H U D: The Housing & Urban Disaster

“Pray for Cleveland”

Sightings from The Catbird Seat

~ o ~


From Unlimited Access: An FBI Agent Inside the Clinton Whitehouse

by Gary Aldrich

~ ~ ~

Special agents of the FBI are trained to find truth, document truth, and present it to a judge, to a jury, or even to the counsel of the president of the United States.

In the many assignments that I was privileged to have over the course of a twenty-six-year career with the FBI, I would often come across a special kind of truth. Everyone has experienced moments of great clarity when we see or hear evidence that is irrefutable. Judges have a name for it – they call it prima facie evidence, facts that are indisputable and require no explanation.

Water is wet, fire burns, con men con.

When I was a young agent in Los Angeles, my prosecutor partner was an assistant U.S. attorney, fresh from Stanford University Law School. We had a bribery case to take to trial. We needed to prove that a Department of Housing and Urban Development (HUD) inspector took bribes from contractors so they could pocket money earmarked for home repairs that they never made – repairs paid for with taxpayer dollars.

Our evidence, frankly, was weak, but the crimes were especially heinous, because when the “repaired” roof leaked like a sieve or when the electrical outlet shorted out or when the furnace didn’t work, the poor couldn’t afford to make the repairs. When they walked away from their defective homes, because they had been defrauded and could not repair them, they walked away from their small chance to have the American Dream. Their credit could be destroyed by a mortgage foreclosure and eventual bankruptcy. Their neighborhoods, full of similarly defrauded people, would disintegrate, and disintegrating neighborhoods were breeding grounds for serious crime.

It was a hard case to prove because the bribes were paid in cash, and the HUD inspector-I’ll call him Raymond-never put the money in a bank. Of course Raymond denied the bribes and blamed the contractors for not doing the work. . . .

The inspector was very slick in his defense. In the end only one contractor had the guts to testify for the government, and he was on the witness stand.

He had some serious problems in his past, including alcoholism and divorce, and the defense attorney took him apart, destroying his credibility. The assistant U.S. attorney and I were worried. The defense attorney’s withering attack on our witness’s character meant we might lose the case.

Our witness was now ‘on trial’, and he was unraveling. But the defense attorney, not knowing when to quit, asked, “Mr. Smith, you didn’t pay any bribes, did you? You were drunk all of the time. Your wife threw you out of the house. In short, you were a mess, weren’t you?”

“Well, actually now that you ask, there is this one thing…,” Smith began.

The defense attorney, sensing danger, tried to cut him off. “Never mind, Mr. Smith, I think the jury has heard enough of your lies. We all know what your answer is going to be. No further questions, your honor.”

The prosecutor stood up. He had a hunch our witness had something important to say. “Wait a minute, your honor, I think we are entitled to hear Mr. Smith’s answer, don’t you?”

The judge concurred. “Go ahead, Mr. Smith, you can finish your answer.”

Smith looked alarmed. “Judge, if I tell it, I gotta use some, well, bad language, and I don’t feel right about that.” He looked over at the jury.

The judge smiled at Smith. “Mr. Smith, I am sure that this Los Angeles jury has probably already heard whatever words you might need to use.” All eyes turned to the jury. They nodded.

“Well, your honor, there was this one thing. Raymond always made us come to his office to pay the bribes. He insisted that it had to be in his office because it was safe there. Behind his desk, where he sat when we paid him, was this big mounted moosehead. Well, when Raymond looked into the envelope to count the hundred dollar bills, he would always laugh. He’d point up at the moosehead behind his desk and say, “If that f–ing moosehead could talk, we’d all go to jail!”

There it was. The moosehead truth. The MHT.

The guilty look on Raymond’s face said the rest. It was all over.

The jury came back inside of thirty minutes with guilty verdicts on all counts.

I’ve always remembered that trial and the discovery of the MHT, and in every case I handled thereafter, I searched for the moosehead truth….

In this book I hope to help the reader find the moosehead truth about the Clintons, their friends, and their political agenda, an agenda that I conclude is at odds with the Constitution I had been sworn to uphold….

July 12, 2003

Probe nets high-profile donor

By Johnny Brannon, The Honolulu Advertiser

Wesley Segawa, former chairman of the Housing and Community Development Corp. of Hawai`i, was arrested yesterday as part of a wide-ranging criminal investigation on illegal political donations.

The probe has become one of the most sweeping in state history, and more than 600 subpoenas have been issued to a variety of companies and individuals for bank records and other financial documents. Segawa’s arrest is the highest-profile so far.

Segawa also agreed in May to pay the state Campaign Spending Commission a $53,500 fine for making illegal donations to several politicians, according to a signed agreement made public yesterday>

He was booked at the Honolulu Police Department’s main station on suspicion of money laundering, illegal ownership of business, making campaign donations under a false name, and an illegal business practice known as monopolization. He was released pending further investigation.

The campaign commission found that Segawa funneled $26,275 to Mayor Jeremy Harris, $21,950 to former Gov. Ben Cayetano, $14,300 to former Lt. Gov. Mazie Hirono, $12,500 to former Maui Mayor James “Kimo” Apana, and $3,000 to Hawai`i County Councilman and former mayoral candidate Fred Holshuh.

Commission director Robert Watada said Segawa provided the money to employees, relatives and friends, and directed them to make campaign contributions. Segawa owns a Hilo engineering firm, Wesley R. Segawa and Associates Inc….

The investigation has lasted more than 18 months and focused largely on money that went to Harris, whose attorney has blasted the effort as a witch hunt. Harris has not been formally accused of wrongdoing.

Segawa’s arrest was the latest in a series that have included several other engineering company figures, all of whom were released uncharged.

Sam Kyu Hyun, president of W.A. Hirai and Associates, was arrested and released on Tuesday on suspicion of the same offenses as Segawa.

Hyun’s firm agreed in March to pay a $19,000 fine for making illegal donations to the campaigns of Harris, Cayetano, Hirono and Apana.

Others arrested earlier this month include Edward K. Noda, vice president of a company that bears his name, and Nancy Matsuno, treasurer for R.M.Towill Corp. Towill vice president Roy T. Tsutsui was arrested last month.

Noda agreed in March to pay the state Campaign Spending Commission a $53,000 fine for funneling money through other people to the campaigns of Harris, Cayetano and former Mayor Frank Fasi.

Segawa and eight other HCDCH board members resigned late last year after the U.S. Department of Housing and Urban Development accused the agency of mismanaging federal money.

HCDCH was also told to refund $771,000, the amount of sole-source contract that HUD said was improperly awarded by former HCDCH executive director Sharyn Miyashiro to a company partly owned by her ex-husband, Dennis Mitsunaga.

Mitsunaga was a major campaign fund-raiser for Harris, Cayetano and others, and is Segawa’s second cousin.

Watada said Mitsunaga’s fund-raising involved many companies that have been fined or are under investigation, but that he has not been accused of wrongdoing.

Several people were charged earlier in the campaign probe. They include Michael Matsumoto, head of SSFM International Inc. engineering, who pleaded no contest last December to felony money laundering and a misdemeanor campaign finance violation. Three others associated with the company were also charged with misdemeanors.

Earlier this month, a member of Harris’ Cabinet pleaded no contest to misdemeanor theft for instructing his secretary to file Harris campaign spending reports while on duty at City Hall.

Michael Amii, director of the city Department of Community Services, was ordered to pay $495 in fines and restitution, and was placed on a form of probation for one year. He remains on the job.

In May, an attorney for the Food Pantry grocery chain was indicted on two misdemeanor charges for allegedly orchestrating illegal campaign contributions to Harris. The lawyer, Edward Chun, pleaded not guilty.

Another company, GYA Architects Inc., has agreed to pay the campaign commission a $6,500 fine for making improper donations to Cayetano, Hirono, and Harris, Watada said….

Remember the ‘War on Poverty’?

From : “Catherine Austin Fitts” <catherine@solari.com>

To : “Solari Action Network” <catherine@solari.com>

Subject : Solari Action Network: Targeting of US population with biological warfare.

Date : Wed, 1 Jan 2003 11:51:09 -0400

It’s a New World Order, and brother you’re the prey.

—Curtis Mayfield


—–Original Message—–

From: Tom

Sent: Wednesday, January 01, 2003 12:43 PM

To: catherine@solari.com

Subject: Have you seen this web site?

Is this guy a crackpot or is he substantial?



I do not know Graves other than through the internet. Based on my research and anecdotal experience, I believe the gist of what he says is true. If you are interested, read Len Horowitz’s book on viruses….


The group doing all of this was the same group targeting black communities with HUD fraud and narcotics trafficking and the war on drugs in combination. The plan was to depopulate blacks in a way that made money from the blacks and the rest of us through the federal credit programs. It was very successful — both in terms of ensuring continued leadership of a select group in a “democracy”, depopulating and dispersing minorities and generating money for the black budget and greater centralized enforcement control.

To get a sense of it, you might want to read/listen to the following links if you have not read them before. These are all quite solid. Graves may or may not be. I just have not had time to look at his material. My focus is entirely on winning the litigation this year. I have another year of very hard work to win this thing.

I believe from the latest deposition that John Ervin and his attorneys believe that they are protecting this ethnic cleansing operation….

HUD was the primary “marketing” arm based on my experience.


As First Published in the May, 1999 issue of From the Wilderness.


Former Bush Assistant Secretary for HUD Reveals “Ethnic Cleansing” Connected to CIA Drug Dealing in Los Angeles

Government Spends Millions in Campaign to Silence Former Wall Street Banker, Cover Up Connections to Dark Alliance Stories & CIA Inspector General Report on Drug Trafficking

Special to From The Wilderness

by Contributing Editor, Catherine Austin Fitts

~ ~ ~

I was ten years old when the combined action of HUD housing investment and heroin trafficking destroyed my West Philadelphia neighborhood. The combined real estate and drug play destroyed the equity in our homes and businesses. Many of us left. Those who stayed were embroiled in the increasing stress of what happens as neighborhoods deteriorate into crime and decay. I decided that I would learn how money worked. I was too young to understand fully how the combination of HUD investment and drugs could move control and ownership from the many people who lived in a community to a few people who lived outside the community. — C.A.F.

* * * * *

I’m an investment banker. In the eighties I was a Managing Director and member of the Board of Directors at the Wall Street investment bank Dillon, Read & Co., Inc. I managed the firm’s large municipal and government clients. My projects included the financing of billions of dollars of improvements in New York City’s subway, bus and commuter rail systems. I also organized the financing for hundreds of millions in renovations to the infrastructures of New York and New Jersey. I regularly handled hundreds of millions of dollars in transactions.

I also helped to make tens of millions of dollars in profits for my firm and I raised tens of thousands of dollars for the George Bush Presidential campaign in 1988. Nicholas Brady, who became George Bush’s Treasury Secretary, had been my partner and boss at Dillon Read.

I was a Wall Street insider and a political insider – or so I thought. I was successful at Dillon Read because I created new investment models that helped ordinary people while making a profit. I thought “outside the box.” When Iran-Contra came and went I was oblivious. I had no idea about the drugs. It never entered my mind. Yet today I am convinced that the illegal drug trade, the enormous cheap capital it generates, and the CIA’s role as enforcer/protector for the profits of that trade is a dominant factor in the economy of this country.

It is a factor, which is destroying the entire American culture and is utterly out of control. As an investor and banker and as a former Cabinet level appointee, I tell you this is true.

My evolution came slowly. In 1989 I was named Assistant Secretary of Housing-FHA Commissioner under Housing and Urban Development Secretary Jack Kemp. I managed $300 billion of mortgage insurance, mortgages and properties of the Federal Housing Administration and, as Commissioner, I advised the Secretary on another $1 trillion of mortgage financing. I was fired by Jack Kemp in late 1990 because I would not go along with the questionable political practices, which seem to be built into HUD’s machinery and purpose.

But still I did not see the bigger picture.

In 1990, after leaving HUD, I started my own investment company, The Hamilton Securities Group, and I devised new and creative ways to save taxpayers billions of dollars.

In 1993, Hamilton secured contracts with HUD through Secretary Henry Cisneros. Hamilton saved taxpayers billions of dollars by taking defaulted HUD housing mortgages, repackaging them and auctioning them on the private market.

Hamilton began putting wealth back into inner city projects by hiring women living in HUD housing and teaching them how to use computers to build data bases on how money works in 63,000 neighborhoods throughout America. Hamilton started a data processing company with these women in a HUD project (Edgewood Terrace) in Washington. The women who lived there earned stock in the company. The company made money and proved the concept of what on-line access in communities could do to build jobs and businesses. We used the success of that effort to persuade HUD to fund computer learning centers in other housing projects. Hamilton was extremely successful. We made millions and we saved the government billions.

Fulfilling my childhood dream, Hamilton also created new software and money management tools, which were, for the first time ever, able to map down to the neighborhood, exactly how HUD and other federal money worked, who profited when loans defaulted, and how money came into or left a community.

For example, we were often able to see where HUD was spending $100-250,000 per unit on apartment buildings when there was single family housing available within walking distance for $25-50,000.

Secretary Cisneros had been extremely supportive of our work. We had unrestricted access to rich quantities of government financial data that was supposedly public but hard to understand. We were translating that into useable information so that people in any community could see how the money flowed through their neighborhood. We helped HUD get increasing amounts of data up on its web site. An unforeseen side effect for the women at Edgewood, and for Hamilton, was that by seeing clearly how the clean money worked, we also began to see how the dirty money worked.

As an investor for more than twenty years, I believed that it was actually more profitable for people to own their own neighborhoods and businesses and to know exactly how the money worked. The MONEY MAPS we made were so simple to understand that they looked like comic books.

As it turns out we mapped a great deal more than we knew.

In 1996, as reporter Gary Webb was busy writing a series of stories connecting CIA and the Contras to the crack cocaine epidemic in Los Angeles, I was busy using the money maps in a way that would help people move people from government subsidies to home ownership and entrepreneurship.

I was also advocating that U.S. government investment in communities should be subject to the same public disclosure rules that private companies are obligated to follow under the Securities and Exchange Commission Rules. If you are a shareholder in a company, that company is using your money. The law requires that they use your money legally and that they do their best to protect your money and make you more.

To earn money, and to do so in a fair, honest and competitive way, federal and state laws require companies to report performance and key transactions to you, the shareholder.

Every citizen is a shareholder in the government. If governments worked like they require corporations to work, they would be required to report to you, in the sunshine, exactly how the money was working, in your neighborhood, and you could either approve – or disapprove of the fairness and effectiveness of that, based upon your understanding of your own needs. That is very threatening to those who have used agencies like HUD as a trough to pay off political cronies.

On August 1, 1996, I gave the keynote address at a Neighborhood Networks conference in Boston, Massachusetts to 500 owners, managers and tenants in private HUD housing. As part of the speech I showed a slide of one of our money maps of Los Angeles. As I put the slide up I made the following statement:

One of the products that has been most successful for the first data servicing sites, Edgewood Technology Services, has been “geo-coding” databases and mapping. I wanted to show you this map; it’s up on the World Wide Web. This is a map of Los Angeles. Can anyone figure out where south central LA is from looking at where the HUD properties are on this map? This is the same thing as the Washington DC map I showed earlier. The little red dots are single family properties that were financed by (now) defaulted HUD-held mortgages. This map was geo-coded and designed and programmed by a woman who, four months before, had been on unemployment compensation and is a tenant in HUD housing”

If you compare this map with the fact that Freeway Ricky Ross – the crack cocaine kingpin described in Gary Webb’s Dark Alliance was known for buying up real estate along the Harbor Freeway and selling drugs throughout this exact area – the mathematical correlation is staggering. Every dot represents a HUD mortgage where the taxpayers lost money in a defaulted FHA loan and where somebody else bought the property for pennies on the dollar.

Most of those loans defaulted as the crack cocaine epidemic ravaged Los Angeles. The taxpayers bear the costs of not only the defaulted mortgages, but also deterioration in property value, the crime, and ultimately the depopulation due to very expensive prison warehousing and welfare.

Exactly who bought and traded in properties throughout this area should be the subject of congressional hearings looking into corrupt HUD practices from the period and continuing to this day. I suspect that many of the same players connected to the Savings and Loan scandals, who have also been tied to Iran-Contra and CIA’s drugs will surface yet again.

Demographically it is also easy to see now that the racial composition of South Central has changed radically and that African-Americans have been geographically and politically fragmented as, I believe, an intended result. Their political power has been weakened.

Just days after showing this first map, I received a subpoena from the Office of the Inspector General of HUD asking for extensive data and records from Hamilton. Suddenly, the loan sales and Hamilton were under investigation. The HUD IG’s actions were doubly surprising given their intimate involvement in and positive feedback about the loan sales program and because a HUD OIG audit team had just finished an audit of the loan sales program and had informed our project manager and HUD that our performance was excellent and there were no problems whatsoever.

At the same time, we got calls from a team of reporters from US News & World Report. They had been assured “at the highest levels” of the HUD Inspector General’s office that we were guilty of criminal action and that I and would soon be indicted. The recent favorable audit disappeared. Investigators started doing interviews where they did more seed planting than information gathering.

The “investigators” at HUD started suggesting to reporters that bid rigging had occurred in the loan sales. This was just after members of the HUD IG audit team had actually sat in on one sale, and concluded that bid rigging was impossible. They had also concluded that there was no way that “rigging” could have taken place because in a sealed-bid auction, you cannot favor one bidder when all bidders have access to the same information. That audit report was suppressed while the IG investigators pushed the exact opposite notion to reporters.

On August 10, Bob Dole announced Jack Kemp as his running mate. Meantime, the Republican appropriations committee, chaired by Republican Congressman Jerry Lewis of San Bernardino, gave Susan Gaffney, the HUD IG a large appropriations increase for her program Operation Safe Home, which targeted black communities for visible media “wag-the-dog” roundups of drug offenders. At the same time, our model for computer learning and data processing by people who had a stake in the company that did the work was adopted by Unicorp.

Unicorp is the Department of Justice private business that markets prison labor to federal agencies.

Suddenly, the black people who were apparently not smart enough to do database and software development near their children and parents were more than competent enough to do it in prison. The prison investment boom was taking off, fueled by new and longer mandated sentences. We at Hamilton felt like we were walking around with a big bullseye on our back because we wanted the communities of America to know what we knew, which was how to make maps that tracked the money flow in their own home towns.

I was not the only one dealing with Inspector General inquiries. The HUD officials working with me were also inundated with an investigation marked by leaks and dirty tactics. The former Deputy Assistant Secretary for Multifamily at HUD, Helen Dunlap, was one of the people targeted. She was from California and had previously run the California Housing Partnership. She had lots of experience in real estate and community development in Los Angeles.

Gary Squier, the Housing Commissioner of LA, on loan from Los Angeles, who was not involved in mortgage sales with Hamilton, nonetheless found himself dealing with similar probes from the HUD OIG. He was later to be turned down for a position by the White House despite impeccable credentials. No one could figure out why.

Suddenly I was persona non grata to long time friends and business relations in and around the government. I believe the leak campaign was far more sophisticated than something the HUD Inspector General could or would do on her own. It appeared that major economic and political powers had ordered that Hamilton be destroyed. More importantly, they wanted the evidence of what we knew – the maps – destroyed. That is also why, to this day, we believe the Federal government has destroyed many, but not all, of our tools and databases.

We didn’t realize it at the time, but I am now convinced that in the summer of 1996, our software and mapping techniques uncovered evidence of ethnic cleansing on Los Angeles. Hamilton’s map revealed that one of the most significant effects of the crack cocaine epidemic was that black homeowners, faced with payments on unlivable and unsellable properties, simply defaulted and fled the city to get away from the shootings and the drugs.

Those properties: industrial, residential and commercial were scooped up for pennies on the dollar. Wouldn’t it be fascinating to know who bought the properties and how much money has been made on them since?

Thanks to people like Gary Webb, Peter Dale Scott (Cocaine Politics), Alex Cockburn (Whiteout), Mike Ruppert, brave DEA Agents like Celerino Castillo – and now to the CIA’s own reports – we can prove that the CIA knew full well what it was doing.

And, as is his particular gift, Mike Ruppert, who gives us permission to see the obvious, has established that blacks were targeted by CIA and that the people who control our intelligence agencies are the same ones who control our economy and Wall Street.

Mike has taken great pains to document these things in previous issues of From The Wilderness.


Ethnic cleansing is a bit trickier in South Central Los Angeles than it is in South Central Europe. It is essential in a “democracy” to have people do it in a way that makes it look like they’re “doing it” to themselves. You need a socially induced suicide.

So how do you get people to commit suicide? You make it very attractive for their children to make money doing something illegal. Then you arrest them for it in a very visible way (Remember the battering rams and armored cars?). You design stories to make people blame themselves for what has happened.

This is how branding works. Pepsi = tastes good, Black people = cause illegal drugs and crime. Support all this by a national media owned by defense contractors and other corporate interests. That way the nightly news has lots of moneymaking incentives to cover HUD OIG sponsored drug raids in black communities rather than doing a story on CIA drug trafficking.

The most efficient ethnic cleansing is self-financed or, better yet, profitable. Drugs and alcohol are excellent tools toward this end, especially when they are combined with easy access to guns. Sell large amounts of addictive substances to a group of people in an area you want to take over, then use the cash flow to buy up their homes and commercial real estate for 10 cents on the dollar, without much competition, while you enjoy the full value of their cash flow. You can then afford the long holding period required to make the land profitable again after the cleansing period is over.

I believe that if the Federal government would make citizens’ data (and it is our data) available, instead of trying to suppress it, it would prove that taxpayers are losing money to fund ethnic cleansing while the people in South Central LA are losing their lives. And I believe that it was the effectiveness of our maps which threatened to expose the deeper financial agendas of the eighties.

I believe our current model, the Solari Investment Model, (www.solarivillage.com) which I am still developing, may well tie Iran-Contra, The Savings and Loan Scandals and the HUD scandals of the late 1980s into one big economic package designed to benefit a very few.

The way to start to do this is to look closely at all the government investment, credit and regulations in Los Angeles since 1980.

Our maps suggest to me and others that the crack cocaine epidemic, created by the CIA was, I believe, just as much a program of ethnic cleansing and land grabbing economic warfare as it was about a bunch of rebels in Central America who were not the equivalent of our Founding Fathers.

But this kind of ethnic cleansing was hard to contain and it spread to other races and classes. It reached the rural and suburban neighborhoods of places like Iowa, Ohio and Tennessee.

By the end of the 1980s it had reached all my friends and relatives who listen to Rush Limbaugh, voted for George Bush and donated money to Oliver Northnot knowing that, according to CIA’s own reports, the networks he controlled were the key to the supply of drugs flowing to their kids and communities.

As Michael Ventura once wrote, “We all live in the South Bronx now.” White families all across America were hurt by drugs and violence and their pocketbooks also got drained, even as the media reinforced the notion that drugs were a black problem….

© Copyright 1999. From The Wilderness Publications

~ ~ ~

After the 1996 election, Secretary Cisneros was asked to resign from HUD.

The choice of Cisneros’ successor seemed strange and somehow connected to Hamilton’s predicament. The Afro-American mayor of Seattle was widely considered to be a shoe-in. After the White House floated his name, another investigation by the HUD OIG into possible misuse of HUD monies in Seattle caused him to be dropped.

Two days later we were assured that an Afro-American woman from Los Angeles, Yvonne Braithwaite-Burke, was the President’s leading candidate. Then suddenly, she disappeared from the radar screen and Andrew Cuomo was announced with surprisingly strong bipartisan support for someone with such a partisan history.

Cuomo moved into the Secretary’s office at HUD from his then current position as Assistant Secretary for Community Development and Planning. Rumors started to float around the HUD networks about minorities and people sympathetic to minorities being moved out.

Meantime, the new Secretary made it clear that his top priority was enforcement and it appeared that the Secretary and the OIG were going to compete for an ever-growing budget via media-worthy enforcement actions. So, then came the Urban Fraud Initiative and increased funding for Operation Safe Home, targeting tenants, real estate owners and managers in black communities.

At the time, we made no connection between these actions and the promotion of prison privatization by Vice President Gore’s National Performance Review. New Federal sentencing guidelines helped increase black inmates to approximately 50% of a rapidly expanding prison population. All this at an extraordinary cost to taxpayers.

As the audits of Hamilton continued, forcing us to spend hundreds of thousands on legal fees, Secretary Cuomo and the Inspector General’s staff, who were later to withhold $2 million in payments, became obsessed with seizing our data and software. This was software we were planning on giving away via the web!

The critical issue from October 1997 through the following March seemed to be – our knowledge! In October, great emphasis was placed on our returning all of our HUD databases, including those that were supposed to be publicly available, and certifying that we had done so.

In the following months, the HUD OIG tried to seize all of our documents, including originals, with no basis in law. After demanding physical access to our computers, government employees made back-ups of our data which, whether intentionally or not, seriously damaged it.

And no one has yet officially accused us of any wrongdoing. We were, and are to this day, only being investigated. It is clear to us that the intent of this campaign was to drive the company into bankruptcy.

The leak campaign against the company and me has since reached new heights of absurdity. As the HUD IG keeps assuring the media that that I am guilty of criminal violations they now have investigators focusing on my sex life! Worse still, HUD IG agents recently showed up at the home of my 72 year old uncle with a subpoena for records of a family owned farm house that doesn’t even have indoor plumbing, implying some kind of fraudulent transaction. Members of my family have reduced or cut off communications, fearing they could be targeted too.

After court battles and negotiation, in March of 1998 HUD insisted that all of our computers be scrubbed. We were not going to be allowed to transfer our own proprietary data and the Federal District Court Judge, Stanley Sporkin, appointed a Special Master as trustee to manage all our digital and paper records.

Inexplicably, HUD was quite upset when they found we had taken our main server with us and not sold it, in spite of the government’s destruction of its files. The HUD investigator made it clear that we could not keep the server because – “We were not allowed to have any of the knowledge”. We could not explain this bizarre position and neither could they.

What I did not know until approximately a year later, after reviewing tapes of Mike Ruppert’s lectures, was that hearings were held on Volume I of the CIA Inspector General’s report on the Dark Alliance allegations on March 16 of 1998. At the same moment the government was trying to steal Hamilton’s data and knowledge.

We also did not notice in February when Vice President Al Gore announced that Secretary Cuomo was bestowing an empowerment zone and $300 million in tax credits on Maxine Water’s congressional district. That was just before the March 16th hearing where Maxine Waters performed brilliantly against CIA in a show that nobody watched. We were busy, at the time, moving our computers over to our law firm to protect the MONEY MAPS from a series of break-ins and other harassment around my home.

Our growing fear of being set up in an asset forfeiture case, after the Department of Justice threatened my assets personally, dominated our lives and does so to this day.

And so we did not notice when the damning Volume II of the CIA Inspector General’s report was released on October 8th, one hour after Henry Hyde’s Committee started the Impeachment inquiry. And we did not notice that Maxine Waters’ voice suddenly fell almost silent as Bill Clinton saved his presidency by blackmailing the Republicans with Volume II and its contents.

I made efforts to communicate with Maxine Waters in November and December 1998 about possible connections between our case and CIA drug dealing but, aside from an initial contact, our calls were not returned.

[FTW placed telephone and e-mail requests to both the LA and Washington offices of Maxine Waters to ascertain whether the $300 million tax credit award in March, 1998 was spontaneous or the result of a previously submitted request. As of press time we have received no response. – ED]

To date we estimate that the HUD Inspector General investigation targeting my companies and me has cost the American taxpayer $35MM. To date we have not been successful in getting the Department of Justice or the HUD OIG to tell us what they are investigating or even who is in charge of the investigation. The investigation continues with no end in site. We have multiple lawsuits filed against HUD and are filing more. We continually hear Judge Stanley Sporkin, rule against us with statements that he disagrees with the law so we should take it up with Congress.

The company I founded, Hamilton, was liquidated a year ago to pay the bills of the ongoing campaign to discredit us. As a result of the persecution we have lost more than one hundred million dollars. I have sold my home, lost millions of dollars in unpaid HUD contracts, endured eighteen audits, burglaries, physical harassment and an unending smear campaign which has produced not a single complaint or indictment after almost three years.

I believe this is because I have the pieces to help prove that what Gary Webb stumbled upon was ethnic cleansing American style.

My bottom-line?

For those of you pushing for testimony on Volume II, let’s try another tactic. Let’s push for a Congressional and GAO investigation on how all the federal investment, credit and regulation worked in Los Angeles from 1980 to 1994. Let’s look at how our government was used, from CIA to DEA to HUD, to destroy and loot our communities.

The key is HUD.

Let’s look at how the Section 8 owners, managers and tax partnership beneficiaries worked along side the drug traffickers.

Let’s look for patterns of loan brokering, money laundering, cleansing and other relationships between real estate, land, prison growth and privatization and the kind of investors who control CIA and intelligence networks.

Then let’s look how this ties in to campaign fundraising.

The present economic and political system is not sustainable and must collapse – or change. New investment models in the information age will show us that integrity, honesty and win-win investment models, rooted in community and place based autonomy are actually more profitable than the liquidate and destroy models currently operating.

Like the auto mechanic said to the car owner who needed repairs, “You can either pay some now – or pay a lot more later.”

But we have to solve some problems first. Finding the will to do that is made easier for me as I recall the words of Bishop Alfred Owens of the Greater Mount Calvary Holy Church, If we can face it. God can fix it.”

After a lifetime of study, from Wharton to the inner sancta of government, I believe I have found the solution to a very real corruption which neither Congress nor Wall Street presently possess the ability to stop. It is a new investment model, born of the Information Age, which will save both the just and the unjust alike by turning the current Industrial Age investment model upside down and making what was once secret available to all.

As the edge of the precipice approaches and as our economic snake eats its own tail it shouldn’t be long before those who have scoffed at the truth-tellers recognize that we are the ones with the maps to lead them out of the jungle.

You can learn more about the Solari investment model by visiting www.solarivillage.com.


Catherine Austin Fitts, is a 1978 Graduate of the Wharton School of Business with an MBA in Finance. From1978 to 1989, at the Wall Street investment bank Dillon, Read & Co she served in the Corporate Finance, Energy Finance, Mergers and Acquisitions and Public Finance Departments. From 1986-9 Fitts was a Managing Director and member of the Board of Directors.

From 1989-90 Fitts served as Assistant Secretary of Housing – Federal Housing Commissioner at the Department of Housing and Urban Development. From 1991-7 she served as President/CEO of the Hamilton Securities Group with aggregate revenues of $50 million, an employee base of 50 and portfolio strategy responsibilities for $400 billion of financial assets.

She is now President and CEO of Solari, Inc; a Washington consulting firm specializing in equity based neighborhood investment models for the Information Age.

Visit www.solari.com


Black Op Radio Archive: Show #62

Feature: D’Ferdinand deposition by attorney Ray Kohlman.

Desiree Carone Ferdinand is the daughter of Colonel Albert Carone, who was the paymaster for Army-CIA-NYPD narcotics trafficking, money laundering and assassinations through the mid-1980’s/Iran Contra.

These depositions provide Desiree and her husband Tom’s Ferdinand’s recollections of what they saw, heard and were told by their father/father-in-law about narcotics trafficking, money laundering and assassination by the US Army, CIA and New York-organized crime with the knowledge/support of NYPD through the mid-80’s, including their use of Afro American gangs to distribute drugs in Afro-American neighborhoods.



Crack the CIA: On Line Video from Guerilla Network News



The Spooky-Minded Professor: CIA Cover-Up Meister Gets Princeton Job

(February 2001) http://www.steamshovelpress.com/offlineillumination4.html


The Story of Edgewood Technology Services- or How I Lost $100 Million



Bush Assistant Secretary for HUD Reveals “Ethnic Cleaning” Connected to CIA


To: The Solari Action Network

Subject: The Kemp Tapes, I-XII- Now Available from Black Ops Radio

Date: Fri, 20 Jun 2003 01:34:21 UT

From: catherine@solari.com


In 1998, my attorneys asked me to record my recollections of serving as Assistant Secretary of Housing-Federal Housing Commissioner during the first Bush Administration, 1989-90. I had reported to HUD Secretary Jack Kemp and worked with his general counsel Frank Keating, his undersecretary, Al DelliBovi and his chief of staff, Scott Reed.

Kemp had announced as the Republican VP candidate in 1996, just after my company had received its first subpoena in the “enemy of the state” process and two weeks before Gary Webb’s Dark Alliance story began publication in the San Jose Mercury News.

One of the reasons that was given for Kemp’s choice was his ability to attract women and minority voters to support the Republican ticket.

Obviously the truth of HUD fraud and narcotics trafficking in South Central LA was not something that either the Republicans or Democrats wanted to come to light.

While I never dreamed that I would circulate the truth of Kemp’s behavior at HUD publicly at that time (and it took years of being targeted before I was willing to do so), the possibility may have been on the mind of both Kemp and Dole’s campaign manager, Scott Reed, as my company was working for HUD, then led by Secretary Henry Cisneros who was a Democratic politician from Texas. The notion of neutralizing both Cisneros and Fitts with a fake scandal may have been attractive.

During 1998-1999, I dictated nine hours of recollections. My apologies, as I never anticipated that this would be listened to by someone other than that an attorney paid to deal with my litigation. The first hour or so were recorded with a cold in a Corvette on the highway. And others were recorded late after office work was done, when I had a cold etc.

Hence, these are raw.

After shipping the cassettes over to my attorneys, one of my colleagues asked me if they could listen to them. To my surprise, they found the Kemp Tapes remarkably interesting and informative. They said that they felt like they were walking around inside “how the money works” for the first time in their life. As a result, others wanted to listen and then others, and over time hundreds of cassette six-packs circulated among researchers interested in Iran Contra, HUD and financial fraud.

This is simply story after story, including the story of Kemp telling me that he would not come to my house for a party because my house was bigger than his house and he “would find it castrating”. There is the story of Kemp ordering me to lengthen my skirts. And the story of the efforts to illegally award project subsidy to Andrew Cuomo in New York.

And stories that describe the scenes created when billions of waste and Iran Contra fraud are being covered up. I left out a few of the most sensitive.

Anita Langley of Black Op Radio has posted The Kemp Tapes at their Hidden Room site:


With the following descriptions:

“The Kemp Tapes – recollections of corruption. Catherine Austin Fitts discusses her work as Assistant Secretary of Housing. There are 12 segments, each approximately 45 minutes. The first two are quite difficult to hear, but it gets easier. I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII.”

~ ~ ~

Much of what I learned about Iran Contra fraud came after I recorded the tapes. By reading and studying the available written material about HUD fraud and then estimating out how the money worked on the various stories, I developed a much better understanding in hindsight of what had really been happening.

For those interested in Frank Keating’s recent role in the Catholic Church commission related to sex abuses, these tapes may also be useful….

March 3, 2003

Who Is Guarding The HUD Guards?

By Martin Edwin Andersen, Insight Magazine

Is HUD Secretary Mel Martinez unprotected by IG�s Secret Service �detail�?

The question is as old as Ancient Rome: Quis custodiet ipsos custodes? (Who will guard the guards?) It was a question raised yet again when media attention focused on pistol-packing Inspector General Janet Rehnquist at the Department of Health and Human Services (HHS) and allegations of document shredding in her office, long considered a model by internal investigators at other agencies. But the epicenter of complaints of wrongdoing by those in charge of policing key government functions may be the Office of the Inspector General (IG) at the Department of Housing and Urban Development (HUD).

Insiders tell Insight that investigative-staff morale has plummeted at HUD in the face of growing allegations of wrongdoing involving senior officials in the internal-affairs office. According to an internal memorandum obtained by Insight, in just 21 months at least 56 agents, nearly 25 percent of the total investigative workforce, voluntarily have left the IG’s employment, an attrition rate critics say is 10 times the average.

In place of senior and seasoned investigators, critics complain, a group of retired Secret Service officials, many unskilled in the kind of white-collar fraud investigations required at HUD, have been appointed to what one IG watcher complained is a growing “good-old-boy” network reflecting senior management’s background in the presidential-protection service. While investigative talent has leached out of HUD, critics contend, management has compensated by lowering the bar on investigatory targets — going after what one agent called “low-hanging fruit” — and systematically giving Congress misleading information about the scope and success of those inquiries it conducts.

An Insight investigation into the inner workings of the HUD IG office has revealed a complex web of alleged abuses of investigative power. Waste and mismanagement of monies appropriated to crack down on the hundreds of millions of dollars’ worth of fraud in federal housing programs is common, and allegations of disregard for civil-service hiring rules and a penchant for political cronyism appear to reach into the highest ranks of the investigations office. Scores of documents examined by this magazine, made available by congressional critics of HUD, suggest that within the very office meant to audit, investigate and evaluate the spending by HUD of billions in taxpayer dollars are senior officials who have engaged in chronic wrongdoing.

In a confidential letter prepared for delivery to Congress and obtained by Insight nearly one-dozen current and former IG officials, including winners of that office’s highest awards, say current leadership at the HUD IG office “cannot be trusted to address the abuses of investigative power, waste of federal funds, mismanagement, political cronyism and disregard for merit principles within its own office.” The IG managers, they charge, engage in cover-ups, “abuse their office to remain in power, ruthlessly crush all dissent and resist any external accountability.”

For example, the former San Francisco-based Western regional director of HUD, Richard Mallory, was appointed by President George W. Bush and is a career housing expert. Last year Mallory used his post aggressively to advocate that strong monitoring and enforcement actions should be taken against that city’s troubled federal housing programs. His concerns included the city of San Francisco’s misuse of HUD community-development funds to sell a property to a convicted felon, a friend of Mayor Willie Brown, who deeded the property to the Nation of Islam for use as a religious institution.

In response, Mallory was warned by one of his superiors that HUD Deputy Secretary Alphonso Jackson, the country’s No. 2 housing official, is a close friend of Brown and that Mallory should not anger either Brown or the San Francisco Housing Authority (SFHA). Mallory’s predecessor in the post already had been demoted for complaining about long-standing corruption and mismanagement at SFHA, which also had been accused by the HUD IG office of widespread mismanagement.

On Feb. 20, 2002, Jackson fired Mallory without giving a reason. In a letter a week later former California governor Pete Wilson, a Republican and former U.S. senator, sent the White House a letter charging that Mallory had been fired at Brown’s request after having exposed internal corruption at HUD. “As I mentioned in our conversation today,” Wilson wrote to White House Counsel Al Gonzalez, “Mallory’s firing was requested by the mayor in a phone call to the deputy secretary. Also [HUD manager] Lily Lee has arrived in [San Francisco] to be the acting regional director.”

Wilson added: “Don’t hesitate to call if I can be of any assistance. The president and [HUD] Secretary [Mel] Martinez deserve to be protected.”

In response to his removal, Mallory contacted the former regional HUD IG, Daniel Pifer, requesting an investigation of his discharge, which he believed to be the result of retaliation. According to local press reports — confirmed by the confidential letter prepared for Congress — Jackson and Lee (who reportedly had been removed earlier under a cloud as head of the Santa Ana [Calif.] Homeownership Center) were close friends, and the SFHA was about to be forgiven some $1.8 million in debt it owed to HUD.

As Pifer prepared to investigate Mallory’s charges, he was informed by HUD headquarters in Washington that the unfolding San Francisco situation was considered to be “a very big deal” and that then-IG-designate Kenneth Donohue had been briefed on the matter. A day later, sources say, an acting deputy IG for investigations placed Pifer on one week’s administrative leave. When he returned, according to insiders, the assistant IG for investigations ordered him to “stand down on the Mallory issue” and to “initiate no action at this time.” The matter was allowed to drop.

Sources at the HUD IG office complain that a climate of orchestrated witch-hunts and the creation of scapegoats pervades the current management structure, adding to the attrition rate and skills drain. They point to the case of Jeffrey Finn, a former special agent in charge of the IG’s Denver-based Rocky Mountain district office. Finn did not contest his removal from federal employment in January 2001 after being the target of numerous accusations of misconduct and administrative violations. According to court documents and the testimony of current and former IG employees, however, IG efforts to “destroy” Finn with trumped-up criminal charges also were used to wreck the careers of a number of employees with whom he had a relationship.

An affidavit offered by a senior IG official claiming, under penalty of perjury, that case documents had been shredded in accordance with existing policy cited a policy that does not exist. A senior IG official appeared to perjure himself when he claimed that his decision to remove two employees from their posts could not have had anything to do with their testimony in support of Finn because he knew nothing about it — yet throughout the court proceedings he had prepared e-mail updates to colleagues around the country. Negative information about two members of the IG team investigating Finn that cast doubt on their credibility never was disclosed to the defense as required.

In throwing out four of the charges against Finn, U.S. District Judge Walker D. Miller found that the HUD IG office not only had engaged in the illegal shredding of potentially exculpatory evidence but also had waged a campaign of “outrageous, improper intimidation” and coercion against Rocky Mountain district agents and administrative employees. Finn was found not guilty of having misused $200 in funds, and Miller has not yet ruled on the other charge — that Finn ordered a subordinate to change the receipt for these funds from “fence damage” to “storage costs.”

IG sources tell Insight that at least half-a-million dollars in federal funds were used to prosecute Finn. The IG investigation of the Rocky Mountain field office found only $18.80 in missing funds out of $1,450,177 in expenditures made by the office during a 33-month period.

Allegations of intimidation did not stop there, IG sources say. They extended to the Fort Worth, Texas, office where two highly regarded IG managers, special agent in charge (SAC) Larry Chapman and assistant SAC James Malloy, one of two American Indian agents in the IG office, were forced into retirement after refusing to support the credibility of the Denver investigation by taking punitive actions in Texas. At issue: their alleged failure to retaliate against former Denver employees who had testified in favor of Finn.

Angry IG staff also have complained that Donohue and Deputy IG Michael P. Stephens, both retired Secret Service agents, have converted the office into “an employment agency” for their retired Secret Service friends. “These retired Secret Service agents, largely white males, have inundated the Inspector General’s office at high-graded GS 14/15 positions,” according to one source.

Retired Secret Service agents “who are now the favored elite” in the office, say insiders, include a deputy assistant IG for investigations, a senior Special Investigation Division (SID) agent, the special agent in charge for the Southeast/ Caribbean region and at least five SID senior agents.

One of the former Secret Service agents selected for a senior HUD IG post later was sued successfully by an IG special agent for sexual harassment; this after the man’s estranged wife, saying she feared for her safety, had turned in his weapon to the Anaheim, Calif., police department after he allegedly assaulted her.

IG agents are preparing to take their concerns to a Republican senator who is the chair of a powerful committee. They say they will bypass referral of their complaints to the President’s Council on Integrity and Efficiency (PCIE) for investigation because, although the PCIE is within the Office of Management and Budget, “it is controlled by the IG community and therefore not independent.

In the unlikely event that the council found cause to discipline one of its own, the result would be no more than a ‘slap on the wrist,’ given that the council has no statutory authority to take independent corrective action.”

December 20, 2002

Lingle wants investigation of public housing agency

By Jim Dooley, Honolulu Advertiser

Gov. Linda Lingle said yesterday she would ask the attorney general to look into possible wrongdoing at the state public housing agency, despite an earlier investigation by former Gov. Ben Cayetano’s administration that found no evidence of criminal acts at the agency.

Lingle’s move comes as the Honolulu office of the FBI conducts its own investigation of the Housing and Community Development Corp. of Hawai’i….

Auditors and officials of the federal Department of Housing and Urban Development, which oversees and funds HCDCH, have been highly critical of the state agency this year, accusing it of financial mismanagement and procurement improprieties.

Some of the most pointed criticism has been aimed at a federally funded $771,000 non-bid contract awarded 2 1/2 years ago by Sharyn Miyashiro, then executive director of the agency.

The contract was given to Punaluu Builders Inc., a company founded and partly owned by her ex-husband, Dennis Mitsunaga.

The Advertiser first reported on the existence of the contract and the circumstances surrounding its award in July.

HUD Assistant Secretary Michael Liu, a former Republican state legislator in Hawai’i, has called the contract award improper, and demanded that HCDCH reimburse the money to HUD.

Cayetano said Liu’s demand was politically motivated, as it was delivered just days before the November gubernatorial election —- an accusation that Lingle denied yyesterday.

“I think HUD has acted appropriately,” Lingle said.

In mid-October, Cayetano did order an investigation into the awarding of the contract. Within a month, the attorney general’s office reported finding no criminal wrongdoing.

Lingle said she and her senior adviser, Randall Roth, had been in close contact with HUD officials this week about the state housing agency, and she had asked the new attorney general, Mark Bennett, to review reported problems there after he takes office Jan. 2.

“If the governor feels that the previous investigation was not as thorough or complete as it might have been, perhaps another investigation is appropriate,” said State Sen. Ron Menor, D-17th (Mililani-Waipi’o), chairman of the Senate Committee on Commerce, Consumer Protection and Housing.

Menor said earlier this week that his review of HCDCH materials had led him to conclude that Miyashiro, who stepped down Dec. 1, violated federal prohibitions against the “appearance of impropriety” in awarding the contract to Punaluu Builders.

Although Miyashiro and Mitsunaga were divorced more than 20 years ago, the terms of their divorce decree required him to pay her home mortgage, supply her with a car and pay her home repair bills until she remarried. Miyashiro has not remarried, but has refused to say whether Mitsunaga supported her financially.

Miyashiro has denied any conflict of interest in the contract award and said a HUD audit of the contract “contains numerous inaccuracies … lacks specificity and made conclusions based on (a) hasty investigation.”

Dexter Sato, president of Punaluu Builders, could not be reached for comment yesterday.

Lingle said she planned to have a “memo of understanding” hammered out with HUD officials by the end of year about how her administration would handle problems at HCDCH.

She said she planned to try to collect the $771,000 from Punaluu Builders and forward it to HUD.

Other terms of the agreement include:

>> A nationwide search for a new executive director. The salary, set by the Legislature, is $73,000 a year. Menor said he did not know whether that was adequate to attract the most qualified candidates, and said he would be willing to discuss an increase if the administration seeks it.

>> Approval from HUD officials before new members of the HCDCH board are appointed or new executive staff hired.

>> Increased training in procurement laws and regulations for HCDCH personnel.

>> Prohibition on awarding any more contracts to companies found to have “abused federal programs or misspent federal funds.”

Liu has said federal money to HCDCH could be cut if the federal housing agency’s demands for improvements are not met. Virtually all of the state public housing programs are financed with $25 million in federal money a year.

Lingle said she has made straightening out problems at HCDCH a priority “so that the people who benefit from these programs would not be hurt, and so we can be positioned to help more people in the coming years.”

In a related development yesterday, outgoing members of the HCDCH board, who have said they would resign by the end of the year, were asked by HUD officials to award a new $1.2 million consulting contract for an exhaustive management study the agency required.

HUD said it had selected IBM Corp. as the consultant in a competitive procurement process handled by the Denver office. Federal officials told the HCDCH board the work would be performed by personnel from PriceWaterhouse-Coopers Consulting, a firm acquired by IBM in July.

HUD demanded earlier this year that HCDCH spend as much as $2 million on an independent outside consultant study to recommend structural changes and eliminate widespread management and financial problems.

The money will come from federal grants previously given to HCDCH.

Acting HCDCH director Robert Hall told board members the money to pay IBM would be drawn from “rehabilitation and maintenance” projects that will have to be deferred.

The IBM contract, if approved by the HCDCH board of directors, would include a $401,000 management assessment and a $790,000 study of the physical condition of the public housing projects managed by HCDCH.

The $1.2 million contract will be followed by a “technical assistance” contract to be paid for from the $2 million originally set aside by HCDCH to meet HUD’s demands for improvement….

October 16, 2002

AG to look into ”missing records”

Cayetano says he does not believe there has been wrongdoing

By Richard Borreca, Honolulu Star-Bulletin

Gov. Ben Cayetano says he has asked the attorney general to look into reports of missing records from a state housing agency.

“Some people say there are missing documents and that sort of thing. I think the public is entitled to know,” Cayetano told reporters during an informal news conference at the state Capitol yesterday.

Cayetano also defended Sharyn Miyashiro, executive director of the Housing and Community Development Corporation of Hawaii, saying she is “entitled to the presumption that she has done nothing wrong.”

Miyashiro has said she plans to leave her job at the end of the year, after working for state government for more than 30 years according to Darrell Young, housing department information officer.

Cayetano said the missing records are noted in a report issued as part of an investigation by the federal Department of Housing and Urban Development.

The investigation was led by Michael Liu, HUD assistant secretary for public and Indian housing and a former Hawaii GOP state senator.

“Whether she did her job in concurrence with federal procurement laws, that is another thing, but I don’t think there has been any criminal activity,” Cayetano said.

He stressed, however, that if the federal government thinks that there is a criminal wrongdoing with the state agency, it should bring charges.

“To clear the air, we welcome the federal government, our own attorney general is looking into it and if the city prosecutor thinks it is worth it, let him come and look at it as well,” Cayetano said.

Cayetano also questioned a portion of the HUD report that was critical of the state’s procedure to combine contracts for design and construction work on projects. He said the state has been successful in using the procedure and cited the Hawaii Convention Center as an example. The Convention Center was not a HUD-funded project.

Two years ago, a state audit criticized the state housing agency, saying there were problems in its accounting and internal controls. The agency said it has implemented most of the auditor’s recommendations.

The audit also faulted a 23-month delay in executing a design-consultant contract and procedures it says could have resulted in a freeze of federal funding assistance.

Slow placement of applicants for low-income housing and rental assistance could lead to a waiting period of two to seven years, the audit said….

For more, GO TO > > > Predators in Paradise

June 25, 2002

Attorney: Hawaiian homes are racially discriminatory

By TIFFANY EDWARDS/ West Hawaii Today

The attorney who successfully argued the Rice v. Cayetano case before the U.S. Supreme Court is preparing another racially-based complaint in Hawaii.

John Goemans sent a letter Thursday to Department of Housing and Urban Development (HUD) Secretary Mel Martinez claiming a Hawaiian Homes subdivision planned in Kamuela violates the Fair Housing Act of 1968.

Goemans asserts the violation is based on Supreme Court justices’ ruling in Rice v. Cayetano that Native Hawaiians are a race, not a tribe.

“I am writing for that class of persons, residents of (Kamuela), who are now threatened by the state of Hawaii with the economic loss and deprivation of the social and professional benefits of living in a racially integrated community,” Goemans wrote Martinez.

He notes the construction of homes on state lands in the next three years will be “solely for lease and sale to persons of the Hawaiian race and no others” and HUD is charged with “the termination of such overt racial discriminations.”

Goemans’ letter expresses confidence that Martinez’ attention to the matter “will protect our town from the evils of racially segregated housing and zoning.”

In an interview Thursday afternoon with West Hawaii Today, Goemans charged the Fair Housing Act and the Hawaiian Homes Commission Act of 1920 are in conflict because the latter states land is to be set aside specifically to be leased only to people having 50-percent native Hawaiian blood.

“The Fair Housing Act states there is to be no discrimination based on race in housing in America,” he said.

Goemans said his “micro-concern” is to prevent the Hawaiian Home Lands subdivision in Kamuela, but the larger effect might be the establishment of “a uniform policy” against programs geared specifically for Native Hawaiians, brought forth either by HUD or the Department of Justice’s Office for Civil Rights.

“The effects are far-reaching,” he said.

Goemans’ letter has been written less than a month after he returned from Washington, D.C., where he resided at a hotel to see the Rice v. Cayetano case through the high court.

The decision was handed down in February 2000, after being presented to the Supreme Court justices in the spring of 1996. Goemans said he and his client Freddy Rice had lost in two lower federal courts.

Rice challenged the voting system in Hawaii to elect the 9-member Office of Hawaiian Affairs (OHA) Board, specifically requiring that those casting a vote for OHA board members be able to trace their Hawaiian ancestry back to 1778.

Goemans maintained Thursday that since Rice v. Cayetano decision, the Department of Education denied Kamehameha Schools some federal funding and the Department of Defense notified the trust that Kamehameha Schools would have to drop their ROTC programs because of a “racially discriminative admissions policy.”

Goemans said HUD is mandated to respond to his letter within 10 days of receipt, and that agency must also notify its state counterpart of his complaint within that same time period.

Department of Hawaiian Home Lands (DHHL) Deputy Chairwoman Jobie M.K.M. Yamaguchi, reached just before the end of business hours Thursday, said she believed Goemans was incorrect in terms of the Rice v. Cayetano decision, that it pertains to voting rights specifically. “It was based on the 15th Amendment and not on issues relating to the 14th Amendment,” she said.

Yamaguchi maintained that the planned subdivision in Kamuela is consistent with the Hawaiian Homes Commission Act, which DHHL is responsible for implementing.

The deputy chairwoman, meanwhile, could not provide details about the proposed subdivision Thursday, and Sandy Asato, who is the DHHL employee in charge of the “Native Hawaiian Housing Plan” could not be reached….

Incidentally, in a Internet-posted commentary entitled, “A Wake Up Call for Native Hawaiians,” written by Hon. William Fernandez (ret.), Goemans is charged to have “made it very clear that he is on a crusade to strip Hawaiians of all their race based entitlements.”

Fernandez, in a separate commentary that was also posted on http://Imuakamehameha.com, writes, “Rice V. Cayetano is more than a decision on voting rights. Our United States Supreme Court in that decision stated that they found no unique obligation owed to Hawaiians by the United States nor that Congress ever intended to give native Hawaiians the same statues as ‘that of Indians in organized tribes.’

The Court expressed grave doubts as to whether ‘Congress may treat the native Hawaiians as it does the Indian tribes.'”

February 2, 2002

Disgruntled HUD official shunted to L.A.

Move follows memo on ex-S.F. housing chief case

Patrick Hoge, San Francisco Chronicle

San Francisco — A senior U.S. Department of Housing and Urban Development official was abruptly moved from San Francisco to a subordinate position in Los Angeles after he complained that his agency was being lax on corruption and mismanagement in the San Francisco Housing Authority, The Chronicle has learned.

John Phillips, HUD’s acting director for California, Arizona, Nevada and Hawaii for the past year and an agency employee in San Francisco for more than two decades, was ordered in December to run the Los Angeles HUD office for at least two months. Until becoming acting director, Phillips had been the Pacific/Hawaii region’s No. 2 official and thus up the chain of command from the Los Angeles operation.

Phillips declined to discuss his transfer. But his wife said she believes it is retaliation for a memo he wrote to his bosses Nov. 2 criticizing HUD’s “alarming” handling of a plea bargain involving former San Francisco Housing Authority Director Ronnie Davis, who recently pleaded guilty to taking excess compensation from a Cleveland housing agency where he once worked.

“I’m thoroughly demoralized. I’m married to a man who’s devoted his working life to an agency, and it’s really hard to feel that this isn’t punitive at some level,” said the Rev. Joan Hull, a retired minister with the Unitarian Church of San Francisco. “It was done so abruptly and so rudely.”

The plea deal Phillips criticized dismissed felony charges against Davis and promised that HUD would halt disciplinary actions arising from audits that accused Davis of mismanaging public money in San Francisco and Cleveland. The deal also allowed Davis to have a public-housing management role again.

“The plea bargain has added weight to charges in San Francisco that the department tolerates corruption in San Francisco,” Phillips wrote in his memo. “The way we handled this raises serious questions . . . about the department’s ability to communicate a clear and consistent message against Housing Authority mismanagement and corruption.”

Phillips addressed his memo to Alphonso Jackson, HUD’s deputy secretary, who was traveling yesterday and did not return calls.

Shortly after Phillips’ transfer, Jackson was the guest of honor at a City Hall party hosted by Mayor Willie Brown, who has stuck by Davis and maintained he improved the city’s public housing.

Brown’s spokesman P.J. Johnston said yesterday that he didn’t know anything about Phillips’ transfer and that the mayor hasn’t been involved with HUD’s handling of Davis.

HUD spokeswoman Nancy Segerdahl said Phillips was not being punished. “If there is any suggestion whatsoever that there’s some sort of linkage between this memo and the reassignment, that would be completely wrong,” she said.

Hull said her husband learned of his transfer Dec. 3 from officials in Washington, who told him “in a very peremptory fashion with no explanation” to report for work in Los Angeles within two days.

Hull said her husband was told the assignment would last at least 60 days. Phillips has been flying down during the week and staying in a hotel at HUD’s expense, returning on weekends, Hull said.

Since Phillips’ transfer, the office has been run by Lily Lee, a HUD manager from Washington, D.C. She said yesterday was her last day and that an appointee of President Bush, Richard Mallory, would take over Monday.

The office had been run under the Clinton administration by Art Agnos, a former mayor of San Francisco.

As to whether Phillips’ transfer was retaliatory, Lee said: “I don’t attempt to see how people perceive things.”

Phillips’ memo to Jackson focused on the Oct. 29 plea agreement that HUD and the U.S. attorney’s office in Cleveland reached with Davis. Under it, Davis pleaded guilty to a misdemeanor charge of knowingly failing to prevent the Cleveland housing agency from paying him twice for benefits when he left for San Francisco in 1996.

Davis, who agreed to repay $5,467, is expected to be sentenced Feb. 26, after which he has agreed to testify in the trial of his old boss, who still faces charges of stealing public money.

Both HUD and federal prosecutors in Cleveland tried unsuccessfully to back out of the plea bargain after the U.S. attorney’s office in San Francisco complained that it was never consulted about the deal, which also gave Davis immunity from prosecution regarding his employment in San Francisco and Cleveland. Last month, a federal judge ruled that the deal would stand.

Davis has not been charged with any illegal activity in San Francisco, but HUD auditors strongly suggested that his administration submitted a forged document to them. Davis was accused of similar misconduct in Ohio, where a woman testified that he was instrumental in creating a letter authorizing the use of public funds to pay his boss’ mortgage.

Three housing authority commissioners testified that signatures on the letter were not theirs.

Davis has denied wrongdoing in both cases.

The San Francisco Housing Authority this week also agreed to pay $320,000 to two employees who said they had been punished for speaking out about corruption while working under Davis. Former eligibility manager Carmen Rosales said Davis ignored her warning that housing benefits were going to people who were ineligible.

Under the settlement, the Housing Authority admitted no fault. Rosales’ suit uncovered evidence that led to the conviction of 21 people, including two agency employees, for participating in a bribery scheme involving the sale of public housing benefits….


From “Agents of Influence: How Japan Manipulates America’s Political and Economic System,” (copyright 1990)

by Pat Choate

JAPAN’S ECONOMIC PROPAGANDA techniques are remarkably similar to America’s political propaganda techniques. A quick way to understand how Japan spreads its propaganda in America is to look at how America spreads its own propaganda elsewhere.

America operates two propaganda program – one is overt, the other is covert. The overt program is operated by the U.S. Information Agency (USIA), which diffuses information about American culture, history, and political positions. USIA employs all the standard public relations techniques – hosting lunches, arranging interviews, distributing literature, providing American guest speakers, stocking libraries, arranging cultural exchanges, sponsoring conferences, and financing trips to America for students, academics, and foreign opinion leaders.

America’s covert propaganda program is directed by the Central Intelligence Agency. By any measure, this is a massive undertaking. Loch Johnson estimates that fully 40 percent of CIA secret operations are propaganda programs….

In addition to advancing specific U.S. themes, the CIA also uses its media assets to boost politicians and opinion leaders in other countries whose positions are favorable to the United States and to tarnish those whose positions are not. Other nations do the same, including Japan….

Japan’s propaganda techniques are similar to those used by America. Much like an enormous Wurlitzer organ, Japan pumps out a steady flow of propaganda through thousands of outlets – books, speeches, reports, conferences, television, editorials, articles, and whisper campaigns….

It’s not surprising, Japanese investors provide much of the new money on which Wall Street depends. And Japanese investors now own an extensive financial stake in may of American’s leading investment firms. Nomura Securities, for instance, owns 20 percent of Wassertein, Perella, the prominent merger and acq1uisition (M&A) specialists. Yamaichi Securities holds 20 percent of the Lodestar Group, which is led by the ex-vice chairman of Merrill Lynch & Company and former chairman of Morgan Stanley & Company.

Sumitomo Bank bought a 12.5 percent share in Goldman, Sachs for $500 million in 1986. Former Federal Reserve chairman Paul Volcker works for Fuji-Wolfensohn, a joint venture to which Fuji Bank contributed $52.5 of the $55 million start-up capital….


HUNDREDS OF WASHINGTON’S POWER ELITE now work to advance Japan’s political and economic interests in America. Nothing comparable is found in the capital of any other nation….

How did this come to be? Why do so many of America’s best and brightest – people who come to Washington to fight for conservative or liberal causes – stay on after their public service to work for overseas interests? Moreover, how do they justify working on behalf of foreign countries in those cases where it is clear that their victories can only occur through American losses?

The answer: money and ideology.

A revealing example of “Washington ethics” in action is contained in the scandal that rocked the Department of Housing and Urban Development (HUD) in the late 1980s.

In early 1989, congressional hearings revealed that, over the previous decade, much of the HUD money available for low-income housing was allocated on the basis of insider relationships. The technique was simple. A lobbyist or consultant with special connections to the Reagan Administration, the Republican Party, or a high-ranking HUD official would ask the HUD Secretary or his top aides for a funding priority. Once the project was approved, the influence peddler would be paid a huge fee.

The ethical mind-set among many insiders is revealed in their responses to the HUD scandal. In July 1989, for instance, the topic arose at a private dinner party in Washington’s fashionable Cleveland Park. Among the guests were a prominent Washington lawyer-lobbyist, several other lobbyists, their spouses, and ex-congressman, and a corporate executive.

One guest condemned the immorality of HUD’s influence peddlers, who had siphoned money earmarked to house the poor. Another sneered at the hypocrisy of James Watt, the ultraconservative former Secretary of the Interior, who publicly denounced HUD’s activities but took $400,000 for using his political connections to get three HUD projects funded.

The lawyer-lobbyist, however, had a somewhat different perspective.

“I only wish,” he said, “that I could have gotten in on the deal. Everything that Watt and the others did was legal. And as far as I’m concerned, if it’s legal, it’s okay” is the ethical standard that now prevails….

October 14, 2000


By Kelly Patricia O’Meara, InsightMag.com

Billions of dollars are missing from the U.S. Department of Housing and Urban Development’s books.

Some HUD officials blame computer glitches; others allege widespread graft.

The Department of Housing and Urban Development (HUD) has earned a failing grade from the House Government Reform subcommittee on Government Management for the way the agency manages taxpayers’ money.

Subcommittee chairman Stephen Horn, R-Calif., is said to be furious that HUD’s most recent financial report shows the agency is unable to balance its checkbook and cannot account for $59 billion.

For most Americans, it is incomprehensible that $59 billion could be missing from the ledger of a single agency. But despite years of earning failing grades – as well as years of being unable to account for tens of billions of dollars – the Clinton/Gore management team at HUD has continued to shell out hundreds of millions of dollars to the same contractors hired to ensure financial systems are in place and working.

It doesn’t take a certified public accountant to see that HUD Secretary Andrew Cuomo’s financial house is not in order, and Susan Gaffney, the inspector general (IG) of HUD, tells Insight, “It’s more serious than you know.”

This dire yet brutally honest evaluation by the IG came in response to questions about her testimony concerning HUD’s 1999 audit, delivered before Horn’s subcommittee in May.

And HUD’s 1999 audit still has not been completed even as the agency is nearing the starting date for the 2000 audit. Instead, Gaffney submitted a 14-page “summary” for 1999, providing a laundry list of systemic reasons for HUD’s financial woes.

Indeed, it took Insight a day and a half just to make sense of the IG’s simplified testimony concerning these financial shenanigans.

Beyond the fact that $59 billion is unaccounted for and that auditors have had to make manual adjustments to the checkbook system retroactively, it is glaringly apparent in the IG’s report that taxpayers should consider themselves lucky that the amount isn’t much higher.

What also is more than evident is that the IG devoted most of her testimony to explaining failed processes at HUD rather than focusing on any specific examples of theft, conversion, embezzlement and other larceny.

For instance, according to Gaffney’s testimony, she could not sign off on the 1999 audit because of “the undetermined effects of the conversion problems of the general ledger from the Program Accounting System [PAS] to HUD’s Central Account and Program System [HUDCAPS] during the fiscal year, the integrated state of HUD’s reconciliation efforts and their documentation for the general ledger accounts for the fund balance with Treasury, and the late manual posting of numerous and significant adjustments (some as late as Feb. 25, 2000) directly to the financial statements, for which we lacked sufficient time to test their legitimacy.”

What the IG is saying is that HUD’s finances are in a shambles because, during 1999, the agency was converting to a new computer system, the field offices didn’t balance their checkbooks on a monthly basis and manual postings were made to the financial statements so late that the IG had no time to review whether the postings were correct.

Gaffney does report in one section of her testimony that “242 adjustments, totaling about $59.6 billion, were made to adjust fiscal year 1999 activity.”

The IG, however, does not explain where the “adjustments” were made, for what services or from which region or field office. But she tells Insight that HUD’s financial problems stem from glitches within the agency”s computer systems.

“The material weakness,” explains the IG, “is that HUD does not have a single financial ledger system in place and this year they tried to implement that. The effort was flawed to say the least. The financial systems flowing in were incompatible and the system rejected transactions, and the rejected transactions weren’t corrected in the new ledger system. HUD does not have a reliable and accurate statement of its financial condition.”

Apparently, the HUDCAPS system that has been going online since 1997 and is supposed to correct the agency’s overwhelming financial-management problems now is being scrapped.

According to Gaffney, just last week she was made aware that Chief Financial Officer Victoria Bateman has decided that HUDCAPS does not do the job and that a new add-on system is being implemented. It’s anyone’s guess when the new system will be fully integrated with the old “new” system which, to date, has done nothing to enhance HUD’s ability to account for the billions of dollars in missing tax money.

According to one source familiar with HUD’s finances who spoke on condition that he not be identified, blaming computer glitches is what is done when they want to hide fraud.

“The history of effort and expenditures that has been poured into correcting deficiencies at HUD does not support a theory of incompetence. If you don’t have decent accounting systems it’s because someone wants to make sure you don’t. It’s standard operating procedure that if one system is being replaced you keep the old one up and running while you work out the kinks in the new one – they’re run parallel. In this case, they took down a system that was running, replaced it with a system that wasn’t and then cried, ‘Oh, we can’t balance the books!’ They can’t say the resources don’t exist to correct the problem. If Cuomo can find hundreds of community builders to run around neighborhoods, he can find enough people to balance the checkbooks.”

And the source adds, “Furthermore, if I wanted to rip off HUD, this is exactly how I would do it. Don’t run parallel systems, don’t bother to balance the books and then radically reengineer the system all at the same time that you double the volume of work. It’s a system ripe for financial fraud. The point is that you have to know what checks were authorized in a specific place and how they sort out, and if you balance the books monthly it becomes very easy to zero in on where the fraud is taking place. What the IG has missed is that it’s not about knowing a problem exists, it’s about fixing the problem – you want to know where and why you’re missing $59 billion. A huge computer system isn’t needed for HUD to balance the books; monthly statement reconciliation is all that is necessary.”

The source continues: “Everything that has transpired at HUD is not an accident, and it sure isn’t a computer glitch. When you take the different material violations of the most basic financial-management rules and compare them to the time and effort put in to have first-rate systems, it is impossible to explain it as anything other than significant financial fraud. The losses could be far greater than $59 billion, but they don’t know for sure because the audit isn’t completed. Secretary Cuomo is a very smart control freak, so it’s ludicrous to think that he doesn’t know what is going on.

There are several ways to correct these problems. Most are basic, but if you want to use the big sledgehammer, the Office of Management and Budget [OMB] and Congress have the ability to make HUD balance the books or [they] shut down the money supply. They are the guardians at the gate. But that is the most telling thing about this problem – OMB and the appropriators have been silent. This is exactly what happened right before the savings-and-loan scandal.”

So is it possible that a problem within the agency’s computer systems is the cause of tens of billions of dollars being unaccounted for or missing? Not if you ask whistle-blower Jack Ballinger.

In 1994 Ballinger began working for the New York City Housing Authority (NYCHA) as a contract inspector. He worked his way up through the system and was made manager of a new section, the Computer Operations and Reports Section. He was there only a few weeks when he became aware of major problems in payments to contractors.

What he found was the main financial-management computer system, known as Financial Management Services (FMS), contained files verifying payments of more than $50 million on nearly 150 contracts that did not show up on the computer system used by the bookkeepers and investigators to track the services provided. Called CAD, this system should have been keeping track of the inspections, the inspector, dates of inspection and inspection results.

Realizing the gravity of the problem, Ballinger reported the missing files. Shortly thereafter the new section was disbanded, his staff was sent back to their previous positions and he was transferred to Coney Island as a boiler inspector. Nonetheless, he was joined in calling for an investigation by a dozen other “clean” inspectors.

Ballinger first requested an investigation by the New York City Department of Investigations. When nothing happened, he contacted Bill DiBlasio, then the IG for HUD in New York (and now Hillary Rodham Clinton’s campaign manager); HUD IG Gaffney in Washington; Rep. Rick Lazio, R-N.Y.; and HUD Secretary Cuomo, whose agency provides more than 90 percent of the funding that NYCHA receives.

Despite overwhelming evidence of corruption – including audio- and videotapes of bribes being offered and accepted, as well as one inspector telling his story of an organized group of inspectors receiving bribes – there was no serious investigation of the misappropriation of funds within the NYCHA.

“The IG,” says Ballinger, “said it was a paperwork mistake and cleared up. But not one person who looked at this could see it as a paperwork problem, and this has been going on for almost two years. There were hundreds of contracts being reported and monitored through that computer system and it would have taken someone a lot of work to pick out 143 that weren’t there every month. I can’t say that the inspections haven’t been done, but there is no record of the work being done on these 143 files. Still they were getting paid. It’s almost funny how sloppy they are about it. They leave a trail because they know that no one will be held accountable.”

The financial problems Ballinger uncovered in the NYCHA are similar to those at HUD. For instance, the IG’s testimony to Congress also raises the issue of a wide variety of people having access to the accounting system with no controls or audit trail to tell what transactions are taking place and under whose guidance.

The IG states, “HUD uses a powerful utility system to resolve data discrepancies by directly altering the data in the HUDCAPS financial tables. � There were an excessive number of users with access to the utility, including users from four different contractor firms as well as HUD program offices. We questioned the need for the high number of users and the database administrator agreed not all the users on the list require access to perform their jobs. Allowing uncontrolled use of such a utility exposes HUD’s financial data to damage and fraudulent activities.”

Gaffney is saying that just about anyone can get into HUD’s financial system, including many who don’t have any business or authorization to be in it. Once in, intruders can change numbers, take money and engage in financial fraud without anyone catching or stopping them.

While Gaffney cannot force changes within HUD, as IG she can bring the problems to light. Unfortunately, the testimony she provided to Congress did little more than alert members to the already-known fact that there are serious financial-management problems under Cuomo at HUD. The IG’s report provides no specific data to help lawmakers, who have oversight of this agency, recommend appropriate and necessary changes. In fact, it is possible members of Congress had the same difficulty deciphering the IG’s testimony as everyone else with whom Insight has spoken.

Despite the fact that the entire report by the IG to Congress deals with financial mismanagement at HUD, not once in all of her 14 pages of testimony did Gaffney so much as use the word “money.”

How much HUD’s missing $59 billion is of concern to lawmakers is anyone’s guess. Chairman Horn, as well as Senate Governmental Affairs Committee Chairman Fred Thompson of Tennessee and Senate Appropriations subcommittee on VA-HUD Chairman Kit Bond of Missouri, did not return Insight’s calls about these matters. . . .

From The Harvard Data Dump:



In the summer of 1996, a highly political “investigation” was begun by the Department of Justice into bid rigging and insider trading with respect to $4.7 billion of HUD loan sales by Goldman Sachs and PNC.

If various efforts to falsify evidence by the HUD and/or destroy evidence by the HUD Inspector General (DynCorp, now prime contractor) and destroy witnesses through a smear campaign during the subsequent four year investigation had been successful, the Department of Justice Asset Forfeiture Fund (DynCorp, prime contractor) would have had the basis of a $4.7 billion seizure of assets from Goldman and PNC.

During the same summer in 1996, efforts began to identify and seek reparations regarding Nazi gold and other assets maintained by Swiss banks, including the Swiss National Bank, Credit Swiss, and United Bank of Switzerland (UBS).

The interim reparations fund was established by the Swiss at $4.7 billion US.

Allegations exist that the PROMIS software system at the Department of Justice was used to identify Nazi accounts at the Swiss banks. According to Bill Hamilton of Inslaw, DynCorp is one of the contractors who assumed Inslaw’s work in managing the PROMIS system for the Department of Justice.

Allegations also exist regarding the use by Lockheed and Pug Winokur/DynCorp of the PROMIS system to compromise the HUD systems, with $17 billion and $59 billion reported missing in FY1998 and FY1999.

Lockheed with DynCorp as a subcontractor manages the largest part of the HUD computer systems. HUD has refused to respond to FOIA’s regarding DynCorp’s contracts and subcontracts at HUD, taking the position that they have no contracts with DynCorp and that the prime contractor refuses to respond to their requests. . . .

~ ~ ~

For more on Nazi Gold, GO TO > > > Dirty Gold in Goldman Sachs?

For more on the Greed at Lockheed, GO TO > > > Tarnished Wings

Carla A. Hills is Chairman and CEO of Hills & Company, International Consultants. The firm provides advice to U.S. businesses on investment, trade, and risk assessment issues abroad, particularly in emerging market economies.

Hills currently serves as a Member of the Board of Directors for American International Group, Chevron, Lucent Technologies Inc., and Time Warner.

She is a Co-Chair of the International Advisory board of the Center for Strategic and International Studies; a Vice Chair of the National Committee on U.S.-China Relations and U.S. China Business Council; a Member of the Board of Trustees of the Asia Society, the Council on Foreign Relations, the Institute for International Economics, and the America-China Society; and a Member of the Trilateral Commission and the Inter-American Dialogue.

Hills served as United States Trade Representative from 1989-1993. As a member of President Bush’s Cabinet, Hills was the President’s principal advisor on international trade policy. She was also the nation’s chief trade negotiator, representing American interests in multilateral and bilateral trade negotiations throughout the world.

Hills was chairman of the Urban Institute from 1983 through 1988, and was a member of the Executive Committee of the American Agenda, co-chaired by Presidents Ford and Carter. In 1981-1982, she served as Vice-Chairman of President Reagan’s Commission on Housing and in 1985-1986 as a member of the President’s Commission on Defense Management.

Hills has been active in the American Bar Association, serving as Chairman of the Antitrust Section 1982-1983, and as Chairman of the Conference of Section Chairmen in 1983-1984.

From 1974 to 1975, she was Assistant Attorney General, Civil Division, United States Department of Justice.

In 1975, Carla Hills, already serving as an assistant attorney general, was named by Republican President Gerald Ford as Secretary of the Department of Housing and Urban Development, becoming the third woman in the US to hold a cabinet-level position. Her lack of relevant experience was somewhat controversial during the appointment hearings. She was succeeded, when Democratic President Jimmy Carter took office, by Patricia Robert Harris, in 1977.

In 1989, President George Bush appointed her to another cabinet level position, this time as US Trade Representative. (At the same time, Bush appointed Elizabeth Dole, the former Secretary of Transportation, as Secretary of Labor.)

A free trade advocate, Hills was the primary US negotiator of the North American Free Trade Agreement (NAFTA).

She was first offered an appointment as assistant US Attorney by Elliot L. Richardson in 1973, but he resigned shortly thereafter during the Watergate scandal. The offer was renewed by his successor, William B. Saxbe, in 1974.

From 1978 through 1989 she was active again in her profession of law; after 1993 she has worked as a consultant and public speaker. She was one of the founders of the Forum for International Policy.

Hills co-founded the Los Angeles law firm of Munger, Tolles & Hills, where she was a partner from 1962-1974. She was an Adjunct Professor at the University of California at Los Angeles Law School, teaching antitrust law, and co-authored the Antitrust Adviser, which was published by McGraw-Hill.

For more on Carla Hills, GO TO > > >: BiotechBirds; The Sinking of the Ehime Maru


January 20, 2001

WASHINGTON (CNN) — President Clinton, just hours before leaving office, pardoned more than 130 people, including Whitewater figure Susan McDougal, former Housing Secretary Henry Cisneros, ex-CIA chief John Deutch and publishing heiress Patty Hearst.

The president pardoned his brother, Roger Clinton, who had been convicted on a cocaine charge in the 1980s after cooperating with authorities, and former Gov. Fife Symington of Arizona, a Republican whose conviction for bank and wire fraud was overturned on appeal.

Prosecutors had sought a rehearing in the case.

Deutch had been under investigation by the Justice Department for mishandling secrets on a home computer. Hearst was kidnapped in the 1970’s and then went to prison for bank robbery.

Cisneros entered a plea agreement as part of an investigation into payments to his ex-mistress.

McDougal, the Clinton’s business partner in the Whitewater land venture, was convicted of loan fraud and spent almost two years in prison for refusing to testify against Clinton before a federal grand jury empanelled by Independent Counsel Kenneth Starr.

Another Whitewater figure and former law partner of Hillary Rodham Clinton, Webster Hubbell, was not pardoned. Hubbell, who served in a top Justice Department position in Clinton’s first term, had to resign and spent 15 months in prison for tax evasion and mail fraud.

No pardons for Milken or Peltier

The president also denied a pardon for financier Michael Milken, the 1980s “junk bond” king who served 22 months for swindling investors of $1 billion, and Leonard Peltier, convicted in the deaths of two FBI agents in 1975.

Federal law enforcement and security enforcement officials urged the president to deny a pardon for Milken, an outspoken cancer survivor and generous philanthropist. FBI agents had protested the possibility of pardoning Peltier after learning his name was on a list of those being considered.

Cisneros, former San Antonio mayor, Clinton’s closest friend among his early Cabinet appointees and a rising political star when his career was unhinged by scandal, was convicted in a cover-up controversy involving payments he made to his ex-mistress.

Deutch, who stepped down as CIA director in 1996, had been considering a deal with the Justice Department in which he would plead guilty to a misdemeanor charge of keeping classified data on his home computers. . . .

Housing Authority In Puerto Rico Under Fire Again

By Cathy Newman, Washington Post Staff Writer

August 22, 2000

The Puerto Rico Public Housing Administration, already under fire over corruption charges, is now being scrutinized over whether it improperly spent federal money hiring a Washington law firm to defend it in a lawsuit against the U.S. government.

The housing authority is slated to appear before the U.S. District Court in Puerto Rico next month to answer fresh questions about its conduct. It also faces the possibility of having its federal funds blocked by Sen. Christopher S. Bond (R-Mo.) because of concern over alleged wrongdoing.

The Puerto Rico housing authority is under investigation by the U.S. attorney, the FBI and the inspector general of the Department of Housing and Urban Development in eight separate corruption cases involving employees and contractors.

Since October 1998, 13 people have been indicted on charges including conspiracy to defraud, embezzlement, theft, kickbacks and money laundering.

Most recently, HUD Inspector General Susan Gaffney has pressed the housing authority about the source of funds used to pay the Washington-based firm of Verner, Liipfert, Bernhard, McPherson and Hand, which represented it in a long-running lawsuit against HUD.

Gaffney said in legal papers that the housing authority may have violated federal regulations prohibiting the use of federal funds to sue the government. She said the agency had a contract to pay Verner $625,000 for legal services relating to the litigation.

In legal documents filed earlier this month with the District Court, the inspector general alleges the housing authority only supplied checks to Verner dating from 1996 and 1997, and that the payment amounts were blacked out.

Verner declined to comment yesterday. However, John Blakeman, executive director of the Puerto Rico agency, denied using federal funds to pay the checks, and added it had supplied all its checks, only withholding information it regarded as confidential.

About 250,000 people live in 57,000 public housing units in Puerto Rico, but, according to Gaffney, conditions are “not good,” even though HUD last year gave the agency about $260.6 million.

“Things aren’t fixed. . . . The people who live in public housing should not have to live in these conditions,” she said in an interview last week. An IG audit in March said that of $39 million in housing authority procurements and other disbursements, about $21.8 million were “ineligible costs.”

The continued controversy over the housing authority’s operations has led to criticism over HUD’s agreement to pay the Puerto Rican agency $130 million to settle its lawsuit. The housing authority filed the legal action in 1996, claiming the U.S. government had over the years shortchanged it.

But although HUD had billed the settlement as a triumph–the Puerto Rico agency had sought $500 million–Gaffney thought otherwise. In a stinging memo to Housing Secretary Andrew M. Cuomo last month, she accused HUD of “failure to stop flagrant fraud, waste, and abuse in the operations” of the housing authority.

It was not that she opposed the payout per se, she said last week, but she believed HUD should have “built into the settlement some measures that would have strengthened accountability.”

Gaffney, a Clinton appointee often at odds with HUD officials, has found an ally in Republican Sen. Bond, who chairs the Senate Appropriations housing subcommittee.

Bond said yesterday that although he would favor a settlement that corrected a historical shortchanging, more safeguards are needed to ensure that federal dollars are spent appropriately.

“Before any more money goes, we want to know: Have the recommended changes been made to ensure that dollars going to the [housing authority] are handled appropriately, so the benefits flow to the needy in Puerto Rico?” he said. An aide said Bond will be discussing with other members of the subcommittee the prospect of holding back additional federal funds for the authority until such a guarantee is given.

HUD is far more sympathetic, insisting that the housing authority is cleaning up its act. The Puerto Rican agency was removed from the “troubled list” of poor performing housing authorities in 1996, after 15 years.

“The last couple of years we’ve had some optimism in that their financial statements were auditable. . . . We need to assess a number of improvements that have been made” by the housing authority, a senior HUD official said.

Blakeman said the housing authority is cooperating in all the investigations.

“We don’t believe in hiding corruption. . . . Maybe we’re not where we should be, but we’re heading in that direction,” he said.

© Copyright 2000 The Washington Post Company

For more on Verner, Liipfert, Bernhard, McPherson and Hand, GO TO > > > Broken Trust

From The Conspirators: Secrets of an Iran-Contra Insider, by Al Martin:


Regarding Denver HUD-Iran-Contra profiteering, I’ve got to give you a little background for this to make sense. There was a scenario of fraud conducted through the HUD office in Denver, when Samuel Pierce was head of HUD and became part of Iran-Contra profiteering, dissipation, illegal transfer of funds, and so on.

A number of billions were involved.

The center of these frauds was HUD, namely the HUD office in Denver. . . .

The way these schemes work is to form real estate companies and incorporate licensed mortgage brokers into them. These then act as pass through agents for HUD loans. . . .

Very simply, projects would be defaulted on or the same mortgages would be applied for. There’d be two, three, and four first mortgages from HUD on the same properties which would then, in turn, guarantee equally fraudulent bank loans usually through Silverado.

Monies then would be siphoned off, and ostensibly, this was just part of a much larger fraud …

But, obviously for this to work, there have to be Republican judges involved, as well as Republican US Attorneys and Assistant US Attorneys.

This includes Gale Norton, former Attorney General of the State of Colorado and current US Secretary of the Interior, who can also be indicted for various malfeasances.

The reason Dinnerstein says it’s so easy is because Zita Weinshank and Ed Burnhill, both Republican appointed judges, are part of the original scheme. . . .

~ ~ ~


And what about all the heat regarding the National Heritage deal recently profiled on 60 Minutes?

It’s another fraud. The genesis of the fraud is that a partnership was formed to purchase Heritage Life Insurance for $4 million. This partnership involved all of the Bush Brothers, including, by the way, John Gotti. . . .

How did it happen? On a Friday night, this partnership purchased Heritage Life. They proffered a check for four million dollars.

The check was worthless. . . .

Over the weekend Heritage turned over the keys to its offices in Boca Raton, Florida, all its files. Everything.

Over the weekend this new partnership proceeds to transfer $4 million of Heritage Life’s reserve capital into its own accounts to cover the check that it had written to buy it.

It’s a true story.

Then they proceeded to turn Heritage Life into a fraud center. They perpetuated a variety of fraud, specializing in and concentrating in HUD fraud.

They would buy busted out HUD properties for $500,000, then list their value on the Heritage books as $5 million. The other four and a half million dollars would simply go into the partnership’s pockets.

And they did this repeatedly.

Andrew Cuomo, through his father Mario’s influence, was hired on as a consultant to the corporation. He was also a member of the Board of Trustees of Heritage Life at $50,000 per year.

When Andrew became Director of HUD, Andrew helped cover-up Heritage’s scams vis-a-vis HUD. Heritage in turn not only buys up HUD property, but it also becomes its own insurer of HUD property.

For example, it would claim that the insurance premium on XYZ property was $1 million a year, when in fact the insurance was only $100,000 a year.

Heritage Life Insurance Company was part and parcel of Heritage Financial Group, Heritage Credit Group, Heritage Securities Group, Heritage Banking Group.

It was much more than just an insurance company. Heritage was a consolidated financial group involving securities, banking, and insurance.

One of the principals of the company was John Gotti. Among the directors was George Sr., George Jr., Jeb, Neil, etc.

These were the directors of the holding company called Heritage Group International.

Because of the relationship (Gotti’s involvement) Richard Brenneke and the National Brokerage Group became involved in selling Heritage policies and securities.

Richard Brenneke was very close to John Gotti and more importantly Brenneke was head of National Brokerage Group, which had a primary securities relationship with Blinder Robinson, (Meyer Blinder, the old con artist). National Brokerage Group in turn marketed Heritage product, Heritage Insurance, Heritage annuities, Heritage securities and Heritage partnerships, etc.

Andrew Cuomo may become another Samuel Pierce, another scapegoat.

The missing $59 billion from HUD coffers is probably a record, but only in terms of public disclosure. . . .

For more on Gale Norton, GO TO > > > Bureau of Indian Affairs



by Uri Dowbenko

Catherine Austin Fitts is still trying to figure out what happened.

Her company, Hamilton Securities, Inc., was the lead financial advisor to the US Department of Housing and Urban Development (HUD).

Hamilton was hired to manage the sales of $10 billion worth of mortgages on houses, apartment buildings and nursing homes.

By all accounts, Hamilton’s new program was a resounding success.

In fact, the HUD loan sales program team was even given a Hammer Award for Excellence in Re-engineering Government by Vice President Al Gore’s Reinventing Government Initiative.

By cutting red tape and improving the resale value of HUD owned mortgages, Hamilton Securities was a case study of a public-private partnership that saved US taxpayers lots of money.


The firm was ambushed by a series of lawsuits, audits and unsubstantiated rumors which destroyed the business.

Catherine Austin Fitts — Maverick Banker

In the arcane but stodgy world of investment banking, Catherine Austin Fitts is a revolutionary.

Before founding her own firm, Fitts, a Wharton graduate, was the first woman to be promoted to managing director of Dillon, Read and Co, Inc., the prototypical elitist men’s club Wall Street investment bank.

To her credit, Fitts was instrumental in building a new market for Dillon Read. She began underwriting previously unrated municipal bonds, in essence, financing large government projects which other Wall Street firms said couldn’t be done.

These novel bond sales helped revive New York City’s crumbling subway system, and they provided funding for the City University of New York and other major projects.

The market in unrated and low-rated muni bonds took off, earning Fitts the title of “Wonder Woman of Muni Bonds,” in a glowing
Business Week article (February 23, 1987).

In 1989, she was asked to become the Federal Housing Administrator under HUD Secretary Jack Kemp. Fitts moved to Washington to undertake the monumental task of reforming the scandal-ridden, fraud-plagued agency.

After her stint in government, she was invited to be a Governor of the Federal Reserve Board. She declined.

Instead she founded Hamilton Securities Group, an employee-owned investment banking firm, which created an innovative system for saving taxpayers billions of dollars in the sale of government-guaranteed mortgage-loan sales from HUD.

By promoting open disclosure in the HUD financial transactions, Fitts undoubtedly, and unknowingly, must have stepped on a lot of toes.

The Crony Capitalists (or Old Boys’ Network — or the Octopus) must have seen Hamilton’s program of financial transparency as a major threat to their system of bid rigging and insider trading.

HUD Cost Savings Lead to Hamilton’s Demise

In this extremely complex case, newly disclosed evidence indicates that powerful forces conspired to destroy the financial equity of employee-owned Hamilton Securities, as well as the personal life savings of the firm’s president, Catherine Austin Fitts.


Because Hamilton Securities had opened up the market for defaulted HUD mortgages.

In simple terms, the established network of insiders would be susceptible to — horrors! — open competition, not to mention an entire universe of new bidders.

In fact, Hamilton’s plan for optimization of sales of defaulted mortgages resulted in a savings of over $2.2 billion for US taxpayers.

The numbers are staggering. Every year HUD issues about $70 billion of mortgage insurance which guarantees the mortgages used to finance homes, apartment buildings, nursing homes, assisted living facilities and hospitals. HUD then pays out about $6 billion on claims for defaulted mortgages, which the agency has to then manage at great cost to taxpayers.

Prior to Hamilton’s involvement, HUD was recovering about 35 cents on the dollar of mortgage insurance payments made on defaulted mortgages.

When Hamilton instituted their new program, HUD’s recovery rate soared to about 70 to 90 cents on the dollar. How? Hamilton introduced a proprietary optimization bidding software and an on-line database of information, accessible to all investors, so that the defaulted portfolio could be bid upon in an open auction.

In October 1997, the Chairman of one Congressional oversight committee referred to the Hamilton-based loan sales at HUD as generating “eye-popping” yields.

In fact from 1994-97, HUD saved about $2.2 billion in HUD’s $12 billion mortgage portfolio. These savings then allowed HUD to issue far more new mortgage insurance at a lower cost.

When Hamilton’s successful loan sales-auction program was suspended due to the investigation, the old levels of government inefficiency and fraud were resumed.

Call it “Business As Usual.”

That means HUD is now losing about $4 billion per year on its $6 billion of defaulted mortgages — instead of just $2 billion.

That’s the equivalent of 20,000 taxpayers working their whole lives to pay for this boondoggle for just one year.

Anatomy of a Corporate Murder

Targeted by criminal elements in the Department of Justice (DoJ), Housing and Urban Development (HUD), as well as a cartel of private investment companies, Hamilton Securities has undergone an onslaught of unimaginable harassment and intimidation.

There had been a SWAT-like attack on Hamilton’s office in Washington, 19 audits, countless subpoenas as well as ongoing litigation against HUD to force them to pay monies owed on their contract. It’s been a 4-year long financially and emotionally draining “investigation.” To date, there has been no evidence of any wrongdoing — just rumors, innuendo, and lots of character assassination.

First, in June 1996, a sealed qui tam lawsuit, a phoney whistle-blower suit, as well as a Bivens action was filed by John Ervin of Ervin & Associates, Inc., a HUD subcontractor, notorious for filing nuisance lawsuits and “bid protests” — 37 of them in the recent past. In the Bivens suit, he sued HUD itself, as well as several former HUD officials personally.

In fact, Ervin’s lawsuits have cost a good-sized fortune in legal fees and overhead, estimated — from 1995 to date — to be as high as $40 to $50 million. An insider claims that during that time Ervin had up to 17 in-house personnel working full time on mountains of paperwork regarding this and other cases.

So who’s bankrolling Ervin?

Nobody has offered any explanations, but for a small time HUD sub-contractor like Ervin, this has turned out to be a serious investment.

Under the False Claims Act, a private party like Ervin, who files suit on behalf of the government, can receive 15-30% of any recovery, if the government’s claim is successful. That percentage (15-30%) would have covered asset seizures of up to $4.7 billion of loan sales won by Goldman Sachs and its partners.

Is somebody just playing the odds? In this version of government “greenmail”, or state-sponsored extortion, any asset seizures could be part of this 15 to 30% bounty.

The Spooky Life of Stanley Sporkin

Then, it just so happened that the judge presiding over the Hamilton case was the former CIA Counsel — Federal Judge Stanley Sporkin (recently retired).

According to Rodney Stich, author of Defrauding America:

“Sporkin was involved with the 1980 October Surprise scheme and his judicial appointment was probably his reward by the Reagan-Bush administration for helping carry it out, and to block any judicial exposure or prosecution action.”

(The October Surprise was the Reagan-Bush black-ops/covert action to delay the release of the hostages in Iran, resulting in the electoral victory of Reagan as US President.)

Sporkin was appointed to the bench by Ronald Reagan in 1985. His spooky roots, however, go back to the days when he was a director of the SEC’s Division of Enforcement, while the infamous Bill Casey was practicing his Wall Street shakedown techniques as Chairman of the Securities and Exchange Commission.

Sporkin’s other claim to fame was to encourage Casey to go after the infamous scamster Robert Vesco.

Was Vesco more competition — or just another freelancer?

Casey, who like George H. W. Bush, neglected or “forgot” to put his assets in a blind trust later also became director of the CIA. His shares — controlling stock in Capitol Cities Communications — were eventually used to take over ABC in a $3.5 billion merger deal.

In the words of Joseph Persico, author of “Casey”, the director of the Central Intelligence Agency was soon to be a substantial shareholder in one of the country’s major forums of free expression, with wondrous opportunity for managing the news.”

Also according to Persico, Casey further employed Sporkin’s specious reasoning by claiming that killing “suspected terrorists” was not murder.

Reagan’s infamous Executive Order 12333 which privatized US National Security State dirty tricks was ostensibly the reason.

“Striking at terrorists planning to strike at you was not assassination,” wrote Persico referring to Sporkin’s logic, “it was ‘preemptive self-defense.'”

Then Sporkin became the general counsel for the CIA (1981-86) and his mastery of coverup skills increased dramatically.

For instance, in keeping the Oliver North Cocaine Trafficking Operation under wraps, it was Sporkin who invented another ingenious method of lying by omission.

Persico writes that “North’s insistence that the oversight committees be cut out troubled the CIA people. But the adroit Sporkin found a loophole. The President was required to inform the oversight committees of a covert action presumably in advance of the action, except when the urgency of the situation required that notification be delayed.”


Everybody was notified 48 hours after the operation.

According to Persico, Sporkin also perfected the techniques of writing retroactive “findings” for Congress, so that CIA criminality could always be disguised or covered up — after the fact.

Stich concludes that “to protect the incoming Reagan-Bush teams and many of the federal officials and others who took part in October Surprise, the Reagan-Bush team placed people, including those implicated in the activities, in control of key federal agencies and the federal courts.

Some, like attorneys Stanley Sporkin, Lawrence Silberman, and Lowell Jensen were appointed to the federal bench defusing any litigation arising from the October Surprise or its many tentacles. . .

“Organized crime never had it so good.” . . .

~ ~ ~

Ironic Postscript Dept.: In Feb. 2000, retired spooky judge Stanley Sporkin (Yale Law School, 1957) joined the global powerhouse law firm Weil, Gotshal & Manges LLP. The company, which boasts 750 attorneys in 12 offices worldwide, is considered one of the leading law firms in the country on bankruptcy.

~ ~ ~

The Hamilton Bushwhack

In the Hamilton Securities case, Sporkin’s claim to fame is that he managed to illegally keep a qui tam lawsuit sealed for almost 4 years. That could be a “judicial” record.

In August 1996, an investigation against Hamilton was initiated by HUD Inspector General Susan Gaffney, serving two subpoenas on the company — and incidentally failing to tell Hamilton about the existence of the qui tam as required by law.

The subpoenas demanded hundreds of thousands of documents, mostly HUD documents that HUD already had, or that had been supplied to them as part of the ongoing work — a clear case of burying Hamilton in paperwork as more ongoing harassment.

At the same time, a HUD audit team from Denver had completed a favorable audit of Hamilton’s program. When Fitts asked HUD IG Gaffney whether she intended to “bury the Denver audit,” Gaffney huffed back, “How dare you suggest that I would do any such thing? That would be unethical.”

In fact, she did exactly that. Susan Gaffney never allowed the publication of the Denver Audit team’s report which exonerated all of Hamilton’s methodology and results.

Then, at the same time, a smear campaign against Hamilton was being waged through a “US News and World Report” hatchet-job article about HUD Secretary Henry Cisneros and the loan sales program.

According to Fitts, the lead reporter had been assured “at the highest levels” of the HUD Inspector General’s office that Hamilton Securities and Fitts were the subject of a criminal investigation and were guilty of criminal violations.

There was no evidence, however, either offered by HUD or published by the magazine, and these false allegation also died with the passage of time.

In a bizarre double-bind mentality, HUD and DoJ — in a separate court and with a different judge — had taken the position that the Ervin lawsuit was without merit — even while Hamilton’s legal costs climbed into the millions of dollars.

The Dirty Fingerprints of Lee Radek

In December 1997, Hamilton wrote a letter to the President’s Council on Integrity & Efficiency (PCIE), a committee in the Office of Management and Budget (OMB), to investigate HUD IG Susan Gaffney’s conduct.

Hamilton’s four-page highly detailed letter to Neil J. Gallagher, Acting Assistant Director of the FBI’s Criminal Investigative Division and Chairperson of PCIE was blunt.

“The HUD IG has crossed the line in its investigation of Hamilton, which was begun in response to complaints from Ervin & Associates, a disgruntled HUD contractor,” wrote Fitts. “The IG’s wide-ranging and unfocused “fishing expedition” against Hamilton has failed to produce findings of wrongdoing and threatens the survival of the firm. The repeated leaking to the press of proprietary and confidential information that only the HUD IG could know and the intervention of other Federal Agencies [IRS, FDIC] into Hamilton’s affairs constitute a campaign of smear, slander and intimidation that should be investigated and stopped.”

Fitts wrote about many incidents of intimidation and harassment which “demonstrate or suggest that the HUD IG is deliberately leaking information to the press about its investigation of Hamilton. These leaks represent serious and persistent breaches of confidentiality, unethical and unlawful behavior and violations of Hamilton’s constitutional rights.”

PCIE declined to investigate. In her next letter to Gallagher in February 1998, Fitts wrote that “since the filing of our complaint, the Hamilton Securities Group Inc. and all of its subsidiaries have been rendered insolvent… In the face of eighteen months of Inspector General ‘lynch mobbing’ we have exhausted our reserves and have no means to continue an investigation that has no end…”

After another refusal by PCIE to investigate, Hamilton filed a Freedom of Information Action (FOIA) for the files.

The files revealed a heavily redacted letter signed by the Lead Coverup Meister himself — Lee Radek, head of the Department of Justice’s ironically named “Office of Public Integrity.”

In a letter dated April 3, 1998 addressed to Thomas J. Piccard, Chairman of the Integrity Committee of the PCIE, Radek wrote “C. Austin Fitts, President of the Hamilton Securities Group, Inc. sent the IC a copy of a civil complaint filed by Hamilton Securities against HUD Secretary Andrew Cuomo, Assistant Secretary Nicolas Retsinas and Inspector General Susan Gaffney. The complaint alleged that HUD’s OIG investigation of Hamilton and improper media leaks by the OIG about the investigation was causing Hamilton to go out of business… After reviewing the letter and the attachments, the Public Integrity Section concludes that the allegations in the complaint do not provide sufficient information to warrant a criminal investigation.”

The rest of the page — seven inches of what used to be text — is blacked out.

For the record, US Department of Justice apparatchik Lee Radek has held a virtual stranglehold on DoJ “investigations,” consistently covering up the criminal activities of the Clinton Administration. As a linchpin in the corrupt DoJ, he has had many opportunities to coverup crimes and block inquiries — and he has taken full advantage of his position as a Federal-Mob “enforcer.”

It’s an ironic twist of fate, then, that Neil Gallagher — the FBI staff member of PCIE, whose job it was to investigate allegations against Susan Gaffney — and Lee Radek appeared together in May 2000 before a Congressional hearing — as antagonists.

Gallagher affirmed in public testimony that Radek was indeed under pressure from US Attorney General Janet Reno to stall any investigation into the Clinton-Gore campaign fund raising scandals.

Unsealing the Lawsuit

Finally in May 2000, US District Judge Louis F. Oberdorfer unsealed the qui tam lawsuit against Hamilton — and surprise! — the DoJ decided not to pursue the groundless claims.
The suit was filed in June 1996, and DoJ’s decision not to intervene in this case came after a 1,400 day so-called “investigation” — or 1,340 days longer than the 60 days mandated by the Federal False Claims Act.

Hamilton Securities maintained that the allegations in the complaint were not true, and there was no evidence to support the false allegations.

In fact, HUD security procedures and overlapping levels of review associated with the open bidding process made the alleged bid rigging and insider trading impossible. This was corroborated by HUD’s own audits.

The sources for the alleged bid rigging in Ervin’s complaint, kept under court seal for almost four years, included
Jeff Parker of the Cargill Group, Terry R. Dewitt of J-Hawk (First City Financial Corporation of Waco, Texas, and a Cargill investment and joint venture partner), and Michael Nathans of Penn Capital Corporation.

The Waco-Cargill Connection

In retrospect, Hamilton must have been a major threat to the nation-wide money laundering and financial fraud network which uses government-guaranteed mortgages and other programs to scam US taxpayers. The formerly secret sources of the false allegations against Hamilton have some interesting connections.

SEC documents state that
First City Financial Corporation (FCFC) of Waco, Texas started business in 1986 “purchasing distressed assets from FDIC and RTC.”

Another subsidiary, First City Commercial Corp. was used to “acquire portfolios of distressed loans” — another hallmark of the standard money laundry operation.

According to the Houston Business Journal (Sept. 24, 1999), “First City Bancorporation, once one of Houston’s largest bank holding companies, was acquired out of bankruptcy in 1995 by J-Hawk Corp of Waco and renamed First City Financial Corp.”

“FCFC began its relationship with Cargill Financial Services Corp. in 1991,” according to the company’s SEC filings. “Since that time, the Company and Cargill Financial have formed a series of Acquisition Partnerships through which they have jointly acquired over $3.2 billion in Face Value of distressed assets. By the end of 1994, the Company had grown to nine offices with over 180 professionals and had acquired portfolios with assets in virtually every state.”

But then — and now comes the sad part — the mortgage banking subsidiary of
First City Financial Corporation, Harbor Financial Group Inc., filed for bankruptcy (Oct., 1999), just as the notorious Denver-based money laundry, M&L Business Machines, had done years before.

The corporate shell game of mergers, acquisitions and liquidation is obviously in full play in this scenario.

The other false accuser listed —
Cargill Financial Services Corp., — on the other hand, is a subsidiary of Cargill, the Minneapolis-based global agribusiness cartel and the world’s largest privately-held company.

Cargill is a mega-corporate international merchant of agricultural, industrial and financial commodities, and it operates in 59 countries, has 82,000 employees, and about $50 billion in annual sales.

The financial subsidiary,
Access Financial Holdings Corp., was formed to “manage the housing finance business” and “provide residential real estate mortgages,” an unregulated arena in which money laundering is often the real business.

And here’s the punch line in this revolving-door-syndrome joke of the Criminal Big Government-Big Business Syndicate.

The lead law firm listed on First City Financial’s 1998 registration statement is Weil Gotshal — former spooky judge Stanley Sporkin’s new employer.

Whistle-Blower Stew Webb’s Perspective

Federal whistle-blower Stewart Webb thinks he knows why Catherine Austin Fitts and her company, Hamilton Securities, were bushwhacked.

In fact, he believes that her operation was a direct threat to the “Denver Boys” — the Bush Crime Family’s money laundering operation based in Denver.

Why was she targeted? “Because she had set up a company which was showing the government how to save money through competitive loan sales programs,” explains Webb. “It was a threat to [Leonard] Millman in Denver. Because they were in control of the mortgage program.”

Webb is referring to the many HUD low-income housing-based frauds and scandals in Denver. He claims that one of their proxies was John Ervin himself. “He had his own office in Denver,” says Webb. “One of the biggest supplies of money to these boys is the money they’re stealing from HUD. They are still robbing HUD like nobody’s business.”

“That’s a massive covert revenue stream for them,” continues Webb. “As of last year, they became the largest apartment owner in the United States. AIMCO. That’s Millman and Company in Denver.”

Apartment Investment and Management Co. (AIMCO) is one of the largest real estate investment trusts, or REITs, in the the US with headquarters in Denver, Colorado and 36 regional offices. AIMCO operates about 1,834 properties, including about 385,000 apartment units nationwide in every state except Vermont.

AIMCO is the successor to the Considine Co,. founded in 1975, by Terry Considine. It was then re-organized as a real estate investment trust and became a public company through an initial stock offering in July 1994.

In an article called “HUD, AIMCO Clash Over Housing” (Denver Business Journal, May 8, 1998), AIMCO was excoriated by affordable-housing advocates for taking 90,000 low-income (“affordable housing”) apartments — bought from HUD at below market rates — and converting them into higher end properties, thereby displacing poor renters.

According to the article, “the revamping also involves upgrading bare-bones properties built with federal funds two decades ago which will allow AIMCO to boost rents.”

AIMCO has also gobbled up Washington DC-based apartment manager NHP, Inc., Ambassador Apartments, a Chicago-based REIT, and the apartment portion of Insignia Financial Group.

Since AIMCO is the nation’s largest owner of affordable housing and the sole provider of such homes in many markets, the implications are ominous.

More homeless people on the streets are a sure bet.

The Harvard-Bush Connection

Since historically the Chinese Opium Trade and the African Slave Trade have provided the financial foundation for the Boston “Bluebloods,” it should come as no surprise that the Harvard Endowment Fund and the Harvard Management Corporation are involved in what can be characterized as shady enterprise at best — or criminal activity at worst.

In 1989, the Harvard Endowment Fund, became the 50% owner of HUD subsidy (Section 8) and non-subsidy apartment buildings through its purchase of NHP, an apartment management firm, headed by Roderick Heller III.

Since their plan was to do an Initial Public Offering (IPO) or a merger for NHP, they tried to run up the value by aggressive acquisition of more apartments, preferably with HUD issued mortgage insurance which could be defaulted on — with little or no consequence.

Unfortunately for Harvard, HUD had initiated its new open-disclosure and performance-based auction under the direction of Hamilton Securities. When the private market firms battled it out, Harvard was outbid by GE, Goldman Sachs and Black Rock and its sour grapes apparently turned to vengeance.

In 1996, according to Fitts, Rod Heller told her that the government had a “moral obligation” to him and his investors (Harvard Endowment) to renew or roll over the subsidies with them to maintain their profits.

In other words, an open auction-free marketplace was not acceptable to the Harvard Boys, since they were operating their business of HUD-backed corporate welfare-subsidies under what Heller claimed was “an understood handshake.”

The HUD portfolio of distressed properties had traditionally been managed to derive profits for private business — like Harvard Endowment Fund — and not the US taxpayers. Since Harvard was used to rigging profits through politics, not fair business practices, it started losing income because there were less management fees and the value of its stock started going down.

In 1991, Harvard and Heller asked Fitts to do an investment bank with them. At the last minute, Harvard Management Company honcho Michael R. Eisenson told her he wanted 20% of her new company’s stock, and the deal was shattered.

On the first large HUD loan sale, Eisenson complained to Fitts, “I don’t like this” –referring to Hamilton’s use of optimization software to auction HUD mortgages — “because the only way we can win is by paying more than our competitors. We prefer a bid process where we can win by ‘gaming it’ because we are ‘smarter.'”

For those unfamiliar with Soviet (or is it Harvard-Mob?) terminology, “smarter” is code language for saying “we can rig it.” And “gaming it” means finding a way of manipulating the players to get control of them, rather than using the competitive process of free market capitalism.

Eisenson was obviously quite at home with the proverbial “fix.”

And who is Mike Eisenson? He was the lead investor who eventually sold Harvard’s share of NHP to the Denver-based AIMCO. His other claim to fame is that he was on the board of directors of the infamous Harken Energy which rigged an insider stock deal on behalf of George W. Bush — not coincidentally a Harvard grad.

In 1986, a small company called Spectrum 7 (George W. Bush, Chairman and CEO) was acquired by Harken Energy Corp.

After Bush joined Harken, the largest stock position and seat on its board was acquired by Harvard Management Co. The oil and gas, real estate and private equity portion of Harvard Endowment also acquired.

Warren Buffet’s position in NHP, one of the largest owners of HUD Section 8 subsidized properties in 1989.

Then the Hamilton Securities-initiated HUD loan sales were slowed down and cancelled, and, of course, Harvard’s capital gains were ensured through an IPO of NHP and through a sale to AIMCO.

The Harken Board gave the Junior Bush $600,000 worth of company stock, plus a seat on the board, plus a consultancy worth $120,000 a year — despite suffering losses of more than $12 million dollars against revenues of $1 billion in 1989.

In 1987 when creditors were threatening to foreclose, the Junior Bush himself made a trip to Arkansas to meet criminal-banking kingpin Jackson Stephens, whose Stephens Inc. arranged financing for the faltering Harken Energy from a subsidiary of the Unon Bank of Switzerland (UBS).

Stephens Inc, of course, had ties to the notorious CIA money laundry bank, the Bank of Credit and Commerce International (BCCI), where drug trafficking and arms-smuggling profits mingled freely with looted S&L and fraud-scam proceeds.

Then 1990 Bahrain awarded an exclusive drilling rights contract to Harken and the Bass brothers added more equity to the deal. Six months later George Bush Jr. sold off 212,140 shares grossing him $848,560.

When Saddam Hussein invaded Kuwait the Harken stock dropped suddenly. The SEC was not notified, and no action for insider trading was taken against the Junior Bush. Why? SEC chairman Richard Breeden was a faithful Bush loyalist.

Today Eisenson, formerly one of the lead investors in NHP and Harken and one of the primary portfolio managers of Harvard Management, runs a private equity portfolio called Charlesbank Capital Partners LLC, Boston which manages $1.4 billion in real estate investments for the Harvard Endowment.

One of the partners of a company doing business with NHP, Scott Nordheimer actually admitted to Fitts in June 1996 — “We tried to get you fired through the White House and that didn’t work. So now the Big Boys got together, and you’re going to jail.”

Shortly thereafter the qui tam lawsuit with the bogus whistle-blower charges was filed against Hamilton.

In this complicated story, there’s another part of the puzzle which needs exposure. The Hamilton Bushwhack involved Cargill personnel falsely accusing the following companies of financial improprieties: Hamilton Securities, as well as investment bankers Goldman Sachs and Black Rock Financial, a subsidiary of PNC.

Goldman Sachs has been touted as one of the largest contributors to the Democratic National Committee and the Clinton-Gore Presidential Campaign.

Was the Hamilton Bushwhack just another outward sign of a covert power struggle? Because of its implications, it had the potential to lead to Clinton’s impeachment on serious fund raising violations — a much more significant charge than the Monica Lewinsky Sexcapades used in the Ken Starr Coverup.

More Spooky Harvard Connections

The key to the mystery of the Hamilton Bushwhack may ultimately be found in the relationship between 1) government guaranteed/insured mortgages, 2) asset seizure/forfeitures, and 3) the private companies whose profits derive from an inside track with both government programs.

More lucrative than mere corporate subsidies, there are entire segments of mega-business which depend on these government insider deals.

For example, besides Harvard, the other primary investor in apartment management company NHP was Capricorn Investments and Herbert S. “Pug” Winokur, Jr.

Winokur, former Executive Vice President and Director of Penn Central Corp, CEO of Capricorn Holdings Inc. and managing partner of three Capricorn Investors Limited Partnerships, is one of those insiders who may have benefited from the outrageous assault on Hamilton’s open bid auction for defaulted HUD mortgages.

Not incidentally, from 1988 to 1997, because of his large investments, Winokur was also the Chairman and CEO of DynCorp, a US government contractor whose customers include Department of Defense, NASA, Department of State, EPA, Center for Disease Control, National Institute of Health, the US Postal Service and other US Government agencies.

Most importantly, according to SEC registration documents (S-1), DynCorp is the prime servicer on the Department of Justice Asset Forfeiture Fund, having procured a five year contract with the Department of Justice worth $217 million from 1993 to 1998. This 1000 person contract required staffing at over 300 locations in the US and involved support of DoJ’s drug-related asset seizure program. According to SEC documents, DynCorp’s personnel supports “US Attorney Offices that are responsible for administering the federal asset forfeiture laws.”

In other words, DynCorp could have profited first from a successful seizure of HUD loan sales. Then, DynCorp could have also profited from HUD “Operation Safe Home” seizures, which target low-income tenants, mortgage holders and apartment owners. And, since the company has the expertise and personnel, DynCorp could also have targeted these communities with private surveillance teams and non-lethal weapons to effect asset seizures using the phoney War on Drugs as a rationale.

By all accounts, there is at least a major conflict of interest in Winokur’s investments in HUD low income housing and his role in Department of Justice seizures.

Imagine — if you’re Winokur, you can make money on defaulted HUD mortgages, guaranteed by US taxpayers, as well as by kicking out low-income housing tenants because of drug-related “asset seizures.” The criminal-corporate-government scams don’t get any better.

In the case of Hamilton’s open-bid auction process on defaulted HUD mortgages, the potential $4.7 billion seizure of HUD loan sales would have been a major plum for DynCorp as the prime servicer of the DoJ Asset Forfeiture Fund.

By the way, Winokur also had the “foresight” not to board the ill-fated flight to war-torn Yugoslavia, which took Secretary of Commerce Ron Brown’s life.

There are other spooky connections. According to Newsweek (Feb. 15, 1999), Reston, Virginia based DynCorp is a $1.3 billion firm, which also trains police in Haiti and works on coca eradication in Colombia, where three of its American pilots have died since 1997.

Reliable sources allege this shadowy outfit may be a CIA-military proprietary, in other words, a privatized entity useful for “plausible deniability.” At any rate, it also provides “Yankee Mercenaries” for the Colombian campaign against drug trafficking. Employing about 30 US Vietnam War veterans, DynCorp has a $600 million contract to run and maintain the planes and helicopters used in “anti-drug” efforts in Peru, Bolivia and Colombia, according to the World Press Review (Nov. 1, 1998).

Postscript: Who says (corporate) crime doesn’t pay? According to the Harvard University Gazette, in June 2000, Herbert S. Winokur Jr. was named to join the seven-member Harvard Corporation, the University’s executive governing board.

~ ~ ~

Doing Business with the Feds

– Imagine having to wait more than 4 yeears to get paid on an invoice.
– For more than $2 million.
– From the US Government.

That, in short, is what happened to Hamilton Securities.

Doing business with the US Federal Government should come with a warning label.

WARNING: Saving money for the taxpayers can be hazardous to your health!

“HUD is withholding about $2 million of funds owed to Hamilton for services performed for HUD,” says Hamilton’s President Catherine Austin Fitts. “We also understand that this with-holding is at the request of the Justice Department and the HUD Investigator General.”

“As the lead investment banker on $10 billion of loan sales, we have been able to preserve the integrity of these transactions. We intend to take whatever steps necessary to recover our shareholders” and employees value as we have done for the US taxpayers. The unsealing of the qui tam lawsuit should free HUD to meet its outstanding contractual obligations to Hamilton as quickly as possible.”

Toward a Positive Future

And what is Catherine Austin Fitts doing now?

Besides trying to recover her life, she’s moving ahead with her new company called Solari Inc., and her vision, the Solari Investment Model, community-based programs for local equity building and investment.

“Solari is an investment advisory service, which plans to re engineer investment and financial structures at a local level, so that new technology can be integrated into communities to increase jobs and ownership,” says Fitts.

“Over the last ten years, we have prototyped a substantial number of transactions, venture capital and portfolio strategy to determine the ideal way to refinance communities in the stock market,” she continues. “Our intention is to create a fund which can finance local development — and maintain local control — through an investment model geared for breakthrough transformations with individual, organizational and community change.”

Her far-reaching vision is an inspiration. “By creating one or two Solari Stock Corporations (one for real estate and one for venture capital) through a community offering, and swapping non-voting stock for outstanding debt,” says Fitts, “the community can lower short term debt service and realign interests between numerous constituents who can be positioned in a win-win financial model.”

The problem, in one sense, is simple.

The old model — the Soviet-inspired centralized command & control system which rules Washington, its agencies and the beltway bandits feeding at the trough of corporate subsidies — must give way to the new paradigm of the neighborhood investment model. It’s a foregone conclusion: the corrupt system which guarantees profits to insiders will be swept into the ashcan of history, just as the Soviet Union and its proxies’ brand of communism has been discredited forever. It’s just a matter of time.

In the end — by building an alignment between spirituality and the material world — Catherine Austin Fitts believes that “everyone can prosper through actions which integrate our spiritual principles in the material world in which we live and work.”

– Copyright 2000 Uri Dowbenko. All Rights Reserved. http://www.conspiracydigest.com/

For some new poop on Herbert S. “Pug” Winokur, Jr., GO TO > > > The Story of Enron

And for some old poop, GO TO > > > Dirty Gold in Goldman Sachs

For more on Dyncorp, GO TO > > > Nests in the Pentagon; The Mercenaries


By: Uri Dowbenko

Recently unsealed court documents in the Hamilton Securities case show that attorneys from the Department of Justice and HUD (Housing and Urban Development) lied repeatedly in court before US District Judge Stanley Sporkin.

In an outrageous example of judiciary malfeasance, Judge Sporkin himself coached the government attorneys on how they should proceed with their investigation and litigation strategy.

Prior to the lawsuit, Hamilton Securities, an innovative software company and its president Catherine Austin Fitts successfully completed an auction sale of defaulted HUD properties, which saved the government $2.2 billion in lost revenue.

Then Hamilton became a target.

In June 1996, John Ervin of Ervin Associates, a disgruntled HUD contractor, filed a secret qui tam lawsuit against Hamilton Securities, Goldman Sachs, and Blackrock PNC. He also filed a lawsuit against HUD and HUD officials.

Transcripts of the sealed hearings show that DoJ and HUD attorneys were clearly the strategic force behind Ervin’s phony suit against Hamilton, running interference for Ervin in closed sessions with Judge Sporkin.

DoJ attorneys Barbara Van Gelder and Anthony Alexis, as well as HUD attorney Judith Hetherton, then managed to keep stalling the qui tam lawsuit against Hamilton for an astonishing four years. This was apparently a clear-cut effort to bleed Hamilton’s financial resources. The time proscribed by law, by the way, for “investigations” of this type, is 60 days.

The coordination against Hamilton seems to have originated in the US Attorney’s office in the District of Columbia, as well as the Lee Radek fiefdom of the Department of Justice, misnamed the “Office of Public Integrity.”

Former CIA operative Lee Radek is a master of conspiracy cover-up and his office has a well-documented reputation for derailing criminal investigation of government insiders and coordinating reprisals against whistleblowers.

Hetherton was a former member of the District of Columbia’s US Attorney’s office, while Van Gelder worked for Eric Holder, the DC US Attorney who became the Assistant Attorney General under Janet Reno.

Van Gelder also reported to Frank Hunger, Al Gore’s brother in law, head of the Civil Division of the Department of Justice.

In essence, the qui tam lawsuit, filed by a bounty hunter (Ervin) on behalf of the government, alleged that the government had been harmed by bid rigging between Goldman Sachs, Black Rock, HUD and Hamilton Securities.

Court documents present a convincing case that the qui tam and the civil lawsuits were themselves concocted by the DC US Attorney’s team — even though they knew it was completely without merit.

During the same time frame (four years), Judge Sporkin illegally kept the court documents sealed to further obfuscate DoJ’s criminality.

In fact, the unsealed court transcripts reveal an astonishing disregard for evidence and normal court protocol by government attorneys as well as the judge.

It’s clear that Judge Sporkin was guiding DoJ and Ervin attorneys in their “search” for non-existent evidence against Hamilton.

Sporkin, former CIA and SEC counsel under Bill Casey, repeatedly helped goverment attorneys by verbally nudging them toward some semblance of professional behavior.

Sporkin, by the way, took over the case from Judge Charles R. Richey who mysteriously — and unexpectedly — died after the first several hearings.

In the March 29, 1999 transcript, for example, Judge Sporkin asked US Attorney Anthony Alexis. “Where are we on this thing here? Where’s the government going? Do they know yet?”

Alexis replies. “No.” Sporkin, evidently frustrated by the US Attorney’s inability to present a credible case against Hamilton, asks him, “You don’t know where you want to go?”

Alexis answers, “I kind of know which direction I want to go in terms of who I want to speak to, but there’s well, obviously the documents which Ms. Hetherton can speak to which is before the special master.”

The case, by the way, was first heard on June 20, 1996, so the preceding conversation took place three years after the supposed “investigation,” which yielded no evidence of wrongdoing by Hamilton.

Each time attorneys for DoJ and HUD appeared in closed session with the judge, they would, time and again, present no evidence, no affidavits, and no documents — just a plea to postpone the case.

Judge Sporkin, time and again, acceded to their baseless request and postponed the case.

The chronology of illegal and bizarre behavior by Sporkin and government attorneys follows:

* July 1, 1996 — Judge Richey extends the case for 60 days based on Barbara Van Gelder’s unsubstantiated allegations that fraud was involved. Judge Richey tells Van Gelder he won’t give them another extension. Then Judge Richey suddenly gets sick and dies.

* Aug 19, 1996 — The new judge, Stanley Sporkin, extends the case another 90 days.

* December 19, 1996 — Sporkin gives government attorneys another 90 day extension. He comments on the fact that John Ervin, the disgruntled government contractor-bounty hunter would get 15% to 30% of the settlement.

“Gee, I had one of these qui tams where the government recovered close to 30 million. And the relator I guess got — what do they get, a third?” the judge asks. “Thirty percent,” answers Wayne Travell, a Venable, Baetjer, Howard & Civilleti attorney, representing failed bounty hunter John Ervin.

* May 20, 1997 – US Attorney Barbara van Gelder lies once again regarding her lack of evidence in the case. She implies that if she’s given more time, she’ll definitely come up with something concrete.

When Sporkin asks her about consolidating the two cases, Van Gelder flirts with the judge and tells him, “Oh, it’s always a pleasure to appear before you.”

The judge says, “You know how to butter me up, don’t you? You and I go back many years…”

But Sporkin doesn’t recuse himself.

Van Gelder then tells the judge, “The reason why we can’t — I believe that we can’t have one case consolidated is that one judge would have total knowledge of the case and the problem is in the other case we are the defendant, and so with the United States being the plaintiff and the United States being the defendant…”

In other words the government is in the bizarre situation of being the Plaintiff AND the Defendant, since Ervin has also sued the government, specifically HUD and HUD officials. Sporkin is puzzled too. He asks her how the government can be both plaintiff and defendant in the case.

After Ervin and his counsel are referred to in court as “bounty hunters,” Sporkin gives government attorneys another 90 days — illegally. Again Van Gelder lies andd tells the judge she needs an additional six months.

Sporkin replies, “…these are interesting cases. I’ve had one of these where the relator I think, he recaptured abut 30 million and I think 25 percent is tops.”

Van Gelder says, “Twenty five is the top, right.” Sporkin says, “And you figure 25 percent of 30 million is 7.5 million bucks.”

The message between the lines is that Sporkin is wondering out loud what the patsy John Ervin is actually doing to “earn” his share of the loot — 25% of the disputed $4.7 billion won by Goldman Sachs and their partners in the HUD loan sales.

* Sept 10, 1997 — Sporkin recommends that Van Gelder use SEC investigators to figure out if the HUD loan sales can be construed as “securities.” Van Gelder says that she wants to use SEC only in an advisory capacity. In essence, Sporkin the judge is advising Van Gelder the DoJ Attorney on litigation and investigation strategy. Improper? Sure. Has Sporkin and van Gelder been censured, fined or prosecuted? Not yet.

* October 1997 — HUD Secretary Andrew Cuomo abruptly cancels the Hamilton Securities contract, despite the fact that Hamilton successfully auctioned off $10 billion worth of defaulted HUD mortgages thereby saving the government $2.2 billion.

HUD still owes Hamilton $2.5 million for contracted services.

* March 9, 1998 — HUD and the FBI loot the Hamilton Securities office in Washington, DC. A sworn affidavit by a building custodian shows DoJ’s intent to plant false evidence in the basement hoard of Hamilton documents in order to frame Hamilton — and in turn, Goldman Sachs.

DoJ Attorney Tony Alexis appears and asks for another 120 day extension in the case.

* July 10, 1998 — Tony Alexis lies again and claims Hamilton isn’t giving them documents they have asked for. The Judge stalls the case again.

* Nov 19, 1998 — Dan Hawke, Ervin’s attorney, asks for another 90 days.

* Jan 29, 1999 – Tony Alexis, assistant US Attorney Civil Division, asks for the case to be sealed for 90 days.

* June 2, 1999 — DoJ attorneys continue to mislead the court.Judge Sporkin begins to show his frustration at the ineptness of government attorneys. You can imagine how he feels after more than three years of no results. He says, “Let me tell you what you’ve got to do here. What you’ve really got to do, because this thing is dragging on, get a team together of some very knowledgeable people. You might have to bring them in from the outside. There’s a big pool of people over there at Securities and Exchange Commission you could use. And I don’t know whether you’re permitted to go outside of the SEC to bring in some people that are knowledgeable in Wall Street and how these things work and get into that end of it. And I don’t know whether HUD has that — the Inspector General has those skills. I don’t know. I really, I think it’s dragging on. And the longer you wait, the harder it’s going to be to reconstruct things because what you’re going to have to do is reconstruct your market.”

Translation: I’m really really frustrated with the incompetence of all you government attorneys. Why can’t you just do the job?

Sporkin then continues leading them, trying to motivate them to bring him something — anything with some kind of perceived value. Sporkin says, “I think you’ve really got to get a team together that’s knowledgeable in this area of the law and can, you know, can go into it and see if these allegations are true or not. I don’t know how you’re going to do it, but you’ve got to get — I don’t know — is the Inspector General carrying this on or do you have anybody from Justice working on this?”

The transcripts show that the Hamilton bushwhack was a setup, a story of dirty politics within the DoJ and HUD.

The transcripts also implicate DoJ Attorneys, the HUD Inspector General Susan Gaffney and HUD Secretary Andrew Cuomo in criminal collusion, if not conspiracy, against Hamilton Securities.

Andrew Cuomo, the mob-connected son of former Governor Mario Cuomo, is currently running for Governor of New York. While he was the director of HUD, HUD Inspector General Susan Gaffney revealed in March 2000 that $59 billion of HUD monies had been “lost” and the accounting could not be reconciled. Computer “error” was initially blamed for the shortfall, but this ludicrous and laughable cover story did not stand.

Furthermore it becomes clear that —

1. DoJ designed the construct and rationale for Ervin to file the lawsuit against Hamilton on behalf of the government.

2. DoJ taught Ervin how to get the ultimate kickback as a “bounty hunter.” Incidentally Ervin was actually paid several million dollars when he agreed to withdraw his lawsuit against HUD and HUD officials, an obvious backdoor payoff.

3. Judge Stanley Sporkin’s egregious behavior and improper conduct is evidence of criminal conspiracy. Well-trained in dirty tricks and spooky “tradecraft,” Sporkin, like Lowell Jensen and Lawrence Silberman, was “appointed to the federal bench to defuse any litigation arising from the October Surprise or its many tentacles,” according to whistleblower Rodney Stich in his magnum opus “Defrauding America.”

So was Hamilton Securities just another domino used by insiders to try to knock down Goldman Sachs?

Or was Hamiton and its innovative software a serious threat to insiders who wanted to cancel the sales of defaulted loans to hide the rampant fraud at HUD?

Were they so afraid that Hamilton’s open auction and bid optimization software would cut them out and destroy their covert revenue streams and money laundering capability through HUD?

And, given the well-documented fraud at HUD, why was the Department of Justice so afraid of getting the Securities and Exchange Commission involved in the investigation?

Other more serious questions also remain.

Why did HUD Secretary Andrew Cuomo and Al Gore’s brother-in-law, Frank Hunger, head of the Civil Divsion of DoJ, try to frame Goldman Sachs during the Clinton impeachment, despite the fact that Goldman Sachs was a major contributor to the Democrat Party?

Was this the aftermath of a failed palace coup by Al Gore, Frank Hunger and Hillary Clinton against Bill Clinton himself?

Timing, after all, is everything.

Hamilton Securities and Catherine Austin Fitts continue to struggle under the burden of a meritless lawsuit by Ervin with continuous support from the Department of Justice.

Hamilton has still not been paid on its invoices for $2.5 million — unquestionably and undeniably owed by HUD.

Gored and bushwhacked, software pioneer Catherine Austin Fitts has paid dearly for her company’s innovations. Nevertheless she’s ready to begin her new project — (The Solari Spirit: How to Create Local Prosperity in a Global Economy) — as soon as this outrageous case is settled…

From Investors Business Daily, March 27, 2000, by John Berlau:

HUD Huddles With Business To Build Housing In China

As tensions mount over China’s threats to attack Taiwan, the Clinton administration is holding closed-door meetings with American industry leaders and Chinese government officials to help China build new housing, Investor’s Business Daily has learned.

On Thursday, representatives of industry and nonprofit groups gathered at the Department of Housing and Urban Development for a meeting of the U.S.-China Residential Building Council, or RBC. The council’s members, mostly from industry, include the American Forest and Paper Association, Fannie Mae, the National Association of Realtors, the Mortgage Bankers of America and Lehman Bros.

HUD would not allow IBD to attend the meeting, which was closed to the public and not reported in the Federal Register. The closed meeting was a possible violation of federal law covering advisory committees with private-sector members.

It is designed in part to demonstrate the success of the president’s policy of engagement with China. It’s a vehicle through which we can have positive cooperation, which can demonstrate changes to the Chinese people in institutions that deal with housing that will demonstrate the benefits of a stable relationship with the U.S.,” said a HUD consultant who did not want his name used.

“This is the restoration of the relationship in the areas of housing and urban development after a 10-year hiatus,” said the consultant, referred to IBD by HUD”s press office.

According to the consultant, HUD and the Chinese government had cooperated on projects in the 1980s, but these ceased after the Chinese government massacred pro-democracy demonstrators at Tiananmen Square in 1989.

But on his trip to China in 1998, Clinton called for a new initiative to help China modernize its housing system. So in November 1999, according to a HUD press release, HUD Secretary Andrew Cuomo, Commerce Secretary William Daley and Chinese Minister of Construction Yu Zhengsheng signed a “memorandum of understanding” setting up the council to “provide new housing opportunities for families and to create housing industry jobs and stronger economies in both nations.”

But Rep. Dana Rohrabacher, R.-Calif., a senior member of the House International Relations Committee, believes “something stinks about the whole deal.”

“If American business wants to go over there and make a buck by building houses in China, it’s OK with me,” Rohrabacher said. “That should have nothing to do with the United States government. If HUD is involved, it means there is a subsidy in some way from the American taxpayers to this project, and that’s what is alarming.”

The HUD consultant said the department will spend less than $100,000 on studies comparing the Chinese and American housing markets, but added, “there’s no U.S. government money going to the Chinese.”

The consultant said the council plans two projects: a pilot housing complex in China with materials from American builders and a program to help China securitize a pool of mortgages. He said the council has no budget, and “everything that the RBC members do on any of these projects, they are pledging to do pro bono. They will be donating time, expertise and, in some cases, material.”

But a watchdog group on government waste remains skeptical.

“You just don’t have an international housing cooperative initiative for free,” said Citizens Against Government Waste spokesman Aaron Taylor, who noted that the time HUD staffers spend on the projects also costs taxpayers money.

Taylor is disturbed that the meetings are closed to the public. He notes that secrecy contradicts the ostensible goal of helping China achieve more openness and transparency. If they were interested in openness in housing policy, there is no reason to be keeping these meetings confidential in any respect,” Taylor said.

“Communist dictatorships thrive on secrecy.”

The Clinton administration might again be violating the Federal Advisory Committee Act, which requires panels with nongovernmental members advising the president or his agencies to notify and open their meetings to the public, says Miami attorney Tom Spencer.

HUD spokeswoman Maria Peralta said the council “was not set up as a federal advisory committee, so the FACA rules would not apply to any convening of that committee.” She then amended “committee” to “building council.”

But Spencer said, “It appears to me this is very close to a (federal advisory committee) if it’s going to be utilized for advice by the administration.”

He added, “This administration has had the dubious honor of having more FACA cases on its tail than any other administration, and they’ve tried to avoid it more often than any other administration.”

HUD told IBD it would send a written opinion from HUD’s legal counsel spelling out why the council doesn’t fall under the law, but the agency had not done so by press time Friday.

Different members of the council have different objectives. Donald Martin, a builder who represents the National Association of Home Builders on the council, said he hopes the project will “broaden the scope” of opportunities American builders have in China.

Shelley Poticha, executive director of the Congress for the New Urbanism, thinks the U.S. can learn from China’s “transportation system that’s not exclusively reliant on cars.”

But Sophia Conroy of the U.S. Tibet Committee is skeptical.

She said the Chinese government’s “ideas of development and ideas of modernizing are totally at the expense of the wishes of the local people in many cases.”

Copyright © Investor’s Business Daily

Independent Counsels Release Report On Reagan Era HUD Abuses

Article submitted by: John Henneberger, TxLIHIS, john@texashousing.org (10/30/98).

The longest-running independent counsel investigation in history is not Ken Starr’s probe of Bill Clinton, but the probe of the illegal doings of top HUD officials during the Reagan Administration.

The independent counsels this week released their findings to the D.C. Circuit of the U.S. Court of Appeals. The independent counsels accused high-ranking former HUD officials of a “monumental and calculated abuse of the public trust.” The report found “a pervasive pattern of improper and illegal behavior” within HUD.

“High-ranking HUD officials put their own interests ahead of those of the members of the public they were charged to serve and protect: the poor and homeless of this nation,” the three-volume report stated. HUD money was not awarded on the basis of merit but for the personal benefit of former HUD officials and other “well-connected individuals,” according to the report.

“At a time of dramatic cutbacks in federal funding — cutbacks that many of these officials publicly supported — increased vigilance was essential to ensure that the scarce remaining funds were put to the best possible use,” the report stated.

“Instead, a pattern of greed, criminal conduct and systematic corruption of the government process by HUD officials emerged.”

According to the Washington Post, the probe’s top focus, former HUD secretary Samuel R. Pierce Jr., was never charged with criminal wrongdoing. Pierce acknowledged in 1994 that he helped create a climate in which the corruption took place and accepted responsibility for the need to launch the independent counsel investigation.

In return for that statement, prosecutors agreed not to pursue charges against him. During the course of the investigation two former assistant housing secretaries were among those convicted.

Charles RosoettiIRS CHIEF ON THE TAKE?


By: Uri Dowbenko

The multi-millionaire IRS Commissioner Charles Rossotti acts as if the usual rules don’t apply to him. And actually he’s right. They don’t.

In a glaring conflict of interest, Charles Rossotti, Commissioner of the US Internal Revenue Service and former Chairman of American Management Systems Inc. (AMS), has retained between $16 million and $80 million of AMS stock.

It’s the ultimate insider’s deal. In essence, Rossotti gets a kickback every time AMS, a computer data-processing company based in Fairfax, Virginia, gets a new government contract.

Rossotti’s ownership of AMS stock was revealed in financial disclosure forms filed in May 2000.

In 1998, the New York Times reported that Rossotti was the largest individual shareholder in AMS, a company that had revenues of $1.28 billion in 2000.

Unlike Vice President Dick Cheney who sold his Halliburton Corp. stock and Treasury Secretary Paul O’Neill who sold $100 million worth of his Alcoa Corp. stock, Rossotti refuses to divest.

In fact, Rossotti flaunts his conflict of interest and ethically challenged behavior.

Appointed by President Clinton in 1997, Rossotti’s brazen ethics-be-damned position is buttressed by the fact that later he received an executive waiver of conflict of interest rules from the Clinton Administration.

According to Insight Magazine (“IRS Boss Snagged Clinton Waiver” by John Berlau, April 30, 2001), Rossotti got a waiver from Stuart Eizenstat, Clinton’s deputy Treasury Secretary. This last minute waiver allows Rossotti to participate in decisions regarding AMS contracts with the IRS. In essence, Rossotti can continue to ensure that AMS interests – and his own – continue to be served by new as well as ongoing government contracts.

Incidentally AMS is supposed to be paid more than $17 million by the IRS this year for “add-ons” to existing contracts for internal software systems — the so-called Custodial Accounting Project (CAP).

IRS continues to give AMS these add-on contracts without taking new bids from any AMS competitors.

This egregious corporate-government fraud by IRS Commissioner Charles Rossotti is unprecedented in recent history.

AMS: Corporate Insiders at the Government Trough

Founded by Charles Rossotti in 1970, AMS has leveraged its insider contacts and government contracts into a $1.28 billion global business with clients that include more than 43 state governments and federal agencies.

From 1965 to 1969, Rossotti himself was one of the so-called “Whiz Kids” of Defense Department Secretary (and unindicted war criminal) Robert McNamara, whose legacy remains the failed policy to prosecute the bogus Vietnam War.

Rossotti worked in the Office of Systems Analysis within the Office of the Secretary of Defense.

The Office’s claim to fame was inventing the use of “body counts” (dead “enemy” soldiers) as a gauge of “success” during the infamous war….

Rossottis IRS Shakedowns: Political Enemies Audited

The long-standing tradition of failing upward has finally landed Rossotti in the office of Commissioner of the Internal Revenue Service.

According to his website bio, Charles Rossotti “assumed his duties as Commissioner on November 13, 1997, pledging to turn the IRS into an organization that will consistently provide first-class service to the American public.”

This stance belies the ugly reality of the IRS and its ongoing shakedowns of perceived political enemies. Its well-known tactics of fear and intimidation have been increasing steadily, marking the IRS as a reasonable facsimile of Soviet thuggery and/or banana republic corruption.

Since Rossotti assumed office, many political enemies of the administration have suffered IRS audits. These audits can only be construed as politically motivated de facto harassment.

A partial list of those targeted by Rossotti and his allegedly “kinder gentler” IRS include:

> Joseph Farah and The Western Journalism Center

> Juanita Broaddrick, who publicly accused Clinton of raping her while he was Arkansas attorney general

> National Center for Public Policy, a group critical of Clinton’s environmental policies

> Bill O’Reilly of Fox News’ The O’Reilly Factor

> Citizens Against Government Waste.

> Catherine Austin Fitts, former FHA Commissioner under Jack Kemp and President of Hamilton Securities, a company which ironically saved HUD $2.2 billion through its innovative loan sales/auction. . . .

Rossottis AMS Sued for Breach of Contract

The corporate history of AMS is rife with lawsuits.

According to its Proxy Statement (2000), AMS has been sued at least several times by its own clients for sub-standard performance, shoddy work and breach of contract.

For example, in 1993, the State of Mississippi had contracted with AMS to improve and integrate its tax collection software. By April 1999, “not a single tax-collection software program was operational,” read the lawsuit, filed on April 22, 1999 against AMS.

On August 23, 2000, a jury found AMS guilty of breach of contract and ordered to pay the State of Mississippi $474.5 million in actual and punitive damages.

Eventually the case was settled for $185 million, of which about $102 million was paid by its insurers.

In 1999, AMS Technical Systems, an AMS subsidiary, was sued by Bezeq, the Israeli telecommunications company. Bezeq alleged that AMS was in breach of contract and sought damages for $39 million. The case was later settled out of court.

In 1995, AMS’s Form 10-K reported that Andersen had also sued AMS for copyright infringement and appropriation of trade secrets

Rossottis AMS and the “Missing” $59 Billion at HUD

One of the most outrageous breaches of public trust (or in-your-face fraud) has been the Department of Housing and Urban Development’s (HUD) “loss” of $59 billion in Fiscal Year (FY) 1999 and $17 billion in FY 1998.

According to the Government Accounting Office (GAO), the company responsible for the HUD software system called HUDCAPS was Rossotti”s company, AMS, as well as a company called Advance Technology Systems (ATS).

Despite the poor performance, HUD continued to pay on its contract to AMS, even though the system didn’t work and $59 billion was “missing.”

The HUD Audit Debacle was then blamed on the agency’s financial reporting systems, i.e. accounting software. In fact in her statement to Congress, HUD Inspector General Susan Gaffney reported that she could not validate an audit of the books.

In other words, there has been no audit of HUD financial statements for 1999. And $59 billion is still “missing.” . . .

In May 2000, Gaffney herself told lawmakers that “the material weakness is that HUD does not have a single financial ledger system in place�� the financial systems flowing in were incompatible and the system rejected the transactions. The rejected transactions weren’t corrected in the new ledger system.”

Gaffney’s conclusion was that “HUD does not have a reliable and accurate statement of its financial condition.”

In other words, then HUD Commissioner Andrew Cuomo (who plans to run for Governor of New York, while “losing” $59 billion during his tenure at HUD) used AMS to install an accounting system, which has never worked.

The HUDCAPS system has supposedly been going online since 1997. According to Gaffney, HUDCAPS does not work and that a new so-called “add-on” system is being implemented.

It’s well known among insiders that “computer glitches” are often used as an excuse to hide fraud within government agencies.

The Office of Management and Budget (OMB), which has the power to rein in this fraud by cutting the HUD budget, has heretofore refused to take responsibility.

And, so far, AMS has avoided a PR debacle – primarily because mainstream media has studiously avoided mentioning its role in HUD’s “missing” $59 billion scandal.

AMS, however, continues to be paid on its $250 million HUD contract – despite its non-performance and its breach of contract in providing HUD with a useable accounting system.

Rossotti must be smiling. But you’d be smiling too – if you weren’t held accountable. And if you had between “$16 million and $80 million” worth of AMS stock that was going up while you slept.

As IRS Commissioner, Charles Rossotti has reached the pinnacle of corporate-government fraud.

After all, who’s going to trifle with the guy?

Gale Norton – From Al Martin Raw, by Al Martin:

From Cradle to Cabal: The Secret Life of Gale Norton

A True Blue Republican Party Apparatchik Also Rises

Gale Norton, the Bush designate for Secretary of Interior, was Attorney General of Colorado from 1991 to 1999. She was brought in after her predecessor Duane Woodard was forced to resign because of his involvement in illegal political contributions.

Incidentally Woodard through his involvement in a series of partnerships and corporations had borrowed over $70 million from the infamous Silverado Savings, which he never repaid. He was recommended for these loans by then Silverado Director Neil Bush.

At the same time, Robert Gallagher, the Arapahoe County District Attorney, was appointed to investigate MDC Holdings Corp., a publicly traded company on the American Stock Exchange, controlled by the infamous Republican cabalist Leonard Millman. After an SEC investigation, MDC plead guilty in 1991, paid a $1.5 million fine and was under SEC supervision for three years.

Then Judge Richard G. Matsch (of the Oklahoma City Bombing Case fame) was assigned to the MDC Holdings case. Denver US Attorney Mike Norton (no relation to Gale) was the prosecutor. Prior to his US Attorney appointment, Mike Norton ran for the Senate, and his campaign manager was the Chief Executive Officer of MDC Holdings, Larry Mizel.

The Assistant US Attorneys in the case were Joseph Mackey and Greg Graff, whose brother, Robert Graff, was also an MDC Holdings Director.

Because of public and media pressure, the US Attorneys office indicted several of the vice presidents of MDC subsidiaries, including Richmond American Homes, one of the nation’s largest builders. They plead guilty.

At that point, Judge Matsch made a statement in open court that he was tired of the prosecution bringing in low level vice presidents before him and because of the serious evidence he expected the prosecutors to vigorously prosecute those who were at the top, David Mandarich and Larry Mizel, and that he would vigorously sentence those involved.

Within days, his daughter was dead.

The bizarre circumstances involved her “falling” into a volcano on Hawaii during a trip there with her boyfriend. An inside source claims that the boyfriend was planted on her. He supposedly met her in a grocery store, wined and dined her and had been dating her for about a month from the time Judge Matsch was assigned to the case.

Then because of the death of his daughter, the MDC case was reassigned to the Chief Judge of the Tenth Federal Circuit Court, Judge Sherman Finesilver. Finesilver accepted a $1.5 million plea bargain from MDC and acquitted Mandarich while Judge Matsch was in mourning.

At that time, Robert Gallagher was appointed Special Assistant Attorney General by the Governor of Colorado to investigate the alleged political contributions of MDC Holdings.

Colorado Attorney General Woodard was named one of the recipients of illegal campaign money and he resigned.

With Woodard gone and Gallagher’s investigation completed, Gale Norton, the new Attorney General, took the investigation report and doctored it, eliminating evidence of wrongdoing by MDC Holdings and its officials, especially Larry Mizel.

And how was Gale Norton paid off?

She was allowed to hire six new attorneys for her staff to interface with Colorado state officials, congressmen and senators. Eyewitness reports have described only two attorneys on staff in the basement offices and the other four attorneys were never seen.

Evidently the notorious M & L Business Machines, a subsidiary of MDC Holdings, had laundered the attorneys payroll checks for Gale Norton’s benefit.

In fact, M & L Business Machines president Robert Joseph testified before a US Federal Grand Jury that the payroll checks for Gale Norton’s phantom attorneys were indeed laundered through M& L Business Machines. Assistants to Gale Norton were further advised and evidence was turned over to them about their boss’s criminal activity and obstruction of justice.

Later when allegations of corruption concerning Silverado Savings and Loan and Denver International Airport appeared on an official report, Gale Norton again rewrote the report omitting any accounts of wrongdoing by her real bosses, Leonard Millman and the Denver Boys.

When Gale Norton left the Attorney General’s office, she was rewarded, given a partnership at the infamous Denver-based Brownstein Law Firm.

So here are some of the connections. Norman Brownstein was on the Board of Directors of MDC Holdings, parent company of Silverado S&L and Richmond Homes, as well as MDC’s corporate counsel.

Brownstein was also on the Board of Directors of Chubb Securities, the insurance company which paid for Bill Clinton’s impeachment defense, the Paula Jones lawsuit damages, and other legal expenses.

Brownstein was on the Board of Directors of AIMCO, one of the largest apartment landlords in the US, which were former properties stolen from HUD.

Other MDC Directors include illegal campaign money and narcotics money launderer Larry Mizel, HUD scamscateer Phil Winn, recently pardoned by Bill Clinton, as well as Clinton’s personal attorney, James M. Lyons, who was also involved with the Whitewater Development fraud and illegal campaign money laundering related to Clinton’s 1992 presidential campaign.

M&L Industries was controlled by MDC Holdings Group, which is Leonard Millman. Gale Norton then was given the lucrative partnership with the law firm of Norman Brownstein.

By the way, Brownstein, a former Bush-era CIA counsel, made his claim to fame in representing Republican-connected scamscateers and CIA-connected dopers in the past. Brownstein was also co-counsel for the defense of Jack Devoe. Devoe was the largest CIA-connected cocaine trafficker during Iran-Contra. Devoe received sentences totaling 117 years and spent 22 days in jail. Then he was allowed to leave the United States and take up residence in India, of all places. (For more details, see “The Conspirators”)

When the SEC asked Norton to investigate the Boulder Properties Limited Partnerships, she dragged her feet and again came up with a clean report.

The assets of these limited partnerships was defaulted HUD property picked up by Leonard Millman, appraised for twice its value, and also formerly owned by Millman himself. The financing for it came from a loan from Silverado S&L personally approved by Neil Bush. Neil Bush then was put on the Board of General Partnership of the Boulder Properties Limited Series.

The intent of the Boulder Properties Limited Partnerships was to market them to potentially hostile Democrats in Congress for the purpose of compromise and control. Congressman William V. Alexander, Democrat of Arkansas, for example, purchased one of them through Jonathan Flake, an officer of the selling agents, Twin Cities Bank of North Little Rock, Arkansas, and a cohort and close business associate of Oliver North.

Alexander made the purchase for $3 million dollars. No money down. Just recourse notes. Then in 1992, he was approached by Flake and asked to stop his Alexander Commission’s Iran-Contra probe. Alexander refused. The notes were pulled and made full recourse. Since the partnership was not paying out any cash dividends anymore, Alexander had no choice but to declare bankruptcy. Congressman Alexander formally complained to Colorado Attorney General Gale Norton.

Again Gale Norton undertook no action.

For the record, Gale Norton also used her authority as Attorney General to fight any increase in mining and mineral lease fees in the State of Colorado. which had not been raised since 1872. She was also involved in keeping prices down on grazing fees, since her patron Leonard Millman, a large landowner, was on the Colorado beef marketing board. She continued to serve Leonard Millman by allowing the sale of BLM property at below market value.

Millman’s companies, Richmond Homes and Red Hawk Homes, as well as Venrock and Phoenix-based Olympic Corp., were the beneficiaries of her fraud. As US Secretary of Interior, Gale Norton will be able to orchestrate the continuing cover-up pertaining to sales of BLM land at below market value.

Before she’s confirmed, Gale Norton should probably be tested for drugs. Doreen Bishop, the infamous Denver political gadfly, involved in Woody Harrelson’s campaign to legalize marijuana, claims that she supplies Norton with high grade sinsemilla. According to an inside source, she grows very high quality marijuana on her property, which an eyewitness reports “look like trees.”

She claims she sells the marijuana to all the politicians, including former Colorado Governor Romer, Gale Norton and “all the Denver crowd.” She said even Denver Mayor Wellington Webb’s wife came over and picked some up for him.

The eyewitness also said that “this is the only gal I know where the FBI goes out to her house, stares at her marijuana plants and says, ‘Wow, I didn’t know they grew this big.'”

Incidentally, Norman Brokaw, the head of William Morris talent agency, is Doreen Bishop’s uncle. Her cousin is Tom Brokaw of the NBC Nightly News.

Doreen Bishop also admitted that Oliver North was “taken care of” to the tune of $40 million. Of course, North, formally represented by William Morris, has claimed that any payments made by William Morris were for his book or for appearances. Yeah, sure, Ollie…

It’s well known that Ms. Norton frequents a certain Denver drinking establishment which caters to a female clientele of a certain sexual persuasion. There is also a prominent Denver area woman involved in politics who has publicly revealed the nature of her relationship with Ms. Norton to a prominent political investigative journalist with the Rocky Mountain News. Since this column is devoted to serious political matters, perhaps it would be in the domain of the tabloid press to pursue these well-documented allegations. . . .

For more on Gale Norton, GO TO > > > Bureau of Indian Affairs; Heavens and Earth; The Biotech Birds



Solari is managing the liquidation of The Hamilton Securities Group, Inc.

Our project name for this process is “Gideon”, named after the Biblical leader Gideon who was asked by God to free Israel from the captivity of the Midianites. (The Bible – Judges 6-9)

About Hamilton

The thing we best remember about Hamilton was how wonderful it was.

The people were great. The work was challenging and interesting. Everyday was a learning experience, with software developers and young people from around the world working and learning side by side with Wall Street investors, government leaders and old style community activists.

Hamilton redefined the meaning and the power of the word diversity.

We believed we could do good and make money. We believed that new technology had filled the world with possibility. We believed that the creation of wealth could help address many problems. We believed that hard work and extraordinary performance could depend on the rule of law. We were wrong, but for a few years, how wonderful life was and how full of hope….

Hamilton was an employee owned investment bank in Washington, D.C.

Hamilton was founded by Catherine Austin Fitts in 1990 and ceased operations in 1998. . . .

~ ~ ~


They’ll never suspect the old double framus” Howling Mad Murdock, ‘The A-Team

“Swat” is the term we use to refer to a multiple action/agency effort by government agencies, often with the participation and assistance of private “informants,” individuals and companies, to profit from the destruction, asset seizure or black mail of the target.

The purpose is to satisfy the goals of one or more private special interest groups and/ or governmental covert operations.

We first learned how a Swat worked when Catherine Austin Fitts, founder of Hamilton, served as Assistant Secretary of Housing/Federal Housing Commissioner at the Department of Housing and Urban Development during the Bush Administration and watched senior government officials order companies destroyed in this manner.

With the HUD loan sales, Hamilton was helping to reengineer and decentralize government to advantage taxpayers and communities as opposed to special interest groups. Because of the risks associated with recommending changes that would disadvantage powerful special interest groups, Hamilton was operated in a transparent fashion in the hopes that open disclosure would reduce the risks associated with any possible “swat” attack.

As part of this plan to avert “swat” assaults, Hamilton carefully designed its operations to withstand close unethical scrutiny by those who might wish to involve Hamilton in scandal.

>> Salaries were kept low, bonuses were paid with equity, all checks required multiple signatures, monthly financials were posted on the Hamilton network intranet.

>> All of Fitts’s assets were kept within the United States and all personal financial records were disclosed to Hamilton’s chief financial officer and managed by an accountant.

>> Hamilton was audited by Big 6 accounting firms, had a Board of Directors and audit committee overseeing the Chief Financial Officer and also had special audits by government contracting firms and advice from counsel expert in government contracting to ensure a very high standard of performance that was known and understood widely by employees and entities doing business with Hamilton.

Because of the viciousness with which the charge of “conflict of interest” was raised through carefully placed “rumors” and “leaks” heard by Hamilton contacts and HUD program staff, Hamilton made a determination not to engage in financial advisory work for private clients and not to develop its planned trading operation until it was free of its last HUD contract.

Unfortunately, Hamilton did not anticipate the ferociousness with which HUD would attack and that such attack would involve HUD’s destruction of its own internal financial controls and the use of its own contractors as a scapegoat, as a means of justifying the return to policies favoring special interests. . . .

While it can be argued that some of these events may have occurred in the ordinary course and that the confluence of any two or three might be coincidence, we think that if you look at events over a period of years, the pattern that emerges speaks for itself.

In viewing this pattern we would make several comments:

>> The nature of a successful covert operation is to achieve one’s goals without the general public’s being aware that a single force is responsible for what appears to be a series of unrelated events. The solution to the problem of bright, tenacious members of the independent press who tend to expose such operations for what they are or might be is to discredit their work as unsupported and to label them as nuts. Witness Gary Webb and his newspaper series and book Dark Alliance, which inspired a CIA Inspector General’s report that affirmed Webb’s assertions that individuals involved in CIA covert operations were witnessing, facilitating and profiting from the dealing of illegal drugs on a massive scale.

>> The best way to prevent someone from harming your credibility by exposing the truth is to carry out a preemptive attack in which you accuse that individual of taking part in the very type of behavior that you are attempting to cover up. That way, when the time comes that the truth teller could harm your credibility, he or she will look silly or be ineffective. So, as an example, if you are guilty of insider trading, you attack any potential accuser for insider trading. And so forth. One of the best clues to understand who is behind a swat attack of the kind that Hamilton experienced is to simply determine: Who is in fact engaging in the type of behavior that Hamilton was accused of and needed a scapegoat? Specifically, who was concerned that Hamilton”s promotion of on-line access to government information would illuminate its illegal operations?

>> In many, if not most, instances of scandalous and immoral behavior by those in positions of authority, plausible deniability is key. Each person who contributes to the illicit affair must be able to avoid seeing the world whole and placing his or her behavior in the overall plan. Each participant must be able to delude himself or herself into believing that the actual result was not intended, that he or she was merely following orders and acting for the well-being of his or her family and organization members. For this reason, very few of those who carry out the “plan,” if you will, recognize they are in fact members of a team. So, a HUD official does what is asked and as a result enjoys big budget increases. This official believes himself or herself free of any responsibility for the overall result and harm to taxpayers or for the destruction of internal controls and program integrity at HUD.

It is not necessary to the success of a covert operation that each participant has the same or even similar interests to those of other participants, that participants belong to the same political party or recognized social class, or even that the participants know each other.

Picture a train.

A very few passengers get on at the first stop and travel to the end of the line. Most get on and off at different points, with no awareness of the destinations or identities of the other passengers. But all have an interest in going in the same direction and arriving at their own individual destinations along the way without impediment, burden or undue cost or risk.

When special interests can control large amounts of government and private funding to get what they want, it is not hard to see lots of government officials undertaking multiple actions that result in a common economic end….

Richard Lugar – From The Buying of the President (1996): The fact that Indiana Senator Richard Lugar is not generally considered to have a real chance of winning the 1996 Republican nomination for president doubtless says more about the process than the candidate. . . .

Lugar was born in 1932 in Indianapolis. Just after attending Ohio’s Denison University in 1954, he became a Rhodes scholar, got married, and then enlisted in the Navy to serve as an intelligence officer . . .

When Lugar was a child, he thought Indianapolis’s historic Marrott Hotel- where Betty Grable and other well-known personalities used to live- was quite impressive. . . . Over the years, however, the old hotel had fallen on hard times and needed a serious makeover.

In 1982, Indianapolis developer Kenneth Puller decided it was time to restore some of the grandeur of the building and spearheaded a project to covert the hotel into upscale apartments. But in order to finance the renovation, Puller needed a loan from the Department of Housing and Urban Development. That’s where his friend Dick Lugar came into the picture.

“I remember Mr. Puller and his wife were contributors to my campaigns,” Lugar told the Center for Public Integrity. “And I think they contributed in more than one instance … They were active in the Indiana builders and people who wee doing work for the builders.” . . .

Lugar’s aides, with the senator’s approval, lobbied HUD officials in Washington, D.C. to approve the loan, despite the fact that the Indianapolis HUD branch had initially rejected the project. Lugar told the Center for Public Integrity that he had sent a letter to HUD on Puller’s behalf.

In a letter to a Kentucky newspaper, Lugar explained, “A member of my Senate staff worked with the city of Indianapolis and with HUD to convince the latter to take a longer term view and to support the project. . . .

At the time, Lugar was chairman of the Senate Housing and Urban Affairs Committee. Two weeks afer the Indiana office rejected the Puller loan, a Lugar supporter and campaign contributor, Martha Lamkin, was appointed to take over the Indianapolis HUD office. She and her husband gave $2,455 between 1979 and 1994.

Lamkin told Newsday that she was instructed by the regional HUD officers to approve the loan immediately.

Puller was successful in securing a nearly $13 million HUD loan. But by early 1989, despite the fact that most of the apartments in the renovated Marott Hotel were occupied, he was forced into default on the loan after higher-than-expected construction costs rendered Puller unable to pay back the debt. HUD wound up buying back the mortgage, costing taxpayers millions.

The hotel was sold at auction in January 1994 for $2.5 million. . . .

Lugar also helped Puller in early 1980s when the senator wrote to HUD officials asking that Puller be admitted into a new HUD program called “co-insurance.” The program replaced HUD staff with private entities who would receive fees for processing loans for housing projects “by selling securities backed by the Government National Mortgage Association,” according to Newsday. If the private lenders defaulted, the government would assume 80 percent of the cost.

Puller’s company was the first to participate in the program, where he eventually developed $400 million worth of HUD-backed projects, with the potential for Puller to earn tens of millions of dollars. However, in 1989, HUD indefinitely suspended Puller’s contract.

Lugar told the Center for Public Integrity that he helped another campaign contributor, J. Irwin Miller, the chairman of Cummins Engine Co., and other citizens of Columbus, Indiana, obtain HUD financing for a development project there. Lugar actually visited then-Secretary of HUD, Samuel Pierce, to discuss the matter.

Miller, whom Lugar described as “one of the patron saints of the country,” has donated $4,850 to Lugar’s Senate campaigns. . . .

From salon.com, April 20, 2000:

Hillary brings in a glamorous group of givers in New York Senate race.

By Jesse Drucker

In what is sure to be the most expensive U.S. Senate race of all time, Hillary Rodham Clinton and Rudy Giuliani continue to raise money at a torrid pace. Giuliani has raised nearly $20 million in campaign funds — including soft-money donations — while Clinton has raised roughly $16 million in soft- and hard-money contributions.

The two candidates’ most-recent filings, made available this week, revealed the latest round of fat cats who want to influence the outcome of the election and presumably, the government.

After the reports were released, the campaigns quickly traded charges and countercharges attacking the ethical hygiene of the opposition’s contributors. The Clinton campaign said it would return $22,000 from a Miami businesswoman who once helped solicit a contribution to the Democratic National Committee from an admitted cocaine trafficker now in prison.

The Giuliani campaign, meanwhile, came under attack for accepting $100,000 from the Renco Group, a company whose holdings include Magnesium Corp. of America, which was cited in a 1998 federal Environmental Protection Agency report as the nation’s top dumper of toxic chemicals.

Both campaigns have established soft-money committees to essentially bypass the federal restrictions on campaign contributions, resulting in some enormous donations.

“It is grotesque,” said Don Simon, general counsel to Common Cause, which along with Democracy 21 has filed a complaint with the Federal Election Commission about the fund-raising practices of the two campaigns.

“You have Senate candidates here openly engaged in the solicitation of contributions far in excess of what the federal rules allow. Those rules have been put there in order to protect the political process from corruption and the appearance of corruption and those rules are just being flouted,” Simon said.

Not surprisingly, donors to Giuliani’s camp include scores of businessmen, many of whom have contracts with the city. They include real-estate developers Douglas Durst, Bernard Mendik and Edward S. Gordon, city bus franchise holder Edward Arrigoni, and builders Joseph Mattone and Lester Petracca.

Financial services company American International Group (recipient of a nearly $56 million city tax break in 1997) gave $20,000.

Several longtime powerhouse national GOP contributors also ponied up for Giuliani. Venture capitalist Thomas McInerney gave $50,000, retired Amway head Richard DeVos and his wife Helen each gave $1,000, television station owner Herbert J. Siegel gave $20,000.

Team Giuliani also attracted plenty of conservatives with national name recognition including columnist William F. Buckley and former Secretary of State Henry Kissinger.

Hillary’s camp, meanwhile, is also being courted by plenty of businesspeople and their emissaries. Financier Bruce Wasserstein, investor Warren Buffett, developer William Zeckendorf and lobbyist Thomas Boggs appear on Clinton’s contributor list.

The influence of Clinton’s husband, who will be in New York with his wife and Al Gore on Monday for a DNC fund-raiser, is felt as well.

Friends of Bill on Hillary’s list include attorney and presidential advisor Lloyd Cutler, attorney Richard Ben-Veniste (who represents Terence McAuliffe, President Clinton’s chief fund-raiser), former HUD secretary Henry Cisneros and former White House counsel Charles Ruff.

Other contributors to the Clinton campaign include Joyce Dinkins, wife of former New York Mayor David Dinkins, People for the American Way official Barbara Handman, feminist icon Eleanor Smeal and Coretta Scott King.

Like her husband, Clinton has no shortage of celebrity donors, including: actors James Garner, Chevy Chase and Sally Field, deejay Casey Kasem, Talk magazine executive Devereux Chatillon (remember the puff piece on Clinton in the magazine’s first issue?), music producer Quincy Jones, publicist Susan Blond, former Cosmopolitan editor Helen Gurley Brown, author Dominick Dunne, musician Don Henley, director Ron Howard, screenwriter Paul Schrader, film editor Thelma Schoonmaker and Playboy CEO Christie Hefner.

But perhaps the most intriguing contribution on the list was the $7,000 Clinton received from the law firm Kirkland & Ellis, home to former independent counsel Kenneth Starr, still on unpaid leave from the firm.

Copyright © 2000 Salon.com All rights reserved.

August 30, 1999

Counsel Has Previous HUD Connections

David M. Barrett, the independent counsel investigating Henry Cisneros.

By Dan Morgan, Washington Post

David M. Barrett, the independent counsel prosecuting former housing secretary Henry Cisneros, brings a unique perspective to the job: Before Barrett was selected four years ago to investigate Cisneros, his own dealings with high-ranking officials at the Department of Housing and Urban Development were scrutinized by an independent counsel looking into a Reagan administration scandal.

No wrongdoing was ever alleged against Barrett, 62, a Republican activist who has had a varied career as a lobbyist, lawyer and Washington deal-maker. But that brush with prosecutors is part of a background that includes a number of twists and turns unusual for an independent counsel.

It includes close associations with at least two former HUD officials who were convicted in the HUD scandals of the 1980s. Barrett himself was questioned by prosecutors as part of the investigation.

Years later, after Barrett was chosen to look into Cisneros’s statements about whether he lied to the FBI about payments to his ex-mistress, Linda Jones, a company Barrett set up to receive revenue from a Washington television tower came under scrutiny by another independent counsel, this one investigating the late Commerce Secretary Ronald H. Brown. Barrett did not report on his financial disclosure form that he was an officer and director of that company in 1994.

Although the independent counsel statute expired June 30, Barrett’s mandate to complete his $9 million investigation of Cisneros continues under terms of that law. Cisneros’s trial on 18 felony charges that he lied to the FBI and the Clinton presidential transition team about payments to his ex-mistress is now scheduled for September. In July, Barrett agreed to drop criminal charges against two former Cisneros aides.

While Barrett’s friends praise his probity, critics say his selection underscores the mysterious–and, some say, erratic–way that independent counsels have been selected by a special judicial panel.

The 1978 law responded to concerns that the attorney general would always be perceived as biased when investigating the president and high administration officials. As a result, critics of the counsel selection process say, it is imperative that those holding the uniquely sensitive and powerful position be free of the slightest trace of partisan taint, personal conflicts or background questions.

Barrett “would not seem to most people to be an ‘A’ choice,” said Charles Lewis of the Center for Public Integrity. “Why he was chosen is frankly mystifying.” Barrett’s history of being “deeply enmeshed in the housing contract culture,” Lewis said, makes for a “peculiar juxtaposition” with his current role.

Friends in Barrett’s circle of Washington judges and lawyers bridle at any criticism of his ethics or qualifications. “He has a wonderful sense of decency and integrity that you don’t find in this town very often,” said Washington lawyer Robert J. Higgins.

Barrett declined to be interviewed, and Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit, who has presided over the judicial selection panel for more than six years, did not respond to written questions about the Barrett appointment.

In a short letter to The Washington Post, Barrett said that “the screening process [by the judges] included thorough inquiry into my past work, including all matters involving HUD.”

At Senate hearings in April, Sentelle defended his screening system, saying he and his fellow judges “cross-examine [candidates] pretty thoroughly” and have eliminated those with “something that would have caused a bad appearance.”

But neither of the two independent counsels who oversaw the investigation of abuses at HUD, Arlin M. Adams and Larry D. Thompson, could recall being contacted by Sentelle about the Barrett appointment.

“There’s no way of knowing what due diligence they [the judges] do,” said Georgetown University law professor Julie O’Sullivan, an expert on the counsel law.

Barrett is a lawyer with a significantly different profile than many of his predecessors–without either extensive experience in criminal prosecution and defense or an illustrious title in his resume such as former federal judge.

Instead, Barrett spent much of his career as a commercial lawyer with an eye for business opportunities, often involving HUD. When appointed, Barrett was a registered lobbyist for a large manufactured-housing company.

Barrett said in his letter to The Post that he had no contact with HUD officials after his appointment and gave up clients with matters before HUD “at some personal sacrifice.” During the year after his selection, while he was launching the Cisneros inquiry, Barrett reported earning $302,793 in outside legal fees and received more than $1 million in stock options from a Pennsylvania environmental company.

After brief stints as an assistant U.S. attorney in Washington and county attorney in Indiana, he made a failed bid for a U.S. House seat from Indiana in 1968. Barrett subsequently labored as a GOP fund-raiser, organizer and activist, volunteering for Lawyers for Reagan in 1980. The group’s chairman, Edward L. Weidenfeld, remembers that Barrett was “politically seasoned and seemed to know a lot of people.”

The Reagan administration seriously considered Barrett for a federal judgeship, but he “could not afford to take it,” according to Fred Fielding, Ronald Reagan’s White House counsel. Instead, Barrett threw himself into lobbying, law and business, concentrating heavily on HUD. In 1988, he was well-heeled enough to lay out $500,000 as a one-time premium for a life insurance policy, according to his financial disclosure reports.

Information gathered during the investigation of Reagan administration HUD Secretary Samuel R. Pierce Jr., along with inquiries by congressional committees and the HUD inspector general, shows that Barrett was part of an interconnected group of lobbyists, consultants, and current and former HUD officials who benefited from high-level access to HUD at a time when corruption in the department was rampant.

Rep. Tom Lantos (D-Calif.), who conducted hearings into the HUD scandal in 1989-90, denounced Barrett’s 1995 appointment. He “clearly benefited from influence-peddling at HUD during the Reagan administration,” said Lantos, who likened his selection to “appointing the well-fed fox to investigate missing hens at the chicken coop.”

At the Reagan housing department, Barrett was acquainted with Pierce’s executive assistant, Lance H. Wilson, who had worked with him in Lawyers for Reagan and on the Reagan transition team.

Barrett also befriended Thomas T. Demery, a former Michigan real estate operator and GOP fund-raiser who became federal housing commissioner in 1986.

Demery told the independent counsel for Pierce that Barrett helped him get the job. Once Demery was situated at HUD, phone logs and other records show, Barrett was in frequent contact with him, organizing meetings, meals, parties and out-of-town travel. In a 1987 memo to GOP presidential candidate Pat Robertson, Demery said Barrett could provide fund-raising help “with the Republican machine.”

Two months later, Barrett’s partner in two Tulsa housing developments wrote to Demery’s office seeking an easing of HUD rules for an apartment building that was seeking federal subsidies.

During questioning by a House committee, Demery initially denied that he had ever discussed the Tulsa projects with Barrett. But the committee introduced a May 1987 entry from Demery’s phone log, noting that Barrett had called “re: Tulsa Hsg Auth . . . needs your help . . . A letter from him is in your box.”

Demery told the committee he did “not remember this particular situation.”

A week after the Barrett message, however, Demery’s office sent a letter to Barrett’s Oklahoma partner, George Carnes, approving the loosened rules. Carnes told HUD auditors in 1988 that he “needed Barrett’s financial backing” and that Barrett was “well-connected in Washington,” though he insisted that Barrett never provided special help to him at HUD.

The mortgage company that made HUD-subsidized loans on the Oklahoma properties later pleaded guilty to concealing illegal payments to Wilson, who by then had left HUD, for his help in obtaining the loans. The illegal “finder’s fees” involving the Oklahoma properties were featured prominently in the Pierce independent counsel’s report released last October, well after Barrett had become the Cisneros independent counsel. Barrett’s name was not mentioned in the report.

Demery also figured in another HUD decision that benefited a client of Barrett’s, according to the 1990 report of Rep. Lantos’s committee. Demery’s appointment schedule showed that he met in May 1987 with Wilson and a developer seeking HUD subsidies for a project in St. Louis. Two months later, the House report said, Demery allowed the project to proceed, despite objections from local housing authorities that the area was oversaturated with HUD-backed housing.

A 1989 HUD audit of the project revealed that the developer paid Barrett’s law firm $83,400 in 1987. Later that year, Barrett wrote a $40,000 check to Wilson for “HUD-related work,” according to the Lantos report.

Wilson invoked the Fifth Amendment rather than testify before the Lantos committee and declined to be interviewed for this article. A lawyer friend of Barrett’s said the $40,000 payment was a private transaction between his law firm and Wilson, and noted that the independent counsel looked at the transaction and took no action.

Wilson and Demery were convicted on HUD-related charges separate from their dealings with Barrett. Wilson’s conviction was reversed on appeal. Demery received probation.

Prosecutors for the Pierce independent counsel questioned Barrett for about an hour about his contacts with Demery and others, and also subpoenaed records of some of his clients, sources said. “It was my very clear impression that they viewed Dave’s conduct in all respects as not inappropriate,” said his lawyer at the time, Mark Tuohey.

Soon after Barrett took office in 1995, a company in which he was involved was drawn into an investigation by an independent counsel probing the business dealings of the late Commerce Secretary Brown.

Barrett set up Silverbar Communications Inc. in Delaware in 1994, and the company’s annual report lists him and a law client, Fort Worth financier John A. Freeman Jr., as the sole officers and directors.

In late 1994, Freeman–who had been a top official of a bankrupt Texas savings and loan–was involved in a complex series of transactions that ended with Silverbar taking over a note from the Resolution Trust Co. that gave the company the right to revenue from the Channel 50 television tower in Washington.

Prosecutors came across Silverbar and Freeman when they were probing the business activities of Nolanda S. Hill, Brown’s onetime business partner and former president of the company that owned Channel 50. They wanted to know if Hill or Brown had a hidden interest in the TV tower.

When Barrett learned Silverbar was under investigation, he demanded that his name be removed from corporate papers, according to a friend. An attorney for Freeman said nothing unlawful was ever alleged about Freeman or Silverbar. Barrett reported on his federal financial disclosure form for 1994 that he received more than $5,000 in legal fees from Freeman that year. But he did not disclose that he was a director of Silverbar, as the statement he filed with the U.S. Office of Government Ethics appears to require.

A friend said the apparent oversight occurred because Barrett had no financial interest in Silverbar and considered his involvement with it “de minimis.”

Dave Barrett is a good, decent guy,” he added. “If there are some chinks in his armor they are de minimis.”

© 1999 The Washington Post Company

FLASHBACK > > > From Reader’s Digest, April, 1968:


By Earl Selby

Our large cities are today facing their gravest crisis.

They are pock-marked with slums, joblessness, crime and disease. Every day they lose more ground in the fight against blight. Increasingly the poor, the illiterates, the unemployables are finding haven within their boundaries. Meanwhile, they are losing their greatest resources – their affluent people, their industries, their sources of tax money.

There was a time when American cities had financial muscle to deal with such misery. As recently as 1932, local governments collected more that 50 percent of all taxes; by 1967 they were down to 14 percent.

And the states got only a shade more. Out of every three tax dollars, the federal government takes two. So when cities look for rescue they know where to look.

In response to the steadily worsening urban crisis, Washington has done everything except what it should have done first – THINK!

The federal establishment – Administration, Congress, the bureaucracy – has thrashed around, scattering billions of dollars in a spree of uncoordinated and often unsuccessful projects.

A number of these programs, instead of helping, have actually contributed to the problem. . . .

Camps of the Abandoned

For more than three years I have been looking at our sick cities – some with only a slight fever, others on the critical list. I have talked with mayors, governors, Congressmen, administrators. I have also been with the people in the slums. The disparity between what the experts talk about doing and what is actually going on in these decaying, dying neighborhoods is staggering.

While protesting its devotion to the dispossessed, the federal government itself has been a major cause of driving the poor deeper into ghettos.

According to Prof. Scott Greer of the Center for Metropolitan Studies at Northwestern University, government urban-renewal programs, costing three billion dollars, have “materially reduced the supply of low-cost city housing.” It’s FHA mortgage-insurance policies, oriented to the suburbs, have encouraged middle-class whites to flee the cities. Its welfare policies, pouring in as much as two billion dollars a year in rental payments for families who can find only substandard housing, have been a slumlord’s best friend.

No one set out to punish the poor, the disadvantaged, or to make the inner cores of our large cities little more than camps of the abandoned.

But that is what they are. And the federal government has helped to aggravate this condition.

In the Worm Can

In the absence of any overall strategy, nearly everyone in official Washington plunged into the game of “Save Our Cities.” The result is a nightmare!

Sen. Edmund S. Muskie, chairman of a subcommittee which for three years had been studying government’s labyrinthine channels, found that 21 federal agencies with 150 bureaus in Washington and 400 offices in the field, direct 220 federal-aid programs financed by 403 separate appropriations. Intertwined, overlapped and indistinguishable as to beginnings, middles or ends, the programs are like one huge can of worms.

Local officials simply get lost in this tangle. Even when they find a program that seems to offer needed help, their applications frequently sink into confusion. The National League of Cities told Congress that federal agencies maintain a “delay by shuffling process.” . . .

Horn of Plenty

During the period when the Johnson Administration was drum-beating for support of its multimillion-dollar “model cities” bill, a government official told a mayors’ meeting in Dallas: “Your time is now! When Vietnam is behind us and the federal treasury is once again embarrassed by overly large revenue dividends, the surpluses are likely to be preempted by those with the best prepared and politically most compelling claims.”

With statements like that, it is hard to fault local governments for trying to belly up to the smorgasbord of federal-aid programs. Indeed there has been so much loose talk about the vast sums being spent for the cities that one might be excused for thinking the horn of plenty was inexhaustible.

Just how much IS being spent? Nobody really knows!

In August 1966, for example, Secretary Robert Weaver of the Department of Housing and Urban Development testified before Sen. Abraham Ribicoff’s subcommittee that “federal financial commitments making a direct impact on urban problems increased to over $28 billion in 1966.” The next day, Nicholas Katzenback, then Attorney General, put the figure for “direct urban spending” at $13 billion. Two days after that, President Johnson, in the flush of a Congressional campaign, cited the amount “of federal investment in our cities” as “almost $30 billion.”

On investigation, Senator Ribicoff found that Weaver listed as “urban aid” $185 million for rural electric and telephone projects, $43 million in rural housing loans and $1,500,000 for farm-labor housing. The Senator also said that Katzenbach’s tally seemed to be based on a federal report which included $300,000 for the Pacific Halibut Commission.

“Something is wrong,” said the New York Times, “when no one in the Administration knows just how much is being spent and just what it has to show for its outlays.” . . .

From Reader’s Digest, May 1968:


By Earl Selby and Robert S. Strother

One Monday evening in July 1966, there was a disturbance in a bar in Hough, a slum section of Cleveland. Memories differ as to how it started. Some say that a Negro customer was refused a glass of water; another account claims that a Negro streetwalker was told by a white man that she wasn’t welcome in the place.

Almost immediately, a rumor began spreading in Hough (pronounced “huff”) that the bar would no longer serve Negroes. Within hours, the bar was robbed. A fire broke out nearby. A mob of 300 gathered and, shortly thereafter, rioting began. For the next five days, Cleveland went through a siege of arson, looting and general mayhem. It took 2000 National guardsmen to restore order. . . .

Investigations mounted by citizens’ groups, newspapers and a special grand jury drew conclusions that differed little from those reached by investigators of similar outbreaks elsewhere: the basic cause lay in the frustrations of life in a degenerating ghetto. Deep-seated bitterness was bred by poverty, unemployment, segregation. In Cleveland, however, there was an additional reason for frustration: the positive harm done to the poor by a program specifically designed to help them – urban renewal.

At the time of the riot, Cleveland had commitments from Washington for $60 million in federal urban-renewal funds. More than half, perhaps as much as two thirds, had already been spent in the city. Some 6000 acres, double the acreage lined up by any other city, had been designated for renewal projects. Planners had been confident that, with the federal government paying most of the bills, Cleveland would wipe out its slums.

It didn’t happen.

Instead of improving the housing available for the poor, urban renewal actually diminished it! And most of the dispossessed victims of this “progress” were left to scramble for shelter in the city’s already overcrowded Negro sections.

In addition, real estate worth $26 million that was acquired for renewal was allowed to remain unused – some of it for years – producing no tax revenues. In 1965, after a decade of the program, the city’s records showed that renewal, predicted to increase the tax base by many millions of dollars, had actually decreased it by $2 million.

Anatomy of a Slum

There is much to be learned from Cleveland’s story. In particular, the agony of Hough illustrates how a badly administered renewal program can speed the decay of an American inner city instead of arresting it.

Hough was for may years a pleasant residential area, with tree-lined streets, neat homes, well-kept apartments. Then, after World War II, hundreds began streaming in from depressed Appalachia, to be followed by a crushing influx of Negro families. Many of Hough’s middle-class residents fled to the suburbs.

An intelligent plan for housing-code enforcement, renovation and relocation might still have improved the lot of Hough’s overwhelmingly Negro population. Instead came Cleveland’s urban-renewal program.

Under urban renewal, a city generally receives from the federal government two thirds of the net cost of a slum-clearance project. After the land is cleared, the city can sell ground to private developers, who add to the city’s tax rolls with new construction.

Although the program has benefitted some cities, notably New Haven, in Cleveland it was for years an unqualified disaster.

The trouble began after the very first project was started in 1954. In clearing a run-down area to make room for a new residential complex known as Longwood, Cleveland neglected to make reasonable provisions for sheltering the people whose homes were being bulldozed. Hundreds of Negro families were forced out, all at the same time, so that they were simultaneously competing for what housing was available.

In rigidly segregated Cleveland, most had only one place to go – deeper into the East Side’s Negro communities. The sudden influx began the transformation of Hough from a somewhat dilapidated neighborhood into a vast breeding ground of misery.

When the next project, Garden Valley, was set in motion in 1956, the city promised to make greater efforts to assist up rooted residents.

The results were not impressive. Many families wound up making their own arrangements as best they could. The city had no record of what happened to some of them. Apparently they were so distrustful of the city’s helping hand that they preferred to wage their own struggle for a new home without even applying for aid.

Both the Longwood and Garden Valley projects proved financial failures in their early years.

The initial rents, running more than $100 a month, were too steep for the poor, and middle-class tenants simply weren’t attracted to the area. The projects had to be refinanced with low-cost government loans. . . .

A third project was begun in the St. Vincent area in 1959. This time, approximately 1200 families moved out even before the city told them to leave. They obviously expected no effective assistance and decided to beat the traffic to whatever housing might still be available.

No Mecca

The St. Vincent plan had originally called for a new residential community with 2424 new housing units for upper-income people. The city proceeded to clear the land. But then no builders came forward to put up the new housing.

And so the land remained vacant. . . .

East Woodland, launched in 1960, presents one of the dreariest of all chapters in the Cleveland saga.

First, the area was marked for residential purposes. Businesses were chased out, and the city spent about $2 million to buy 126 buildings, of which 100 were torn down. At the same time, homeowners were encouraged to invest up to $6800 each to rehabilitate their residences. But financing couldn’t be found for residential development, so in 1964 the city switched the area to industrial use. This raised the threat that the improved homes would have to be cleared away in the effort to lure back the departed businesses.

Another grandiose plan was Erie-view, a proposed downtown mecca begun in 1961 in the hope of creating 4,700,000 square feet of new office space and 5500 luxury apartments. The paper dreams spiraled into disaster. Private developers didn’t rush in, and instead of the eye-pleasing blend of buildings, fountains, walks and views of Lake Erie, as envisioned by the city, Erie-view became a wasteland of parking lots dominated by one new federal building, a commercial skyscraper and an apartment building….

Then there was the University-Euclid project (which includes Hough). As initiated in 1962, the primary goal of this program was to rehabilitate 2011 buildings and houses. By the end of 1966 … exactly 226 (11%) of the homes had been repaired. Meanwhile, blight had overtaken far more properties than that.

The Cure That Didn’t

By this time, most Negroes realized that urban renewal meant Negro removal, and as project piled on project, about the only possible place to go was Hough.

This was like trying to force two quarts of milk into a pint bottle. Three or four families were packed into single-family homes; apartments were cut up into cubicles. By the mid-1960’s, Hough had deteriorated into a teeming compound of rotten houses, cheap bars and littered streets that bred crime, prostitution, illegitimacy and disease. Unemployment ran as high as 60% on some blocks. Welfare supported nearly one of every four Hough residents.

Meanwhile, as the squalor increased in this area, thousands swarmed into other previously stable neighborhoods, setting in motion there the insidious mechanics of slum-building.

In Hough, it was plain that this involved a breakdown in city services. Slum people said they often had to wait hours before police responded to a call for help. Trash collections were so inadequate that the fastest way to unload garbage was out the window into the nearest yard – a disposal system known to slum dwellers as “air-mail.”

The rat became king.

The city claimed that it lacked funds to increase services and enforce build and sanitation codes. In fact, however, the problem was the same one that had plagued the entire urban-renewal program: lax city officials.

Listen to slum property owner Mrs. Josie Davis, a 68-year old widow who, when asked by she had let her house deteriorate, told the Cleveland Press: “Back in 1953, the city told us not to fix up our houses – that they were going to be purchased. I’ve waited. Nothing has happened. Looks like the city is waiting until my house falls down so it can be had for nothing.”

Mrs. Davis had some basis for her suspicions: in renewal areas, the city for years had suspended enforcement of housing codes calling for safe and sanitary living conditions. Reports of code violations were rarely served on property-owners, many of whom were absentee landlords. Instead, they were held in the Renewal and Housing Department. Unless the director, James M. Lister, asked for enforcement of the code, the owners seldom had to make repairs. When tenants asked owners for repairs, a typical response was, “Why? The place will be junked when renewal comes, anyhow.”

One effect of this policy, a city official speculated in testimony later, was to drive down property values, thereby cutting city costs in acquiring the land.

It also kept thousands of people living in quarters unfit for safe habitation. State Rep. Carl Stokes, who has since become Cleveland’s mayor, called the practice “contemptuous, callous and inhuman.”

Lister resigned in Jan 1966. Surveys subsequently showed that, under his administration, projects ran one to four years behind schedule, saddling taxpayers with $2 million in extra interest and administration costs; that $65,000 went uncollected in rents on properties which had not been torn down after being acquired for renewal; that the city has no record of where or how 60% of those displaced by Cleveland’s projects were relocated.

Sleeping Watchdogs

Supervising local renewal programs has been the responsibility of the Department of Housing and Urban Development (DHUD) and its predecessors.

The law states that before a city can get a renewal grant it must prove to the federal authorities that adequate housing is available for the displaced – and that the city has the staff to help them relocate. The government watchdogs apparently accepted Cleveland’s allegations on faith, although one city official later admitted that figures on housing available for Negroes were “not completely realistic” and that the “judgment has certainly been made on a tenuous basis.”

Finally, in Jan 1967, Robert C. Weaver, Secretary of DHUD, took an unprecedented step. He withdrew $10 million in federal funds that had previously been assigned to Cleveland and refused to sanction further renewal projects in the city until the mess was cleaned up.

Nevertheless, early this year the General Accounting Office blistered Weaver’s department for being tardy. GAO charged that DHUD went on approving $7,700,000 in just one project – University-Euclid – even after DHUD’s own staff had warned that every phase of project activity was behind schedule and that rehabilitation in the area was an abject failure.

A Cleveland woman was recently asked her opinion about the city’s future. She answered by pointing to a bumper sticker that read:

“Pray for Cleveland”

~ ~ ~

# # #



























FAIR USE NOTICE. This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml . If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Last Update June 20, 2003 by The Catbird