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Paul Merrell

Barack Obama's Secret Terrorist-Tracking System, by the Numbers - The InterceptThe Inte... - 0 views

  • Nearly half of the people on the U.S. government’s widely shared database of terrorist suspects are not connected to any known terrorist group, according to classified government documents obtained by The Intercept. Of the 680,000 people caught up in the government’s Terrorist Screening Database—a watchlist of “known or suspected terrorists” that is shared with local law enforcement agencies, private contractors, and foreign governments—more than 40 percent are described by the government as having “no recognized terrorist group affiliation.” That category—280,000 people—dwarfs the number of watchlisted people suspected of ties to al Qaeda, Hamas, and Hezbollah combined. The documents, obtained from a source in the intelligence community, also reveal that the Obama Administration has presided over an unprecedented expansion of the terrorist screening system. Since taking office, Obama has boosted the number of people on the no fly list more than ten-fold, to an all-time high of 47,000—surpassing the number of people barred from flying under George W. Bush. “If everything is terrorism, then nothing is terrorism,” says David Gomez, a former senior FBI special agent. The watchlisting system, he adds, is “revving out of control.”
  • Most people placed on the government’s watchlist begin in a larger, classified system known as the Terrorist Identities Datamart Environment (TIDE). The TIDE database actually allows for targeting people based on far less evidence than the already lax standards used for placing people on the watchlist. A more expansive—and invasive—database, TIDE’s information is shared across the U.S. intelligence community, as well as with commando units from the Special Operations Command and with domestic agencies such as the New York City Police Department. In the summer of 2013, officials celebrated what one classified document prepared by the National Counterterrorism Center refers to as “a milestone”—boosting the number of people in the TIDE database to a total of one million, up from half a million four years earlier.
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    How do we dismantle the Politics of Fear? 
Paul Merrell

The Feds & Media: How the FBI Destroyed Journalism | nsnbc international - 0 views

  • James Comey, director of the Federal Bureau of Investigations (FBI) defended the use of an FBI agent posing as an Associated Press journalist in order to install spyware into the computer of a teenager from Lacy, Washington State.
  • Comey said in an open letter published in mainstream media that the FBI did not “overstep its bounds” while using deceptive tactics during their investigation into the teen who was in communication “online with the” FBI agent.” According to Comey: “An F.B.I. agent communicated online with the anonymous suspect. Relying on an agency behavioral assessment that the anonymous suspect was a narcissist, the online undercover officer portrayed himself as an employee of The Associated Press, and asked if the suspect would be willing to review a draft article about the threats and attacks, to be sure that the anonymous suspect was portrayed fairly.” To entrap the student, the FBI produced a fake news report provided by the FBI agent to the Associated Press regarding a “technology savvy student holds Timberline High School hostage.”
  • The Reporters Committee for Freedom of the Press (RCFP) wrote a letter to Holder and Comey explaining : “The warrant for such action apparently did not mention that the tracker was delivered as an AP article, with an AP byline “and therefore impersonated a news media organization.” Concerned that the FBI not only failed to follow its own guidelines for such activity, but also did not make clear to the judge who signed the warrant or FBI counsel that the software ‘impersonated a media organization or that there were First Amendment concerns at stake’.”
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  • The FBI agent made sure the teen saw the article which facilitated the downloading of spyware into the boy’s computer in order to track the child’s online whereabouts. Kathy Best, executive editor of the Seattle Times commented : “The FBI, in placing the name of The Associated Press on a phony story sent to a criminal suspect, crossed a line and undermined the credibility of journalists everywhere – including at The Times.” The FBI maintains that “the operation was aimed at preventing tragedy. We were fortunate that information provided by the public gave us the opportunity to step into a potentially dangerous situation before it was too late.” Kathleen Carroll, executive editor of AP said : “This latest revelation of how the FBI misappropriated the trusted name of the Associated Press doubles our concern and outrage, expressed earlier to Attorney General Eric Holder, about how the agency’s unacceptable tactics undermine AP and the vital distinction between the government and the press.”
  • The RCFP continued in their letter: “The utilization of news media as a cover for delivery of electronic surveillance software is unacceptable. This practice endangers the media’s credibility and creates the appearance that it is not independent of the government. It undermines media organizations’ ability to independently report on law enforcement.” Ironically, the FBI have a program targeting teenagers called, “The FBI Teen Reporter’s Workshop” where “selected” high school students in New York are brought to the FBI field office to “learn about how the FBI interacts with the media. In addition to hearing about the overall mission of the FBI and the mission of the Office of Public Affairs, the teens have the opportunity to meet members of the media and to take photos with FBI equipment.”
Paul Merrell

Why Russia Matters to the Boston Bombing Suspect's Defense - WhoWhatWhy - 0 views

  • But a close look at the nature of the information Tsarnaev’s defense team has repeatedly requested from prosecutors in motions to the court suggests Tsarnaev’s lawyers are trying to pry loose something about the government’s relationship with the Tsarnaevs prior to the bombing on April 15, 2013.The key to this relationship may lie in a store of information that the Russians delivered to U.S. investigators in the days after the bombing. Equally, it may be found in warnings Moscow delivered to U.S. investigators before the attack. Either way, the U.S. government has fought hard to keep the lid on what it knows.The defense team’s motive in asking for such information is clear enough: they are angling for anything that might convince jurors to spare their client’s life. But the government’s stonewalling raises serious questions about why it wants to keep secret what the Russians knew about the Tsarnaevs, and how and when this information reached the FBI and the CIA.
  • Already, Tsarnaev is facing an uphill battle because of a widespread presumption of his guilt—a presumption fed, in large part, by law enforcement leaks and an unquestioning media. The FBI has been waging an apparent war on witnesses, characterized by the scorched-earth tactic of intimidating, arresting, deporting, and, in one case, killing them. That has rendered them inaccessible to Tsarnaev’s defense.These hardball tactics appear to be just part of the government strategy of suppressing information in the case. The Justice Department’s trump card is the ability to withhold information based on national security claims. That is in addition to an overwhelming financial advantage.
  • The defense team has thus repeatedly had to ask U.S. District Judge George A. O’Toole Jr. to compel the government to release information. That has eaten up a lot of time critical in preparing the defense case.Not that Tsarnaev has been given much of it. One statistic tells the story: Tsarnaev’s team has had about half of the preparation time that defense lawyers in federal death penalty cases have been granted over the past decade—18 months versus a median of 36. So the prospects for getting the whole story behind the bombing laid out in open court look bleak.
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  • All of this brings up numerous questions, not the least of which are:
  • But is there more to the government’s obstruction tactics? Is there something in those conversations that the government doesn’t want to come up at trial? After all, it was the Tsarnaev family that repeatedly claimed the FBI tried to recruit Tamerlan as an informant—a claim the agency quickly batted down as ridiculous.However, the aggressive and well-documented efforts by the FBI to infiltrate the Muslim community with informants and provocateurs makes the FBI’s denials ring a little hollow.
  • But is there another reason for the government’s stonewalling? Is the deeper motive to suppress evidence that could uncover serious government misjudgments or, worse, malfeasance?Despite the fact that the U.S. government’s relationship with the Tsarnaevs prior to the bombing has great relevance to victims of the bombing—and to the public at large—current national security classification rules make it unlikely that such information will ever see the light of day.It’s important to note that defense lawyer Clarke has made a career out of keeping high-profile individuals presumed to be guilty out of the proverbial electric chair. In this case, maybe she senses a cover-up.In the process of trying to keep Tsarnaev alive, it may be that she and her team will make a crack in the walls protecting the truth about what the government knew, and when.
Paul Merrell

Thousands Join Legal Fight Against UK Surveillance - And You Can, Too - The Intercept - 0 views

  • Thousands of people are signing up to join an unprecedented legal campaign against the United Kingdom’s leading electronic surveillance agency. On Monday, London-based human rights group Privacy International launched an initiative enabling anyone across the world to challenge covert spying operations involving Government Communications Headquarters, or GCHQ, the National Security Agency’s British counterpart. The campaign was made possible following a historic court ruling earlier this month that deemed intelligence sharing between GCHQ and the NSA to have been unlawful because of the extreme secrecy shrouding it.
  • Consequently, members of the public now have a rare opportunity to take part in a lawsuit against the spying in the Investigatory Powers Tribunal, a special British court that handles complaints about surveillance operations conducted by law enforcement and intelligence agencies. Privacy International is allowing anyone who wants to participate to submit their name, email address and phone number through a page on its website. The group plans to use the details to lodge a case with GCHQ and the court that will seek to discover whether each participant’s emails or phone calls have been covertly obtained by the agency in violation of the privacy and freedom of expression provisions of the European Convention on Human Rights. If it is established that any of the communications have been unlawfully collected, the court could force GCHQ to delete them from its vast repositories of intercepted data.
  • By Tuesday evening, more than 10,000 people had already signed up to the campaign, a spokesman for Privacy International told The Intercept. In a statement announcing the campaign on Monday, Eric King, deputy director of Privacy International, said: “The public have a right to know if they were illegally spied on, and GCHQ must come clean on whose records they hold that they should never have had in the first place. “We have known for some time that the NSA and GCHQ have been engaged in mass surveillance, but never before could anyone explicitly find out if their phone calls, emails, or location histories were unlawfully shared between the U.S. and U.K. “There are few chances that people have to directly challenge the seemingly unrestrained surveillance state, but individuals now have a historic opportunity finally hold GCHQ accountable for their unlawful actions.”
Paul Merrell

Feds identify suspected 'second leaker' for Snowden reporters - Yahoo News - 0 views

  • The FBI has identified an employee of a federal contracting firm suspected of being the so-called "second leaker" who turned over sensitive documents about the U.S. government's terrorist watch list to a journalist closely associated with ex-NSA contractor Edward Snowden, according to law enforcement and intelligence sources who have been briefed on the case. The FBI recently executed a search of the suspect's home, and federal prosecutors in Northern Virginia have opened up a criminal investigation into the matter, the sources said.
  • vestigative website co-founded by Glenn Greenwald, the reporter who first published sensitive NSA documents obtained from Snowden. Headlined "Barack Obama's Secret Terrorist-Tracking System, by the Numbers," the story cited a classified government document showing that nearly half the people on the U.S. government's master terrorist screening database had "no recognized terrorist affiliation."
  • The story, co-authored by Jeremy Scahill and Ryan Devereaux, was accompanied by a document "obtained from a source in the intelligence community" providing details about the watch-listing system that were dated as late as August 2013, months after Snowden fled to Hong Kong and revealed himself as the leaker of thousands of top secret documents from the NSA. This prompted immediate speculation that there was a "second leaker" inside the U.S. intelligence community providing material to Greenwald and his associates.
Paul Merrell

No Fly List: Govt Offers New Redress Procedures - 0 views

  • The government will no longer refuse to confirm or deny that persons who are prevented from boarding commercial aircraft have been placed on the “No Fly List,” and such persons will have new opportunities to challenge the denial of boarding, the Department of Justice announced yesterday in a court filing. Until now, the Government refused to acknowledge whether or not an individual traveler had been placed on the No Fly List and, if so, what the basis for such a designation was. That is no longer the case, the new court filing said: “Under the previous redress procedures, individuals who had submitted inquiries to DHS TRIP [the Department of Homeland Security Traveler Redress Inquiry Program] generally received a letter responding to their inquiry that neither confirmed nor denied their No Fly status.” “Under the newly revised procedures, a U.S. person who purchases a ticket, is denied boarding at the airport, subsequently applies for redress through DHS TRIP about the denial of boarding, and is on the No Fly List after a redress review, will now receive a letter providing his or her status on the No Fly List and the option to receive and/or submit additional information.”
  • If the individual traveler chooses to pursue the matter, DHS “will provide a second, more detailed response. This second letter will identify the specific criterion under which the individual has been placed on the No Fly List and will include an unclassified summary of information supporting the individual’s No Fly List status, to the extent feasible, consistent with the national security and law enforcement interests at stake.” The new redress procedures were developed in response to legal challenges to the No Fly List procedures, which argued that the procedures were constitutionally deficient or otherwise improper. The notice of the new procedures was filed yesterday in the pending lawsuit Gulet Mohamed v. Eric H. Holder, Jr., which is one of the ongoing lawsuits over the No Fly List.
  • The CRS report, which predates the newly announced procedures, reviewed many of the legal issues involved. See The No Fly List: Procedural Due Process and Hurdles to Litigation, April 2, 2015.
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    Still not good enough. There should be no no-fly list. And if we are to have one anyway, people should be notified before or at the time they are placed on the list Finding out only when you arrive at the airport and are denied boarding is B.S.  Say I decide I want to work in Thailand for a few years teach English as a second language. I arrange for a job there, make the initial payment for rental of housing, get rid of most of my possessions, sell my house, and make other arrangements for a long-term absence from the U.S. Then I get to the airport and learn I'm not allowed to leave the U.S. This is bureaucracy gone nuts, Kafkaeque.   
Paul Merrell

Nusra Front quietly rises in Syria as Islamic State targeted - The Washington Post - 0 views

  • The Nusra Front, Syria’s al-Qaida affiliate, is consolidating power in territory stretching from the Turkish border to central and southern Syria, crushing moderate opponents and forcibly converting minorities using tactics akin to its ultraconservative rival, the Islamic State group. But while the Islamic State group gets most of the attention largely because its penchant for gruesome propaganda, the Nusra Front quietly has become one of the key players in the four-year civil war, compromising other rebel groups the West may try to work with while increasingly enforcing its own brutal version of Islamic law. Its scope of influence now abuts the Golan Heights bordering Israel, and its membership largely composed of Syrian nationals refuse any negotiations with the government of embattled President Bashar Assad, further complicating the brutal conflict.
  • “The Nusra Front will most likely outlast ISIS in Syria, and will represent a severe and existential threat to the aspirations of the Syrian people in terms of a pluralistic, democratic society,” said Fawaz A. Gerges, director of the Middle East Center at the London School of Economics, using an alternate acronym for the extremist group. The Islamic State group helped create the Nusra Front, providing financing, manpower and military hardware in 2012. But the group and its patron eventually had a falling out in 2013 for ideological as well as strategic reasons. The Nusra Front, while loyal to al-Qaida, has cooperated with other Syrian rebel factions in the fight to oust Assad. In recent months, the group has overrun rebel strongholds in Syria’s Idlib province, trouncing two prominent, U.S.-backed rebel factions, Harakat Hazm and the Syria Revolutionaries Front. Following the deadly clashes, SRF leader Jamal Maarouf fled to Turkey and Hazm announced it was dissolving.
Paul Merrell

Lawmakers ask agencies to reveal use of phone surveillance technology | TheHill - 0 views

  • Lawmakers on the House Oversight Committee sent letters Monday to the heads of 24 federal agencies seeking answers about the use of a controversial surveillance technology.The devices, known by the brand name “StingRay,” simulate a cell phone tower and are able to collect information on mobile phones and their users. Lawmakers say they are trying to create a comprehensive record of how different federal agencies use the devices. The scrutiny comes after the Department of Justice and the Department of Homeland Security adopted new policies for how their employees may deploy the technology.ADVERTISEMENT“As it was with DOJ and DHS before those agencies issued department-wide policies governing use of the devices, the Committee is concerned that other federal agencies may be governed by a patchwork of policies,” the letters said. “Those policies may permit the use of cell-site simulators devices through a lower standard than a search warrant obtained after a showing probable cause."The letters, signed by Oversight Chairman Jason Chaffetz (R-Utah) and ranking member Elijah Cummings (D-Md.) as well as Rep. Will Hurd (R-Texas) and Rep. Robin Kelly (D-Ill.), were sent to 24 federal agencies in total, including many not traditionally viewed as having law enforcement functions, like the Social Security Administration and the National Science Foundation.Lawmakers have asked the agencies for documents and information related to their potential use of the devices.
Paul Merrell

Reducing Chronic Homelessness, and More from CRS - 0 views

  • The number of chronically homeless persons in the U.S. dropped from more than 120,000 in 2008 to around 84,000 in 2014, a new report from the Congressional Research Service notes. The federal government has undertaken to end chronic homelessness by 2017. “One of the reasons that federal programs have devoted resources to ending chronic homelessness is studies finding that individuals who experience it, particularly those with serious mental illness, use many expensive services often paid through public sources, including emergency room visits, inpatient hospitalizations, and law enforcement and jail time,” the CRS report said. “Even emergency shelter resources can be costly. In addition to potential ethical reasons for ending chronic homelessness, doing so could reduce costs in providing assistance to this population.” See Chronic Homelessness: Background, Research, and Outcomes, December 8, 2015.
Paul Merrell

Judge bars release of 2013 videos of fatal shooting by Chicago cops -- for now - Chicag... - 0 views

  • s Mayor Rahm Emanuel was apologizing Wednesday for the broken system of police accountability exposed by the Laquan McDonald case, city attorneys argued before a federal judge that footage of an officer fatally shooting a 17-year-old carjacking suspect nearly three years ago should be kept from public view.Lawyers for Cedrick Chatman's family allege the videos of his January 2013 killing contradict statements from police that Chatman had turned and pointed a dark object at police as he ran, prompting Officer Kevin Fry to fire in fear of his life. City attorneys argue releasing the footage — which they described as low-quality and incomplete — could inflame the public and jeopardize a fair trial.At a brief hearing Wednesday, U.S. District Judge Robert Gettleman said the records should stay sealed for the time being. But the judge said he would likely lift the protective order next month if he was going to be asked to consider the videos in any pretrial rulings, a move that would automatically make them part of the public record.
  • "If it's likely going to come out through pretrial motions, then there really is no reason to wait," said Gettleman, who set a hearing on the issue for Jan. 14.Gettleman's ruling came three weeks after police dash-cam video of 17-year-old McDonald being shot 16 times by Officer Jason Van Dyke went viral, sparking protests and leading to the resignations of both police Superintendent Garry McCarthy and Scott Ando, who headed the Independent Police Review Authority, which has drawn criticism for its lax enforcement on excessive-force complaints.
  • Earlier this year, Lorenzo Davis, the IPRA supervisor who headed up the Chatman probe, filed a federal lawsuit alleging he was fired by Ando for concluding that officers in several shootings — including Chatman's — were not justified in using lethal force.Davis, who viewed the surveillance video as part of the IPRA inquiry, told the Tribune last month he did not see Chatman aim at or turn toward the officers."Cedrick was just running as the shots were fired," Davis said. "You're taught that deadly force is a last resort and that you should do everything in your power to apprehend the person before you use deadly force. I did not see where deadly force was called for at that time."An investigator on Davis' team alleged that Fry violated the department's deadly force policy, but that claim was ruled "unfounded" in the final IPRA report.
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    If the videos "could inflame the public and jeopardize a fair trial," then they must show a different story than the police have been telling, yes? 
Paul Merrell

U.S. government reveals breadth of requests for Internet records | Reuters - 0 views

  • The Federal Bureau of Investigation has used a secretive authority to compel Internet and telecommunications firms to hand over customer data including an individual’s complete web browsing history and records of all online purchases, a court filing released Monday shows.The documents are believed to be the first time the government has provided details of its so-called national security letters, which are used by the FBI to conduct electronic surveillance without the need for court approval.The filing made public Monday was the result of an 11-year-old legal battle waged by Nicholas Merrill, founder of Calyx Internet Access, a hosted service provider, who refused to comply with a national security letter (NSL) he received in 2004. Merrill told Reuters the release was significant “because the public deserves to know how the government is gathering information without warrants on Americans who are not even suspected of a crime.”
  • National security letters have been available as a law enforcement tool since the 1970s, but their frequency and breadth expanded dramatically under the USA Patriot Act, which was passed shortly after the Sept. 11, 2001 attacks. They are almost always accompanied by an open-ended gag order barring companies from disclosing the contents of the demand for customer data.A federal court ruled earlier this year that the gag on Merrill’s NSL should be lifted. Merrill's challenge also disclosed that the FBI may use NSLs to gain IP addresses on everyone a suspect has corresponded with and cell-site location information. The FBI said in the court filings it no longer used NSLs for location information. The secretive orders have long drawn the ire of tech companies and privacy advocates, who argue NSLs allow the government to snoop on user content without appropriate judicial oversight or transparency.
  • Last year, the Obama administration announced it would permit Internet companies to disclose more about the number of NSLs they receive. But they can still only provide a range such as between 0 and 999 requests, or between 1,000 and 1,999. Twitter (TWTR.N) has sued in federal court seeking the ability to publish more details in its semi-annual transparency reports. Several thousand NSLs are now issued by the FBI every year, though the agency says it is unaware of the precise number. At one point that number eclipsed 50,000 letters annually. The FBI did not respond to a request for comment Monday.
Paul Merrell

Martin Shkreli Arrested on Securities Fraud Charges - 0 views

  • Martin Shkreli, a boastful pharmaceutical executive who came under withering criticism for price gouging vital drugs, denied securities fraud charges on Thursday following an early morning arrest, and was freed on a $5 million bond. While the 32-year-old has earned a rare level of infamy for his brazenness in business and his personal life, what he was charged with had nothing to do with skyrocketing drug prices. He is accused of repeatedly losing money for investors and lying to them about it, illegally taking assets from one of his companies to pay off debtors in another. “Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company,” Brooklyn U.S. Attorney Robert Capers said at a press conference.
  • Evan Greebel, a New York lawyer, who is alleged in the federal indictment to have helped Shkreli in his schemes, was also arrested and charged. Like Shkreli, he pleaded not guilty, and he was freed on a $1 million bond. Both men and their lawyers declined to comment after their court appearance.
  • Read the full text of the indictment here In the federal indictment and a complaint by the Securities and Exchange Commission, authorities say Shkreli began losing money and lying to investors from the time he began managing money. In his mid-20s, he got nine investors to place $3 million with him and at one point he had only $331. Securities fraud is hardly unheard of on Wall Streeet and the amounts involved here are nowhere near on the scale of Bernie Madoff. But Shkreli’s case has drawn such attention because of his defiant price-gouging and his own up-by-the-bootstraps history. The son of immigrants from Albania and Croatia who did janitorial work and raised him and his brothers in working-class Brooklyn, Shkreli seemed at first to embody the American dream and then to mock it. After dropping out of an elite Manhattan high school, he worked as an intern for Jim Cramer’s hedge fund as a 17-year-old and quickly impressed with his ability to call stocks. He created hedge funds, taught himself biology and, after earning a BA at Baruch College in New York City, began hedge funds investing in biotech.
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  • He became famous within a certain world but entered public consciousness after he raised the price more than 55-fold for Daraprim in September from $13.50 per pill to $750. It is the preferred treatment for a parasitic condition known as toxoplasmosis, which can be deadly for unborn babies and patients with compromised immune systems including those with HIV or cancer. His company, Turing Pharmaceuticals AG, bought the drug, moved it to a closed distribution system and instantly drove the price into the stratosphere. He drew shocked rebukes from Congress, doctors and presidential candidates, and brought public attention to the rising prices of older drugs. Donald Trump called Shkreli a “spoiled brat,” and the BBC dubbed him the “most hated man in America.” Bernie Sanders, the Democratic presidential candidate, rejected a $2,700 campaign donation from him, directing it to an HIV clinic. A spokesman said the campaign would not keep money “from this poster boy for drug company greed.” All the criticism seemed at first to have some impact and Shkreli said he would lower the price. Then he reneged. When Hillary Clinton tried one more time last month to get him to cut the cost, he dismissed her with the tweet “lol.” At a Forbes summit in New York this month, wearing a hooded sweatshirt, he said if he could have done it over, “I probably would have raised the price higher,” adding, “My investors expect me to maximize profits.”
  • Shkreli did further damage to his public image with other acts and boasts. He spent millions on the only copy of a Wu-Tang Clan album that music fans are desperate to hear and then told Bloomberg Businessweek that he had no immediate plans to listen to it. He takes often to Twitter and message boards, bragging about his business strategies, musical tastes and politics; he live-streams from his office for long stretches. The SEC complaint and federal indictment lay out a series of schemes and cover-ups carried out by Shkreli. Capers said authorities began investigating him as early as 2014.
  • Barely 23, he was managing hedge fund Elea Capital in New York and lost it all in 2007. Around then, a trade with Lehman Brothers ended with a $2.3 million judgment against him, prosecutors said. In 2010, he lost his clients’ $3 million investment in his new fund, MSMB Capital. In 2011, he bet that shares of Orexigen Therapeutics Inc. would fall and wound up owing $7 million to his broker, Merrill Lynch, authorities said. He couldn’t pay, and he, an unnamed accomplice and MSMB Capital eventually extinguished the debt with a $1.35 million settlement, they said. Part of that money came from his next firm, authorities said. After the collapse of MSMB Capital, Shkreli launched MSMB Healthcare with about $5 million from 13 investors. He paid himself “far in excess” of the agreed-upon 1 percent management fee and 20 percent profit incentive, according to the SEC.
  • Shkreli then used cash from MSMB Healthcare to invest in Retrophin, the pharmaceutical company he founded in 2011, even though it “had no products or assets,” prosecutors said. Later, he used the assets of Retrophin to repay angry investors in his hedge funds, prosecutors said. Shkreli is confident that he will be cleared of the charges, according to a statement on his behalf. Shkreli is particularly disappointed that his litigation with Retrophin has become a government enforcement matter, according to the statement. He also denied the charges regarding the MSMB entities, which he said involve complex accounting matters that prosecutors and the SEC fail to understand, according to the statement. “It is no coincidence that these charges, the result of investigations which have been languishing for considerable time, have been filed at the same time of Shkreli’s high-profile, controversial and yet unrelated activities,” according to the statement. “The government suggested that Mr. Shkreli was involved in a Ponzi scheme. Ponzi victims do not make money, yet Mr. Shkreli’s investors enjoyed strong results.”
  • As Shkreli’s losses mounted, so did his lies. He fabricated portfolio statements and, with his lawyer’s help, deceived the SEC and outside accountants. He backdated records, manufactured a phony loan agreement between Retrophin and a hedge fund, and created sham consulting agreements with Retrophin as a way to route the company’s cash to his earlier investors. Greebel, the arrested lawyer, made sure Retrophin’s outside accountants were unaware of Shkreli’s financial maneuvers and helped him concoct the consulting agreements used to repay the hedge fund investors, the U.S. said. The cases mirror a lawsuit brought by Retrophin. Shkreli blithely dismissed his old company’s claims, saying, “The $65 million Retrophin wants from me would not dent me. I feel great. I’m licking my chops over the suits I’m going to file against them.” Earlier, he had denied wrongdoing in a post on InvestorsHub after Retrophin disclosed it had received a subpoena from federal prosecutors and the preliminary findings from its own investigation of Shkreli. He called the company’s allegations “completely false, untrue at best and defamatory at worst.”
  • “Every transaction I’ve ever made at Retrophin was done with outside counsel’s blessing,” he said on the investment blog in February, without identifying the lawyers. When Shkreli was working for Cramer’s firm, he was still a teenager. After recommending successful trades, Shkreli eventually set up his own hedge fund, quickly developing a reputation for trashing biotechnology stocks in online chatrooms and shorting them, to enormous profit. Widely admired for his intellect and sharp eye, he set up Retrophin to develop drugs and acquire older pharmaceuticals that could be sold for higher profits. Turing, which is less than a year old and has raised $90 million in financing, has followed a similar strategy with the purchase of drugs, including Daraprim. Shkreli recently bought a majority stake in KaloBios Pharmaceuticals Inc. after Turing received a warning from the New York attorney general that the distribution network for Daraprim may violate antitrust laws. State officials made their concerns known to Turing and Shkreli in an Oct. 12 letter obtained by Bloomberg.
  • KaloBios recently acquired the license for benznidazole, a standard treatment for Chagas, a deadly parasitic infection most common in South and Central America. The firm announced plans to increase the cost from a couple hundred dollars for two months to a pricing structure like that for hepatitis-C drugs, which can run to nearly $100,000 for 12 weeks.
  • With the federal charges and regulatory actions, Shkreli could be banned from running a public company, which could put the future of KaloBios into question. Trading in KaloBios shares was halted after the stock fell 53 percent. It’s less clear what the impact could be on Turing, which is closely held.
  • Federal authorities will have to ask a judge to impose an asset freeze if they want to guarantee Shkreli doesn’t dispose of ill-gotten gains. The charges suggest that a small group of health-care firms—ones that acquire the rights to drugs and significantly increase their prices—is drawing the scrutiny of regulators and prosecutors, with a possible chilling effect on aggressive drug-pricing strategies. Legislators are already paying attention. A hearing of the Senate Special Committee on Aging on Dec. 9 scrutinized such tactics. Before Shkreli started Turing, Retrophin raised the price of Thiola, used to treat a rare condition causing debilitating recurrences of kidney stones, from $1.50 a pill to $30. “Some of these companies seem to act more like hedge funds than traditional pharmaceutical companies,” said Senator Susan Collins, a Maine Republican who ran the recent hearing. George Scangos, CEO of biotechnology giant Biogen Inc., went further, saying in an interview, “Turing is to a research-based company like a loan shark is to a legitimate bank.”
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    Couldn't happen to a nicer guy.
Paul Merrell

Maduro Makes Moves toward Economic Reform as New Poll Predicts PSUV Win | venezuelanaly... - 0 views

  • Venezuelan President Nicolas Maduro unveiled  a series of economic measures on Tuesday following the release of a new poll predicting a victory for the ruling United Socialist Party (PSUV) in December parliamentary elections. Among the measures are various modifications to Venezuela’s Fair Price Law aimed at fighting speculation by private retailers, which has become rampant amid soaring inflation.
  • A new category of maximum price will applied to all goods and services, stipulating a 30% maximum profit for retailers determined on the basis of “real costs of production and commercialization”. Within this new schema, importers will be entitled to a maximum profit of 20%, while domestic producers will be allowed to take in a 30% maximum gain in an effort to stimulate national production. By capping profits in each rung of the production chain, the government aims to put a halt to the speculative spiral rapidly driving up the prices of everyday goods, which constantly erodes the purchasing power of Venezuela’s popular sectors. Additionally, Maduro announced a modification applying to food and health services, a category, which the government says has been manipulated by private retailers. The new “Fair Price” registry will be determined unilaterally by Venezuela’s National Superintendence of Fair Prices over the next 30 days. In order to enforce the new “fair price” regime, Maduro also unveiled tougher punishments for speculation, which will be detected by evaluating the net income of private firms in light of new regulations on maximum price and maximum profit. The government will now impose steeper penalties on retailers who remark the price of goods, which may include jail time. Furthermore, the common practice of fixing prices on the basis of the parallel dollar will now be considered an offense. Apart from measures against speculation, Maduro also announced a 30% across-the-board salary increase for public sector workers and armed forces personnel, which comes on the heels of a 30% raise in the national minimum wage announced last week. The salary adjustment was coupled with the approval of 110,000 new pensioners as part of the national pension system, which has been massively expanded under the Bolivarian administrations of Chávez and Maduro.
  • Lastly, the Venezuelan president indicated that the ministries of industry and commerce would be fused in order to better coordinate efforts to combat speculation and guarantee the distribution of essential goods.
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    Socialist (and populist) Venezuela is under siege by right wing businessmen and the U.S. government, with two attempted coups in the last few years, one earlier this year. Hoarding of goods by businessmen opposed to the government in an attempt to undermine government support has been a big problem. The profit-capping measures just announced are directed at that problem. 
Paul Merrell

2015: The Year Police Killings In America Were Counted - 0 views

  • The Black Lives Matter movement that swept the country in 2015 has—among other accomplishments—forced global media outlets to afford victims of police killings the most basic acknowledgement: a public record of their names and deaths. Such a grim tally was maintained this year by both the Guardian and the Washington Post, following the consistent failure of the U.S. government to keep adequate records. According to the Guardian, 1,126 people were killed by police so far in 2015, averaging more than three a day, with 27 percent of those slain facing mental health issues. The numbers confirm the racial injustices highlighted by nationwide protests. Among black people in America, 6.9 per million were killed by police, compared to 2.86 white people per million. In other words, African-Americans were nearly 2.5 times as likely to be killed by police as their white counterparts. Native-Americans and Latinos were also disproportionately likely to have their lives taken by law enforcement, with 3.4 per million and 3.35 per million killed respectively.
  • The high number of killings was corroborated by the Washington Post, which only tracks fatal police shootings—not killings by taser, beating, and other forms of force, such as the high-profile death of African-American man Freddie Gray in Baltimore. The paper concluded, nonetheless, that nearly 1,000 civilians were shot and killed by police this year. What’s more, the Post‘s analysis found that the FBI, which is tasked with tracking such shootings, is dramatically undercounting killings because “fewer than half of the nation’s police departments report their incidents to the agency.” “The Post documented well more than twice as many fatal shootings this year as the average annual tally reported by the FBI over the past decade,” journalists Kimberly Kindy, Marc Fisher, Julie Tate, and Jennifer Jenkins reported this week.
  • But perhaps, more than anything, both databases show that heightened visibility, in itself, will not end police killings or bring justice to its victims.
Paul Merrell

Apple could use Brooklyn case to pursue details about FBI iPhone hack: source | Reuters - 0 views

  • If the U.S. Department of Justice asks a New York court to force Apple Inc to unlock an iPhone, the technology company could push the government to reveal how it accessed the phone which belonged to a shooter in San Bernardino, a source familiar with the situation said.The Justice Department will disclose over the next two weeks whether it will continue with its bid to compel Apple to help access an iPhone in a Brooklyn drug case, according to a court filing on Tuesday.The Justice Department this week withdrew a similar request in California, saying it had succeeded in unlocking an iPhone used by one of the shooters involved in a rampage in San Bernardino in December without Apple's help.The legal dispute between the U.S. government and Apple has been a high-profile test of whether law enforcement should have access to encrypted phone data.
  • Apple, supported by most of the technology industry, says anything that helps authorities bypass security features will undermine security for all users. Government officials say that all kinds of criminal investigations will be crippled without access to phone data.Prosecutors have not said whether the San Bernardino technique would work for other seized iPhones, including the one at issue in Brooklyn. Should the Brooklyn case continue, Apple could pursue legal discovery that would potentially force the FBI to reveal what technique it used on the San Bernardino phone, the source said. A Justice Department representative did not have immediate comment.
Gary Edwards

Goldman Sachs mortgage-backed securities settlement - Business Insider - 0 views

  • “Goldman took $10 billion in TARP bailout funds knowing that it had fraudulently misrepresented to investors the quality of residential mortgages bundled into mortgage backed securities,” said Special Inspector General Christy Goldsmith Romero for TARP. 
  • “Many of these toxic securities were traded in a taxpayer funded bailout program that was designed to unlock frozen credit markets during the crisis.  While crisis investigations take time, SIGTARP is committed to working with our law enforcement partners to protect taxpayers and bring accountability and justice.”
  • $5 billion settlement with Goldman Sachs over the bank’s deceptive practices leading up to the financial crisis.
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  • The settlement includes an agreed-upon statement of facts that describes how Goldman Sachs made multiple representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors, its process for screening out questionable loans, and its process for qualifying loan originators. 
  • Contrary to those representations, Goldman Sachs securitized and sold RMBS backed by large numbers of loans from originators whose mortgage loans contained material defects.
  • In the statement of facts, Goldman Sachs acknowledges that it securitized thousands of Alt-A, and subprime mortgage loans and sold the resulting residential mortgage-backed securities (“RMBS”) to investors for tens of billions of dollars. 
  • During the course of its due diligence process, Goldman Sachs received pertinent information indicating that significant percentages of the loans reviewed did not conform to the representations it made to investors.
  • Goldman also received and failed to disclose negative information that it obtained regarding the originators’ business practices.  Indeed, Goldman’s due diligence vendors provided Goldman with reports reflecting that the vendors had graded significant numbers and percentages of sampled loans as EV3s, i.e., not in compliance with originator underwriting guidelines. 
  • In certain circumstances, Goldman reevaluated loan grades and directed that such loans be waived into the pools to be purchased or securitized. 
  • In many cases, 80 percent or more of the loans in the loan pools Goldman purchased and securitized were not sampled for credit and compliance due diligence. 
  • Nevertheless, Goldman approved various offerings for securitization without requiring further due diligence to determine whether the remaining loans in the deal contained defects.  A Goldman employee overseeing due diligence for a particular loan pool noted that the pool included loans originated with “[e]xtremely aggressive underwriting” and “large program exceptions made without compensating factors.”  Despite this observation, Goldman did not review the remaining portion of the pool, and subsequently securitized thousands of loans from the pool. 
  • Goldman made statements to investors in offering documents and in certain other marketing materials regarding its process for reviewing and approving originators, yet it failed to disclose  to investors negative information it obtained about mortgage loan originators and its practice of securitizing loans from suspended originators. 
  • Attorney General Schneiderman was elected in 2010 and took office in 2011, when the five largest mortgage servicing banks, 49 state attorneys general, and the federal government were on the verge of agreeing to a settlement that would have released the banks – including Bank of America – from liability for virtually all misconduct related to the financial crisis.
  • Attorney General Schneiderman refused to agree to such sweeping immunity for the banks. As a result, Attorney General Schneiderman secured a settlement that preserved a wide range of claims for further investigation and prosecution.
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    If this doesn't qualify as fraud, nothing does. "We now know more about the $5 billion settlement Goldman Sachs has agreed to pay related to residential mortgage-backed securities it sold between 2005 and 2007. Regulators announced details of the settlement on Monday. Goldman Sachs initially announced the settlement in January. That nearly wiped out fourth-quarter earnings for the firm. "Today's settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling," said one regulator, U.S. Attorney Benjamin B. Wagner of the Eastern District of California, in a statement. Morgan Stanley announced a similar settlement in February. It agreed to pay $3.2 billion over charges that it misled investors on the quality of mortgage loans it sold. And on Friday, the Justice Department announced that Wells Fargo had agreed to pay $1.2 billion to settle "shoddy" mortgage-lending practices. Here's what we learned about the Goldman settlement on Monday:"
Paul Merrell

HSBC Judge: Public Has a Right to HSBC's Dirty Linen | 100Reporters - 1 views

  • A federal judge on Thursday ordered the release of an independent monitor’s review of HSBC’s internal cleanup after a landmark $1.92 billion settlement for laundering drug money and for sanctions violations. The U.S. Justice Department and the bank had claimed that disclosing the report could harm law enforcement efforts and provide criminals with a “road map” to holes in HSBC’s defenses against money laundering. But U.S. District Judge John Gleeson ruled that the court and the public had a right to know whether HSBC was living up to its agreement to improve internal controls and merited a deferral of prosecution by the government.
  • Gleeson also said it was “equally appropriate and desirable for the public to be interested and informed now in the progress” of the HSBC settlement. HSBC in 2012 reached a landmark settlement with the federal government, admitting that it had deliberately laundered funds for drug cartels and countries under trade sanctions. Prosecutors described the settlement as a “sword of Damocles” hanging over HSBC. Should the bank fail to improve, it would face prosecution for unbridled financial wrongdoing. A condition of the settlement was that the bank submit to extensive outside review of its reform efforts. The former New York State ethics chief Michael G. Cherkasky was appointed as the HSBC monitor in 2013. A leaked copy of his report recounted instances of U.S. bank managers bullying and shouting at compliance team members, and drew attention to the bank’s dealings with clients that had possible links to terrorism, according to Bloomberg.
Paul Merrell

EU finally stands up to US 'bullying' over Iran sanctions | Asia Times - 0 views

  • By Pepe Escobar September 30, 2018 4:36 PM (UTC+8) Share Tweet Linkedin Print Email Share 0 Comment 0 History may one day rule this was the fateful geopolitical moment when the European Union clinched its PhD on foreign policy. Last week, EU foreign policy head Federica Mogherini and Iranian Foreign Minister Mohammad Javad Zarif, announced at the UN a “special purpose vehicle” (SPV) to deal with the Trump administration’s sanctions on Iran after the US unilaterally pulled out of the JCPOA,  also known as the Iran nuclear deal.
  • Mogherini crucially emphasized, “in practical terms, this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world.” The SPV, which according to Mogherini “is aimed at keeping trade with Tehran flowing while the US sanctions are in place,” could be in effect before the second stage of US sanctions begin in early November. This single initiative means Brussels is attempting to position itself as a serious geopolitical player, openly defying the US and essentially nullifying the Iran demonization campaign launched by the White House, CIA and State Department.
  • It may have taken a few months, but the EU-3 have finally realized what Moscow and Beijing already knew: any business with Iran – which is in the interest of all players – must bypass the US dollar. So now we come to a situation where the EU-3 will set up a multinational, state-backed, financial mechanism to help European companies conduct business with Iran in euros – and thus away from US financial enforcers. In parallel, we will have Russia and China doing business with Iran in rubles and yuan.
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  • And in a total symbiotic way, the SPV opens another path for Russia and China as well. After all, the SPV mechanism will bypass the Belgium-based SWIFT financial network, on which the US interferes at will. SPV may become the preferred post-SWIFT mechanism, allowing for even more cross-border business across Eurasia and expanding to the Global South.
  • The game reveals its complexity when we consider that Iran has been the catalyst for the EU to finally stand up to the US – and potentially get closer to Russia and China. What we see emerging is the contours of a possible cross-Eurasia alliance, in multiple fronts, between Russia-China-Iran – the three key nodes of Eurasia integration – and the EU-3. It’s a game worthy of a Persian chess master: involving energy wars, the balance of power in Southwest Asia, the absolute power of the US-controlled global financial system and the status of the US dollar – bolstered by the petrodollar – as the global reserve currency.
Paul Merrell

The New Snowden? NSA Contractor Arrested Over Alleged Theft Of Classified Data - 0 views

  • A contractor working for the National Security Agency (NSA) was arrested by the FBI following his alleged theft of “state secrets.” More specifically, the contractor, Harold Thomas Martin, is charged with stealing highly classified source codes developed to covertly hack the networks of foreign governments, according to several senior law enforcement and intelligence officials. The Justice Department has said that these stolen materials were “critical to national security.” Martin was employed by Booz Allen Hamilton, the company responsible for most of the NSA’s most sensitive cyber-operations. Edward Snowden, the most well-known NSA whistleblower, also worked for Booz Allen Hamilton until he fled to Hong Kong in 2013 where he revealed a trove of documents exposing the massive scope of the NSA dragnet surveillance. That surveillance system was shown to have targeted untold numbers of innocent Americans. According to the New York Times, the theft “raises the embarrassing prospect” that an NSA insider managed to steal highly damaging secret information from the NSA for the second time in three years, not to mention the “Shadow Broker” hack this past August, which made classified NSA hacking tools available to the public.
  • Snowden himself took to Twitter to comment on the arrest. In a tweet, he said the news of Martin’s arrest “is huge” and asked, “Did the FBI secretly arrest the person behind the reports [that the] NSA sat on huge flaws in US products?” It is currently unknown if Martin was connected to those reports as well.
  • It also remains to be seen what Martin’s motivations were in removing classified data from the NSA. Though many suspect that he planned to follow in Snowden’s footsteps, the government will more likely argue that he had planned to commit espionage by selling state secrets to “adversaries.” According to the New York Times article on the arrest, Russia, China, Iran, and North Korea are named as examples of the “adversaries” who would have been targeted by the NSA codes that Martin is accused of stealing. However, Snowden revealed widespread US spying on foreign governments including several US allies such as France and Germany. This suggests that the stolen “source codes” were likely utilized on a much broader scale.
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