THE OFFSHORE BANKING SCANDAL CONTINUES: WHAT INDICTMENTS?
Going back some six years, I have repeatedly commented on and described the shameful crises of offshore banking, brokerage, hedge funds, naked shorting, money laundering, and support for terrorism. I have heard promise after promise of additional pending indictments, or recovery of stolen funds, or both, and I have patiently waited for the system to work.
It has all been for naught, as not a single indictment of a material character has come down except for the notorious Amir Elgindy, other than the truncated action against the criminal Badian brothers, and their coterie of facilitators. The manipulation of Sedona Corporation by this conspiracy should be the best case in the industry, yet all the Federal authorities have done is blow the case by the numbers. Further, there is even less evidence of any material recovery of the funds spirited offshore by these highly organized criminal enterprises.
I know and have worked closely with many US Attorneys and their investigators from various Federal agencies. I have seen their frustration with the system. Probably no one organization has suffered more severely than the FBI, whose retention rate is now approaching the pregnancy term of an elephant, 20 months. It is not their collective fault. Rather it is a signal of the wholesale corruption of our political, legal and judicial systems for the protection of hugely funded vested interests, whose integrity is non-existent.
I have repeatedly told the story of how criminals and their facilitators set up complex interlinked and layered structures mixing international business corporations with offshore irrevocable trusts, set up in non-matching venues/jurisdictions, using offshore banks protected in every case by banking secrecy laws. All of the major global brokers, banks, significant hedge funds, select money managers, and many major corporations have set up all forms of complex special purpose entities (SPE’s) most Americans first heard of in relation to the hiding of profits by Enron.
A major sponsor of this kind of activity was the banking systems set up by one major player in Bermuda, operating through a huge spider web of enterprises all over the Caribbean, with links to many other such entities globally, ranging from the Channel Islands off Britain, to Cyprus, to such arcane locations as Vanuatu. One of those key operators in the formation and money laundering of such entities, Jonathan Curshen, of Red Sea Management, was arrested in Costa Rica, and he has been extradited over a year ago back to the US. Nothing more has been heard from him, again quite suspiciously.
Tracking washed, flushed and laundered monies offshore has been something the USG has shown itself to be astoundingly incompetent at. The real story of Madoff behind the rip-off of a reported $50 Billion from investors is what happened to those monies over the $1 Billion recovered thanks to Madoff coming in and giving it up. The impact of such ham-handed behavior is to cause most Americans to wonder if the reported number of $50 Billion is even honest, or if the real number isn’t in fact much larger.
Last week, the CIA ran ads in the New York Post and on Bloomberg Radio looking for investment bankers and hedge fund traders to help them unwind the monstrously complex systems of offshore banking and money laundering, including millions of regular wire transfers designed to make such money lose its identity. The ad itself was an indication of the very first problem. Investment bankers and traders aren’t where the knowledge or expertise lies. It is in the hands of the back office and banking officials handling the rolling wires done every 60 to 90 days from one offshore account to another.
The details of how this is done are not nearly as important as the fact that many of the top experts are not even known to our law enforcement officials, or if they are, there is no sustained relationship with not only them, nor with the foreign entities that have the real knowledge. They need the equivalent of financial bounty hunters, not employees or clerks, who will work for a percentage of funds that are located and returned. If ever there has been a case for the old adage “You get what you pay for”, this is it.
One of the first really definitive works done on this process was written in the early 1970’s, “The Fountain Pen Conspiracy” by Jonathan Kwitny. I know that for several years, it was used by the FBI at Quantico in training agents in fraud by wire. This book is the story of how the first known $100 Million dollar money laundering scam was perpetrated, constructed by two lawyers in Florida, using an entity known as the Bank of Sark, which was not much more than some P. O. Boxes in the Caribbean.
The next definitive book on this kind of process was “Metal Men” by A. Craig Copetas, on the story of the new Oil to old Oil conversion process that helped Mark Rich steal over $10 Billion from the US in the 1970’s and 1980’s, only ended when he fled to Switzerland to avoid arrest under a DOJ indictment. He was later pardoned by President Clinton with the assistance of his lawyer, our current Attorney General, Eric Holder.
Another major money laundering operation was set up by the Arkansas Development Finance Authority, set up to launder the drug money proceeds of the Iran Contra guns for drugs operation in Mena, Arkansas when Clinton was Governor. As revenues from those efforts started to run at $100 Million a month, it was realized that no bank in Arkansas could handle this kind of cash, and the ADFA moved all of its accounts to Bank of Credit and Commerce (BCCI) in Florida, later shut down in the most important major bank scandal of that era.
There are more of these stories, but no stories of major political figures being indicted. This is the pattern being repeated over and over again. If this is a primer, understand that I could write post graduate level papers on the details of this series of scandals, which have morphed yet again into modern variants on this theme. All of you need to understand that several Trillion dollars are gone offshore, maybe more than our annual GDP. We are doomed if a major part is not recovered.
There are no dumb questions here. This is NOT a don’t ask, don’t tell problem. Wake Up and smell the burning economy.