Here are the facts about Bain and KB Toys, much worse than 'Vulture' Capitalism

There is good private equity and there is bad private equity firms.
…
Here are the facts about KB Toys.

1. At the time it was purchased KB Toys was an industry leader, it was not in trouble.

http://www.fundinguniverse.com/company-histories/KB-Toys-Company-History.html

In 1999, KBkids.com received top points from an e-commerce market research firm, the Gomez Advisors, in the categories of customer confidence, overall cost, and bargain shopping. Softletter named the site one of the 'Ten Best Online Software Stores of 1999' in its October 15th issue. Even the Wall Street Journal dubbed the site the 'best overall' online toy retailer. In a little more than four months online, KBkids.com increased its business more than 400 percent and twice ranked among the five biggest gainers on the NextCard eCommerce Movers index.

It seemed nothing could stop KB Toys from challenging its rivals in the toy industry. Operating profit for 1999 was up 51 percent from 1998. The company, seeking to capitalize on its growth, decided to hold an initial public offering in the spring of 2000, then postponed trading due to unfavorable market conditions. Notwithstanding this delay, KB was more focused than ever on fine-tuning its position in the very fashion-forward toy industry. With relatively small stores and a knack for innovation and creativity in marketing, KB was ready as ever to make quick adjustments to changing customer and merchandise trends.

2. KB Toys was a company that made money and exercised social responsibility

After a 13 year old boy in NYC was shot and killed while holding a realistic toy gun (not from KB Toys) KB Toys destroyed 300,000 toys in inventory and never again carried realistic toy guns. They also gave toys for guns.

The company also participated in New York's 'Goods for Guns' program, which offered gift certificates to people who surrendered real firearms. Although Ann Iverson left as chairman in 1994, her policy of not selling look-alike guns was continued by her successor, Alan Fine, who had been senior vice-president before becoming president and CEO.

3. Bain Capital 'purchased' KB for the respectable price of $ 305 million dollars on December 8, 2000.

http://en.wikipedia.org/wiki/KB_Toys

4. Bain Capital only offered $ 18 million in cash, the rest was leaveraged debt put on the company.

5. "Sixteen months after the buyout, Bain Capital paid itself $85 million in dividends in early 2002."

6. "January 14, 2004, K·B Toys filed for Chapter 11 bankruptcy protection and closed 365 stores."

7. Three years latter the rest of the 156 stores were closed down.

But there is a little more to the story. KB Stores had already gone through a tough restructuring in 1996. At that time a private equity bought the company, closed unprofitable stores, and increased profits.

SO HERE IS THE OBJECTIVE REALITY OF WHAT BAIN DID.

Bain engineered a private equity purchase of a profitable company that had already gone through 'creative destruction' eliminating unprofitable legacy operations and saddled the company with hundreds of millions of dollars of debt. The company was not just profitable but an example of the kind of companies that demonstrate a wider social conscious for its customers and the larger community. SIXTEEN MONTHS AFTER PURCHASING THE COMPANY WITH ONLY 6% CASH OF THE VALUE BAIN TAKES OUT DIVIDENDS AT OVER 400% OF THEIR INVESTMENT. Significantly this was done during the time of the attacks on 9/11 when the country as a whole was undergoing a hightened sense of patriotism, sacrifice and social duty. Less than 2 years after saddling KB Toys with massive debt and taking out astronomical dividends, K-B Toys faces Chapter 11 bankruptcy and closes 354 previously profitable stores.

Vultures take meat that is already dead and complete the final loop in the cycle of life.

Bain took a company that had already been restructured and was surging in profits and cash. There was never any interest by Bain to restructure KB Toys, that had already been done.

BAIN PURCHASED KB TOYS SIMPLY TO RAID ITS CASH, and they did so during a time when the rest of the country was undergoing a period of reviewing the founding principles of the country.

To call what Bain did to KB Toys as 'Vulture' Capitalism is an insult to Vultures.

They were pirates and this is why there is so much interest to change the subject and not let the real facts of Bain Capital come to the surface during the Republican Primary.

My reaction:  The key points to take away from this are:

1)  Newt Gingrich didn’t win South Carolina.  Romney lost (crushed by his past).

2)  Romney’s now public experience at Bain makes him unelectable.  If Romney was the nominee, Obama would have a field day with this stuff come November.  Romney would get crushed.

3)  This drastically improves Ron Paul’s chances of being the republican nominee.  Take Virginia, where only Ron Paul and Mitt Romney are on the ballot.  How do you think Romney will fair in a one-on-one match against Paul as the video above spreads through the American electorate?


Conclusion:  With Mitt Romney taking this devastating hit, killing Ron Paul’s candidacy became infinitely more complicated, if not impossible.

Daily Paul explains what is going on.

Daily Paul Goes Dark - Wednesday January 18 - SOPA/PIPA Strike
Submitted by Michael Nystrom on Tue, 01/17/2012 - 12:19

* * S P R E A D  T H E  M E S S A G E :  S O P A  S T R I K E * *

On January 18, The Daily Paul will join Wikipedia, Reddit, Twitter, BoingBoing, MoveOn.org, The Free Software Foundation, and tens of thousands of other websites around the Internet in going dark to oppose SOPA and PIPA, the looming US legislation that would create an impossible Internet censorship regime and export it to the rest of the world.

In a post-SOPA world, out-links from the Daily Paul to any other website would be prohibited unless I was completely, 100% positive that there was no copyright infringing content on those websites. This means no more linking to YouTube, Twitter, TVPC, WordPress, Blogger, or any other user-content generated website -- including your personal blog -- lest I personally face the pain of being shut down, my finances frozen, the DailyPaul.com domain confiscated, having my IP address blacklisted, and eventually -- who knows -- probably being put into a cage for the protection of there rest of society.

In other words, if SOPA passes, say goodbye to our little community here at the Daily Paul. This website would go dark for good.

Such a bleak future is corporatism at its worst, and is what Dr. Paul has warned us against: Big Business getting into bed with Big Government to force submission to their goal of controlling every last aspect of our lives, including what we are able to read and speak here on this last bastion of freedom - the Internet.

… the beauty of the internet is freedom. Is it any wonder that The Powers That Be want to put an end to it?

The time to make the stand is now. Please help spread the word about the SOPA Strike. Encourage other websites you frequent to participate in the strike. And by all means, call and write your representatives to let them know where you stand on the issue of Internet censorship.

This must not stand. The future is in your hands.

My reaction:  Please help spread the word about the SOPA Strike!  Call and write your representatives to oppose this Internet censorship!

LIFE WITH BIG BROTHER
Are Americans really to be jailed at Gitmo?
Critics warn bill empowers president to lock up citizens, throw away key
Posted: December 16, 2011 7:50 pm Eastern
By Drew Zahn © 2011 WND

Buried within an 1,844-page bill currently sitting on Barack Obama's desk awaiting his signature is text that many critics are warning could give the president legal authority to send Americans to jail without charges, without trial, without end.

Both the U.S. House and Senate have passed the National Defense Authorization Act, a sweeping piece of legislation that affects dozens of aspects of foreign and military policy, but that was designed primarily to give the military – and not civilian courts – the clear authority for prosecuting and jailing terrorists.

But voices from across the political spectrum are concerned that the bill opens the door for the military – led by the president as commander in chief – to indefinitely detain American citizens, even within the U.S.

"We're talking about American citizens who can be taken from the United States and sent to a camp at Guantanamo Bay and held indefinitely," explains Rand Paul of Kentucky, one of 13 senators who voted against the bill. …

…
"It's something so radical that it would have been considered crazy had it been pushed by the Bush administration," said [Tom] Malinowski [of Human Rights Watch]. "It establishes precisely the kind of system that the United States has consistently urged other countries not to adopt. At a time when the United States is urging Egypt, for example, to scrap its emergency law and military courts, this is not consistent."
…

Fox19 reports that the Obama administration demanded power to detain U.S. citizens.

Reality Check: The Obama administration demanded power to detain U.S. citizens
Posted: Dec 15, 2011 11:08 PM EST Updated: Dec 16, 2011 7:40 AM EST
By Ben Swann
…
According to Sen. Carl Levin, who helped to craft this bill, not only did the President want the power, THIS ADMINISTRATION WAS THE ONE WHO DEMANDED THE POWER TO DETAIN U.S. CITIZENS INDEFINITELY BE PLACED INSIDE THE BILL.
…

For more, check the links below:

Transcript of House Debate on the NDAA (lawfareblog)
Obama insists on indefinite detention of Americans (RT, December 12)
The National Defense Authorization Act: You, Your Body, and Your Country (thebaynet.com, December 15)
Disappointment on 220th Anniversary of Bill of Rights (Yahoo News, December 16)
Obama Throws Away Civil Liberties With Defense Bill (Newser, December 16)
Rights Activists "Appalled" as Senate Passes Prison Without Trial Bill (The New American, December 16)
Death To Civil Liberty: The National Defense Authorization Act Passes (eCorsair.com, December 16)
Indefinite Detention Bill: Obama's Trail of Broken Promises (International Business Times, December 16)
Etc…

--------------------------------

The Nightly News With Brian Williams: On December 15, the Obama administration defended civil liberty by cracking down on “unconstitutional policing” in Arizona.

The Nightly News did not report on the death of Habeas Corpus. Instead it aired the segment below:

Nightly News: Arizona Sheriff Targeted Latinos, Feds Say

Visit msnbc.com for breaking news, world news, and news about the economy

Why Isn't Wall Street in Jail?
Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them
By Matt Taibbi
February 16, 2011 9:00 AM ET


Illustration by Victor Juhasz

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."

I put down my notebook. "Just that?"

"That's right," he said, signaling to the waitress for the check. "Everything's fucked up, and nobody goes to jail. You can end the piece right there."

Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and NOBODY WENT TO JAIL. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.

The rest of them, ALL OF THEM, got off. Not a single executive who ran the companies that cooked up and cashed in on the phony financial boom — an industrywide scam that involved the mass sale of mismarked, fraudulent mortgage-backed securities — has ever been convicted. Their names by now are familiar to even the most casual Middle American news consumer: companies like AIG, Goldman Sachs, Lehman Brothers, JP Morgan Chase, Bank of America and Morgan Stanley. Most of these firms were directly involved in elaborate fraud and theft. Lehman Brothers hid billions in loans from its investors. Bank of America lied about billions in bonuses. Goldman Sachs failed to tell clients how it put together the born-to-lose toxic mortgage deals it was selling. What's more, many of these companies had corporate chieftains whose actions cost investors billions — from AIG derivatives chief Joe Cassano, who assured investors they would not lose even "one dollar" just months before his unit imploded, to the $263 million in compensation that former Lehman chief Dick "The Gorilla" Fuld conveniently failed to disclose. Yet not one of them has faced time behind bars.

Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice. "If the allegations in these settlements are true," says Jed Rakoff, a federal judge in the Southern District of New York, "it's management buying its way off cheap, from the pockets of their victims."

To understand the significance of this, one has to think carefully about the efficacy of fines as a punishment for a defendant pool that includes the richest people on earth — people who simply get their companies to pay their fines for them. Conversely, one has to consider the powerful deterrent to further wrongdoing that the state is missing by not introducing this particular class of people to the experience of incarceration. "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."

But that hasn't happened. Because the entire system set up to monitor and regulate Wall Street is fucked up.

Just ask the people who tried to do the right thing.

Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange. All of these outfits, by law, can at least begin the process of catching and investigating financial criminals, though none of them has prosecutorial power.

The major federal agency on the Wall Street beat is the Securities and Exchange Commission. The SEC watches for violations like insider trading, and also deals with so-called "disclosure violations" — i.e., making sure that all the financial information that publicly traded companies are required to make public actually jibes with reality. But the SEC doesn't have prosecutorial power either, so in practice, when it looks like someone needs to go to jail, they refer the case to the Justice Department. And since the vast majority of crimes in the financial services industry take place in Lower Manhattan, cases referred by the SEC often end up in the U.S. Attorney's Office for the Southern District of New York. Thus, the two top cops on Wall Street are generally considered to be that U.S. attorney — a job that has been held by thunderous prosecutorial personae like Robert Morgenthau and Rudy Giuliani — and the SEC's director of enforcement.

The relationship between the SEC and the DOJ is necessarily close, even symbiotic. Since financial crime-fighting requires a high degree of financial expertise — and since the typical drug-and-terrorism-obsessed FBI agent can't balance his own checkbook, let alone tell a synthetic CDO from a credit default swap — the Justice Department ends up leaning heavily on the SEC's army of 1,100 number-crunching investigators to make their cases. In theory, it's a well-oiled, tag-team affair: Billionaire Wall Street Asshole commits fraud, the NYSE catches on and tips off the SEC, the SEC works the case and delivers it to Justice, and Justice perp-walks the Asshole out of Nobu, into a Crown Victoria and off to 36 months of push-ups, license-plate making and Salisbury steak.

That's the way it's supposed to work. But a veritable mountain of evidence indicates that when it comes to Wall Street, the justice system not only sucks at punishing financial criminals, it has actually evolved into a highly effective mechanism for protecting financial criminals. This institutional reality has absolutely nothing to do with politics or ideology — it takes place no matter who's in office or which party's in power. To understand how the machinery functions, you have to start back at least a decade ago, as case after case of financial malfeasance was pursued too slowly or not at all, fumbled by a government bureaucracy that too often is on a first-name basis with its targets. Indeed, the shocking pattern of nonenforcement with regard to Wall Street is so deeply ingrained in Washington that it raises a profound and difficult question about the very nature of our society: whether we have created a class of people whose misdeeds are no longer perceived as crimes, almost no matter what those misdeeds are. The SEC and the Justice Department have evolved into a bizarre species of social surgeon serving this nonjailable class, expert not at administering punishment and justice, but at finding and removing criminal responsibility from the bodies of the accused.

The systematic lack of regulation has left even the country's top regulators frustrated. Lynn Turner, a former chief accountant for the SEC, laughs darkly at the idea that the criminal justice system is broken when it comes to Wall Street. "I think you've got a wrong assumption — that we even have a law-enforcement agency when it comes to Wall Street," he says.

In the hierarchy of the SEC, the chief accountant plays a major role in working to pursue misleading and phony financial disclosures. Turner held the post a decade ago, when one of the most significant cases was swallowed up by the SEC bureaucracy. In the late 1990s, the agency had an open-and-shut case against the Rite Aid drugstore chain, which was using diabolical accounting tricks to cook their books. But instead of moving swiftly to crack down on such scams, the SEC shoved the case into the "deal with it later" file. "The Philadelphia office literally did nothing with the case for a year," Turner recalls. "Very much like the New York office with Madoff." The Rite Aid case dragged on for years — and by the time it was finished, similar accounting fiascoes at Enron and WorldCom had exploded into a full-blown financial crisis. The same was true for another SEC case that presaged the Enron disaster. The agency knew that appliance-maker Sunbeam was using the same kind of accounting scams to systematically hide losses from its investors. But in the end, the SEC's punishment for Sunbeam's CEO, Al "Chainsaw" Dunlap — widely regarded as one of the biggest assholes in the history of American finance — was a fine of $500,000. Dunlap's net worth at the time was an estimated $100 million. The SEC also barred Dunlap from ever running a public company again — forcing him to retire with a mere $99.5 million. Dunlap passed the time collecting royalties from his self-congratulatory memoir. Its title: Mean Business.

The pattern of inaction toward shady deals on Wall Street grew worse and worse after Turner left, with one slam-dunk case after another either languishing for years or disappearing altogether. Perhaps the most notorious example involved Gary Aguirre, an SEC investigator who was literally fired after he questioned the agency's failure to pursue an insider-trading case against John Mack, now the chairman of Morgan Stanley and one of America's most powerful bankers.

Aguirre joined the SEC in September 2004. Two days into his career as a financial investigator, he was asked to look into an insider-trading complaint against a hedge-fund megastar named Art Samberg. One day, with no advance research or discussion, Samberg had suddenly started buying up huge quantities of shares in a firm called Heller Financial. "It was as if Art Samberg woke up one morning and a voice from the heavens told him to start buying Heller," Aguirre recalls. "And he wasn't just buying shares — there were some days when he was trying to buy three times as many shares as were being traded that day." A few weeks later, Heller was bought by General Electric — and Samberg pocketed $18 million.

After some digging, Aguirre found himself focusing on one suspect as the likely source who had tipped Samberg off: John Mack, a close friend of Samberg's who had just stepped down as president of Morgan Stanley. At the time, Mack had been on Samberg's case to cut him into a deal involving a spinoff of the tech company Lucent — an investment that stood to make Mack a lot of money. "Mack is busting my chops" to give him a piece of the action, Samberg told an employee in an e-mail.

A week later, Mack flew to Switzerland to interview for a top job at Credit Suisse First Boston. Among the investment bank's clients, as it happened, was a firm called Heller Financial. We don't know for sure what Mack learned on his Swiss trip; years later, Mack would claim that he had thrown away his notes about the meetings. But we do know that as soon as Mack returned from the trip, on a Friday, he called up his buddy Samberg. The very next morning, Mack was cut into the Lucent deal — a favor that netted him more than $10 million. And as soon as the market reopened after the weekend, Samberg started buying every Heller share in sight, right before it was snapped up by GE — a suspiciously timed move that earned him the equivalent of Derek Jeter's annual salary for just a few minutes of work.

The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn't likely to fly, explaining that Mack had "powerful political connections." (The investment banker had been a fundraising "Ranger" for George Bush in 2004, and would go on to be a key backer of Hillary Clinton in 2008.)

Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO. At first, Aguirre was contacted by the bank's regulatory liaison, Eric Dinallo, a former top aide to Eliot Spitzer. But it didn't take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm's lawyers, Mary Jo White, was on the phone with the SEC's director of enforcement. In a shocking move that was later singled out by Senate investigators, the director actually appeared to reassure White, dismissing the case against Mack as "smoke" rather than "fire." White, incidentally, was herself the former U.S. attorney of the Southern District of New York — one of the top cops on Wall Street.

Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive — not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target's firm is being represented not only by Eliot Spitzer's former top aide, but by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC's enforcement division — not Aguirre's boss, but his boss's boss's boss's boss. Mack himself, meanwhile, was being represented by Gary Lynch, a former SEC director of enforcement.

Aguirre didn't stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued. "It all happened so fast, I needed a seat belt," recalls Aguirre, who had just received a stellar performance review from his bosses. The SEC eventually paid Aguirre a settlement of $755,000 for wrongful dismissal.

Rather than going after Mack, the SEC started looking for someone else to blame for tipping off Samberg. (It was, Aguirre quips, "O.J.'s search for the real killers.") It wasn't until a year later that the agency finally got around to interviewing Mack, who denied any wrongdoing. The four-hour deposition took place on August 1st, 2006 — just days after the five-year statute of limitations on insider trading had expired in the case.

"At best, the picture shows extraordinarily lax enforcement by the SEC," Senate investigators would later conclude. "At worse, the picture is colored with overtones of a possible cover-up."

Episodes like this help explain why so many Wall Street executives felt emboldened to push the regulatory envelope during the mid-2000s. Over and over, even the most obvious cases of fraud and insider dealing got gummed up in the works, and high-ranking executives were almost never prosecuted for their crimes. In 2003, Freddie Mac coughed up $125 million after it was caught misreporting its earnings by $5 billion; nobody went to jail. In 2006, Fannie Mae was fined $400 million, but executives who had overseen phony accounting techniques to jack up their bonuses faced no criminal charges. That same year, AIG paid $1.6 billion after it was caught in a major accounting scandal that would indirectly lead to its collapse two years later, but no executives at the insurance giant were prosecuted.

All of this behavior set the stage for the crash of 2008, when Wall Street exploded in a raging Dresden of fraud and criminality. Yet the SEC and the Justice Department have shown almost no inclination to prosecute those most responsible for the catastrophe — even though they had insiders from the two firms whose implosions triggered the crisis, Lehman Brothers and AIG, who were more than willing to supply evidence against top executives.

In the case of Lehman Brothers, the SEC had a chance six months before the crash to move against Dick Fuld, a man recently named the worst CEO of all time by Portfolio magazine. A decade before the crash, a Lehman lawyer named Oliver Budde was going through the bank's proxy statements and noticed that it was using a loophole involving Restricted Stock Units to hide tens of millions of dollars of Fuld's compensation. Budde told his bosses that Lehman's use of RSUs was dicey at best, but they blew him off. "We're sorry about your concerns," they told him, "but we're doing it." Disturbed by such shady practices, the lawyer quit the firm in 2006.

Then, only a few months after Budde left Lehman, the SEC changed its rules to force companies to disclose exactly how much compensation in RSUs executives had coming to them. "The SEC was basically like, 'We're sick and tired of you people fucking around — we want a picture of what you're holding,'" Budde says. But instead of coming clean about eight separate RSUs that Fuld had hidden from investors, Lehman filed a proxy statement that was a masterpiece of cynical lawyering. On one page, a chart indicated that Fuld had been awarded $146 million in RSUs. But two pages later, a note in the fine print essentially stated that the chart did not contain the real number — which, it failed to mention, was actually $263 million more than the chart indicated. "They fucked around even more than they did before," Budde says. (The law firm that helped craft the fine print, Simpson Thacher & Bartlett, would later receive a lucrative federal contract to serve as legal adviser to the TARP bailout.)

Budde decided to come forward. In April 2008, he wrote a detailed memo to the SEC about Lehman's history of hidden stocks. Shortly thereafter, he got a letter back that began, "Dear Sir or Madam." It was an automated e-response.

"They blew me off," Budde says.

Over the course of that summer, Budde tried to contact the SEC several more times, and was ignored each time. Finally, in the fateful week of September 15th, 2008, when Lehman Brothers cracked under the weight of its reckless bets on the subprime market and went into its final death spiral, Budde became seriously concerned. If the government tried to arrange for Lehman to be pawned off on another Wall Street firm, as it had done with Bear Stearns, the U.S. taxpayer might wind up footing the bill for a company with hundreds of millions of dollars in concealed compensation. So Budde again called the SEC, right in the middle of the crisis. "Look," he told regulators. "I gave you huge stuff. You really want to take a look at this."

But the feds once again blew him off. A young staff attorney contacted Budde, who once more provided the SEC with copies of all his memos. He never heard from the agency again.

"This was like a mini-Madoff," Budde says. "They had six solid months of warnings. They could have done something."

Three weeks later, Budde was shocked to see Fuld testifying before the House Government Oversight Committee and whining about how poor he was. "I got no severance, no golden parachute," Fuld moaned. When Rep. Henry Waxman, the committee's chairman, mentioned that he thought Fuld had earned more than $480 million, Fuld corrected him and said he believed it was only $310 million.

The true number, Budde calculated, was $529 million. He contacted a Senate investigator to talk about how Fuld had misled Congress, but he never got any response. Meanwhile, in a demonstration of the government's priorities, the Justice Department is proceeding full force with a prosecution of retired baseball player Roger Clemens for lying to Congress about getting a shot of steroids in his ass. "At least Roger didn't screw over the world," Budde says, shaking his head.

Fuld has denied any wrongdoing, but his hidden compensation was only a ripple in Lehman's raging tsunami of misdeeds. The investment bank used an absurd accounting trick called "Repo 105" transactions to conceal $50 billion in loans on the firm's balance sheet. (That's $50 billion, not million.) But more than a year after the use of the Repo 105s came to light, there have still been no indictments in the affair. While it's possible that charges may yet be filed, there are now rumors that the SEC and the Justice Department may take no action against Lehman. If that's true, and there's no prosecution in a case where there's such overwhelming evidence — and where the company is already dead, meaning it can't dump further losses on investors or taxpayers — then it might be time to assume the game is up. Failing to prosecute Fuld and Lehman would be tantamount to the state marching into Wall Street and waving the green flag on a new stealing season.

The most amazing noncase in the entire crash — the one that truly defies the most basic notion of justice when it comes to Wall Street supervillains — is the one involving AIG and Joe Cassano, the nebbishy Patient Zero of the financial crisis. As chief of AIGFP, the firm's financial products subsidiary, Cassano repeatedly made public statements in 2007 claiming that his portfolio of mortgage derivatives would suffer "no dollar of loss" — an almost comically obvious misrepresentation. "God couldn't manage a $60 billion real estate portfolio without a single dollar of loss," says Turner, the agency's former chief accountant. "If the SEC can't make a disclosure case against AIG, then they might as well close up shop."

As in the Lehman case, federal prosecutors not only had plenty of evidence against AIG — they also had an eyewitness to Cassano's actions who was prepared to tell all. As an accountant at AIGFP, Joseph St. Denis had a number of run-ins with Cassano during the summer of 2007. At the time, Cassano had already made nearly $500 billion worth of derivative bets that would ultimately blow up, destroy the world's largest insurance company, and trigger the largest government bailout of a single company in U.S. history. He made many fatal mistakes, but chief among them was engaging in contracts that required AIG to post billions of dollars in collateral if there was any downgrade to its credit rating.

St. Denis didn't know about those clauses in Cassano's contracts, since they had been written before he joined the firm. What he did know was that Cassano freaked out when St. Denis spoke with an accountant at the parent company, which was only just finding out about the time bomb Cassano had set. After St. Denis finished a conference call with the executive, Cassano suddenly burst into the room and began screaming at him for talking to the New York office. He then announced that St. Denis had been "deliberately excluded" from any valuations of the most toxic elements of the derivatives portfolio — thus preventing the accountant from doing his job. What St. Denis represented was transparency — and the last thing Cassano needed was transparency.

Another clue that something was amiss with AIGFP's portfolio came when Goldman Sachs demanded that the firm pay billions in collateral, per the terms of Cassano's deadly contracts. Such "collateral calls" happen all the time on Wall Street, but seldom against a seemingly solvent and friendly business partner like AIG. And when they do happen, they are rarely paid without a fight. So St. Denis was shocked when AIGFP agreed to fork over gobs of money to Goldman Sachs, even while it was still contesting the payments — an indication that something was seriously wrong at AIG. "When I found out about the collateral call, I literally had to sit down," St. Denis recalls. "I had to go home for the day."

After Cassano barred him from valuating the derivative deals, St. Denis had no choice but to resign. He got another job, and thought he was done with AIG. But a few months later, he learned that Cassano had held a conference call with investors in December 2007. During the call, AIGFP failed to disclose that it had posted $2 billion to Goldman Sachs following the collateral calls.

"Investors therefore did not know," the Financial Crisis Inquiry Commission would later conclude, "that AIG's earnings were overstated by $3.6 billion."

"I remember thinking, 'Wow, they're just not telling people,'" St. Denis says. "I knew. I had been there. I knew they'd posted collateral."

A year later, after the crash, St. Denis wrote a letter about his experiences to the House Government Oversight Committee, which was looking into the AIG collapse. He also met with investigators for the government, which was preparing a criminal case against Cassano. But the case never went to court. Last May, the Justice Department confirmed that it would not file charges against executives at AIGFP. Cassano, who has denied any wrongdoing, was reportedly told he was no longer a target.

Shortly after that, Cassano strolled into Washington to testify before the Financial Crisis Inquiry Commission. It was his first public appearance since the crash. He has not had to pay back a single cent out of the hundreds of millions of dollars he earned selling his insane pseudo-insurance policies on subprime mortgage deals. Now, out from under prosecution, he appeared before the FCIC and had the enormous balls to compliment his own business acumen, saying his atom-bomb swaps portfolio was, in retrospect, not that badly constructed. "I think the portfolios are withstanding the test of time," he said.

"They offered him an excellent opportunity to redeem himself," St. Denis jokes.

In the end, of course, it wasn't just the executives of Lehman and AIGFP who got passes. Virtually every one of the major players on Wall Street was similarly embroiled in scandal, yet their executives skated off into the sunset, uncharged and unfined. Goldman Sachs paid $550 million last year when it was caught defrauding investors with crappy mortgages, but no executive has been fined or jailed — not even Fabrice "Fabulous Fab" Tourre, Goldman's outrageous Euro-douche who gleefully e-mailed a pal about the "surreal" transactions in the middle of a meeting with the firm's victims. In a similar case, a sales executive at the German powerhouse Deutsche Bank got off on charges of insider trading; its general counsel at the time of the questionable deals, Robert Khuzami, now serves as director of enforcement for the SEC.

Another major firm, Bank of America, was caught hiding $5.8 billion in bonuses from shareholders as part of its takeover of Merrill Lynch. The SEC tried to let the bank off with a settlement of only $33 million, but Judge Jed Rakoff rejected the action as a "facade of enforcement." So the SEC quintupled the settlement — but it didn't require either Merrill or Bank of America to admit to wrongdoing. Unlike criminal trials, in which the facts of the crime are put on record for all to see, THESE WALL STREET SETTLEMENTS ALMOST NEVER REQUIRE THE BANKS TO MAKE ANY FACTUAL DISCLOSURES, effectively burying the stories forever. "All this is done at the expense not only of the shareholders, but also of the truth," says Rakoff. Goldman, Deutsche, Merrill, Lehman, Bank of America ... who did we leave out? Oh, there's Citigroup, nailed for hiding some $40 billion in liabilities from investors. Last July, the SEC settled with Citi for $75 million. In a rare move, it also fined two Citi executives, former CFO Gary Crittenden and investor-relations chief Arthur Tildesley Jr. Their penalties, combined, came to a whopping $180,000.

Throughout the entire crisis, in fact, the government has taken exactly one serious swing of the bat against executives from a major bank, charging two guys from Bear Stearns with criminal fraud over a pair of toxic subprime hedge funds that blew up in 2007, destroying the company and robbing investors of $1.6 billion. Jurors had an e-mail between the defendants admitting that "there is simply no way for us to make money — ever" just three days before assuring investors that "there's no basis for thinking this is one big disaster." Yet THE CASE STILL SOMEHOW ENDED IN ACQUITTAL — and the Justice Department hasn't taken any of the big banks to court since.

All of which raises an obvious question: Why the hell not?

Gary Aguirre, the SEC investigator who lost his job when he drew the ire of Morgan Stanley, thinks he knows the answer.

Last year, Aguirre noticed that a conference on financial law enforcement was scheduled to be held at the Hilton in New York on November 12th. The list of attendees included 1,500 or so of the country's leading lawyers who represent Wall Street, as well as some of the government's top cops from both the SEC and the Justice Department.

Criminal justice, as it pertains to the Goldmans and Morgan Stanleys of the world, is not adversarial combat, with cops and crooks duking it out in interrogation rooms and courthouses. Instead, it's a cocktail party between friends and colleagues who from month to month and year to year are constantly switching sides and trading hats. At the Hilton conference, regulators and banker-lawyers rubbed elbows during a series of speeches and panel discussions, away from the rabble. "They were chummier in that environment," says Aguirre, who plunked down $2,200 to attend the conference.

Aguirre saw a lot of familiar faces at the conference, for a simple reason: Many of the SEC regulators he had worked with during his failed attempt to investigate John Mack had made a million-dollar pass through the Revolving Door, going to work for the very same firms they used to police. Aguirre didn't see Paul Berger, an associate director of enforcement who had rebuffed his attempts to interview Mack — maybe because Berger was tied up at his lucrative new job at Debevoise & Plimpton, the same law firm that Morgan Stanley employed to intervene in the Mack case. But he did see Mary Jo White, the former U.S. attorney, who was still at Debevoise & Plimpton. He also saw Linda Thomsen, the former SEC director of enforcement who had been so helpful to White. Thomsen had gone on to represent Wall Street as a partner at the prestigious firm of Davis Polk & Wardwell.

Two of the government's top cops were there as well: Preet Bharara, the U.S. attorney for the Southern District of New York, and Robert Khuzami, the SEC's current director of enforcement. Bharara had been recommended for his post by Chuck Schumer, Wall Street's favorite senator. And both he and Khuzami had served with Mary Jo White at the U.S. attorney's office, before Mary Jo went on to become a partner at Debevoise. What's more, when Khuzami had served as general counsel for Deutsche Bank, he had been hired by none other than Dick Walker, who had been enforcement director at the SEC when it slow-rolled the pivotal fraud case against Rite Aid.

"It wasn't just one rotation of the revolving door," says Aguirre. "It just kept spinning. Every single person had rotated in and out of government and private service."

The Revolving Door isn't just a footnote in financial law enforcement; over the past decade, more than a dozen high-ranking SEC officials have gone on to lucrative jobs at Wall Street banks or white-shoe law firms, where partnerships are worth millions. That makes SEC officials like Paul Berger and Linda Thomsen the equivalent of college basketball stars waiting for their first NBA contract. Are you really going to give up a shot at the Knicks or the Lakers just to find out whether a Wall Street big shot like John Mack was guilty of insider trading? "You take one of these jobs," says Turner, the former chief accountant for the SEC, "and you're fit for life."

Fit — and happy. The banter between the speakers at the New York conference says everything you need to know about the level of chumminess and mutual admiration that exists between these supposed adversaries of the justice system. At one point in the conference, Mary Jo White introduced Bharara, her old pal from the U.S. attorney's office.

"I want to first say how pleased I am to be here," Bharara responded. Then, addressing White, he added, "You've spawned all of us. It's almost 11 years ago to the day that Mary Jo White called me and asked me if I would become an assistant U.S. attorney. So thank you, Dr. Frankenstein."

Next, addressing the crowd of high-priced lawyers from Wall Street, Bharara made an interesting joke. "I also want to take a moment to applaud the entire staff of the SEC for the really amazing things they have done over the past year," he said. "They've done a real service to the country, to the financial community, and not to mention a lot of your law practices."

Haw! The line drew snickers from the conference of millionaire lawyers. But the real fireworks came when Khuzami, the SEC's director of enforcement, talked about a new "cooperation initiative" the agency had recently unveiled, in which executives are being offered incentives to report fraud they have witnessed or committed. From now on, Khuzami said, when corporate lawyers like the ones he was addressing want to know if their Wall Street clients are going to be charged by the Justice Department before deciding whether to come forward, all they have to do is ask the SEC.

"We are going to try to get those individuals answers," Khuzami announced, as to "whether or not there is criminal interest in the case — so that defense counsel can have as much information as possible in deciding whether or not to choose to sign up their client."

Aguirre, listening in the crowd, couldn't believe Khuzami's brazenness. The SEC's enforcement director was saying, in essence, that firms like Goldman Sachs and AIG and Lehman Brothers will henceforth be able to get the SEC to act as a middleman between them and the Justice Department, negotiating fines as a way out of jail time. Khuzami was basically outlining a four-step system for banks and their executives to buy their way out of prison. "First, the SEC and Wall Street player make an agreement on a fine that the player will pay to the SEC," Aguirre says. "Then the Justice Department commits itself to pass, so that the player knows he's 'safe.' Third, the player pays the SEC — and fourth, the player gets a pass from the Justice Department." [wow]

When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants "get answers" regarding the status of their criminal cases, he initially doesn't believe it. Then I send him a transcript of the comment. "I am very, very surprised by Khuzami's statement, which does seem to me to be contrary to past practice — and not a good thing," the former prosecutor says.

Earlier this month, when Sen. Chuck Grassley found out about Khuzami's comments, he sent the SEC a letter noting that the agency's own enforcement manual not only prohibits such "answer getting," it even bars the SEC from giving defendants the Justice Department's phone number. "Should counsel or the individual ask which criminal authorities they should contact," the manual reads, "staff should decline to answer, unless authorized by the relevant criminal authorities." Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. "We collaborate with the SEC, but they do not consult with us when they resolve their cases," Assistant Attorney General Lanny Breuer assured Congress in January. "They do that independently."

Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank's executives. According to a letter that was sent to Sen. Grassley's office, Khuzami had a "secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend" of his and "who was counsel for the company." The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge.

All of this paints a disturbing picture of A CLOSED AND CORRUPT SYSTEM, a timeless circle of friends that virtually guarantees a collegial approach to the policing of high finance. Even before the corruption starts, the state is crippled by economic reality: Since law enforcement on Wall Street requires serious intellectual firepower, the banks seize a huge advantage from the start by hiring away the top talent. Budde, the former Lehman lawyer, says it's well known that all the best legal minds go to the big corporate law firms, while the "bottom 20 percent go to the SEC." Which makes it tough for the agency to track devious legal machinations, like the scheme to hide $263 million of Dick Fuld's compensation.

"It's such a mismatch, it's not even funny," Budde says.

But even beyond that, the system is skewed by the irrepressible pull of riches and power. If talent rises in the SEC or the Justice Department, it sooner or later jumps ship for those fat NBA contracts. Or, conversely, graduates of the big corporate firms take sabbaticals from their rich lifestyles to slum it in government service for a year or two. Many of those appointments are inevitably hand-picked by lifelong stooges for Wall Street like Chuck Schumer, who has accepted $14.6 million in campaign contributions from Goldman Sachs, Morgan Stanley and other major players in the finance industry, along with their corporate lawyers.

As for President Obama, what is there to be said? Goldman Sachs was his number-one private campaign contributor. He put a Citigroup executive in charge of his economic transition team, and he just named an executive of JP Morgan Chase, the proud owner of $7.7 million in Chase stock, his new chief of staff. "The betrayal that this represents by Obama to everybody is just — we're not ready to believe it," says Budde, a classmate of the president from their Columbia days. "He's really fucking us over like that? Really? That's really a JP Morgan guy, really?"

Which is not to say that the Obama era has meant an end to law enforcement. On the contrary: In the past few years, the administration has allocated massive amounts of federal resources to catching wrongdoers — of a certain type. Last year, the government deported 393,000 people, at a cost of $5 billion. Since 2007, felony immigration prosecutions along the Mexican border have surged 77 percent; nonfelony prosecutions by 259 percent. In Ohio last month, a single mother was caught lying about where she lived to put her kids into a better school district; the judge in the case tried to sentence her to 10 days in jail for fraud, declaring that letting her go free would "demean the seriousness" of the offenses.

So there you have it. Illegal immigrants: 393,000. Lying moms: one. Bankers: zero. The math makes sense only because the politics are so obvious. You want to win elections, you bang on the jailable class. You build prisons and fill them with people for selling dime bags and stealing CD players. But for stealing a billion dollars? For fraud that puts a million people into foreclosure? Pass. It's not a crime. Prison is too harsh. Get them to say they're sorry, and move on. Oh, wait — let's not even make them say they're sorry. That's too mean; let's just give them a piece of paper with a government stamp on it, officially clearing them of the need to apologize, and make them pay a fine instead. But don't make them pay it out of their own pockets, and don't ask them to give back the money they stole. In fact, let them profit from their collective crimes, to the tune of a record $135 billion in pay and benefits last year. What's next? Taxpayer-funded massages for every Wall Street executive guilty of fraud?

The mental stumbling block, for most Americans, is that financial crimes don't feel real; you don't see the culprits waving guns in liquor stores or dragging coeds into bushes. But these frauds are worse than common robberies. They're crimes of intellectual choice, made by people who are already rich and who have every conceivable social advantage, acting on a simple, cynical calculation: Let's steal whatever we can, then dare the victims to find the juice to reclaim their money through a captive bureaucracy. They're attacking the very definition of property — which, after all, depends in part on a legal system that defends everyone's claims of ownership equally. When that definition becomes tenuous or conditional — when the state simply gives up on the notion of justice — this whole American Dream thing recedes even further from reality.

My reaction: I don’t really have much to add to all this. The corruption speaks for itself.

August 18, 2011, 11:27 AM ET
Ron Paul: Perry ‘Makes Me Look Like a Moderate’

Presidential candidate Ron Paul, who has long called for abolishing the Federal Reserve, said he now looks “like a moderate” compared with GOP rival and fellow Texan, Gov. Rick Perry, who said it would be “almost treacherous, or treasonous,” if the central bank increased the money supply before the 2012 election.

Referring to Mr. Perry, the Texas congressman told supporters at a campaign event in Concord, N.H., Wednesday that “He realizes that talking about the Fed is good, too. But I tell you what: He makes me look like a moderate.”

Mr. Paul added, “I have never once said [Fed Chairman Ben] Bernanke has committed treason.”

Mr. Perry, who entered the race on Saturday, raised eyebrows among both Democrats and some Republicans Monday with his remarks on the Fed, including the idea that things could get “pretty ugly” for Mr. Bernanke in the Lone Star State if he chooses to pump more money into the economy before the election.

The attention on Mr. Perry has irked Mr. Paul’s campaign because Mr. Paul has been railing against the Fed for years, including a 2009 book titled “End the Fed.” In Congress, Mr. Paul chairs the House subcommittee that oversees the central bank.
…

On basically all important policy positions, Rick Perry mimicked Ron Paul:

1) Ron Paul wants to eliminate the Fed…
… Rick Perry wants to eliminate the Fed.

2) Ron Paul wants to eliminate five federal agencies…
… Rick Perry declares he wants to eliminate three federal agencies.

3) Ron Paul had staked out a lonely position as the only presidential candidate to oppose aid to Israel (Paul is against all foreign aid)…
… Then Rick Perry more or less aped him on that (see Rick Perry: Israel Foreign Aid Starts 'At Zero').

4) Etc…

The end result is that Rick Perry is a spoiler custom designed to hurt Ron Paul. He is appealing to exactly the same demographic as Ron Paul, and virtually all his supporters would otherwise be for Ron Paul supporters.

To understand Ron Paul’s true level of support, Rick Perry’s and Ron Paul’s poll numbers should be added together.

Reality: Rick Perry is corrupt

Perry’s outrage at Washington corruption rings hollow: He is corrupt himself. The Atlantic Wire reports on Rick Perry's Unlikely Crusade Against Casual Corruption.

… lot of Perry's wealth has come from well-timed real estate investments. As the Fort Worth Star-Telegram's Aman Batheja reported earlier this year, Perry has long faced criticism that he used his political connections to make money. There was the time in 1993 when he bought 10 acres of undeveloped land that happened to occupy the space between computer magnate Michael Dell's home and municipal sewer lines. Two years after buying it, Perry sold the land to Dell for $465,000 -- more than triple the price he paid. There was the time in 2001 when Perry bought some land in Horseshoe Bay, Texas, for $314,770 and sold it six years later for $1.1 million -- to a guy who was a business partner of with the man Perry bought the land from in the first place. And Perry made some lucky trades himself: In 1996, Perry made $38,000 by selling stock in Kinetic Concepts, a medical supply company founded by a donor…

Rick Perry's commitment to his ideas is not genuine

Matt Taibbi explains how Rick Perry is The Best Little Whore In Texas

Rick Perry: The Best Little Whore In Texas
The Texas governor has one driving passion: selling off government to the highest bidder
November 26, 2011, by Matt Taibbi
…
Those in Texas who have followed Perry most closely over the years have all come to the same conclusion about him. "He's a cash-and-carry governor," says Craig McDonald, director of Texans for Public Justice, a group that monitors campaign contributions in the state. "He has an extremely strong stomach for holding his nose and doing really dirty favors."

"He'll be whatever you want him to be," says one longtime political opponent. "He's all about greed."

"There's no line he won't cross," says another.

"This guy doesn't believe in one damn thing," says a third.

As for how this classic, big-government, machine politician … could run as a small-market conservative and Tea Party champion, many in Texas express bewilderment.

"If you tell a lie often enough, people believe it," says Debra Medina, a Tea Party Republican who ran against Perry in the gubernatorial primary last year. "That's Rick Perry."
…

Political Ticker reports about Perry's 'Oops'.

Will 'Oops' be Perry's campaign epitaph?
Posted by CNN Political Unit

(CNN) - A visibly flustered Rick Perry was reduced to "Oops" after a painful 53 seconds of trying to remember the name of the third of three federal agencies he would cut at a Republican presidential debate in Rochester, Michigan, on Wednesday.

Answering a question about jobs creation, Perry attempted to name the three agencies he has proposed shutting. He named two, but could not come up with the third, even after appearing to consult notes.
…
"The third agency of government I would - I would do away with Education, the Commerce, and, let's see. I can't. The third one, I can't. Sorry. Oops."
…

The Republican presidential debate in Michigan revealed Rick Perry for the fraud he was. You forget lines that have been fed to you, not your core beliefs.

Commentary: Paul’s authenticity keeps his campaign afloat
December 1, 2011 at 9:06 pm
By Patricia Kilday Hart, Austin bureau
…
Paul is unlikely to be accused of a flip-flop, or have an “oops” moment about his positions. YOU FORGET LINES THAT HAVE BEEN FED TO YOU — NOT YOUR CORE BELIEFS.
…

Mainstream media’s role in promoting the Rick Perry's fabricated candidacy

Just look at the chart below. While Ron Paul only appeared as the "primary newsmaker in only 2% of all election stories", Rick Perry appears in a shocking 17% of all election stories, more than any other candidate. (Source: Ron Paul media blackout has been officially confirmed)



And it isn’t just any news stories. Search for any major Washington scandal on Google News and Rick Perry shows up at the top of the results:

Results for fast & furious:


Results for congress insider trading:


What this means: If an average American googles any of the scandals that Ron Paul has been railing about for years, all they find is Rick Perry, Rick Perry, Rick Perry… Think about how twisted that is.

Status of Rick Perry’s cadidacy

Between his career ending “oops” and his deep history of personal corruption, Perry has no chance of being president.

Is Rick Perry giving up? Hell no. His purpose was never to win, but to make sure Ron Paul doesn’t.

So despite tumbling even lower in new nationwide polls, Rick Perry is pouring it on in Iowa, seeking to rebound. Perry now leads in purchase of Iowa TV ads.

IowaPolitics.com: Perry leads in purchase of Iowa TV ads
12/2/2011
By Lynn Campbell and Hannah Hess

DES MOINES — Texas Gov. Rick Perry’s large purchase of TV ads in November has made him Iowa’s new leader in paid political advertising, surpassing Texas U.S. Rep. Ron Paul.

In Des Moines and Cedar Rapids, Perry purchased 2,665 ad spots at a cost of $745,247.50 during the past month, according to an IowaPolitics.com review of public records this week at the CBS, ABC, NBC and FOX affiliates in the two major media markets.

That’s THREE TIMES as many ad spots as Paul, …

Perry has also just announced he will launch a month-long Iowa bus tour… and every vote he manages to get will be one less for Ron Paul.

--------------------------------

1) Occupy Wall Street

While the discontent it taps into may be genuine, the Occupy Wall Street movement itself is fabrication. Fox News reports that ACORN Playing Behind Scenes Role in 'Occupy' Movement.

EXCLUSIVE: ACORN Playing Behind Scenes Role in 'Occupy' Movement
By Jana Winter
Published October 26, 2011 | FoxNews.com

The former New York office for ACORN, the disbanded community activist group, is playing a key role in the self-proclaimed “leaderless” Occupy Wall Street movement, organizing “guerrilla” protest events and hiring door-to-door canvassers to collect money under the banner of various causes while spending it on protest-related activities, sources tell FoxNews.com.

The former director of New York ACORN, Jon Kest, and his top aides are now busy working at protest events for New York Communities for Change (NYCC). That organization was created in late 2009 when some ACORN offices disbanded and reorganized under new names after undercover video exposes prompted Congress to cut off federal funds.

NYCC’s connection to ACORN isn’t a tenuous one: It works from the former ACORN offices in Brooklyn, uses old ACORN office stationery, employs much of the old ACORN staff and, according to several sources, engages in some of the old organization’s controversial techniques to raise money, interest and awareness for the protests.

Sources said NYCC has hired about 100 former ACORN-affiliated staff members from other cities – paying some of them $100 a day - to attend and support Occupy Wall Street. Dozens of New York homeless people recruited from shelters are also being paid to support the protests, at the rate of $10 an hour, the sources said.

At least some of those hired are being used as door-to-door canvassers to collect money that’s used to support the protests.

Sources said cash donations collected by NYCC on behalf of some unions and various causes are being pooled and spent on Occupy Wall Street. The money is used to buy supplies, pay staff and cover travel expenses for the ex-ACORN members brought to New York for the protests.

In one such case, sources said, NYCC staff members collected cash donations for what they were told was a United Federation of Teachers fundraising drive, but the money was diverted to the protests.

Sources who participated in the teachers union campaign said NYCC supervisors gave them the addresses of union members and told them to go knock on their doors and ask for contributions—and did not mention that the money would go toward Occupy Wall Street expenses. One source said the campaign raked in about $5,000.

Current staff members at NYCC told FoxNews.com the union fundraising drive was called off abruptly last week, and they were told NYCC should not have been raising money for the union at all.

Sources said staff members also collected door-to-door for NYCC’s PCB campaign — which aims to test schools for deadly toxins —but then pooled that money together with cash raised for the teachers union and other campaigns to fund Occupy Wall Street.

“We go to Freeport, Central Islip, Park Slope, everywhere, and we say we’re collecting money for PCBs testing in schools. But the money isn’t going to the campaign," one source said.

"It’s going to Occupy Wall Street, and we’re not using that money to get schools tested for deadly chemicals or to make their kids safer. It’s just going to the protests, and that’s just so terrible.”

A spokesman for the United Federation of Teachers told FoxNews.com, "The UFT is not involved in any NYCC fundraising on the PCB issue.”

Multiple sources said NYCC is also using cash donations through canvassing efforts in New York’s Harlem and Washington Heights neighborhoods for union-backed campaigns to fund the Wall Street protests.
…
Those who contribute don't know the money is going to fund the protests, the source said.

“They give contributions because we say if they do we can fix things - whatever specific problem they’re having in their area, housing, schools, whatever ... then we spend the contributions paying staff to be at the protests all day, every day. That’s where these contributions - the community’s money – is going,” the source said.
…
Another source, who said she was hired from a homeless shelter, said she was first sent to the protests before being deployed to Central Islip, Long Island, to canvass for a campaign against home foreclosures.

“I went to the protests every day for two weeks and made $10 an hour. They made me carry NYCC signs and big orange banners that say NYCC in white letters. About 50 others were hired around my time to go to the protests. We went to protests in and around Zuccotti Park, then to the big Times Square protest,” she said.

“But now they have me canvassing on Long Island for money, so I get the money and then the money is being used for Occupy Wall Street—to pay for all of it, for supplies, food, transportation, salaries, for everything ... all that money is going to pay for the protests downtown and that’s just messed up. It’s just wrong.”
…

Fox News reports that ACORN Officials Scramble, Firing Workers and Shredding Documents, After Exposed as Players Behind Occupy Wall Street Protests.

ACORN Officials Scramble, Firing Workers and Shredding Documents, After Exposed as Players Behind Occupy Wall Street Protests
By Jana Winter
Published November 03, 2011 | FoxNews.com

Officials with the revamped ACORN office in New York -- operating as New York Communities for Change -- have fired staff, shredded reams of documents and told workers to blame disgruntled ex-employees for leaking information in an effort to explain away a FoxNews.com report last week on the group’s involvement in Occupy Wall Street protests, according to sources.

NYCC also is installing surveillance cameras and recording devices at its Brooklyn offices, removing or packing away supplies bearing the name ACORN and handing out photos of Fox News staff with a stern warning not to talk to the media, the sources said.

“They’re doing serious damage control right now,” said an NYCC source.

NYCC Executive Director Jon Kest has been calling a series of emergency meetings to discuss last week’s report—and taking extreme measures to identify the sources in their office and to prevent further damage, a source within NYCC told FoxNews.com.

Two staffers were fired after NYCC officials suspected them as the source of the leaks, a source told FoxNews.com. “One was fired the day the story came out, the other was fired on Friday. (NYCC senior staff) told everyone that they were fired because they talked to you,” a source said.

NYCC spokesman Scott Levenson denied that anyone was fired for talking to the press.

FoxNews.com’s report identified NYCC as a key organizing force behind the Occupy Wall Street protests. Sources within the group also told FoxNews.com NYCC was hiring people to carry signs and join the protests. NYCC -- a nonprofit organization run almost entirely by former ACORN officials and employees --did not reply for comment prior to the publication of the initial article, but later posted a statement on its website dismissing the article and denying that it pays protesters.

A source said that immediately following publication of the FoxNews.com report staff were called into the Brooklyn office for meetings headed by NYCC’s organizing director, Jonathan Westin. Westin handed out copies of the article and went through it line-by-line, the source said.

Staffers were also given copies of photos of Senior Fox News Correspondent Eric Shawn and three other Fox News staff members, including this reporter.

“They reminded us that we can get fired, sued, arrested for talking to the press,” the source said. “Then they went through the article point-by-point and said that the allegation that we pay people to protest isn’t true.”

“‘That’s the story that we’re sticking to,’” Westin said, according to the source.

The source said staffers at the meeting contested Westin’s denial:

“It was pretty funny. Jonathan told staff they don’t pay for protesters, but the people in the meeting who work there objected and said, ‘Wait, you pay us to go to the protests every day?’ Then Jonathan said ‘No, but that’s your job,’ and staffers were like, ‘Yeah, our job is to protest,’ and Westin said, ‘No your job is to fight for economic and social justice. We just send you to protest.’

“Staff said, ‘Yes, you pay us to carry signs.’ Then Jonathan says, ‘That’s your job.’ It went on like that back and forth for a while.”

During the meetings, NYCC Deputy Director Greg Basta provided Westin with the copied photos of Fox News reporters to hand out to staff members, the source said. Basta told staffers they might be asked about the article when out in communities working on campaigns or when calling people by phone, the source said.

“They told us if people bring up the article, we’re supposed to say the source and all the stuff in there came from a disgruntled ex-employee who’s not working with us anymore.”

NYCC is also monitoring its staff’s behavior, cracking down on phone use and socialization. Officials have ordered all papers -- even scraps -- to be shredded every night, the source said.

“And all the supplies—everything around the office that said ‘ACORN’ -- is now all in storage until this blows over,” the source said. “People literally have to cover up the cameras on the back of their cellphones in the office.”

“Now there’s no texting in the office, no phone calls in the office. They tell us to take our phone calls out into the waiting room where there’s an intercom, and then they turn on the intercom to hear our conversations. They’re installing new cameras and speakers around the building so they can hear everything.

“It’s almost like working at Fort Knox.”
…

Eurasia Review reports that the Obama Administration violated the ban on federal funding for ACORN.

US Justice Department Involved In New Corruption Scandal, Says Watchdog Group – OpEd
Written by: Jim Kouri
December 5, 2011

The already scandal-ridden Obama Justice Department is being accused of more misbehavior, according to a blog this week by a top “Inside the Beltway” watchdog group.

A Justice Department program that distributes hundreds of millions of dollars each year to supposedly combat juvenile delinquency is now under fire for giving a leftist group nailed for rampant corruption in the past — the Association of Community Organizations for Reform Now or ACORN — taxpayers’ money that was fraudulently spent.

According to a report on the Judicial Watch blog, this is just the latest of several controversies for the DOJ’s Office of Juvenile Justice and Delinquency Prevention (OJJDP) which has managed to maintain a significant budget through the years despite multiple allegations of cronyism.

…
Now, the Justice Department’s own Inspector General released a report that exposes corruption surrounding a $138,130 grant that OJJDP awarded to an ACORN branch in New York City. The IG’s audit found that there were internal control weaknesses, unsupported grant expenditures, lack of contractor monitoring, weaknesses in budget management, inadequate grant reporting, unmet conditions and deficiencies with the program’s overall performance.

The IG also describes the New York group as a “pass-through entity” for ACORN, the crooked nonprofit that’s raked in huge sums of taxpayer dollars over the years. In 2009, Congress actually passed a law (Defund ACORN Act) to ban federal funding for ACORN after a series of exposés about the group’s illegal activities, which include fraudulent voter registration drives and involvement in the housing market meltdown.

The group has close ties to President Barack Obama, who worked for ACORN as a “community organizer” in Chicago, prior to embarking on his political career.

Earlier this year a Judicial Watch probe found that the Obama Administration violated the ban on federal funding for ACORN by giving the beleaguered group nearly $80,000 to “combat housing and lending discrimination” against minorities.

…
This year Judicial Watch also published a special report about the organization’s transformation into various spinoffs and affiliated groups. Amid a massive fraud scandal and a series of criminal probes, ACORN supposedly dismantled but the reality is that it simply changed its name.

For instance, … ACORN has been one of the driving forces behind the movement to end economic segregation and social injustice in the U.S. culminating in the current Occupy Wall Street movement.
…

In the 2008 election, Obama’s theme was “political division”. In the 2012 election, Obama's theme will be “economic division” (inequality), as foretold by this December 6 speech. It's Occupy Wall Street's narrative.

So, as Bachmann pointed out, Occupy Wall Street Is 'Obama's Reelection Team'. It cleanly and efficiently deflects attention from Obama’s own near-3 year performance as president. It probably won’t work, but the effort itself hurts the Ron Paul Campaign (See Is Anyone Dumb Enough to Believe that Obama Supports the 99%?).

Media’s role in promoting Occupy Wall Street

The Sun Times reports that media skews tea party, 'Occupy' coverage.

Media skews tea party, ‘Occupy’ coverage
November 25, 2011 2:40PM

How can America solve its problems when the media — our source for information — is biased, hypocritical and short on facts and rational analysis?

Americans have observed this journalistic failure in the coverage of the Occupy Wall Street activities and the tea party rallies.

The media reaction to the tea party generally was negative, with reporters claiming racist motives without proof. Yet, the tea party clearly stated its goals — stop out-of-control government spending, soaring national debt, and dictatorial rule from Washington, D.C.

Tea party members obtained legal permits for their rallies and left public areas clean after making their point. But according to an examination of all mainstream television news reports covering the tea party, only 13 positive accounts were broadcast the first two weeks about this organic outpouring of citizen discontent. The media later wavered between blaming the tea party for gridlock and claiming the tea party was dying.

In contrast, the Occupy Wall Street protesters have polluted public parks and walkways, disobeyed laws, created health hazards and resisted police. Yet, the liberal media supported these clueless occupiers 113 times during the first two weeks.
…

The Daily Caller reports that Tea party groups criticize media coverage of ‘Occupy Wall Street’.

Tea party groups criticize media coverage of ‘Occupy Wall Street’
Published: 12:04 AM 10/11/2011 | Updated: 5:06 PM 10/11/2011
By Alex Pappas--The Daily Caller

Activists affiliated with the tea party movement say they’re witnessing a double standard in the way the media is covering the “Occupy Wall Street” protests compared to the tea party.

“It’s almost laughable,” said Sal Russo, a strategist with the California-based group Tea Party Express, in an interview.

While reporters at first didn’t always cover tea party rallies, Russo said, a California newspaper has recently been putting stories about the Occupy Wall Street on its front page.

“The Sacramento Bee actually had a front-page story before the rally, TELLING PEOPLE WHERE IT WAS AND WHAT TIME IT WAS,” Russo said.

An official at FreedomWorks, the Washington, D.C.-based group that has organized tea party rallies since the movement burst onto the scene in 2009, said the media has been ignoring negative features of the “Occupy Wall Street” protests while it played up dubious charges against conservative activists last year.

“I think it’s kind of funny that the media talked about alleged things that the tea party guys did that were never proven,” spokesman Adam Brandon told The Daily Caller. “Then you have pictures of these guys getting arrested and confronting officers and now they’re being celebrated.” (RELATED: TheDC’s Jamie Weinstein: Unlike the tea party, ‘Occupy Wall Street’ will fail)

Mark Meckler, the co-founder of the Tea Party Patriots, struck a similar note, saying that when the tea party protests first began, “we were ignored, mocked, and then attacked by the media” and “called ‘Astroturf,’ ‘fringe,’ ‘racists’ and ‘Nazis.’”

“Yet today, the leftist media seemingly cheers for a group of lawbreaking miscreants who have openly committed a variety of illegal acts,” Meckler said.

Said Brandon: “Of course, you hear about the guy who got arrested throwing a shoe at the White House. I heard they were pepper-spraying people down at the Smithsonian. I have yet to hear a story about a tea partier ever doing that.”

And Judson Phillips, the leader of the Tennessee-based group Tea Party Nation, said the “media’s coverage of Occupy Wall Street has been almost totally positive to the point of glossing over some serious issues.”

While there have been news stories about some of the more negative attributes of the Occupy Wall Street protests, these conservative activists say it’s nothing in comparison to the scrutiny the media applied to tea partiers.

“While a number of people have been arrested and there is even a photo of a protester defecating on a police car, there still is no really negative coverage from the mainstream media,” Phillips said.

“Meanwhile, protesters in New York had a photoshopped image of the decapitated head of the chairman of Goldman Sachs on a pike and no one seems to be talking about that,” he said.

Occupy Wall Street is a huge distraction for the Ron Paul campaign, siphoning off money and volunteers (See Donations To Occupy Wall Street Skyrocket In October and Creepy 'One Voice' Occupy Protesters Heckle Ron Paul). The result is boosting Obama re-election chances at Ron Paul’s expense.

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3) Newt Gingrich's “surge”

When I last wrote about Ron Paul on November 23, the latest poll showed him in the lead in Iowa with a solid 25 percent of likely Republican Caucus-goers supporting him. (Paul’s surging support was a result of Perry’s self-destruction)

Despite having the entire mainstream media aligned against him, effort to marginalize him aren’t working: it looks like Ron Paul is headed for a win in Iowa (See Poll watcher: Is Paul the strongest candidate in Iowa?). The latest poll shows Paul now in the lead in Iowa with a solid 25 percent of likely Republican Caucus-goers supporting him, and there are more Ron Paul bumper stickers on cars than all the other candidates put together. There is broad agreement that Paul has momentum in Iowa.

That is exactly when the Newt Gingrich's "surge" began, conveniently preventing Paul from enjoying frontrunner status.

The Newt Gingrich "surge" is absurd

Gingrich is campaigning as an agent of change, yet, as Salon.com reports, Newt is The ultimate Beltway swindler.

Wednesday, Nov 23, 2011 8:00 AM 17:26:38 EST
Newt: The ultimate Beltway swindler
Gingrich has taken money from everyone from Big Pharma to Freddie Mac. How is he leading the Republican pool?
By Michael Winship

You maybe should think twice when even Jack Abramoff thinks you’re beneath contempt. Not that Newt Gingrich cares.

Abramoff, America’s favorite convicted influence peddler, told NBC’s David Gregory that presidential candidate and former Speaker of the House Gingrich is one of those “people who came to Washington, who had public service, and they cash in on it. They use their public service and access to make money.”

Newt, he continued, is “engaged in the exact kind of corruption that America disdains. The very things that anger the Tea Party movement and the Occupy Wall Street movement and everybody who is not in a movement and watches Washington and says why are these guys getting all this money, why do they go become so rich, why do they have these advantages?”

Why indeed? Granted, Abramoff’s in the middle of his promotion tour of confession and attempted redemption, a pot obscenely eager to call his kettle and former mentor black – especially if it sells books. But Casino Jack does have a point.

Gingrich personifies everything rotten about the ATM machine we call Washington: the merchandising of favors and votes; the conversion of past incumbency into insider information, making your contacts and the ability to play the system available to the highest bidder; the archetypal revolving door between government service and shilling for corporate America.

Yet there he is, suddenly riding at the top of the polls, his debate skills lauded, his churlish dismissal of the media praised, and infused with sufficient cheek to portray himself to gullible elements of the electorate as an outsider. It’s as if Kim Kardashian proclaimed herself American Housewife of the Year.

(Gingrich now is trying to play the inside-outside game both ways, proclaiming last week, “We just tried four years of amateur ignorance and it didn’t work very well. So having someone who actually knows Washington might be a really good thing.”)

In fact, a quick look at just a few of Newt’s activities since his GOP colleagues tossed him out of the speakership in 1998 is sufficient to expose him as the ultimate poster boy for inside-the-Beltway game playing — adherence to ideology often shoved aside in favor of expedience and the chance to make a buck.

You’ll remember hearing just this past spring about Mr. and Mrs. Gingrich’s revolving, no-interest credit line at Tiffany’s, a luxury store they treated like a diamond encrusted version of the Home Shopping Network, and Tim Carney’s report in the Washington Examiner that, “Christy Evans, formerly a top staffer to … Gingrich, is a registered lobbyist for Tiffany’s.”

Now Carney writes, “We know that Gingrich has been paid by drug companies and by the drug lobby, notably during the Medicare drug debate. A former employee of the Pharmaceutical Research and Manufacturers of America (the main industry lobby) told me Gingrich was being paid by someone in the industry at the time. A spokeswoman for Gingrich’s healthcare consulting firm, Center for Health Transformation, told me that drug companies have been CHT clients. PhRMA confirmed in a statement that they had paid Gingrich. Bloomberg News cited sources from leading drug companies AstraZeneca and Pfizer saying that those companies had also hired Gingrich…

“Three former Republican congressional staffers told me that Gingrich was calling around Capitol Hill and visiting Republican congressmen in 2003 in an effort to convince conservatives to support a bill expanding Medicare to include prescription-drug subsidies. Conservatives were understandably wary about expanding a Lyndon Johnson-created entitlement that had historically blown way past official budget estimates. Drug makers, on the other hand, were positively giddy about securing a new pipeline of government cash to pad their already breathtaking profit margins.”

On Monday, the chair of Gingrich’s Center for Health Transformation estimated its revenues over the past decade at $55 million. Fees are flexible, she said, with “charter memberships” going for an annual fee of $200,000. According to the Nov. 21 Wall Street Journal, “The health think tank also charges for consulting sessions with the former speaker and Mr. Gingrich’s speeches, according to two health care trade groups.”

More dynamically, the center’s P.R. materials promised “direct Newt interaction”(!) and as per the Washington Post, “The biggest funders, including such firms as AstraZeneca, Blue Cross Blue Shield and Novo Nordisk, were also eligible to receive discounts on ‘products and workshops’ from other Gingrich groups.” Sounds like the Potomac edition of “The Price Is Right.”

Another Center for Health Transformation charter member was Gundersen Lutheran Health System of La Crosse, Wis. The Nov. 17 New York Times reported that in July 2009, without reporting his connection, Gingrich praised the company in the Washington Post “for its successful efforts to persuade most patients to have ‘advance directives,’ saying that if Medicare had followed Gundersen’s lead on end-of-life care and other practices, it would ‘save more than $33 billion a year.’”

Advance directives means helping families determine future care for the terminally ill, but when Tea Partyers and others started yelling about “death panels” during the healthcare reform fight, Gingrich made a quick flip-flop to the right and changed sides.

Listening to Newt attack child labor laws this week, I thought one of his clients might be Miss Hannigan’s Orphanage. In reality, others who have anted up for his advice include GE, IBM, Microsoft, Growth Energy (a pro-ethanol lobby group that between 2009 and 2011 paid him $575,000) and the U.S. Chamber of Commerce. The Wall Street Journal notes that, “The Chamber, the largest lobbying organization in Washington, paid Mr. Gingrich about $840,000, according to people familiar with the arrangement, or about $120,000 a year for seven years, beginning in 2001, to serve on an informal board of advisers to its president and senior staff.”

And then, of course, there’s Freddie Mac, which triggered this recent tsunami of scrutiny when Gingrich claimed at the Nov. 9 candidates’ debate that it was for his expertise as an historian that the home mortgage giant had paid him $300,000. Bloomberg News then reported that THE NUMBER WAS ACTUALLY AS MUCH AS $1.8 MILLION, paid as consulting fees right up until 2008, when the failing agency was taken over by the government and such outside contracts were suspended. Gingrich claims he warned Freddie about “insane” loans and then told USA Today, “I was advising them over a period when they weren’t in crisis. I’m pretty happy to say, I gave these guys advice… on how do you build opportunity for the poor to learn to be non-poor?” Until caught, he hadn’t bothered to mention his own involvement, even as he attacked Barney Frank and others for taking Freddie Mac’s campaign contributions.

Through it all, GINGRICH HAS DENIED BEING A LOBBYIST, apparently adhering to a very narrow definition – he’s not officially registered with Congress under the Lobbying Disclosure Act of 1995, as amended by the Honest Leadership and Open Government Act of 2007.

But you do the math: According to Julie Hirschfeld Davis and Kristin Jensen at Bloomberg News, “The former Georgia congressman reported assets in 1997 of between $197,000 and $606,000, according to his last House personal financial disclosure report, which permits lawmakers to record their wealth in broad ranges. According to his 2011 presidential disclosure report, the Republican primary candidate today is worth between $7.3 million and $31 million.”

NOT BAD FOR GOVERNMENT WORK.

Gingrich is utterly unprincipled (he even had delivered divorce papers to his wife at her bedside in the hospital).

The Newt Gingrich's popularity is fake

Gawker.com reports that Most of Newt Gingrich's Twitter Followers Are Fake.

Most of Newt Gingrich's Twitter Followers Are Fake
By John Cook, Aug 1, 2011 4:05 PM

Yesterday Newt Gingrich laid out a new argument for why he should be the GOP presidential nominee: He's got the most Twitter followers. But according to a former Gingrich staffer, he bought them.

Gingrich complained yesterday that the press is ignoring his prodigious Twitter audience: "I have six times as many Twitter followers as all the other candidates combined, but it didn't count because if it counted I'd still be a candidate; since I can't be a candidate that can't count." Which is true! Gingrich currently boasts 1,325,842 followers, whereas competitors Mitt Romney and Michele Bachmann have yet to crack 100,000.

But IF NEWT IS WINNING THE TWITTER PRIMARY, IT'S BECAUSE OF VOTER FRAUD. A former staffer tells us that his campaign hired a firm to boost his follower count, in part by creating fake accounts en masse:

Newt employs a variety of agencies whose sole purpose is to procure Twitter followers for people who are shallow/insecure/unpopular enough to pay for them. As you might guess, Newt is most decidedly one of the people to which these agencies cater.

About 80 percent of those accounts are inactive or are dummy accounts created by various "follow agencies," another 10 percent are real people who are part of a network of folks who follow others back and are paying for followers themselves (Newt's profile just happens to be a part of these networks because he uses them, although he doesn't follow back), and the remaining 10 percent may, in fact, be real, sentient people who happen to like Newt Gingrich. If you simply scroll through his list of followers you'll see that most of them have odd usernames and no profile photos, which has to do with the fact that they were mass generated. Pathetic, isn't it?
…


While it would be impossible to survey all of Gingrich's followers, a cursory glance immediately turned up a few accounts that featured odd names, no personal information, no followers, no posts, and a small follow list. And there's certainly a healthy market out there for buying Twitter followers, either by hiring a company to strategically follow accounts that will follow you back or by paying for dummy accounts. If Gingrich did goose his Twitter numbers, it would help explain why he has, for instance, more than twice as many followers as Sarah Palin, which just doesn't sound right.
…

Consider this: The media is justifying Gingrich’s sudden surge as a reflection of his sharp speaking skills. However, Newt has been debating for months, and his performance has been pretty consistent throughout. Are we are supposed to believe that the public suddenly had a complete change of heart right when Paul started leading in the polls?

The Media’s role in this fake Gingrich “surge”

The Lone Star Watchdog reports that The Media Created Grand Illusion of Gingrich.

Sunday, December 4, 2011
The Media Created Grand Illusion of Gingrich.

One thing I learned is well spoken charismatic people seeking power can be the most dangerous. I give Newt credit for being a good well spoken orator. But so is any good con artist or a used car salesmen. If BS was money, we would not have a national debt. President Obama, Bush and Clinton would have a budget surplus but giving a good speech if BS was the currency. The truth about Newt must be told. If the media is choosing the person and the party. That is the man who will hurt the country to preserve the power of the party.

Newt Gingrich is the poster child for everything that is wrong with Washington DC and the Republican party. What he stands for is the status quo of politics as usual. The Americans are sick and tired of business as usual in the District of Con-artist were everything changes but still stays the same. He is the new boss, same as the old boss. The media in Iowa and New Hampshire is in a synchronized effort to prop up the establishment candidate in an effort to defeat Ron Paul. Skewed polling data trying to sell the illusion must be countered and debunked.

… We must not allow Gingrich a free rise … with this synchronized media effort to sell their candidate. Newt is for Carbon taxes and individual mandate for us to purchase health insurance. He still wants to sell the illusion of a war on terror, the patriot act, the justification for torture, wars for Israel and still tries to talk like Ron Paul when it concerns the Federal Reserve. To me IT IS ALL JUST RHETORIC TO WOO THE VOTERS JUST TO GET BURNED ONE MORE TIME AFTER THE ELECTION. It goes back to business as usual.

The establishment is scared of Ron Paul. If Ron Paul wins the party nomination and the Presidency. Not only the Federal reserve is in peril. The GOP might have all the globalist and neo cons removed who pretend to be patriots. Ron Paul will be able to change the leadership inside the party back to a libertarian, constitutional orientated people no longer under the globalist control. We can see more fairness in election breaking the monopoly of the two party system controlling the election process allowing other candidates of minor parties the equal forum as the two major political parties enjoy. Ron Paul represents real change and not just political rhetoric. That is what scares the establishment about Dr. No. This is why the media is trying to sell Newt like they are selling the Iphone or the Ipad as the next best thing to sliced bread. Newt is like stale bread and a loser. In an open forum, Newt would lose when his record is shown for all to see. Ron Paul represent who the globalist establishment fear. Loss of control of a major political party that can be a severe blow to the globalist agenda.

We in the alternative media must dispel the white wash they will try for Newt. We must shatter this media created illusion. We must show why the main stream news media cannot be trusted and why they are losing credibility. We have to discredit Newt for what he is. A globalist traitor, a sell out, an authoritarian calling for the end to US sovereignty. We allowed the media to burn us with McCain four years ago. We must not let happen fours years ago happen again. If we do not redouble our efforts or nothing will change. No more grand illusions. Ron Paul for President or bust. If we don't, we will again say meet the new boss, same as the old boss. We must never accept that again. This is the year we sink or swim as a republic.

The Mainstream media had no choice but to go back to Gingrich. The public was fast losing confidence in Perry (his debate "oops" moment was not supposed to happen). The Gingrich "surge" is fiction.

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Below is a video showing why so many people like Ron Paul: his consistency and his integrity.

A Summary of GATA's Work - Andrew Hepburn
Submitted by Administrator on Mon, 2004-01-12 08:00.
By Andrew Hepburn

The Gold Anti-Trust Action Committee (GATA) believes that central banks, acting through certain investment banks, have surreptitiously manipulated the price of gold. Such activity appears to have started in the mid-1990s and continues to this day. Prominent entities involved include J.P. Morgan Chase, Goldman Sachs, Deutsche Bank, the Federal Reserve, the Bank of England, and the Bank for International Settlements. GATA specifically alleges that the U.S. Treasury's Exchange Stabilization Fund [ESF] has been used, contrary to official denials, for gold market interventions. Furthermore, GATA believes that the official sector intervened in the late 1990s to prevent an impending gold derivative crisis, the result of excessive short positions accumulated over many years.

These claims are based on analyses of publicly available government documents and statistics, trading abnormalities, and material presented in a GATA-backed lawsuit. Howe vs. Bank for International Settlements et al. accusing the BIS, Federal Reserve, U.S. Treasury, and four bullion banks of gold market manipulation. Though the suit was dismissed in 2002 on two technicalities, the evidence presented in it is recognized by many knowledgeable observers as having sufficiently proven the price-fixing allegations. …

…
Central banks lease gold either by making gold deposits with, or by making gold loans to, bullion banks, the largest of which are international banks or other financial institutions. In both cases, the gold is placed with a bullion bank usually at a very low rate of interest, often 2% or less. This so-called "leased" gold is then sold into the market and the currency proceeds delivered for investment or other use by the bullion bank and/or its customer. When the gold deposit is called or the gold loan comes due, the physical gold required for repayment must generally be repurchased in the market.
…
The benefit to the bullion banks lay in the difference between gold lease rates and prevailing interest rates. By borrowing gold cheaply, selling it into the spot market, and investing the proceeds in interest-bearing instruments, the gold borrowers realized substantial gains. …

Understanding the mechanics of the gold leasing (gold manipulation)

The Goldseek article below does a Forensic Examination of the Gold Carry Trade.

Forensic Examination of the Gold Carry Trade
-- Posted Wednesday, 13 May 2009
By: Rob Kirby

… Central Banks “swap” and “lease” gold is an undeniable matter of public record.  …

… Central Banks claim to “officially” have somewhere in the neighborhood of 30,000 metric tonnes of gold bullion in their vaults.  However, the reality is that Central Banks possess LESS physical gold than they officially report – how much less is a matter of speculation and a closely guarded secret.

The following formula explains the mechanics of the Gold Carry [lease] Trade:


** Do not confuse the Gold Forward Rate [GOFO] with the Gold futures price – they are not related.

…
What Happens When Gold Is Leased?

When Central Banks lease gold, it PHYSICALLY leaves the vault and the recipient / borrower sells the physical metal into the marketplace to raise cash – to invest or to finance capital expenditures. In this regard, we can say that “GOLD LEASING” is a means by which physical bullion is made available in the market place – thereby lowering the gold price.  After the gold physically leaves the vault of the Central Bank, it is replaced with an I. O. U. and the Central Bank, for accounting purposes, “double counts” by continuing to claim that they still possess the same amount of physical bullion in the vault.  It is notable that fraudulent accounting practices relating to gold is promoted by lawmakers the world over.  This is contrary to generally accepted accounting practices and promotes market opacity instead of the much talked about need for transparency.  Explicitly, it serves to promote the supremacy of the fiat U.S. Dollar as the world’s reserve currency.

I’ve circled the 10 % spike in lease rates on the chart below:



…
Now, let’s stop and consider WHO did the lending of metal in Sept. 1999 – expelling physical precious metal, intentionally at a loss, in the face of a RISING PRICE of GOLD. Remember folks, 3 month GOFO [the gold forward rate] is the return “earned” by the lender of bullion:



So ask yourself WHO would lend physical gold bullion to ANYONE with a guarantee that you would get LESS bullion back in 3 months????????????
…

What to take away from the passage above is that the gold lease rate is an indicator of how much central bank gold is being leased out.  The higher the lease rate, the more leased gold is being sold

It is also key to note that when leased gold is sold to investors around the world, the money collected is brought to the US and put into “interest-bearing instruments”.  This means more gold is leased out, the more demand is created for dollars and US treasuries.

Time Frame of the gold leasing fraud

The gold leasing that was rampant in the 1990s was ended by the “Washington Agreement”.  The gold sextant explains how this happened.

February 1, 2000. Two Bills: Scandal and Opportunity in Gold?
…
On September 26, 1999, 15 European central banks, led by the ECB, announce that they will limit their total combined gold sales over the next five years to 2000 tonnes, not to exceed 400 tonnes in any one year, and will not increase their gold lending or other gold derivatives activities. Besides the ECB and the 11 members of the EMU, Britain, Switzerland and Sweden are parties. The 2000 tonnes include the remaining 365 tonnes of British sales and 1300 tonnes of previously proposed Swiss sales, leaving only 335 tonnes of possible new sales. The announcement, made in Washington following the IMF/World Bank annual meeting, is ironically christened the "Washington Agreement" although the government in Washington played no role. However, the BIS, IMF, U.S. and Japan are all expected to abide by it, and the BIS is expected to monitor it.

…the agreement was hammered out secretly among the members of the EMU, the BIS and Switzerland, that the British were given a chance to sign on after the fact, and that the U.S. was not informed until just before the Sunday announcement. For references to European press commentary on the genesis of the agreement, see W. Smith, "Operation Dollar Storm," www.gold-eagle.com/editorials_99/wsmith111099.html.
…
The notion, shared by many, that the EMU would forever acquiesce in the trashing of its gold reserves by bullion banks operating in the largely paper gold markets of London, New York and Tokyo appears in retrospect to have been incredibly naive. … With the euro successfully launched, they quickly lost reason to continue capping the gold price…

… Currently the European central banks through the BIS and within the limits of the Washington Agreement are engaged in a tightly controlled feed of modest amounts of gold into the market. …

Verifying timing through gold lease rate data  

The gold lease rate data going back to 1990 can be found by visiting the LBMA's website (LBMA = The London Bullion Market Association), as seen below.



By graphing this data, we see the gold leasing really took off in the 1990s.  However, after the 1999 Washington agreement, the flow of leased gold started to die off until it ended completely in the 2001/2002 period.

(Remember: The gold lease rate is an indicator of how much central bank gold is being leased out.  The higher the lease rate, the more leased gold is being sold.)


Full Resolution

SUMMARY OF THE NAKED SHORT SELLING CONSPIRACY

Deedcapture explains that miscreants are selling billions of dollars of stock that simply does not exist (phantom stock).

The Story of Deep Capture
You can download a printable version of The Story of Deep Capture here.
By Mark Mitchell, with reporting by the Deep Capture Team
Introduction - by Mark Mitchell

…
August 12, 2005…the proudest day of Patrick Byrne’s life. … Patrick is on a conference call with 500 blue chip investors and a few journalists. He tells his telephone audience that he’s been talking to this fellow named Bob …, and … he’s laid out this scheme, he’s made some predictions… so everybody please download Patrick’s computer generated slide show and follow along from home.

The first slide reads, “The Miscreants’ Ball.” Patrick says the miscreants are selling billions of dollars of stock that simply does not exist – phantom stock. They have destroyed hundreds of public companies for profit. Some journalists, meanwhile, are “crooked.” They’re “lickspittles.” They are famous journalists and they cover up the miscreants’ crimes. They attack all who oppose them. …

And that’s not all, follow along please with the slides — they show how the miscreants and the journalists have ties to government agencies and private investigators, maybe the Mafia, and also an arms dealer, an undercover mole, a corrupt law firm, and Eliot Spitzer. …

…
The crimes are the work of Wall Street hedge fund managers and brokers who engage in a common trading strategy known as short-selling. A short sale is a way of making money when the price of a stock goes down. You borrow shares from someone else and immediately sell them off. If the price drops, you buy the shares back and return them to the original owner, pocketing the difference. If a company goes out of business, short-sellers hit the jackpot.

This is perfectly legal and unobjectionable. But some short-sellers do not play by the rules. A small group of powerful hedge fund managers stop at nothing to annihilate the companies they sell short. Their tactics include: blackmail, smear campaigns, espionage, fraud, harassment, extortion, bribery, rumor-mongering, sabotage, off-shore money laundering, political cronyism, frivolous lawsuits, witness tampering, biased financial research, false identities, bogus credit ratings, bribery, libelous blogs, bad science, forgery, wiretapping, counterfeiting, collusion, lying, cheating, threats and theft.

Their most egregious trick is to sell “phantom stock.” By exploiting a glitch in Wall Street’s computerized trading system, and a loophole in federal regulations, some hedge funds sell virtually unlimited amounts of stock that they have not yet borrowed or purchased. This is often referred to as “NAKED SHORT SELLING.” Hedge funds use this tactic to flood the market with supply and drive down prices – which is blatantly illegal.

Patrick has written a blog explaining how this works in laymen’s terms. An economist has written a detailed history of “FAILURES TO DELIVER” (i.e. stock sold and not delivered, because it is phantom stock) for Regulation magazine, published by the Cato Institute. A former SEC Chairman has spoken extensively against the problem. Many other researchers, several professors, a former SEC economist, and a former deputy secretary of commerce have also written papers on the subject. If you are interested in the mechanics of the crime, read some of those papers here, here, here, here, here, and here.
…
In addition to the 300-plus companies on the SEC’s list, as many as 1,000 companies have already been wiped off the map by illegal short-selling, according to some experts.
…

Understanding the mechanics of stock “failures-to-deliver” (naked short selling)

Deedcapture describes the process through which naked short selling is used to destroy US companies.

It was in October 2004, and the Easter Bunny [Patrick Byrne's anonymous Wall Street informant] … made some predictions. He said that Gradient would continue to publish outrageous information at Rocker’s behest. He said the same information that had ended up in The Wall Street Journal, would soon get into the hands of specific reporters at Fortune, Forbes, MarketWatch.com, Barron’s magazine, and TheStreet.com – all of whom would call in the coming weeks. And he said that Overstock would soon become the target of a nonsensical federal investigation.

The Easter Bunny also laid out THE MECHANICS OF SOMETHING CALLED "NAKED SHORT SELLING." He predicted that OVERSTOCK WOULD SUDDENLY BE LISTED, WITHOUT ITS AUTHORIZATION, ON A BUNCH OF FOREIGN STOCK EXCHANGES—making it easier for hedge funds to sell phantom stock. And he predicted that Overstock would appear on the SEC’s Reg SHO list of victim companies, scheduled to appear for the first time in January, 2005.

Over the next two weeks, Patrick received calls from precisely the predicted journalists at Forbes magazine, Barron’s, The Wall Street Journal, The New York Post, and Fortune magazine – all of them reading the same list of questions supplied to them by Gradient. …

Within a few weeks, the Federal Trade Commission in San Francisco began a bizarre investigation into Overstock that went nowhere. Within a couple of months, OVERSTOCK HAD MYSTERIOUSLY APPEARED ON EXCHANGES IN STUTTGART, MUNICH, FRANKFURT, BERLIN, AND AUSTRALIA. And come January, the company was indeed on the SEC’s victim list (along with three other companies that Rocker had just hammered in a column for Barron’s magazine).

“The power of any theory is its ability to make predictions,” Patrick later says in his “Miscreants’ Ball” presentation. “It doesn’t matter how wacky a theory sounds, if it makes predictions that are confirmed, you’ve got to pay attention to it.”

There are two important points to note here about the naked short selling crimes outlined above:

1)  The targets of naked short sellers get listed on foreign exchanges

Before companies are attacked by naked short selling, they are listed on foreign exchanges without their knowledge.  This 2005 Euromoney article offers confirmation of this process.

Naked shorting: Stung by the German connection
April 2005
by Peter Koh

Thousands of US stocks are being traded on a little-known Berlin exchange, without the knowledge of many of the companies involved. …

A YEAR AGO Ted Noble, chief financial officer at Advanced ID Corporation, a Calgary-based microchip-tracking company, received some surprising news.

"We were congratulated by a third party who saw that our shares were trading on the Berlin Stock Exchange," he recalls. "That came as news to us because WE'D NOT DONE ANYTHING TO GET LISTED IN GERMANY. I talked to a few people and we couldn't figure out whether it was good or bad."

Noble soon found out when his company's shares started behaving oddly on the US OTC bulletin board. "April 29 [2004] was a slow day, and only about 10,000 of our shares had traded. Then 370,000 shares traded in the last 20 minutes before the close. It knocked our stock price down from 58 cents to 41 cents, before closing nearly 20% down at 48 cents. That was very unusual for our stock. I'd never seen anything...

2)  The money from selling "phantom shares" doesn’t go to the naked short sellers

When stock IOUs are sold by naked short sellers, the money paid by the buyer goes into collateral (US treasuries) to backup the stock IOUs.  This letter to the SEC confirms that “phantom shares” are collateralized.

Ms. Florence Harmon Acting Secretary Securities and Exchange Commission 100 F. Street, NE Washington, DC 20549-9303 Re: Release No. 34-58773; File No. 87-30-08 Amendment to Regulation SHO Interim Final Temporary Rule

Dear Sirs,

…
The foundation for the DTCC-administered clearance and settlement system in use in the U.S. has been illegally converted to one based upon mere “collateralization versus payment” or “CVP” wherein the seller of securities is only asked to collateralize the monetary amount of the failed delivery obligation on a daily marked to market basis.  This policy invites abusive naked short selling activity in that the failures to deliver shares results in the procreation of what are referred to as “securities entitlements” that are allowed to be readily sellable as if they were legitimate “shares” of a corporation due to the wording unfortunately incorporated into the text of UCC Article 8-501.  
…

So when "phantom shares" of US companies are sold “on exchanges in Stuttgart, Munich, Frankfurt, Berlin, and Australia”, the money collected from buyers is transferred to the US and put into treasury securities.  The more "phantom shares" are sold abroad, the more demand is created for dollars and US treasuries.

Time Frame of the naked short selling fraud

Naked short selling wasn’t a major problem during the 1990s.  It was only more recently that companies started getting wiped out of existence by “phantom shares”.  To see exactly when, we need to look at the data.

While the DDTC only started releasing failures-to-deliver (naked short selling) data for stocks after 2006, it is possible to get an idea when naked short selling started to be a problem by looking at the failures-to-deliver data for treasury securities, agency debt, and MBS.  This data is readily available on the Fed's website going back to 1990, as seen below.



By graphing this data, we see that naked short selling problem started in the 2001/2002 period.


Full Resolution

Comparing the gold lease rate and failure-to-deliver data

If we combine the gold lease rate and failure-to-deliver data into one graph, we get a pretty interesting result, as seen below.


Full Resolution

The graph above shows how naked short selling sprung up after the 1999 Washington agreement and became epidemic as gold leasing died out.  The odds of this being a coincidence are astronomically low.  Essential, the gold leasing fraud was replaced by the naked short selling fraud.

Motive behind gold manipulation and naked short selling

To find the connection between gold leasing and naked short selling, all you need to do is "follow the money".

Gold leasing: Investors around the world pay billions in foreign currencies to buy the thousands of tons of gold being leased out.  These foreign currencies are than converted into dollars (helping keep the US currency strong) and used to buy US treasuries (helping the US treasury finance the federal deficit) to serves as collateral for the loaned gold.

Naked short selling:  Investors around the world pay billions in foreign currencies to buy the millions of phantom stock in midsize companies listed on foreign exchanges.  These foreign currencies are then converted into dollars (helping keep the US currency strong) and used to buy US treasuries (helping the US treasury finance the federal deficit) to serves as collateral for the phantom stock.

The naked short selling fraud, which began after the 1999 Washington Agreement, was meant to replace the enormous flow of money into the dollar and US treasury market that was about to be lost due to the end of gold leasing.

The party responsible for both frauds

Since gold leasing and naked short selling both support the dollar and the US treasury market, the obvious party responsible is the Treasury's Department's Exchange Stabilization Fund (ESF) which is officially in charge of defending the dollar.  The ESF role in gold manipulation has long been recognized by GATA and others, as explained by the Golden Sextant.

February 1, 2000. Two Bills: Scandal and Opportunity in Gold?
…
Evidence is accumulating that … the Clinton administration has effectively capped the gold price by using the ESF to backstop the selling of gold futures and other gold derivative products by politically well-connected bullion banks. …
…
The odd behavior of the gold price over the past five years, including massive gold leasing and heavy bouts of futures selling apparently timed to abort threatened rallies, has generated considerable speculation regarding intentional manipulation by governmental authorities. …

The Fed and the ESF are the only arms of the U.S. government with broad statutory authority "to deal in gold" and thus by reasonable extension in gold futures and derivatives. Were the Fed to engage in such activities, it would of necessity have to do so subject to all the institutional safeguards that govern its more important functions. Unlike the Fed, the ESF is virtually without institutional structure or safeguards. It is under the exclusive control of the Secretary of the Treasury, subject only to the approval of the President. Indeed, direct control and custody of the ESF must rest at all times with the President and the Secretary. The statute further provides (31 U.S.C. s. 5302(a)(2)): "Decisions of the Secretary are final and may not be reviewed by another officer or employee of the Government."

Originally funded out of the profits from the 1934 gold confiscation, the little known ESF is available for intervention in the foreign exchange markets. …

… the allegation that knowledgeable gold market participants and observers are making … is that the ESF -- by writing gold call options or otherwise -- is making sufficient gold cover available to certain bullion banks to allow them safely to take large short positions in gold, thereby putting downward pressure on the price and in the process making huge profits for themselves.
…

While the ESF’s role in gold manipulation is recognized, its role in naked short selling, on the other hand, is not.

Patrick Byrne and Deep Capture unfortunately seem to believe that naked short selling is a wall street crime motivated by greed.  That isn't right.  It isn't the government regulators (SEC, etc...) that have been "deep captured" by Wall Street Interest.  It is Wall Street (DTCC, primary dealers, hedge funds, etc) that has been corrupted by the treasury department (specifically the ESF).

Conclusion: It is all ONE conspiracy

The gold manipulation conspiracy alledged by GATA and the naked short selling conspiracy alledged by Deepcapture are one and the same, and the Treasury's Exchange Stabilization Fund (ESF) is the force behind gold leasing and "phantom stocks".

(for the more about the Treasury's ESF, see my entry *****What I have been afraid to blog about: THE ESF AND ITS HISTORY*****)