Sightings from The Catbird Seat

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October 14, 1996


The Honolulu Star-Bulletin

The State of Hawaii will become the owner of thousands of acres of Colorado real estate, in its ongoing effort to recover assets for the 13,000 policy-holders of failed Investors Equity Life Insurance Co….

Gary Vose, who was chairman of Investors Equity when the state took it over in June 1994, has agreed to hand over The Meadows, a 4,000-acre subdivison at Castle Rock, Colo, to Hawaii Insurance Commissioner Wayne Metcalf . . .

Metcalf and the previous insurance commissioner, Lawrence Reifurth, have been working to recover assets since the state seized the insurance company after its management had run up a $60 million deficit. . . .

The deficit, which has since grown to more than $90 million, was incurred largely because Vose lost policy-holders’ money in highly speculative leveraged investments known as derivatives, the state charges. . . .

Vose’s agreement to transfer The Meadows and a smaller subdivision settles the state’s lawsuit against him, Eugene Sprague, an attorney in Denver representing the Hawaii Insurance Division, said today. . . .

Neither Vose’s attorney nor Metcalf could be reached for comment, so it was not immediately clear what the value of the Colorado properties might be. Sprague said he could not go into details because of a confidentiality agreement….

The Meadows was the brainchild of former savings and loan executive Charles Keating and was put up for auction after Keating’s Lincoln Savings & Loan Association became insolvent. . . .

The state alleged that Vose then used $23.3 million of Investors Equity’s money, through one of his affiliated companies, to acquire the property in 1992.

In a civil suit, the state accused Vose of racketeering, fraud and other misconduct in buying The Meadows. The suit alleges that the holding company that controlled Investors Equity conducted sham real estate deals and used the insurance firm’s assets to pay huge fees to Vose and companies connected with him. . . .

ITT Hartford Life Insurance Co. early this year acquired the Investors Equity policies, keeping them alive. A state insurance fund contributed $10 million to boost the value.

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April 25, 1997

Land rush

Paula Moore, Business Journal Real Estate Editor

Land is such a hot commodity in metropolitan Denver that ground owners couldn’t give away a couple of years ago is being briskly pursued.

Stew Mosko, manager of the acreage group at Fuller and Co. in Denver, last year sold a parcel once considered one of the most polluted in the country to the Home Depot chain of home-improvement stores.

The 17 acres off South Santa Fe Drive in Denver had housed the Robinson Brick Co., and before that a smelter whose radium waste and metals contamination cost the Environmental Protection Agency almost $1 million to remediate. The deal was trotted out by U.S. Vice President Al Gore and touted in the national press as a sterling inner-city environmental cleanup.

“We’re listing Superfund sites, and they’re selling,” said Mosko, who deals in both commercial and residential land.

The current demand for dirt, both for current and future development, is driven by job growth. Colorado’s rejuvenated economy in the 1990s has filled subdivisions and commercial buildings — office structures, warehouses, shopping centers — that became vacant, or never were fully occupied, when the state’s economy tanked in the 1980s. Because much prime ground already has been absorbed, a lot of what’s left has “hair growing on it,” as land brokers say; it battles problems related to utilities, government, environment….

Land for commercial development isn’t the only type of ground in demand. Residential land, or acreage that some day will sprout housing, is even more prized.

“Builders are like little PacMen, running around the city trying to gobble up lots,” echoed Jay B. Scolnick, president of lot developer Premier Community Developments Ltd. of Denver….

The remaining 3,000 acres of the Meadows, a 4,000-acre master-planned project near Castle Rock, went up for sealed-bid sale in April. The property boasts quite an ownership pedigree. It initially was developed by the poster boy of savings and loan fraud, Lincoln Savings chief Charles Keating of Phoenix, who lost it to the Resolution Trust Corp. The RTC sold it to Colorado developer Gary Vose, who failed to get the proposed 1,000-acre Mount Carbon master-planned project southwest of Lakewood off the ground and who lost the Meadows to current seller the Insurance Commission of Hawaii….

What choice ground remains up for grabs, priced per square foot because of its desirability, also is selling at a relative premium. Southeast suburban dirt, used mostly for office development, that reaped $2 or $3 a square foot a couple years ago now commands $8 a foot….

Copyright 1997 American City Business Journals Inc.

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Honolulu Star-Bulletin, Jun 97, by Rick Daysog: . . . Investors Equity Clients Learn Settlement Details: . . . Bank of America in March agreed to pay $39 million to about 5,500 annuity investors to settle a state suit against the bank. . . .

In its 1995 suit against Bank of America, the state alleged that the bank’s predecessor, Honfed Bank [owned by Bishop Estate and ex-Secretary of Treasury, William Simon], misled 4,000 bank customers in their sales of Investors Equity annuities at bank branches . . .

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The Honolulu Advertiser, 08/08/97, by Jean Christensen: . . . Archer Daniels Midland Investor Services must pay policyholders $8.3 million for its handling of investments on behalf of the failed Investors Equity Life Insurance Co., an arbitration panel ruled … yesterday. ADM Investor Services is among several brokerages targeted by the state in an attempt to recover part of the $100 million in total losses caused by the collapse of Investors Equity.

The state contends the brokerages exposed Investors Equity investors to more risk than financial guidelines allow. Most of Investors Equity’s losses came from speculative investments known as derivatives. . . .

State Insurance Commissioner Rey Graulty said $12 million had be recovered from other brokerages prior to the arbitration panel’s decision in the ADM Investor Services case. Graulty is also pursuing cases against Goldman Sachs & Co., Tradition (Government Securities) Inc. and Tradition (North America) Inc. . . .

He called the award “a big shot in the arm” for the state as it moves against Goldman Sachs. . . The award … includes $6.9 million for net trading losses incurred by Investors Equity and $1.4 million in interest. . . . The three-member panel ruled that an ADM Investor Services executive responsible for the Investors Equity account had knowingly ignored the risk of loss to policyholders and was motivated by a desire to generate above-market fees, Graulty said.

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Honolulu Star-Bulletin, 11/06/98, by Russ Lynch: . . . The investment firm of Goldman Sachs & Co. will pay $15.9 million to settle claims brought by the state on behalf of policy holders in the defunct Investors Equity Life Insurance Co. . . .

As liquidator, Rey Graulty has been working to recover money for holders of annuity policies. Major targets have been national brokerages that invested the policyholders’ funds in risky derivatives and futures. Graulty said yesterday that during the first five months of 1994 alone, Investors Equity assets were used to trade more than $86 BILLION worth of treasury bond futures, resulting in losses well above the company’s 1993 net worth of $16 million. . . .

One case remains unresolved, the state’s action against Archer-Daniels-Midland Investors Services, Inc. which is in the hands of the 9th Circuit Court of Appeals. The Investors Equity claims against others — Merrill Lynch & Co., Dean Witter Reynolds, Nomura Securities International, and Tradition North America Inc. — have been settled. . . .

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From the web Derivatives Links Page: . . . Derivatives, in part, have created a new world order. Not only do regulators not have easy access to all the participants, but there are participants that clearly are outside of the regulator’s reach, either because they are in a different industry, or are in a different country.

Michael Metz, chief investment strategist of Oppenheimer and Co. … in trying to explain the dramatic fall in Wall Street on 27 October 1989, Metz highlighted the role of speculation caused by funds dealing with derivatives:

“These derivatives have too much leverage,” he said. “They are uncontrolled. With $4,000 under them, they can control $80,000 worth of stocks. This is crazy. This causes enormous risks and it is highly speculative. This situation is due to deregulation.” . . .

“Total global derivative trading comes to $55 trillion, more than the GDP of the world. It’s absolutely terrifying because we just don’t know what’s out there. And yet, how often do you hear about that on the evening news?” . . .

Investors Equity Life Insurance Co., in Hawaii lost $80 million in 3 days.

Other banks such as Drexel-Burham and the Bank of England have also incurred losses. . . .

By the end of 1994, derivatives losses were estimated to be more than $10 billion. . . .

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[A little bird told me . . . Controlling interest in Honolulu Federal Savings & Loan (HonFed) was purchased in the early 90’s, by Bishop Estate and former U.S. Sec. of Treas. William Simon. HonFed was marketing variable annuities through Investors Equity, largely to elderly people as part of their retirement plans. Such high risk derivatives were generally considered inappropriate investments for life insurance companies by the Hawaii Insurance Commissioner’s office. According to a reliable source, however, Investors Equity had obtained a letter from then-Insurance Commissioner, Robin Campaniano, giving the o’k to Investors Equity/HonFed to invest in these instruments. Shortly after leaving his government position, Campiano would be hired as president of AIG Hawaii, a subsidiary of American International Group. Investors Equity purchased these derivatives through Goldman Sachs, among others. Bishop Estate was a major investor in Goldman Sachs. HonFed was sold to Bank of America in the mid-90’s, and Bishop Estate and Simon made millions. Bank of America got caught holding the hot potato, however, since they had purchased HonFed’s liabilities along with the assets.]

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[Catbird Ponderings: . . . Isn’t it a little strange that the State of Hawaii settled its case against Gary Vose so quickly by agreeing to accept The Meadows property — which had been purchased with investors’ money to begin with? And since the state was accusing Vose of racketeering, fraud and other misconduct, why was this only a civil suit, with no criminal charges ever being made? And isn’t it odd that there was a confidentiality agreement in this case, when it involved policy-holders’ and taxpayers’ money? Obviously, the value of The Meadow’s property was insufficient to cover Investors Equity’s losses, but why keep the value secret? And why settle with Vose when the recovery process from Goldman Sachs and others had barely begun? Hmmmm.]

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By Susan Casey

The Hawaii Insurance Commissioner may soon own The Meadows.

Castle Rock Town Attorney Bob Slentz has been informed by the Hawaii Insurance Commissioner, Lawrence Reifurth, that a settlement contract has been executed between the Insurance Commissioner and one of Gary Vose’s companies, Yale Investments, owner of The Meadows.

A closing date of Oct. 22 has been set. Prior to that the commissioner will be completing the due diligence on the project.

The insurance commissioner will take over The Meadows and other Yale holdings in Summit County in his capacity as rehabilitator and liquidator of Investors Equity Life Insurance Company of Hawaii, Ltd. IEL was purchased by Gary Vose in 1991. In 1993 IEL’s business volume jumped from $7.4 million to $19.8 million.

Vose, doing business as Yale Investments, purchased The Meadows in 1993, using IEL assets, from the Resolution Trust Corp. after Charles Keating and the now infamous Lincoln Savings and Loan Association went into bankruptcy. Reifurth alleges that the transaction was a “part of a scheme to convert IEL’s cash assets into speculative and over-valued bonds and real estate and to divert IEL’s assets to (the defendants’) own use and benefit …” According to charges filed against Vose by Reifurth, this and several other transactions were conducted to pay dividends to Vose and had the effect of reducing IEL’s financial position to the point where its liabilities exceeded its assets and it was “likely to be unable to continue doing business and protect the safety of insurance policies and annuity investments.”

In 1994 Reifurth filed and was granted a petition to seize and rehabilitate IEL. He later filed a petition to liquidate IEL.

The Hawaii Insurance Commissioner has filed charges of racketeering, piercing the corporate veil, breach of fiduciary duty and obligations, negligent breach of fiduciary duty, fraud and intentional misrepresentation, insurance code violations, unfair and deceptive trade practices, negligence, conspiracy, constructive trust and fraudulent transfers against Vose and his companies.

Slentz said he understands that ownership of The Meadows and bonds will be transferred to the insurance commissioner.

Slentz said he believes that, once the settlement is complete, the insurance commissioner will undertake a market analysis of the properties and probably sell the property as quickly as possible, probably to a master developer.

The town attorney has spoken to the commissioner regarding the town’s request for property on which to build a fire station. Slentz says that will require about two acres.

He also discussed the right-of-way needed for the extension of Santa Fe Road. The development plans for Red Hawk include a requirement to build Santa Fe Road from Wolfensberger Road north to Meadows Parkway. To accomplish that, the town must obtain 120 feet of right-of-way from Meadows Parkway south to the Red Hawk property line. Slentz said that amounts to approximately 12.5 acres.

The discussions with the Hawaii Insurance Commissioner went well, Slentz said. “He was very cooperative. The land dedications we need are actually in advance of the development requirements in The Meadows, but he is looking at the requests. We’re hopeful that he will give us a read on them prior to the closing.”

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October 8, 1997


By Mary Beth Jannakos

Take down that For Sale sign, The Meadows has been sold.

Castle Rock Developments LLC recently announced its acquisition of The Meadows in Castle Rock.

A small portion of the company is owned by real estate developer Lee Alpert, one of the main owners of the proposed Happy Canyon Ranch development that has caused a stir in recent months for Douglas County residents.

Castle Rock Developments was formed recently with the intent to purchase The Meadows, according to Donald Sturm, who owns 90 percent of the company. Alpert owns the remaining 10 percent. Castle Rock Developments closed the deal on The Meadows Sept. 25.

The purchase involved approximately 3,200 acres and also included about $110,000,000 of metropolitan district bonds. However, Sturm would not disclose the selling price.

The Meadows, which is west of the Castle Rock Factory Shops, consists of zoning for 13,000 dwelling units. Almost 1,000 of those units have been constructed. It also consists of 450 acres for commercial use. . . .

The president of the Meadows Metropolitan District No. 1, Carl Alessi, said his reaction to the sale is somewhat mixed because of Alpert’s connection with Castle Rock Developments.

“We’ve been waiting for a new developer for quite some time,” Alessi said. “We hope that The Meadows is developed as its own entity leaving Happy Canyon out of it … we’re concerned and truly hope that the intent is to develop it with integrity,” he said. “It’s been stagnant for a long time.”

According to Councilman Gordon Tye, who represents The Meadows, the new owner appears to be a “true developer” and development in the area can now move forward.

While Tye has stated his opposition to the proposed Happy Canyon development, he is not concerned about Alpert’s connection. He said Alpert is a minor partner and doesn’t believe Happy Canyon will directly affect the planning of The Meadows. Tye also said Alpert has a “pretty decent reputation” as a developer.

Castle Rock Developments acquired The Meadows from the Hawaii Insurance Commissioner.

The commissioner took over The Meadows as liquidator of Investors Equity Life Insurance Company of Hawaii, Ltd., a Gary Vose company.

Vose, doing business as Yale Investments, had purchased The Meadows in 1993 using IEL assets. Vose had purchased The Meadows from the Resolution Trust Co., after the Lincoln Savings and Loan Co. went bankrupt.

– Douglas County (Colorado) News

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Meadows project sold

Investors Equity Life Insurance Co. of Hawaii has sold the Meadows master-planned community in Castle Rock to Castle Rock Developments LLC.

The 3,900-acre property includes 800 residential units as well as commercial development.

Castle Rock Developments’ principals include businessman Donald Sturm and real estate developer Lee Alpert.

Sturm chairs three bank holding companies, sits on the board of Continental Airlines and is a major shareholder in Peter Kiewit Sons Inc.

Alpert has built houses at Cherry Hills Farm, the Timbers and Green Valley Ranch.

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Archer-Daniels-Midland – From the FBI Website:

Antitrust —— Archer Daniels Midland (ADM)

The Archer Daniels Midland (ADM) investigation had been characterized by the Department of Justice, Antitrust Division, as the largest criminal antitrust case in United States history. Since August 1996, seven cases have been filed against eight companies and ten individuals charging price fixing and allocating sales volumes of lysine and/or citric acid worldwide.

Lysine, a $600 million a year industry, is used by farmers as a feed additive to ensure proper growth of poultry and swine. Citric acid, a $1.2 billion a year industry, is a flavor additive and preservative produced from various sugars and is found in soft drinks, processed foods, detergents, and pharmaceutical and cosmetic products. To date, eight corporate defendants and six individual defendants have pled guilty and have been fined in excess of $190 million. Most of the defendants have been from or based overseas.

In October 1996, ADM was sentenced to pay a $100 million fine for its participation in the lysine and citric acid conspiracies. At the time, that was the largest criminal fine ever imposed in an antitrust case.

On September 17, 1998, three former ADM executives were convicted of participating in the lysine conspiracy following a nine-week trial.

This trial was one of the Antitrust Division’s highest profile and most successful criminal cases in recent history.

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From The Buying of the President (1996):

In 1988, 249 individuals each gave at least $100,000, achieving a total of $25 million, to help elect George Bush president.

By giving that much, they became members of “Team 100″ and not only had personal access to Bush and other members of the Bush administration, but many of them — from real estate and construction to finance, from manufacturing to agribusiness to oil and gas interests — received special favors during the Bush presidency. . . .

The many quid pro quo relationships have been well documented by Common Cause magazine and others. The two largest donors were Archer-Daniels-Midland (ADM) and its chairman, Dwayne Andreas, who gave $1,072,000 and Atlantic Richfield (Arco) and its chairman, Lodwrick Cook, who contributed $862,360.

Both companies made or saved hundreds of millions of dollars from their well-placed Washington investments. . . .

Archer Daniels Midland touts itself as the “supermarket to the world.” This behemoth, based in Decatur, Illinois, has its fingers in nearly every agribusiness pie. . . . Its net sales in fiscal year 1994 exceeded $11 billion and its profits topped $1 billion. . . .

The company battled with a spate of bad publicity in the summer of 1995, when the Justice Department, using an ADM informant, made public its undercover investigation into allegations of price-fixing for sweeteners and food additives….

Andreas and ADM, playing it safe, are among the largest contributors to both parties in national political campaigns…

In 1994, ADM alone gave approximately $2.5 million to various congressional candidates….

Andreas has befriended virtually every president since Nixon. His generosity to all of them is notorious. His $25,000 check to CREEP wound up in the bank account of one of the Watergate burglars.

As a result he was investigated, but ultimately cleared, by the Senate Watergate Committee….

For more, GO TO > > > The Biotech Birds

Recommended Reading: The Informant; Rats in the Grain


Charles Keating – Owner of American Continental Corporation, and the infamous Lincoln Savings and Loan.


By Brian Downing Quig

From, posted by Ron Bell (9/11/92)

Charles Keating, the godfather of the S&L scandal, now sits behind bars, perhaps for the rest of his life. He has been assessed fines exceeding 3.6 billion dollars in just one civil action. Federal prosecution has not yet begun. Yet after several books and tens of thousands of column inches of newsprint, the major features of the Keating story remain, until now, untold. For example, General John Singlaub and the CIA’s Latin American military campaigns, Carl Lindner’s purchase of UNITED BRANDS and the U.S. Honduran aid program, extensive BCCI transactions, PRUDENTIAL INSURANCE, and Keating’s attempt to get a strangle hold on the water supply of Arizona are key essential features of Keating’s story that have not had national exposure.

An army of federal regulators, prosecutors, attorneys and judges have combed the affairs of Charles Keating. So why haven’t the major features of his operations come to light? Having a brother who was vice president of ASSOCIATED PRESS helped keep items off the wire service. The ownership of Phoenix’s two city newspapers helped even more. The ARIZONA REPUBLIC and the PHOENIX GAZETTE are owned by the Dan Quayle family.

The Vice President’s involvement in the affairs of CIA Latin American programs provided plenty of incentive for Phoenix newspapers to keep the Keating affair as quiet as possible. And Carl Lindner, a much bigger fish than Charles Keating in these affairs, holds the largest stock interest in KTSP TV, the CBS television affiliate in Phoenix.

Keating is a man who has done favors for many powerful individuals including Presidents Ford, Reagan and Bush. Steven Pizzo, author of INSIDE JOB, one of the best books on S&L looting, supplied Barbara Honegger, author of OCTOBER SURPRISE, a Defense Intelligence Agency telex indicating that the alleged OCTOBER SURPRISE airplane for William Casey’s and Heinrich Rupp’s Paris trip was arranged by Kenneth Qualls, formerly the chief pilot of Charlie Keating’s AMERICAN CONTINENTAL CORPORATION. This and other high level CIA favors may suggest even more sinister reasons why the major features of the Keating story never made it to print.

Savings and Loans were originally chartered to provide home mortgage loans. When Ronald Reagan deregulated the industry, high rollers were free to attempt more ambitious projects with the federally insured deposits. No one was more ambitious than Charlie Keating and no one lost more of the tax payer’s money.

To date taxpayers have been assessed $500 billion for the S&L looting – $2 1/2 billion for Charlie’s sins alone.

After providing less than a dozen home loans, Keating set out to build THE PHOENICIAN, a $300 million luxury resort hotel financed 55% by his newly acquired S&L, LINCOLN SAVINGS, and 45% by the King and Queen of Kuwait.

November of 1989, six months after Keating’s parent company AMERICAN CONTINENTAL finally hit the skids, the Feds took over the PHOENICIAN RESORT in a surprise 1:00 AM raid. At 4:00 AM Keating was summoning bellmen to a side entrance where 24 cartons of files were loaded into Keating’s recreational vehicle. When asked about this by a member of the local press the Feds responded that they knew of this and Keating was allowed to take these files because “they were his personal correspondence — like letters to his family.” The federal investigation of Keating was totally compromised from beginning to end.

If the Feds had done even the most elemental examination of the business affairs of Charles Keating, this is what they would certainly have found: On November 26, 1980, just two weeks after the election of Ronald Reagan and George Bush, Keating purchased the property located at 2735 East Camelback Road for his AMERICAN CONTINENTAL CORPORATION Headquarters. For this he paid $3,083,000 to the < NAME OMITTED > DEVELOPMENT CORPORATION. During the period from 1980 to 1984, Maricopa county court records show that sixty civil suits were filed against < NAME OMITTED >….

< NAME OMITTED > purchased what would soon become the AMERICAN CONTINENTAL Headquarters property April 2, 1979, from James E. Patrick II and Herman Chanen for $550,000. The sale to Keating represented a bump of $2.5 million in only 8 months! What is more, Patrick II and Chanen are not stupid when it comes to real estate.

Patrick II is the son of James Patrick, who at this time was President of VALLEY NATIONAL BANK, Arizona’s largest bank. Herman Chanen owns the largest construction company in Phoenix and at sale time was Chairman of the State Board of Regents which oversees all state universities.

These men represented the very pinnacle of the Phoenix business establishment. Soon after the Keating deal, James Patrick Sr. retired to become president of ROYAL PETROLEUM in Kuwait, a country closely connected to Charlie’s business affairs.

September 19, 1985, Keating received a $5 million loan on this property from PRUDENTIAL INSURANCE COMPANY, a bump of another $2 million. This was a one payment note that was due in total October 1, 1990. The note was secured with nothing more that the property which had been purchased for $3,083,000. When Keating filed Chapter 11 in April of 1989 this $5 million was added to the rest of the money that just evaporated.

Why were these big business interests coming forward to set Charlie up in business? PRUDENTIAL is a big player in this. Not only was George Bush’s father, Prescott Bush, on the board of Directors of PRUDENTIAL but Ronald Reagan was one of the largest stockholders.

It was PRUDENTIAL that owned the land upon which Herman Chanin built the lavish shopping center, BILTMORE FASHION SQUARE, which is located just across the street from Keating’s Headquarters.

One month after the PRUDENTIAL loan, Keating really became bold when he purchased the property adjoining the HQ property for $13,000,000 for the Arizona branch of LINCOLN SAVINGS! . . .

The RESOLUTION TRUST CORPORATION (RTC) after taking over LINCOLN SAVINGS moved its Arizona operations to this property. They did this to protect Keating. Keating never had clear title to this property. It can not be sold. The RTC attorneys have been presented with all this information as have the attorneys for the bondholders. They have never as much as made a phone call in response!

Why all this high level protection and why would these big business interests provide Keating all this money? Some answers to these questions lie in Keating’s origins. Charles Keating started out as an attorney for Carl Lindner, the original owner of AMERICAN CONTINENTAL CORPORATION. According to UC Berkeley professor Dr. Peter Dale Scott, Carl Lindner is a well documented profiteer off the Vietnam war. Lindner is a much bigger player than Keating.

According to Peter Brewton, the star reporter for the HOUSTON POST whose hard hitting exposes have linked the CIA to the looting of 22 other S&Ls, Lindner owned 7 failed S&Ls but has gone virtually unmentioned in regards to the S&L looting scandal. Lindner is reported to be one of the wealthiest men in America and a top financier of the CENTRAL INTELLIGENCE AGENCY.

When Gorbechev came to the United States he visited Carl Lindner. At the same time as Keating was purchasing the AMERICAN CONTINENTAL HQ property, Lindner was transferring almost the total assets of his AMERICAN FINANCIAL CORPORATION (a private company requiring no stockholder reports) into a Honduran company, UNITED BRANDS, taking UNITED BRANDS from a publicly traded to a private company.

UNITED BRANDS was formed when UNITED FRUIT, a CIA front prominent in several Latin American coups, was merged with a second company. CHIQUITA BANANAS is one of UNITED BRANDS well know brand names.

On the deed of Keating’s HQ property it stated “When recorded mail to AMERICAN CONTINENTAL 2621 East Camelback Road, Suite 150, Phoenix, Arizona.” This was just across the hall from General John Singlaub’s U.S. COUNCIL FOR WORLD FREEDOM, the American affiliate headquarters of the WORLD ANTI-COMMUNIST LEAGUE.

General Singlaub’s long CIA career goes all the way back to when he was an OSS agent under the direction of William Casey in France and China during WWII. By purchasing UNITED BRANDS Carl Lindner set himself up to become the world’s greatest financial beneficiary of the CONTRA/HONDURAN aid program which poured billions in U.S. aid into Honduras to the direct enrichment of Lindner’s plantations. Did Lindner send his water boy, Charles Keating, out to Phoenix to facilitate the Contra war with General Singlaub so that Lindner could multiply his fortune?

The summer preceding Keating’s purchase of his headquarters property, Keating headed the media relations group for the JOHN CONNALLY FOR PRESIDENT campaign. With Keating in this section was Jim Brady (soon to become Ronald Reagan’s Press Secretary) and Joyce Downey. Upon arriving in Phoenix, Downey went across the hall to become General Singlaub’s top executive. Former Texas Governor Conally’s son Mark later became an AMERICAN CONTINENTAL executive after serving as an aide to “Keating Five” Senator John McCain.

In a very complicated way all this bleeds into Keating’s transactions with BANK OF CREDIT AND COMMERCE INTERNATIONAL (BCCI). It is beyond dispute that before it was exposed, BCCI was the largest corporate crime network the world had ever known.

Even TIME MAGAZINE ran a cover story explaining how BCCI had become the favored means of moving dirty money for not only the Medullin Cocaine Cartel, but for the PLO, MOSSAD, Abu Nadal and the CIA as well as various countries like Saudi Arabia and North Korea.

For anyone looking for the possibilities that Keating was laundering illegal funds for Singlaub’s Contras campaign, any transactions with BCCI would set off all kinds of bells and whistles.

In early 1986 Keating met a Pakistani in Switzerland named Abbas Gokal. Gokal belongs to a family of shipping magnates who started the downfall of BCCI by defaulting on $700 million in loans. Gokal introduced Keating to Alfred Hartmann, a BCCI director and president of the Bank’s Geneva branch.

Steven Pizzo reported in the NATIONAL MORTGAGE NEWS that Hartmann provided $3 billion in loans to Saddam Hussein for nuclear, chemical and ballistic missile programs just preceding the Gulf war and is the director most closely linked to the laundering of Medullin Cartel drug money.

In 1986, Keating, Hartmann and other BCCI directors met in London, Paris, Zurich, Phoenix and the Bahamas where they founded a corporation known as TRENDINVEST. All this was well known by lower level federal regulators who could not get an appropriate response from higher ups.

In testimony before the HOUSE BANKING COMMITTEE a federal regulator, John J. Meek, testified that “AMERICAN CONTINENTAL had no records of Keating’s secret role in TRENDINVEST. Regulators learned of the partnership only from an offhand remark by an AMERICAN CONTINENTAL executive.”

Keating invested $17.5 million into this company without even informing the board of directors of AMERICAN CONTINENTAL.

Meeks went on to detail an unending train of baffling Keating transactions which included $25.5 million to DIA HOLDINGS, a Netherlands company, $10 million to SOUTHBROOK HOLDINGS, a Panamanian company, $25 million to GFTA, a West German company – all deals that regulators never figured out.

In summary, did Keating have both the motive and the opportunity to launder illegal funds for CIA operations in Latin America and elsewhere? Yes. Yes. Yes.

It is worth mentioning that when Keating moved out of suite 150, POSTNEWSWEEK moved in. Remember, this was just across the hall from where General John Singlaub ran the Nicaraguan Contra campaign. This was the operation that led Ollie North and General Secord into so much temptation. With the parade of mercenaries that processed through Singlaub’s office one must conclude that POSTNEWSWEEK was one among many news organizations that never had the slightest inclination to cover any of these stories.

In as much as an animal is undefinable apart from its environment, it is worth analyzing the political setting of Charles Keating. During the high points of Keating’s reign the big man in Arizona was Kemper Marley. Marley was the first and only billionaire in Arizona. His wealth was based originally on a liquor monopoly conferred upon him by Sam Bronfman of the SEAGRAMS family.

In Arizona Marley was all powerful.

In 1948, fifty-two employees of Kemper Marley’s wholly-owned company, UNITED LIQUOR, went to prison on federal liquor violations – including Gene Hensley, the father-in-law of Arizona Senator John McCain.

Gene Hensley was Kemper Marley’s UNITED LIQUOR general manager. On the basis of so many prosecutions some people might feel UNITED LIQUOR could qualify as organized crime. The slick attorney who kept Marley out of this trial and sent McCain’s father-in-law to prison in his place was William Rehndquist – currently the Chief Justice of the U.S. Supreme Court.

It was the judgement of the court that Gene Hensley would be prohibited from ever working in the liquor industry. Of course such judgments meant nothing to Marley. When Gene Hensley got out of prison Marley arranged a BUDWEISER distributorship for Hensley which is now in the hands of Senator John McCain and reported to be worth $50 million!

The best source for an introduction to the environment of total political corruption in Arizona is the book, THE ARIZONA PROJECT: HOW A TEAM OF INVESTIGATIVE REPORTERS GOT REVENGE ON DEADLINE. In graphic detail journalist Michael Wendland links the most prominent people in Arizona with various organized crime king pins.

Wendland was part of the group called INVESTIGATIVE REPORTERS AND EDITORS who came to Phoenix in the wake of the fatal car bombing of the ARIZONA REPUBLIC’s investigative reporter, Don Bolles.

It was the conclusion of this group that Marley, by far the wealthiest man in Arizona, was behind this murder.

According to intelligence sources of the Phoenix police, who prepared a background profile of Kemper Marley the week following the Bolles murder, Marley was at one time directly connected to the remnants of the old Al Capone mob.

When Marley died July 1990 he owned 5 square miles of Carefree – the highest priced real estate in Arizona. The smallest lot in this most exclusive township is zoned for one acre. By some coincidence the Tax Accessor made the same mistake evaluating Marley’s properties as he did on Charlie Keating’s properties. This oversight was saving Marley a million dollars a year. Of course the official investigation showed no wrongdoing in either case.

For the last 45 years Marley bankrolled the Republican Party which doled out Marley’s great wealth to a slate of Republican candidates who were almost universally successful in obtaining high political office. Marley was able to control the Democratic party as well. Every current congressman and every senator in Arizona owes his position to the Marley machine.

These office holders include the “Keating Five” Senators John McCain and Dennis DeConcini as well as former State Attorney General, Bob Corbin.

At one point Marley served as Chairman of the Board of the VALLEY NATIONAL BANK. When Bugsy Siegel, on instructions from Meyer Lansky, built the FLAMINGO CLUB, Las Vegas’s first casino, the money was borrowed from the VALLEY NATIONAL BANK.

Al Lizanetz, who served as Kemper Marley’s public relations man for 20 years, is one of the richest sources for background on the liquor magnate. The Bolles murder was part of a package deal that was to include a hit on Lizanetz.

According to Lizanetz, the Marley machine placed the highest priority on placing lawyers in all the key state and municipal positions. The Arizona State Attorney General during the Keating era, Bob Corbin, worked formerly for Marley in the insurance industry in the 1950s.

Corbin accepted a $55,000 campaign contribution from Charles Keating in a race where he was unopposed. Since Corbin did not have to spend the money in the campaign he got to keep the $50,000 when he retired. This is significant since S&Ls are state chartered institutions and it was therefore the responsibility of State Attorney General Corbin to oversee Keating’s operations.

Marley placed his people in the top positions of the Department of Public Safety. The county prosecutor was also key to him. Lizanetz claims that Marley recruited Eugene Pullium to come to Phoenix to start the ARIZONA REPUBLIC/PHOENIX GAZETTE, the monopoly newspaper which has succeeded in covering up these matters.

Eugene Pullium is the grandfather of Dan Quayle.

Dan Quayle grew up in the Phoenix suburb of Paradise Valley living just next door to the founder of the JOHN BIRCH SOCIETY, Robert Welsh. Quayle’s parents were the local JOHN BIRCH coordinators.

Marley’s mentor was Sam Bronfman, the progenitor of the SEAGRAM’S empire. When Sam Bronfman visited Marley in Arizona he came in the company of Al Capone. Lizanetz claims that Jack Ruby, assassin of Lee Harvey Oswald, was also on the Bronfman payroll.

There may be something to this since Louis Bloomfield, the family attorney for the Bronfmans, was the chairman of the board of PERMENDEX, the Italian company whose board also included Clay Shaw, the man prosecuted by District Attorney James Garrison for the murder of President Kennedy.

Many have suggested that Charles Keating fell out of favor with the powers that be and was set up. This is clearly not so. Ironically, after issuing millions in bribes, the downfall of Keating’s empire began and ended with one minor public official who was not for sale. Charlie was playing fast and loose with the rules but he did have his end game well planned.

In order to buy time for his failing company, Keating resorted to selling AMERICAN CONTINENTAL bonds through the affiliates of his S&L, LINCOLN SAVINGS. Telephone solicitors were paid to call LINCOLN CD holders just prior to expiration dates and advise them to roll over their investments into ACC bonds. This was good for $230 million of keep alive money.

While the higher rate of interest was mentioned, the fact that these bonds were not federally insured was not. But these minor infractions would all be covered by Keating’s most grandiose of all grandiose schemes.

The most precious resource in Arizona is water. Keating was going to pay off his bondholders with the profits he was going to make through his near successful attempt to monopolize the water supply for the city of Phoenix!

In Arizona there are five water tables from which water can be pumped – an enterprise known as water farming. Keating arranged a $200 million dollar loan through LINCOLN SAVINGS for Ron Ober, Senator Dennis DeConcini’s campaign manager.

The grand plan was for Ober to purchase all the land suitable for water farming in La Paz county just south of Phoenix that Keating did not already own. Then Keating engineered a bill for the Arizona legislature that stipulated that the city of Phoenix would be legally obligated to purchase 100% of Keating’s and Ober’s water before they could purchase a drop from anyone else!

Since Keating and Ober were planning to pump a million acre feet of water a year at a thousand dollars an acre foot that meant profits in the hundreds of millions – far more than was necessary to pay off the bondholders. In fact Keating and Ober would have been well on their way to Rockefeller status wealth.

Since Senator DeConcini had purchased land in the other five suitable water tables he would have made out ever better.

This plan was probably conceived by the more cautious DeConcini who intended to use Keating and Ober for stalking horses for his own business interests. Such grandiose scams can only be attempted when one can count on the local media to keep secrets and law enforcement to look the other way.

Despite some obstreperous lower level officials at the Federal Home Loan Bank Board everything was going like clockwork for Keating. While everyone slept and no one even heard of this water legislation, Keating’s bill sailed through the Arizona House of Representatives in a record 2 days. It would have done the same in the state senate except for one man – State Senator Jerry Gilespie.

Another man in Jerry’s position could have parlayed for a suit case full of hundred dollar bills. But Jerry killed the bill without wasting a heart beat. In the next senate election a massive amount of funding showed up for Jerry’s opponent. Today Jerry heads up the BO GRITZ FOR PRESIDENT CAMPAIGN in Arizona.

This fascinating water story made it onto the cover of the November 1989 issue of PHOENIX MAGAZINE under the very appropriate title PARASITES IN OUR WATER.

This unbelievable account of greed and corruption was believable only because it was written by 5-term ex-congressman Sam Steiger. Even so, no wire services picked it up. This article is the first national coverage of Keating’s failed end game.

Things still looked rosy on May 20, 1988 when Keating threw a lavish champagne party at his Headquarters celebrating what Keating imagined to be his final victory over the Federal Home Loan Bank Board. K eating always kept magnums of Dom Pernon chilled for special occasions. FHLBB examiners in San Francisco had been motioning to close down LINCOLN SAVINGS. Thanks to backing from John McCain and Dennis DeConcini and the other “Keating Five” senators LINCOLN SAVING’s FHLBB files had that day been moved to Washington D.C. where they were guaranteed to receive much more favorable treatment.

At the height of this rancorous party, Keating ripped off his shirt to reveal a tee shirt with a skull and cross bones superimposed over the letters FHLBB. As one top exec poured cold champagne down the front of one secretary’s brassier, Keating threw a computer and a typewriter out through the glass of second story windows. Everyone there roared with approval. The $1 million in bribes to senators seemed well spent.

But there was something Keating had not considered – one $15,000 per year state senator who did not have a price….

* * *

From The Buying of the President 2000, by Charles Lewis
and the Center for Public Integrity:

JOHN McCAIN . . . In 1976, McCain toyed with the idea of running for a seat in the U.S. house of Representatives in Florida, where he was stationed at the time. He ended up deciding not to run, but within a year he was on Capitol Hill as the Navy’s liaison to the Senate . . .

As his days in the liaison office were winding down, McCain grew impatient to run for office, but he lacked a base from which to launch his political career. As a Navy brat, he’d never lived anyplace long enough to call home. His marriage to Carol Shepp, whom he had wed in 1965, fell apart shortly after he returned from Vietnam. So, in 1981, a year after remarrying, he headed for Arizona, the home state of his second wife, Cindy Hensley.

Cindy Hensley is heir to a considerable family fortune. Her father, James Hensley, started a beer distributorship in 1955, just as Arizona’s economy was entering a long boom period. Today, Hensley & Company, based in Phoenix, is the biggest Anheuser-busch distributor in the state and one of the largest beer distributors in the nation.

From the moment McCain landed in Phoenix, the Hensleys were key sponsors of his political career. Being elected to Congress was “the ultimate goal,” McCain recalled years later. “I just didn’t know how long it would take.”…

The Hensleys helped a lot throughout these years. So did an Arizona real-estate developer named Charles H. Keating, Jr….

For years, McCain accepted Keating’s assorted forms of largesse– campaign contributions, all-expenses-paid vacations, free rides on his corporate jet– without realizing, apparently, that there might be strings attached….

Over the course of his House and early Senate career, McCain would collect $112,000 in campaign contributions from Keating, his relatives, and his employees.

But there was a kicker. When he was asked, years later, at a press conference, whether his contributions to politicians bought him influence, Keating replied, “I want to say in the most forceful way I can: I certainly hope so.”

McCain got more than just campaign money from Keating. McCain, his family, and their babysitter flew on Keating-owned or -chartered jets nine time, including three trips to Cat Cay, Keating’s vacation estate in the Bahamas. And in 1986, Keating cut Cindy McCain and her father into Fountain Square Shopping Center, a strip mall that American Continental Corporation built and managed, for a $359,000 investment.

It was just a matter of time before Keating called in his chits. When he did, it was over Lincoln Savings and Loan, a thrift in Irvine, California, that he’d bought in 1984. It turned out that Keating was raiding the assets of Lincoln’s depositors to finance post real-estate projects such as The Phoenician, a $300 million, 654-room hotel and spa in Scottsdale, Arizona, and his own lavish lifestyle.

By 1986, Edwin Gray, the chairman of the Federal Home Loan Bank Board, grew worried that Lincoln had strayed too far from its core mortgage business, and began to clamp down. Keating turned to his friends in Washington for help.

On March 19, 1987, Keating appealed to McCain in person to meet with federal regulators on his behalf.

At first McCain balked, but then, on April 2, he joined Senators Alan Cranston of California, John Glenn of Ohio, and Dennis DeConcini of Arizona in DeConcini’s office to meet with Gray. On April 9, the four Senators, joined by Don Riegle of Michigan, sat down in San Francisco with four more regulators from the Federal Home Loan Bank Board.

Following the meetings, the board delayed its seizure of Lincoln Savings and Loan for two more years.

When the federal government finally took over Lincoln in 1989, the bailout cost taxpayers $2.6 billion, making it the most expensive S&L bailout in U.S. history. About 17,000 small investors also lost a total of $190 million.

In November 1989, outrage over the bailout and the intervention of powerful lawmakers sparked an investigation by the Senate Ethics Committee. From then on, McCain and the other four Senators, who together accepted $1.3 million in contributions from Keating, were known as the Keating Five.

Caught neck-deep in Keating’s pocket, McCain scrambled to extricate himself. He quickly paid Keating $13,433 for the flights he and his family had taken on Keating’s jet years earlier. But is was too late to make up for the fact that, as a member of the House, he’d never disclosed the flights, as required under House rules.

He refused to return Keating’s contributions; instead he filed a complaint with the Federal Election Commission in which he charged that Keating had illegally made his campaign contributions through American Continental employees. (The FEC dropped the case a few years later.)

McCain readily admitted that he’d made a mistake by going to the meetings, but insisted, “I in no way abused my office.”…

In February 1991, the Senate Ethics Committee cleared McCain, saying he had “exercised poor judgment” but that his actions had not been “improper nor attended with gross negligence.”

“Clearly, ‘no improper conduct’ is what is important here,” McCain said on hearing the committee’s decision. “I view that as full exoneration.”

In a postscript to the scandal, McCain finally contributed $112,000– the amount of money he’d gotten from Keating-related interests– to the U.S. Treasury. (Keating would otherwise rank as his No. 1 career patron.)

McCain’s wife and father-in-law, however, held on to their stake in the Fountain Square Shopping Center. In fact, they held on to it long after American Continental went bankrupt.

Cindy McCain, her father, and the remaining owners sold the mall two years ago for $15 million, reaping a profit that McCain has reported as between $100,000 and $1 million….

* * *

January 12, 1999

Charles Keating, son face new trial
– U.S. reinstates fraud charges

By Michael L. White

LOS ANGELES (AP) – Former Lincoln Savings & Loan chief Charles H. Keating Jr. will be tried again on charges that he defrauded customers by selling them millions of dollars in worthless bonds, a federal prosecutor said Monday.

The case of Mr. Keating and his son, Charles Keating III, was returned to U.S. District Court after an appellate court threw out their federal convictions and said they deserved a new trial….

Mr. Keating rose to national prominence in Phoenix but grew up in Cincinnati, where he practiced law with his brother, former congressman and Enquirer publisher William J. Keating, and got his start in business.)

Known for lavish spending and big salaries during his days as chairman of American Continental Corp., Mr. Keating became a symbol of the savings and loan crisis of the 1980s. He was convicted in federal and state court on charges stemming from the $3.4 billion collapse of Irvine-based Lincoln Savings, which American Continental owned.

Charles Keating III also was convicted during the federal trial. However, the federal convictions were overturned on grounds that jurors learned of Mr. Keating’s state conviction and discussed it in the jury room.

The elder Keating’s state conviction also was thrown out after an appeals court determined the trial judge gave jurors improper instructions.

Stephen Neal, attorney for the elder Mr. Keating, said prosecutors should give up. Both convictions were constitutionally flawed, he said.

* * *

LOS ANGELES (Reuters) 04-10-99: Charles Keating Jr., whose failed Lincoln Savings and Loan symbolized the thrift industry’s crash in the 1980s, pleaded guilty Tuesday to federal fraud charges and was sentenced to the time he already has served in prison.

Keating, 75, pleaded guilty to three counts of wire fraud and one count of bankruptcy fraud, charges which could have meant a maximum of 20 years in prison and a $1 million fine if he had been convicted at trial.

Federal charges against his son, Charles Keating III, were dropped.

Under the original indictments, the elder Keating faced 73 counts of racketeering, conspiracy and fraud. His son was charged with 64 counts.

Lincoln’s failure ultimately cost U.S. taxpayers $2.6 billion, making it the costliest thrift crash in U.S. history….

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For more on Prudential Insurance, GO TO > > > PRUDENTIAL: A Nest on Shaky Ground

For more on Resorts International, GO TO > > > Broken Trust; The Game Birds


Chubb Corporation – Chubb is a holding company whose subsidiaries are engaged in two industries: property & casualty insurance and real estate.

The second largest institutional investor in Chubb is Putnam Investment Management, a subsidiary of the world’s largest insurance broker, Marsh & McLennan.

The third largest institutional investor in Chubb is Citigroup, which was formed through the mega-merger of Citicorp and Travelers Insurance Company. Citigroup is co-headed by Robert Rubin, the former U.S. Treasury Secretary and former co-chairman of Goldman Sachs. A leading institutional owner of Goldman Sachs is Hawaii’s filthy rich BISHOP ESTATE.

The broker for Bishop Estate is Marsh & McLennan. Marsh & McLennan placed the estate’s Directors & Officers Liability insurance policy in Federal Insurance Company, a Chubb subsidiary.

Federal Insurance Company provided the excess liability insurance policy for Bill Clinton that defended him in the Paula Jones lawsuit.

Just one big happy flock….

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For more on the Chubb Group, GO TO > > > The Chubb Group

For Harmon v. Federal Insurance Co., Marsh & McLennan, et al., GO TO > > > RICO in Paradise

For Harmon’s letters to California and Hawaii Insurance Depts, GO TO > > > Insurance Commissioners.

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See also: Kiewit Pacific


Goldman Sachs – The Goldman Sachs Group is a leading global investment banking and securities firm with three principal business lines: Investment banking; Trading and Principal Investments; and Asset Management and Securities Services.

From Goldman Sachs, by Lisa Endlich:

GOLDMAN SACHS had been expanding the size of its partnership steadily for decades. There had been fifty partners in 1973; there were seventy-five in 1983 and one hundred fifty by 1993. But as the size of the partnership increased, the profits of the firm had to grow at breakneck speed if existing partners’ income levels were to be maintained….

With his ascendency in 1990, Robert Rubin openly discussed with the partnership the need for an expanding pie…

In addition to the firm’s limited partners (retired partners who choose to leave capital in the firm), Goldman Sachs has taken on three groups of financial partners. Sumitomo’s investments in 1986 entitled the Japanese bank to 12.5% of the firm’s annual profits.

Kamehameha Schools/Bishop Estate, the giant Hawaiian education trust, which also made two major cash infusions into the firm, first in 1992 and again in 1994, receives about 11% of what the firm makes every year. Finally, a group of insurers has injected $225 million into the capital structure.

Goldman Sachs will go down in history as the last major partnership on Wall Street. . . .

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


Kiewit Pacific – Construction company; subsidiary of Peter Kiewit Sons’, Inc.

From Honolulu Star-Bulletin, by Jean Christesen:


The state will leave an investigation into the collapse of an unfinished section of the H-3 freeway to the project’s contractor, Kiewit Pacific Co.

Transportation Director Kazu Hayashida said state engineers will continue to monitor the project where four construction workers were injured Saturday. . . .

Four Kiewit Pacific employees were working atop the 120-foot-long freeway section three miles into Halawa Valley when it abruptly fell 25 feet to the ground Saturday.

The men were flown by helicopter to Queen’s Hospital, where three remained in fair condition yesterday. The fourth was released shortly after the accident….

Kiewit Pacific has a $96 million contract to build a mile-long section of the freeway and a $36 million contract to build an exploratory tunnel along the route….

The $1.37 billion H-3 project has claimed two lives to date.

Steven Ouderkirk, a Kiewit Pacific employee, died Jan. 26, 1995, when a concrete wall fell on him in a Halawa Valley stream bed.

The state fined the company $5,000 but said unsafe conditions did not contribute to the accident.

Orlindo Domingo, a Hawaiian Dredging and Construction Co. employee, died June 5, 1990, when a concrete girder he and three others were standing on fell 50 feet. The company was fined $2,450 for not using safer procedures.

Asked if there is reason to question Kiewit Pacific’s commitment to safety, Hayashida said, “I don’t think so. I think that they’re a good firm.”

Stinson said, “I have all the confidence in the world that when this freeway is opened it will be structurally sound and structurally safe.” . . .

* * *

In the United States Court of Appeals For the Seventh Circuit – No. 98-2094

Level 3 Communications, Inc.,



Federal Insurance Company and

Pacific Insurance Company,


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 96 C 5346–George W. Lindberg, Judge.

Argued November 4, 1998–Decided February 16, 1999

Before Posner, Chief Judge, and Bauer and Evans, Circuit Judges.

Posner, Chief Judge. This diversity suit, governed by Nebraska law (though no peculiarities of that law bear on the case), seeks $14 million in damages for breach of a contract of directors’ and officers’ liability insurance.

Peter Kiewit Sons’, Inc. was sued along with one of its directors in 1994 by six (two others joined later, making eight) of its minority shareholders for securities fraud and related torts. Kiewit’s successor seeks through the present suit, which is against its primary and excess insurers (but we’ll ignore the latter, and pretend there is just one insurance company, Federal, to simplify our opinion further), to recoup the costs that it incurred in defending against and eventually settling the securities case. . . .

There is another issue in the case, however, and here we part company with the district court. Pompliano and his co-plaintiffs had similar claims in the securities fraud suit. Each was suing as a shareholder in the corporation that they claimed the defendants had defrauded; and we assume (a matter on which the record is strangely silent) that they shared in the settlement in proportion to their shareholdings. Pompliano had 16 percent of the shares and so presumably received 16 percent of the settlement, with the rest going to plaintiffs who were not “Insureds” within the meaning of the insurance contract.

The coverage of their claims was not barred by the “Insured versus Insured” exemption. . . .

In summary, the judgment of the district court must be affirmed in part and reversed in part, and the case must be remanded to the district court for further consideration of the issue of allocation in conformity with this opinion.

Presumably Kiewit is entitled to insurance proceeds equal to the amount of the settlement in the fraud case minus the amount that went to Pompliano . . .

* * *

From the S&W website: S&W SECURITIES LITIGATION . . .

MFS Communications

S&W assisted the founding shareholders of MFS Communications Company, Inc., a fiber-optics telecommunications firm, in achieving a favorable settlement with Kiewit Diversified Group, the company that bought MFS after helping to install its first network and expand to other cities.

A few months after Kiewit purchased our clients’ remaining MFS shares, it took the company public at a value more than four times higher than the price it paid.

After our clients discovered Kiewit had begun working with Salomon Brothers on the IPO before buying their stock, we filed a complaint alleging breach of fiduciary duty and fraud.

Two days into the federal trail, Kiewit agreed to a settlement. . . .

See also: Chubb Corporation


Nomura Securities Group – The world’s oldest and largest financial conglomerate.


By Ben Hills, Sydney Morning Herald

Dec 11, 1998 – The world’s oldest and largest financial conglomerate broke the law when it attempted to ambush the Australian Stock Exchange and wipe $15 billion off the value of Australia’s public companies, the Federal Court ruled yesterday….

Justice Ronald Sackville found, “Nomura engaged in deliberately misleading conduct designed to achieve illegitimate ends.”

Nomura International is a division of the scandal-plagued, Tokyo-based Nomura Securities Group, founded in 1872, which has $151 billion in assets….

The verdict is expected to trigger action against Nomura in the two cities from which the “sting” was organised — London, and in Hong Kong where legal action has been launched by the local securities regulators.

The decision followed a trail that ran for 16 days in the Federal Court and involved millions of documents, electronic records, and taped telephone calls. It represents a major victory for the ASIC. . . .

Mr. Cameron said it was a “landmark” decision that “…will help establish the boundaries of acceptable trading strategies not only in Australian boundaries but also for players in the international securities and futures markets.”

The case focused on the drama of March 28, 1996, when Nomura tried to destroy billions of dollars of the value of the Australian Stock Exchange by dumping a portfolio of shares worth $600 million — more than the normal total daily turnover — in the closing minutes of trading.

The court was told that Nomura executives and traders in London and Hong Kong laughed and joked about what they were doing as they faxed instructions to 10 different brokers, hoping to drive the stock exchange’s All Ordinaries index of 353 stocks down by as much as 10 per cent.

This would have destroyed $15 billion of the value of Australia’s major public companies, with devastating consequences to pension funds and hundreds of thousands of individual shareholders. . . .

This is the latest of a series of adverse findings against the world’s largest stockbroker.

In June last year, the Tokyo District Prosecutors’ office filed charges against the company and two former managing directors accusing them of paying a sokaiya (racketeer) $625,000 to ensure that a shareholders’ meeting was not disrupted. The company was also banned from trading on its own account on the Tokyo Stock Exchange for four months for compensating a gangster for trading losses.

In July last year, Nomura agreed to pay $94 million to Orange County, south of Los Angeles, in settlement of an action over the biggest bankruptcy in US municipal history.

Nomura was one of the brokers the county used in gambling on high-risk securities which cost it nearly $3 billion….

* * *

September 23, 1996

Nomura Securities:

Another payoff scandal, yet not widely reported

By Ito Hirotoshi, kaleido.smn

Even though several evening papers and local newspapers have reported it and the securities industry has been shaken, there is a grave problem the public is not aware of because the mainstream media, i.e., national dailies and TV networks, have not reported it.

The matter involves payoffs by Nomura Securities to big-shot “sokaiya.”

Sokaiya are extortionists who specialize in purchasing shares in large companies, thereby earning the right to attend annual stockholders meetings, which they threaten to disrupt unless they are paid off. Sokaiya evolved from thugs hired to prevent criticism of the company from ordinary shareholders during annual meetings.

The allegations against Nomura Securities include that it opened an account for a dummy company owned by a big-shot sokiya called “K.” Apparently Nomura had discretionary control over the account and made sure that it generated profits. Paying sokaiya off is against Commercial Law . . . Furthermore, managing client’s accounts with discretionary powers is against the Securities and Exchange Act. . . .

Hundreds of millions of yen for the den.

Nomura Securities is the largest securities firm in Japan. The Nomura annual stockholders meeting was initially controlled by the late right-wing bigwig Kodama Yoshio. When Kodama died, his disciple in the sokaiya industry, Uemori Kotetsu, took the business over and conducted a typically perfunctory shareholders meeting.

Uemori himself died around five years ago, and K became his successor. . . .

Nomura paid him off, it seems, as follows:

The dummy company mentioned above is a real estate company called “S,” managed by K’s kid brother. In Nov 1994, S opened an account with Nomura Securities and deposited 500 million yen. Nomura invested this money not only in promising stocks, but also high-risk, high-return products such as warrant bonds and futures, and allegedly generated profits of several hundred million yen per annum. . . .

The unrepentant bookie of the gambling den.

The Securities and Exchange Commission has already commenced discreet investigations this spring. . . .

In June 1993, a scandal in the securities industry broke when it was revealed that only high-roller investors were being compensated for their losses in the stock market.

This scandal showed that the Japanese stock market was a gambling den where Nomura had effective control over the market and could weigh the odds in favor of clients for whom it chose to do so.

Public confidence in the securities industry plummeted, and Tabuchi Setsuya, then chairman of Nomura Securities and known as the “Don of the securities industry,” resigned and withdrew from all official duties. But we now know that just one year later Nomura was not only illegally paying off a sokaiya, but was in fact using the stock market to generate profits.

All the repentance was only a show, and it is clear that Nomura is still the bookmaker presiding over the gambling den.

It is also suspected that the profits from the S account were also distributed to other sokaiya via K.

In any case, confidence in the Japanese stock market will indubitably drop even further and share prices will fall once this incident breaks into the open.

* * *

Honolulu Star-Bulletin, 3/18/97 — California Pension Fund Dropping Nomura

The California Public Employees Retirement System, the nation’s largest public pension fund, said it will cease dealing with Japan’s scandal-plagued Nomura Securities Co. The $110 billion pension fund, known as CalPERS, also said it will begin to manage more of its own domestic funds rather than rely on outside managers.

Nomura has been tainted by alleged illegal stock transactions on behalf of a racketeering group.

* * *

Nomura Capital Management Inc., a unit of Nomura Securities, manages $185 million for the $7 billion Hawaii Employees’ Retirement System.

Stanley Siu, the ERS’ administrator, said last week that he had been assured by Nomura that questionable trades do not involve ERS investments.…* * *

November 30, 1997

Japan Faces Corporate
Racketeering Scandal (AP)

A century-old brokerage is in ruins, some of Japan’s most respected companies have been shamed, and dozens of executives are behind bars.

This week, all eyes will be on the trial of Ryuichi Koike, the man at the center of the storm.

Koike, 54, on Tuesday faces charges he received millions of dollars in bribes as a “sokaiya,” a mob-connected extortionist who threatens to disrupt shareholders’ meetings unless paid off.

The case has damaged the credibility — and stock prices — of some of Japan’s top companies, led to the arrest of corporate executives and become a symbol of the rot at the center of the Japanese financial world. . . .

Koike, who allegedly worked with his brother Yoshinori, is accused of receiving $5.5 million in payoffs from Japan’s top four brokerages. Dai-Ichi Kangyo Bank — one of the world’s largest banks — allegedly made him a shady loan of $92.1 million. Dozens of corporate officials have been arrested in the case…

Just this week, 100-year-old Yamaichi Securities, the nation’s fourth largest brokerage, went belly up after its role in the scandal sapped what was left of its sagging credibility and clobbered its share prices.

Days ago, four Daiwa Securities Co. officials were arrested under suspicion of links to Koike. And in July, the government forced Nomura Securities — Japan’s largest brokerage — and Dai-Ichi Kangyo to shut down key operations until the end of the year after the payoffs came to light.

In separate cases, police have arrested Mitsubishi Motors Corp. executives on charges of making illegal payoffs to other racketeers, and companies in the Mitsubishi and Hitachi groups have been implicated in similar cases. . . .

There are about 1,100 sokaiya still operating in Japan. About 30 are arrested each year and penalties are light. Convictions are punishable by up to six months in jail or $2,600 in fines. . . .

~ o ~

Catbird Comment: Note the dates on the above revelations9/23/96; 3/18/97; 11/30/97 and 12/11/98then take careful note of the dates in the following article:

From Wharton Ethics Program:

The House of Nomura and the Japanese Securities Scandals

“I sincerely apologize to the public and the nation’s investors for the trouble caused … I am responsible for the firm’s actions. … Employees in the future will strictly abide by ethical rules.” Setsuya Tabuchi, Chairman of Nomura Securities (June 20, 1991)

~ ~ ~

These shocking statements of contrition and admission were in response to the revelation that one of the world’s most powerful securities houses had been “caught red handed, offering illicit compensation to institutional clients, laundering money for yakuza (the Japanese Mafia) and encouraging stock speculation.

Nomura and three other members of the “Big Four” securities firms in Japan (Daiwa, Nikko, Yamaichi) were ultimately accused of a plethora of improper activities, which also included tax evasion, ignoring the Ministry of Finance (MOF) directives, succumbing to extortionists, and misusing confidential information.

On Oct 8, 1991, the MOF announced penalties against the Big Four. Nomura was banned from brokering equities in 86 offices and branches for one month, starting Oct 15, 1991….

A month later, the Japanese Fair Trade Commission (JFTC) publicized the results of its investigation of the scandals and issued decrees against the Big Four, ordering them to promise never to compensate clients for losses again. The JFTC also clearly stated its position that similar offenses in the future would lead to criminal sanctions…

The Big Four signed consent decrees with the JFTC in December, 1991.

Yoshihisa Tabuchi resigned as president in late June, 1991 and Setsuya Tabuchi resigned as both chairman of Nomura and vice chairman of Keidanren…

Thirty-two senior Nomura officers were fired, and several others demoted, while the pay of those executives who remained was slashed by as much as 30%….

For more on the Yakuza, GO TO > > > Yakuza Doodle Dandies


Rey Graulty – From RICO Case Statement, Harmon v. Federal Insurance Co, et al.:

Plaintiff alleges that the following persons and agencies have a duty in law to act upon complaints of citizens, yet failed to act, pretended to act but did not act, or misled or deceived Plaintiff in other ways when, in good faith, he brought to their attention evidence and suspicions of serious ongoing criminal activity endangering the citizens of the United States. By their acts and omissions they either sanctioned or perpetuated the crimes. It was clearly within the duties and functions of these people and agencies to act and take seriously the allegations plaintiff had set forth:

a) Insurance Commissioner’s Office, State of Hawaii.

b) Wayne Metcalf, Insurance Commissioner, State of Hawaii

c) Rey Graulty, former Insurance Commissioner, State of Hawaii

d) California Department of Insurance

e) Chuck Quackenbush, Insurance Commissioner, State of California . . .

* * *

Small Business Views, Aug, 2000, by Sam Slom:

Inquiring minds want to know:

How did the newly-appointed judge (former Democrat Senator) Rey Graulty get assigned to the high profile City Ewa Estates fraud trial and then excuse Mayor Jeremy Harristhe Governor’s and Dan Inouye’s choice for his successor – from being put under oath?

For more, GO TO > > > More Claims By Harmon: The Insurance Commissioners; Woo vs. Harmon: Witness Rey Graulty


Wayne Metcalf – From RICO Case Statement, Harmon v. Federal Insurance Co; P&C Insurance Co; Marsh & McLennan, Inc; PricewaterhouseCoopers; Trustees of Bishop Estate, et al.:

Plaintiff alleges that the following persons and agencies have a duty in law to act upon complaints of citizens, yet failed to act, pretended to act but did not act, or misled or deceived Plaintiff in other ways when, in good faith, he brought to their attention evidence and suspicions of serious ongoing criminal activity endangering the citizens of the United States. By their acts and omissions they either sanctioned or perpetuated the crimes. It was clearly within the duties and functions of these people and agencies to act and take seriously the allegations plaintiff had set forth:

a) Insurance Commissioner’s Office, State of Hawaii.

b) Wayne Metcalf, Insurance Commissioner, State of Hawaii

c) Rey Graulty, former Insurance Commissioner, State of Hawaii

d) California Department of Insurance

e) Chuck Quackenbush, Insurance Commissioner, State of California

For more, GO TO > > > More Claims By Harmon: The Insurance Commissioners

# # #



For more vultures in the meadows and from
sea to shining sea…and beyond:


AIG: The Un-American Insurance Group

Apollo Advisors

Arbitrate This!

A Connecticut Yankee in King Kamehameha’s Court


Broken Trust

Buzzards of Paradise

The Carlyle Group: Birds that Drink from Cesspools

The Chubb Group

Claims By Harmon

Dirty Money, Dirty Politics & Bishop Estate

Paradise Paved

Prudential: A Nest on Shaky Ground

RICO in Paradise

The Indonesian Connection

Investigating Investcorp

The Marsh Birds

The Morgan, Lewis & Bockius Report

The Pimps to Power

Predators in Paradise

The Puna Connection

The Sinking of the Ehime Maru

Woo vs. Harmon

Yakuza Doodle Dandies



Last Updated October 5, 2005, by The Catbird