Kris:
We continue to research rumors alleging money laundered from Russia being
used to finance the purchase by Goldman Sachs, BlackRock (PNC) and their bid
partners of up to $4.7 billion of HUD loan sales between 1994-97 as well as
how the use of PROMIS and other technologies may have been used in moving so
much money out of the Russian banking systems through the international
settlement systems to the US and offshore during that period.
I would appreciate if you could circulate these links far and wide. All
feedback welcome.
Thanks.
Catherine Austin Fitts
Solari
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I. HOUSE OF REPRESENTATIVES STUDY ON US-RUSSIAN ORGANIZED CRIME
The estimates of how much was drawn out of Russia during the 1994-98 period
range from the 100's of billions into the trillions, much of it through
organized crime. In 1994, Louis Freeh, head of the FBI, testified that
Russian organized crime was one of the greatest threats to national
security.
The nexus to Clinton and DNC fundraising---and no doubt Republican
fundraising--is a subtext. The house finished a large investigation last
year which is posted on the House website:
RUSSIA's ROAD TO CORRUPTION by House of Representatives Speakers Advisory
Committee
http://policy.house.gov/russia
I recently finished the best book I could find on US-Russian Organized
Crime:
II. RED MAFIYA: A RECENT PUBLICATION ON RUSSIAN ORGANIZED CRIME
Red Mafiya: How the Russian Mob Has Invaded America by Robert I Friedman.
Published in 2000 by Little Brown and Company
According to Friedman, the US Russian mafia is predominately all Jewish and
gathered in New York starting in the 70's. They worked closely and
intimately with the Italian mobs throughout the eighties, pouring money into
both Governor Carey and Cuomo's campaigns. The book describes a fundraiser
for Mario Cuomo in 1994. The Russian Jews specialty is financial fraud. They
have invested substantial monies in Israel as well as both Democratic and
Republican campaigns. Their relations with the intelligence communities are
strong, one of the reasons the book said that the FBI and others have been
slow to go after them. Their ties to Wall Street and the New York Jewish
community appear to be many and deep.
It was the first time that the BONY story and the various rumors around
Goldman started to make any sense in terms of being operationally possible.
One of the top journalists on Russia over the last decade is Anne
Williamson. She believes that the firm that laundered the most money from
Russia is Goldman Sachs. Given the amounts involved, no firm could not have
possible done this amount without the support or "look the other way" of the
Administration. Other names mentioned are BONY, Harvard and AIG.
III. THE DOJ LAWSUIT AGAINST HARVARD RE ITS ROLE IN RUSSIA
The following link is to a copy of the qui tam adopted by DOJ against
Harvard for its role in the rape of Russia. I believe the Boston US Attorney
is handling the prosecution.
http://www.solari.com/harvardcomplaint.pdf
IV. ONGOING LITIGATION AGAINST BONY
Attached is a copy of one of the shareholder suits against BONY. The case
has standing in Chin's court in NY Southern District and discovery is
proceeding. This is the suit in which a subsidiary of AIG, as E&O carrier,
is providing a defense (Sullivan & Cromwell) for the Bank of New York and
its board and senior management on the sharedholder suit accusing them of
intentionally laundering money from Russia.
The following is Kelly O'Meara latest article in Insight Magazine on the
suit.
FYI....BONY's error and omissions insurance is a sub of AIG. AIG is paying
for Sullivan and Cromwell's defense . Apparently the reality of fraud as
plead by bank officers and admitted by the bank is not a problem.....
http://www.insightmag.com/archive/200105071.shtml
Has Dirty Money Polluted
BNY?
By Kelly Patricia O’Meara
[EMAIL PROTECTED]
The Bank of New York’s chairman/CEO and its
board of directors are being sued for their alleged
involvement in the laundering of billions of dollars
stolen from Russia.
Last year Thomas Renyi, chairman of the board and chief executive
officer (CEO) of the Bank of New York (BNY) received more than
$20 million in salary and other compensation for his management of
the nation’s oldest financial institution. This represents a more than 50
percent increase from what Renyi received in 1999 — the year in
which he was called to testify before the House Banking and Financial
Services Committee regarding allegations that BNY was involved in
laundering at least $7 billion from what law-enforcement officials have
described as dubious financial institutions and other entities in the
former Soviet Union.
In the course of his testimony, Renyi told federal lawmakers that
he was “dismayed” by the “suggestions in the press that the Bank of
New York has been involved in or been used as a vehicle for money
laundering or other illicit activities.” The BNY chairman/ CEO then
purred that he wanted to “set the record straight.”
Rather than firmly state that the bank had no knowledge of and
did not participate in any illegal activity, Renyi told committee
members in carefully worded testimony that “no charges have been
filed against the Bank of New York. No relevant authorities have
asserted that the Bank of New York has engaged in money
laundering or violated any other law.” In fact, in the six pages of
testimony read to lawmakers, not once did Renyi deny the allegations.
In September 2000 — the same year Renyi enjoyed a nearly $8
million increase from his previous year’s compensation — Renyi and
the BNY board of directors were sued by shareholders in both state
and federal court for “systemic wrongdoing that occurred within the
bank for over six years.”
The New York law firm of Milberg Weiss Bershad Hynes &
Lerach LLP filed a shareholder derivative lawsuit in the U.S. District
Court for the Southern District of New York charging that, “at least
as early as 1993, Renyi actively conspired, directly participated in
and personally profited from schemes to illegally divert and steal
Russian assets.”
The federal lawsuit further contends that “the conduct of the
board represents a wholesale abandonment of the critical
management-oversight function directors are obligated to ensure.
Despite facts brought to the board’s attention, and despite its
independent obligation to do so, the board failed to ensure the
effective implementation of the most basic systems designed to ferret
out the wrongdoing involved. The board recklessly permitted the
endemic misconduct described herein to continue despite its clear and
unequivocal power and obligation to halt it. Multiple internal reports
were made regarding the wrongdoing, but no effective action was
ever taken. By the end of 1997, the Bank had earned over $1 billion
from wire-transfer processing fees, and the wrongdoing arising from
the bank’s Eastern European division continued unchecked.”
New York attorney Richard Brualdi also filed a derivative
lawsuit against Renyi and the board of directors in the Supreme Court
of the state of New York on behalf of shareholders of BNY and the
Bank of New York Co. Inc., charging that “the defendants have
breached their fiduciary duties of due care and loyalty by inter alia
participating directly, by conspiracy or by aiding and abetting one
another.”
Whether money was laundered through BNY is not in question.
Lucy Edwards, former vice president of the Eastern European
division of BNY, and her husband, Peter Berlin, pleaded guilty last
year to money laundering and facilitating the movement of billions of
dollars out of Russia through accounts with BNY.
The New York law firm of Sullivan & Cromwell is the lead
counsel for the investment bank of Goldman Sachs —which Robert
Rubin cochaired before becoming secretary of the Treasury in 1995
during the major Russian money laundering — representing that
company and BNY in the lawsuits. Sullivan & Cromwell, however,
deferred to a BNY spokesman, who insisted upon not being
identified, before claiming to Insight that “the charges have no basis in
fact and the bank will defend itself vigorously.”
Brualdi and Mel Weiss, the lead attorneys for the plaintiffs in the
state and federal civil lawsuits, say they are confident the facts will
expose the board’s wrongdoing. “We had to satisfy ourselves [that
the facts are straight], and we would not have made the allegations if
we did not think they were credible,” explains Weiss. “All you have
to do is look at his [Renyi’s] testimony before Congress and then tell
me if he’s credible.”
While neither of the law firms representing the shareholders is
eager to discuss their cases in detail, Brualdi’s take on the lawsuit is
not unlike that of Weiss. “The Bank of New York,” Brualdi explains,
“will tell you he [Renyi] is doing a great job as CEO, but we think the
facts will establish that he either knew or should have known that
there was money being laundered.”
The attorney continues: “We will show at trial that this has
caused the bank embarrassment — diminished the bank’s reputation
around the world — and I think we can establish that [some] people
don’t want to do business with it because of what has occurred. The
evidence will show that the bank was significantly harmed and that
millions of dollars have been spent responding to various
investigations.”
Asked how it is possible that Renyi claims to have had no
knowledge of the billions of dollars being run through the bank,
Brualdi said with a laugh, “Why Renyi didn’t know or should have
known is the $10 billion question.”
Anne Williamson, author of The Contagion: The Betrayal of
Liberty, Russia and the United States in the 1990s and an expert on
Russian economic reform and Western aid, testified before the House
Banking and Financial Services Committee in September 1999. She
alleges that BNY “is a looting operation. The shareholders are happy
with making money and they don’t want to bring attention to this
problem. I was living in Moscow and I saw what was going on. Many
people were telling them [BNY] that the banks were crooked, but
BNY wanted the money. That country is falling apart. You can’t loot
a country for 15 years and not have the infrastructure collapse. It’s
still going on and there is going to be a terrible result in the future
that
we’re all going to have to deal with.”
Williamson continues: “Clinton’s policy was a disaster over there.
Hundreds of billions of dollars were taken out of Russia, and they
were stealing from their own people. It was our people who were
misdirecting the International Monetary Fund [IMF] money. So now
you have a country in a real mess and it will ultimately fall on the
shoulders of the taxpayers. The real question is where were the
overseers? I contend that they were making money just like Renyi.
I’ve been saying since 1997 that they should be indicted. Where is
the Justice Department?”
So why isn’t the Justice Department involved? “I talked to
people at Justice long ago,” says Williamson, “and one guy told me,
‘Look, the Department of Justice has been corrupted and the
Clintons knew what they were doing when they fired all the U.S.
attorneys. They will never file anything that makes the Clintons look
bad.’” Williamson concludes: “The issue is that BNY knew about the
[money] laundering. But there is so much money moving through the
system that no one can police it if the banks don’t cooperate.”
Williamson raises an important point. While there are hundreds
of laws in place, and new ones being enacted each year, in an effort
to rein in illegal banking transactions, the focus is on the banking
practices of average depositors. But who watches the bankers? Who
makes sure the bankers are not facilitating the money laundering?
A Treasury official at the Virginia-based Financial Crimes and
Enforcement Network (FinCen) who asked not to be identified tells
Insight that “banks and other financial institutions are supposed to file
currency-transaction reports or suspicious-activity reports with
FinCen. But FinCen isn’t law enforcement; it is only the repository of
information.” Asked if FinCen could provide specific information
about the number of suspicious-activity reports filed by BNY for
specific dates, the official explains they are “protected by privacy and
we can’t release that information.”
An officer at the New York Federal Reserve Bank, who also
asked not to be identified, explains that “we have some regulation and
supervision, but it’s kind of an umbrella system. In terms of
supervision, we don’t have people out pursuing individual bank
accounts, we don’t do forensic audits and we don’t monitor activity
day to day. It’s a variety of regulators who oversee the banks. It’s a
collective responsibility to make sure the banks are safe and it’s our
job to ensure that the controls are in place.” Precisely how and what
entity makes sure the controls are in place apparently is too difficult to
explain.
Even Congress, which has oversight of the banking industry, is
speechless on this issue. According to Peggy Peterson, a
spokeswoman for House Banking and Financial Services Committee
Chairman Michael Oxley of Ohio, the committee cannot comment on
a pending lawsuit. Never mind that the committee already has held
hearings on the issue and taken sworn testimony from BNY chairman
Renyi about the alleged money laundering.
Although it has been established in court that at least two
officers
connected to BNY were involved in money-laundering schemes, no
evidence has been made public that the bank’s board, including
Chairman Renyi, participated or had knowledge of the illegal
activities. However, based on Securities and Exchange Commission
(SEC) documents, Renyi’s compensation sharply increased during the
height of the Russian financial crisis.
For instance, in 1991 BNY was recovering from losses on bad
loans; the net income for the bank was a dismal $134 million. Renyi’s
compensation reflected the bank’s poor profit performance and he
received no bonus. However, in 1997, the peak period of the
laundering of Russian money, Renyi’s compensation jumped from a
little more than $3 million to $10.4 million.
In 2000, say critics, when it seemed the bank successfully had
weathered the storm without serious enforcement action by
regulators, Renyi appears to have been rewarded for his efforts with
an increase in his compensation to just under $21 million, a raise of
more than 50 percent. Furthermore, the most recent proxy from the
company shows that BNY stock, during the prior five-year period,
substantially outperformed both its peer group of larger banks and the
S&P 500 (see chart, left).
So BNY, a relatively small bank compared to peer rivals Chase
Manhattan, Citibank and J.P. Morgan, outperformed them
significantly at the very time BNY is alleged to have participated in
laundering billions of dollars from financial institutions in Russia.
Additionally, BNY’s increased prosperity and performance, as well
as the chairman/CEO’s ballooning compensation, also coincided with
huge increases in BNY’s interest-bearing foreign deposits.
As reported in Insight (see “Dirty Dollars,” May 15, 2000), SEC
documents show that between 1993 and 1999, BNY’s average
foreign interest-bearing deposits increased from $7.9 billion to $20.2
billion. It was the only category to show substantial increases.
Although Renyi assured Congress under oath — and penalty of
perjury —that neither the bank nor any of its customers have “lost
any money as a result of the activities in question,” his testimony did
not detail the remarkable performance and profits BNY enjoyed
during the period in question. And no one on the committee asked
BONY-AMC.pdf
