.  Once a felon, always a felon. Yet Elstein referred to Sam Antar as “a former felon.”  That alone shows his bias and makes the reader believe that rather than an article the piece is meant to rehabilitate Antar.  A felon is someone convicted of a felony. There is no such thing as a former felon.

Elstein also reported:  “Mr. Antar admits working for a short-seller before.  He did research for Barry Minkow, an investor who served prison time in the 1990s for running a fraudulent carpet cleaning service.” This is like saying “The titanic ran into an ice cube.” There are several understatements in the “article.”

Sam Antar not only worked for Barry Minkow but contributed $250,000 to Minkow’s Fraud Discovery Unit, which supposedly ferrets out false information in filings by publicly listed companies. Antar claims that this $250,000 was his wife’s money. Antar’s wife must be the most generous woman in the world- doling out $250,000 as a gift to her husband’s friend.

Here’s what happened: Minkow finds false information in SEC filings. Minkow then sells the stock short, in hopes that the stock price declines. Minkow then releases his findings. Minkow then buys back the stock after the price has declined. By that very fact alone, Minkow is not an “investor.” Minkow is a short seller.

As the reader can readily determine someone is making money from this arrangement. What’s not stated in the article is that Minkow did not just run “a fraudulent carpet cleaning service.”  Minkow’s carpet cleaning business was called ZZZZ Best, a stock fraud that defrauded the American public of hundreds of millions of dollars. Minkow served seven years in federal prison for fraud among other charges.

The article is a “white wash,” a “fix.” Minkow owes the government approximately $16 million and his salary is garnished to pay the amount owed. That is why the payment could not be made out personally to Minkow but to the Fraud Discovery Unit- the money would have been seized.

During his incarceration Minkow converted to Christianity and studied for a Divinity Degree. Currently Minkow is a pastor of a Church. I find it rather amusing when convicted felons turn to God.  It has been my experience that once a stock fraud artist- always a stock fraud artist.  The money is too good and too easy. That is why the members of Aish Kodesh in Long Island participated in the stock frauds of Maier Lehmann.

Sam E. Antar is a fraudster; as is Barry Minkow.
Both have now found God. Perhaps they have monetarized God.”

Manfredonia, a trader and whistleblower on Wall Street in the 1980s, is now on a campaign to expose corruption on the Street. Please e-mail him tips to Edward@blackstarnews.com

Ron Paul: No Military Occupation Of Haiti

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(Via David Kramer LRC blog, January 21, 2010 09:32 PM)

Statement of Congressman Ron Paul,  United States House of Representatives Statement in Opposition to H Res 1021, Condolences to Haiti, January 21, 2010

I rise in reluctant opposition to this resolution. Certainly I am moved by the horrific destruction in Haiti and would without hesitation express condolences to those who have suffered and continue to suffer. As a medical doctor, I have through my career worked to alleviate the pain and suffering of others. Unfortunately, however, this resolution does not simply express our condolences, but rather it commits the US government “to begin the reconstruction of Haiti” and affirms that “the recovery and long-term needs of Haiti will require a sustained commitment by the United States….” Continue reading →

Bill Anderson On The New KKK: Kleptocrats, Kartels, and Kon Men

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“As I see it, the bankers are not clueless at all. They understand the game, they understand that the government is going to clean up the mess that they and their friends in Congress and the Bush and Obama administrations have created, and they understand that their antics are going to give them what they always have wanted: a nice, cozy, financial cartel which will provide sweet political contributions for the political classes, bonuses and high pay for themselves, and very little for everyone else. Continue reading →

Former Spy Bosses, Goldman Exec Behind Full-Body Scanner

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I blogged earlier about the full-body scanner.

It turns out that one of the scanner’s strongest advocate, Michael Chertoff, former Homeland Security Czar, stands to gain by the sale of the scanner, via his security consulting outfit, Chertoff Group.

Its 8 members include 3 former senior executives from Homeland Security, 2 from the CIA, 3 from the NSA, 1 from FEMA, and 1 from Goldman Sachs. Continue reading →

Goldman Charity Prompted By PR Concerns

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RaceTotheBottom, a law blog on corporate regulatory issues, has this on the latest PR move  by Goldman Sachs, one we noted in our previous blog post on Haiti. which mentioned the donations made by the big banks.

“The latest effort by Goldman to ameliorate the criticism is apparently to require top officers and managers to donate a certain percentage of their compensation to charity. As the NYT noted:

* While the details of the latest charity initiative are still under discussion, the firm’s executives have been looking at expanding their current charitable requirements for months and trying to understand whether such gestures would damp public anger over pay, according to a person familiar with the matter who did not want to be identified because of the delicacy of the pay issue.

Apparently Bear Stearns had done something similar in the past, requiring the top 1000 employees to contribute 4% of their compensation to charity.

The specifics have apparently not yet been determined. Nonetheless, unlike the stock bonuses, the approach effectively reduces the amount of compensation paid to each employee.

Goldman could have considered reducing the amounts paid in compensation and contributed the saved amounts directly to charity. The financial institution in fact added an additional $200 million to its charitable foundation. But making direct contributions would have potentially violated state law.

Corporations are obligated to profit maximize. Some portion of the company’s profits can be donated to charity. Companies may do so, however, only if there is a business benefit. See RMBCA § 3.02(15)(permitting “donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.”). For modest amounts of contributions, the business benefit can be vague, with enhanced reputation in the community enough of a justification.

For more significant amounts, however, there must be a sufficient nexus to the business of the company. Had Goldman chosen to donate 5% of the amount left aside for compensation, an amount that would probably exceed $1 billion, it would have needed to show some type of meaningful connection to its business. Any failure to do so would likely generate lawsuits from shareholders alleging that the board had failed to engage in the required profit maximization.”

My Comment:

Isn’t this exactly why the more laws you have on the books, the more complicated your problems get?

Think about it. Goldman can’t make direct charitable contributions, because companies are obligated to maximize profits. Why are they obligated to maximize profits?

Because that’s what shareholders are due, per company law.

You might ask whether maximizing profits is always in a company’s best interests, versus building long term value or market share or any number of other things that stake-holders in the company might value more than high returns, but those things don’t count, because that’s how a law works – like a blunt instrument.

And then when managers focus on these short-term horizons and start doing legal (or illegal) tricks to show quick gains on their books, then we need another set of laws to curb them, with incentives running in the opposite direction….

The end result is a muddle of misplaced directives and restrictions that distort the market.
And people criticize the free market!

Sith-Lord Sweep: AG’s Pending Indictments Cover Major Hedgies, Journalists, and Regulators

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Corporate finance generalist, investment banker and expert in derivatives, Austin Burrell, sums up last week’s announcement by Attorney-General Eric Holder that there are 5000 pending indictments [sic] arising out of the investigation of fraud in the capital markets:

[Note: the DOJ is involved in some 5000 odd cases of fraud related to the financial industry… Continue reading →

Open Letter To The Secretary-General Of UN

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Open Letter to Secretary-General of United Nations
Wednesday, December 9th 2009, 2:07 AM EST
Co2sceptic (Site Admin)

Dear Secretary-General,

Climate change science is in a period of ‘negative discovery’ – the more we learn about this exceptionally complex and rapidly evolving field the more we realize how little we know. Truly, the science is NOT settled.

Therefore, there is no sound reason to impose expensive and restrictive public policy decisions on the peoples of the Earth without first providing convincing evidence that human activities are causing dangerous climate change beyond that resulting from natural causes. Before any precipitate action is taken, we must have solid observational data demonstrating that recent changes in climate differ substantially from changes observed in the past and are well in excess of normal variations caused by solar cycles, ocean currents, changes in the Earth’s orbital parameters and other natural phenomena.

We the undersigned, being qualified in climate-related scientific disciplines, challenge the UNFCCC and supporters of the United Nations Climate Change Conference to produce convincing OBSERVATIONAL EVIDENCE for their claims of dangerous human-caused global warming and other changes in climate. Projections of possible future scenarios from unproven computer models of climate are not acceptable substitutes for real world data obtained through unbiased and rigorous scientific investigation.
Specifically, we challenge supporters of the hypothesis of dangerous human-caused climate change to demonstrate that:

Variations in global climate in the last hundred years are significantly outside the natural range experienced in previous centuries;

Humanity’s emissions of carbon dioxide and other ‘greenhouse gases’ (GHG) are having a dangerous impact on global climate;

Computer-based models can meaningfully replicate the impact of all of the natural factors that may significantly influence climate…”

For the rest of the post and the complete list of signatories, see Climate realists.

Hedge-Fund Pays Naked Shorting Critic Byrne $5 Million

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Copper River Partners (formerly Rocker Partners), the short-selling hedge-fund of David Rocker and Marc Cohodes, and associated entities have settled a case brought against them in 2005 by Patrick Byrne, CEO of embattled internet retailer Overstock, according to  The Register.

Note: The suit doesn´t charge naked shorting, but defamation and illegal collusion with research analysts.

Copper River worked with a research firm, Gradient Analytics, that  employed well-known financial journalist Herb Greenberg, one of the central figures in the story of the “capture” (corruption) of Wall Street journalists by speculators. Hedge funds stand accused of engaging in illegal collusion with journalists to drive down stock-prices of companies.

Last year, Gradient settled for a figure between $1.5-$2 million and issued an apology. Now comes this further vindication.

Despite the relatively trivial amount won in the Rocker case, $5 million, it´s noteworthy that the settlement does all the things victory in an actual court trial does, without the risk of losing on a technicality.

It also underscores something I´ve been suggesting for a while.

That public interest blogging and journalism alone isn´t enough.

It´s necessary to actually sue or inflict damage of some kind to score victories in these things.

Unfortunately, that´s usually not worth doing for people who aren´t wealthy.  Vicariously, however, we “little people” can at least relish the spectacle of the behemoths of finance getting it in the rump.

And this case  could prove to be a model for similar lawsuits by other embattled companies.

Still to come is Overstock´s suit against 12 prime broker-dealers (including Goldman Sachs), which will go to trial in late 2010. The suit charges an illegal stock market manipulation scheme.

Also in the works, the SEC, which dropped its investigation of Gradient in 2007, has now turned its sights on Byrne. Given Byrne´s  charge of regulatory and media capture, there are some who see this as retaliatory.

What A Billionaire Can Buy

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For those who think that nationalism is the threat, rather than transnationalism, consider this:

“Bill Gates, America’s richest man with a net worth of $50 billion, has a personal balance sheet larger than the gross domestic product (GDP) of 140 countries, including Costa Rica, El Salvador, Bolivia and Uruguay. The Microsoft ( MSFT – news – people ) visionary’s nest egg is just short of the GDP of Tanzania and Burma.”

More here at Forbes.

Sandinista General: Kleptocrats ‘R Us – So What?

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“Ortega defends the Sandinista Front’s rise to economic power, which started during the 1980s and has accelerated in recent years. Since President Daniel Ortega returned to power, opponents have criticized him and his party for essentially privatizing Venezuelan aid, which last year totaled $457 million, according to the Central Bank.

The Sandinista government has created a series of privately managed companies under the auspicious of the Venezuela-bankrolled Bolivarian Alliance for the Americas (ALBA). Those companies, which represent more than $530 million in energy contracts, tourism holdings, and cattle farms, are linked to the presidential couple and managed by the family and Sandinista party treasurer, Francisco López…….

Ortega said one can be a self-identified leftist and still be rich….”

More here at The Nica Times.

In other words Nicaragua’s dear “leaders” are in bed with every rich speculator/developer from abroad. And aid to the country is being siphoned off by them. Great news for the foreign speculators/flippers in the country, making their capital gains and throwing chump change to the kiddies to feed their conscience.

Bad news for ordinary folks who make their living working and producing for the predator class.

Ah, but the new rich are kind too. A few bones are being tossed to the underclasses to buy respectability. The usual formula of crony capitalism – predation + charity.

I steal whatever I can get away with. Then I go to mass and toss your dying children some old toys. I get to be richer than everyone…and better too. I cheat, lie, defraud, and stomp on a thousand faceless individuals to get what I have. Then I toss some tiny part back to some one else and absolve myself.

It’s the Jeffrey Levitt model of absolution. More than twenty years ago, Tony Korneiser wrote a piece in The Washington Post on the man who “stole Baltimore.”

Back then, Kornheiser presciently put his finger on the moral and social attitudes that would metastasize in twenty years to give us the bank that “stole America.”

“Today’s businessmen seem to have hung a sign that says: We Will Lie, Cheat and Steal Unless You Stop Us. They renounce their responsibility to behave ethically, and dare the government regulators to seal off the border.

The sin isn’t cheating, but getting caught. If Jeffrey hadn’t been caught, he and Karol might still be the toasts of Baltimore. They wouldn’t be seen as gluttons, but as eccentrics and damned entitled to be so.

A few years ago Jeffrey hired a public relations firm to retool his image. The trick, and Jeffrey understood it, was philanthropy. Rockefeller, Ford, du Pont, Morgan — they all gave some away. That’s how they bought respectability. Now their great-grandsons are running for president. Instead of being known as a slumlord, which he was before he got into banking, Jeffrey would be known as a philanthropist. Through Jeffrey’s and Karol’s good charitable deeds, the Levitt name would stand for kindness and compassion. What Jeffrey neglected to tell the public relations firm was that it wasn’t his own money he was giving away. “

To “slum-lord,” add con man, gangster, penny-stock pumper, bid-rigger, racketeer, briber, stock fraudster, blackmailer, thief, extortionist, pimp, charlatan – which is what the word financier really stands for today.

Kind of takes away the glamor…