Friday, September 17, 2010

A Tear In Both Eyes

Rihab Kanaan, a Palestinian poetess was born in Beirut 1959. The Intifadah and the Zionist occupations’ brutal manner to curbing it were the theme of her poems.

She was called after the old Arab poetess Al-Khansaa who had spent her life lamenting her brother who had been killed .

During the massacre at the Lebanon Palestinian refugee camps of Sabra and Shatila in 1982, Rihab lost 54 of her family members and relatives. It happened that Rihab’s baby daughter, Maimanah, escaped the massacre, and was raised up by her neighbors.

Maimanah grew up in a Palestinian refugee camp. Poetess Rihab didn’t know that Maimanah was one of the few survivors of the massacre, also no one knew that the mother survived too. Rihab moved to Tunis and got married there where she lived for 15 years, as the Lebanese authorities did allow her to visit Lebanon.

With the start of the second Intifadah Rabab (Al-Khansaa) started to show up on the Palestinian T.V. station to recite her patriotic poems, and it happened that one of her Sabra and Shatila neighbors saw her reciting her poems, and recognized her from the name.

The Abu Dhabi T.V. station knew of the story and arranged for their meeting on air alive without the knowledge of the mother.


Image by Benjamin Heine

Last night my cousin Aaron visited us for dinner and brought with a film for us to watch afterwards. He said it was “special for me” and promised that I would enjoy it. I looked at the title, it certainly did not look like a movie I would go out of my way to see, it was called The Motorcycle Diaries’.

The film itself was produced in 2004, but was unknown to me, probably because it is in Spanish (with English subtitles) and never received raving reviews in Israel. It was a film based on diary entries written by one of my heroes, Che Guevara. Next month it will be the 43rd anniversary of his brutal assassination in Bolivia by the CIA. But, despite his demise, he is very much with us today. His face has become an icon to an entire generation that adorns it on t shirts and posters. But, what is known about the man himself?

The Motorcycle Diaries shows a side of Che never before revealed on film…. the Humanitarian that he was. A man who cared, a man who loved, both family and all of humanity. It showed how he became the revolutionary that he was, a man that dedicated (and gave) his life for humanity.

The thoughtfulness of my cousin for choosing this particular film indicates what a special human being he is as well. All I can say is thank you Aaron and Bless you for being you!

And Bless the memory of Ernesto ‘Che’ Guevara ….. may he continue to inspire generations to come!

The film itself is a MUST SEE for those of you that haven’t already. I guarantee that you will not regret it.

A short clip from the film can be seen here…..

What TARP Could Have Paid For...

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How Corporations Own the US Congress

With the November elections quickly approaching, the majority of Americans will be thinking one thing: "Who cares?” This apathy isn't due to ignorance, as some accuse. Rather, working people's disinterest in the two party system implies intelligence: millions of people understand that both the Democrats and Republicans will not represent their interests in Congress.

This begs the question: Whom does the two party system work for? The answer was recently given by the mainstream The New York Times, who gave the nation an insiders peek on how corporations "lobby" (buy) congressmen. The article explains how giant corporations — from Wall-mart to weapons manufacturers — are planning on shifting their hiring practices for lobbyists, from Democratic to Republican ex-congressmen in preparation for the Republicans gaining seats in the upcoming November elections:

"Lobbyists, political consultants and recruiters all say that the going rate for Republicans — particularly current and former House staff members — has risen significantly in just the last few weeks, with salaries beginning at $300,000 and going as high as $1million for private sector [corporate lobbyist] positions." (September 9, 2010)

Congressmen who have recently retired make the perfect lobbyists: they still have good friends in Congress, with many of these friends owing them political favors; they have connections to foreign Presidents and Kings; and they also have celebrity status that gives good PR to the corporations.

Often, these congressmen have done favors for the corporation that is now hiring them, meaning, that the corporations are rewarding the congressmen for services rendered while in office, offering them million dollar lobbyist jobs (or seats on the corporate board of directors) that requires little to no work.

The same New York Times article revealed that the pay for 13,000 lobbyists [!] currently bribing Congress is a combined $3.5 billion. It was also explained how some lobbying firms keep an equal amount of Democrats and Republicans on hand, so they can be prepared for any eventuality in the elections.

This phenomenon is more than a little un-democratic: when millions of people vote for a candidate, the outcomes are quickly manipulated and controlled before the election even happens.

Interestingly, the corporate-directed Wall Street Journal wrote a similar article in 2008, as the Democrats had begun to dominate politics in Washington:

"Washington's $3 billion lobbying industry has begun shedding Republican staffers [politicians], snapping up Democratic operatives [politicians] and entire firms, a shift that started even before Tuesday's ballots were counted and Democrat Barack Obama captured the presidency." (November 5, 2008)

This article was appropriately titled “Lobbyists Put Democrats Out Front as Winds Shift.”

The corporate money flows from party to party, so that the same goals are achieved: higher profits for corporations. The sums thrown at these politicians are mind boggling: the Associated Press reported that the corporate-orientated Chamber of Commerce spent "... nearly $190 million since Barack Obama became president in January 2009." (August 21, 2010)

These numbers explain the "deeper" differences between Democrats and Republicans — money. Each party is a machine that vies for power because this power carries with it vast sums of corporate money. The longer a party is in office and the more connections it makes, the more its net worth to corporations, the more that these rewards can be spread to the different layers of the party. There is indeed a real-life, nasty fight between the Republican and Democratic Parties to dominate this corporate money.

One "interest group" that ex-Congressmen don't work for is labor unions. Unions spend millions of dollars to help get Democrats elected, and millions more is spent trying to get their ear while they're in office.

But unions cannot out-spend the banks; and they can't offer millionaire retirement packages to retired Senators. The corporate retirement plans of Congressmen prove where their minds are while in office, and whose interests are being looked after.
Unions cannot continue to pretend that the Democrats are their "friends.” Labor has very little to show for this dysfunctional, decades-long friendship: union membership continues to shrivel as do jobs, wages and benefits for workers – a losing strategy if ever there was one.

A “lesser of two evils” approach to politics equals evil politicians for labor, no matter who wins. In fact, the lesser-evil Democrats have become increasingly evil over the years, to the point where the party as a whole is more Conservative than the Nixon-era Republicans.
The point has been reached where — in various states — Democratic governors are being endorsed by unions after promising to attack the wages and benefits of public workers!

To get out of this vicious, dead-end cycle, unions could unite their strength to form coalitions that promote independent labor candidates: 100 percent funded by labor to govern 100 percent in the interest of working people. All other roads lead back to the corporate lobbyists.

Follow the Dirty Money

LAST month, a federal district judge approved a deal to allow Barclays, the British bank, to pay a $298 million fine for conducting transactions with Cuba, Iran, Libya, Myanmar and Sudan in violation of United States trade sanctions. Barclays was discovered to have systematically disguised the movement of hundreds of millions of dollars through wire transfers that were stripped of the critical information required by law that would have enabled the world to know that for more than 10 years the bank was moving huge sums of money for enemy governments. Yet all federal prosecutors wanted to settle the problem was a small piece of the action.

When Judge Emmet Sullivan of federal district court in Washington, who ultimately approved the deal with Barclays, asked the obvious question, “Why isn’t the government getting rough with these banks?” the remarkable response was that the government had investigated but couldn’t find anyone responsible.

How preposterous. Banks can commit crimes only through the acts of their employees. Federal law enforcement agencies are simply failing to systematically gather the intelligence they need to effectively monitor the crime.

The Barclays deal was just one in a long line of wrist slaps that big banks have recently received from the United States. Last May, when ABN Amro Bank (now largely part of the Royal Bank of Scotland) was caught funneling money for the benefit of Iran, Libya and Sudan, it was fined $500 million, and no one went to jail. Last December, Credit Suisse Group agreed to pay a $536 million fine for doing the same. In recent years, Union Bank of California, American Express Bank International, BankAtlantic and Wachovia have all been caught moving huge sums of drug money, but no one went to jail. The banks just admitted to criminal conduct and paid the government a cut of their profits.

Wachovia alone had moved more than $400 billion for account holders in Mexico, $14 billion of which was in bulk currency that had been driven in armored cars or flown to the United States. Just who in Mexico did anyone think had that kind of cash? Of course, the government did a thorough investigation but could find no individuals responsible.

Bankers are escaping prosecution because law enforcement is failing to expose the evidence that some bankers market dirty money. Years after the transactions occur, any effort to prove what was known at the time is practically impossible. The bankers simply say they didn’t know where the money came from. Naturally, prosecutors look for ways to get around trying to prosecute those sorts of cases, and instead make deals.

It should be up to law enforcement agencies to bring prosecutors solid proof of what the bankers knew and said at the time they knowingly handled ill-gotten money. This is not difficult, only time-consuming.

In the 1990s, while I was a federal agent working to gather evidence against Colombian drug cartels, I spent a year and a half building a sophisticated undercover identity as a money launderer, with the help of a half-dozen informants and concerned citizens. Then, for the next two and a half years, I infiltrated the highest levels of one cartel and began dealing with their banking contacts. I recorded hundreds of conversations behind boardroom doors with sophisticated international bankers.

They readily gave me access to all the tools of their trade, starting with lawyers who knew how to create offshore corporations for crooks in places like Panama, Hong Kong, the British Virgin Islands and Gibraltar. The bankers also provided secret safe deposit boxes abroad, and arranged for currency to be shipped in safes to places like Dubai and Abu Dhabi, where large cash deposits are not recorded. My money could then be repatriated to the United States disguised as offshore loans. Account details were whispered in secret meetings so that paper never crossed borders. And any records sought by any government could simply be destroyed.

The evidence I gathered led, in the early 1990s, to the demise of the Bank of Credit and Commerce International, the seventh largest privately held bank in the world, and Capcom, a multinational commodities trading company. More important, it put a slew of bankers behind bars and got their tongues wagging, so much so that we learned where Manuel Noriega, the former Panamanian general, had hidden his fortune in payoffs from Colombian cartel leaders.

Revenues from global drug trafficking — estimated to add up to more than $400 billion a year — are just one small component of the money, known as flight capital, that criminals try to hide from governments. This capital also includes proceeds from things like tax evasion, trade with countries under sanctions and arms dealing. It’s big business. The desire to have a share in this business has led the private client divisions of many international banks to develop sophisticated skills to avoid scrutiny from regulators.

Tracking and confiscating the fortunes of terrorist organizations, drug cartels and organized criminals is important for national security, and yet no single federal law enforcement agency systematically investigates the international bankers and businessmen who launder this money. What’s needed is a small but elite multi-agency task force, including representatives of the intelligence community and accomplished members of law enforcement agencies from other nations, that could identify the institutions and businesses that handle the bulk of the dirty money flowing around the globe. A task force numbering 100 people or less, at least initially, could compile a database containing detailed information about bad banks and money launderers.

Some of this data could be culled from the various law enforcement agencies’ existing files. But investigators should also debrief the hundreds of high-level criminals now being held in our prisons to get detailed information about their allies in the banking and business community.

The task force should also try to identify every asset used by major criminal and terrorist organizations. If one of them buys a million-dollar airplane, for example, investigators should find out where the money to buy it came from. All this information should be kept in the same database.

It would be important for this task force to have access to records of the Federal Reserve and the central banks of cooperating nations to find out which financial institutions are depositing large amounts of American dollars. (If investigators had had such access years ago, it would have been easy for them to see the billions in currency that Wachovia was shipping from Mexico.) By getting access to wire systems operated by the Fed and the Society for Worldwide Interbank Financial Telecommunication, investigators could also identify and track the accounts for which banks convert cash into wire transfers. Here again, the information should be added to the database. Eventually, all this collected data could reveal a pattern of activity that would point to dirty bankers and businessmen.

To make use of this intelligence, undercover agents from around the world should be trained and equipped with the tools needed to infiltrate the banking and business community. Working with the information in the database, they could inflict a devastating blow to the fortunes of the underworld and its money launderers. Finally, the government would be able to prosecute the people personally responsible for laundering billions of dollars worth of criminal profits.

Robert Mazur, a former federal agent, is the author of “The Infiltrator,” a memoir about his undercover life as a money launderer. He is the president of a private investigative agency.

Right-wing paramilitaries, the heirs of the infamous death squads, have started to re-emerge in Colombia

In recent years, the image of Colombia has changed - particularly since Alvaro Uribe, the country's former president, took office in 2002. The notorious left-wing group, the Revolutionary Armed Forces of Colombia (FARC), has been weakened, paramilitary groups have been disarmed and cocaine production has dropped.

But this new image does not reflect the reality in rural villages and towns, where people continue to live at war and the FARC are just one of many threats they face.

It is in these places - far away from the improved security seen in Colombia's main cities - where the former paramilitary group, the Self Defense Units of Colombia, also known as the AUC, have been replaced by smaller but equally dangerous groups.

These groups are referred to as the heirs of the AUC, which was tasked with fighting left-wing rebels. Their method, known as 'draining the water to kill the fish', involved carrying out massacres of innocent civilians and provoking mass displacement. Human rights groups say they may have been responsible for the deaths and disappearances of at least 120,000 people.

When Uribe came to power he implemented a security plan that involved increasing the presence of the state in Colombia's most remote regions by sending the military there. The objective was to weaken the presence of left-wing rebels in the areas they used to control.

He also negociated a truce with the AUC, with 30,000 men handing over their weapons in a televised ceremony.

The Justice and Peace Law, which offered reduced sentences to paramilitary members in return for information on the atrocities they committed, was also passed.

But, travelling around Colombia, we met people who spoke about groups with names like the Black Eagles and the Ratsrojos.

They said the faces were the same as those they used to see and that the men who had handed their weapons in to Uribe's government had simply moved on to these smaller, but equally as dangerous, groups.

The government refuses to call them paramilitaries, insisting that they are criminal gangs working for drug cartels. But the tone of the threats made by these groups are distinctly right-wing.

For many analysts, the failure of demobalisation can be explained by the fact that while the men may have handed their weapons in, the power structures at the core of the groups were never touched. Land owners, drug cartels and even politicians backed the actions of the AUC.

The extent of these links have only recently started to be revealed with the eruption of the 'parapolitics' scandal.

The Heirs takes a close look at these right-wing groups and the threat they pose to human rights, indigenous groups and anybody who stands in their way.

The victims of the AUC and these new groups continue to wait for information on what happened to their loved ones. Many hope that Juan Manuel Santos, the country's new president, will finally bring them peace, if not justice.

US OKs $30 Million In Military Aid To Colombia

(AP) WASHINGTON (AP) - Citing improvements in Colombia's human rights record, the Obama administration on Wednesday freed up more than $30 million in assistance to the country's military to help it fight leftist insurgents and other drug-funded illegal armed groups.

The administration said Colombia's government had curbed what had been a growing number of extrajudicial killings and taken other steps to prove it is serious about protecting human rights. The finding allows the administration to send $30.3 million to the Colombian armed forces that had been withheld over human rights concerns.

U.S. officials said the money would go to support military aviation, ground and maritime programs as well as training for peacekeepers and equipment. Some human rights groups had urged the administration not to release the funds, arguing that Colombia has yet to rein in abuses by its security forces.

But the State Department said that despite some shortcomings, particularly involving impunity for rights violators, continuing threats against human rights activists and the use of illegal wiretapping, there had been demonstrable progress.

"Though there continues to be a need for improvement, the Colombian government has taken positive steps to improve respect for human rights in the country," it said in a statement. "Firm direction by the government that extrajudicial killings will not be tolerated has led to a rapid reversal in this disturbing trend."

A State Department official added that new Colombian President Juan Manuel Santos had also engaged with labor and civil society groups to improve the situation as well as proposing "monumental legislation" to return to displaced peasants millions of stolen acres of farmland. The official was not authorized to speak on the record.

Colombian prosecutors are investigating some 1,100 soldiers in the alleged extrajudicial killing of more than 2,400 civilians, the vast majority during the 2002-2010 government of former President Alvaro Uribe.

U.S. law specifies that military aid is not to be given to any Colombian unit that is even under investigation for rights abuses. Yet the cases span 30 of Colombia's 32 provinces.

When the scandal broke in late 2008, Santos, who was then defense minister, fired 27 military officers for negligence and the commander of the army later resigned. Santos was elected president in June and took office last month.

To date, 191 members of Colombian security forces have been convicted of extra-judicial killings and nearly 300 are on trial.

Prosecutors on Wednesday charged 29 soldiers with murder in the 2005 case of two men slain and presented to authorities as leftist rebels killed in combat.

Also Wednesday, Colombia's acting chief prosecutor and defense minister announced the creation of a commission to strengthen investigations of homicides by soldiers. The country's top human rights prosecutor, Hernando Castaneda, told The Associated Press that he has 39 prosecutors dealing with such cases but needs 27 more.

Continuing killings in Colombia of peasant activists seeking to reclaim stolen land and of union organizers also remains a concern of rights groups.

Although killings of labor activists have diminished in recent years, at least 35 have been murdered so far this year, according to the National School of Labor.

Colombia has received more than $6 billion in U.S. military and other aid since 2000 under Plan Colombia, an initiative intended to help the country deal with leftist rebels and far-right militias and the illicit drug trade.

However, many Colombian military units have over the years been accused of colluding with the far-right paramilitaries, which emerged in the 1980s in response to rebel kidnapping and extortion of ranchers.

A number of senior army officers have been prosecuted for such ties.


Associated Press writers Libardo Cardona and Frank Bajak in Bogota, Colombia contributed to this report.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

One in seven Americans is living in poverty, Census shows

One in seven Americans is living in poverty, the highest number in the half-century that the government has kept such statistics, the Census Bureau announced Thursday.

Last year was the third consecutive year that the poverty rate climbed, in part because of the recession, rising from 13.2 percent in 2008 to 14.3 percent, or 43.6 million people, last year.

Asians were the only ethnic group whose poverty rate did not change substantially; every other race and Hispanics experienced increases in poverty rates.

In addition, 51 million Americans were uninsured, as the number of people with health insurance dropped from 255 million to less than 254 million -- the first decrease since the government started keeping track in 1987. The number would have been worse because 6.5 million fewer people got insurance through their jobs, but it was offset by a leap in government-backed health insurance. More than 30 percent of Americans now get coverage from the government.

"Given all the unemployment we saw, it's the government safety net that's keeping people above the poverty line," Douglas Besharov, a University of Maryland public policy professor and former scholar at the American Enterprise Institute, told the Associated Press.

The grim statistics reflect the depth of the recession that began almost three years ago and could have an impact on midterm elections less than two months away.

"These numbers should be a wake-up call," said Peter Edelman, a Georgetown University professor and co-director of the Georgetown Center on Poverty, Inequality and Public Policy. "These are deeply disturbing numbers."

At organizations where the unemployed come to get help finding a job or seek food, the numbers were no surprise.

"In the decade I've been doing this work, this is a low point," said Jason Perkins-Cohen, executive director of the Job Opportunities Task Force in Baltimore. "We're getting a real feeling of desperation. For sheer numbers, it's a new, unhappy world."

At the nonprofit Action Though Service in Prince William County late Thursday morning, the shelves of the agency's pantry were starting to empty, as the line for help snaked out the door with a few dozen people seeking assistance.

Prince William resident Carol Williams said she has come to the shelter once a month since January, when she was laid off from her job at United Medical Center due to budget woes.

"I worked since I was 15, and, now, for the first time I don't have a job and I can't feed my family," said Williams, 55. "I have a degree; doesn't matter. The jobs aren't there."

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CNN on Jews Did 9/11

Nothing informations

WTC 7 Explosion

Bank Repossessions Hit Record High in August: RealtyTrac

The number of homes taken back by lenders hit a new record high last month, according to RealtyTrac. Lenders foreclosed on 95,364 U.S. properties in August, about 2 percent higher than the previous peak of 93,777 recorded by the company in May 2010.

August REO activity increased 3 percent from the previous month and was up 25 percent compared to August 2009. It’s the ninth straight month in which REOs have increased on a year-over-year basis.

Based on RealtyTrac’s market analysis, overall foreclosure activity – including default notices, scheduled auctions, and REO bank repossessions – jumped 4 percent in August compared to the month prior, but was down 5 percent from a year earlier.

A total of 338,836 properties received at least one foreclosure filing last month. RealtyTrac says the figure represents one in every 381 U.S. housing units.

New notices of default were recorded on 96,469 homes during August. That’s a 1 percent decrease from the previous month and a 30 percent drop compared to a year ago. It’s the seventh straight month where default notices have declined on a year-over-year basis.

RealtyTrac notes, though, that default notices increased on a monthly basis in some states, counter to the national trend. Default notices in California increased the third month in a row, and New York, Indiana, Ohio, and Florida also registered month-over-month increases in default notices.

Foreclosure auctions were scheduled for the first time on a total of 147,003 U.S. properties in August, a 9 percent increase from the previous month and a 2 percent increase from August 2009. The August total for scheduled auctions was the second highest monthly total in the history of RealtyTrac’s report, dating back to April 2005.

“The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month – a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers,” said James J. Saccacio, RealtyTrac’s CEO.

Saccacio added, “On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in steady stream rather than a flood – presumably to prevent further erosion of home prices.”

Nevada claimed the nation’s highest state foreclosure rate for the 44th straight month in RealtyTrac’s study. One in every 84 homes in the state received a foreclosure filing in August – 4.5 times the national average – even though foreclosure activity in Nevada is down 25 percent compared to a year ago.

Florida’s foreclosure activity decreased on a year-over-year basis for the fifth straight month in August, but the Sunshine State still ranked second highest among all states, with one in every 155 homes in foreclosure last month.

One in every 165 Arizona housing units received a filing in August, giving it the nation’s third highest state foreclosure rate.

California came in at No. 4, with one in every 194 of its homes in foreclosure.

Idaho was fifth with a foreclosure rate of one in every 220 homes. Idaho was the only state with a top 5 foreclosure rate to document a year-over-year increase in foreclosure activity.

Rounding out RealtyTrac’s top 10 list were Utah, Georgia, Michigan, Illinois, and Hawaii.

2 years of economic doom, is the future clearer?

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Will Gold Be The Next Bubble To Burst?

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US homes lost to foreclosure up 25 pct on year

US home repossessions spike in August to highest level since start of mortgage crisis

Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.

The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.

In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.

August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.

Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can't afford to simply dump the properties on the market.

Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.

That's one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.

"These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer's market with too much distressed inventory for fear of what it would do for house prices," he said.

As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.

The number of properties receiving an initial default notice — the first step in the foreclosure process — slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.

Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.

Still, the number of homes scheduled to be sold at auction for the first time increased 9 percent from July and rose 2 percent from August last year. If they don't sell at auction, these homes typically end up going back to the lender.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July, but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.

Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. That's 4.5 times the national average.

Rounding out the top 10 states with the highest foreclosure rate in August were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.

Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.

Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

The program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners since March 2009.

Regardless, many troubled borrowers have seen their efforts to get a loan modification stymied.

Larry Book of Winter Garden, Fla., was one packet away from a permanent loan modification from Chase under the Obama administration's foreclosure prevention plan after more than a year of back and forth and one failed attempt.

But his modification never went through. Instead, his loan was transferred from Chase to IBM Lender Business Process Servicers in July and he was told he owed $9,562.62 and must bring his mortgage current by Sept. 15 or foreclosure proceedings will begin.

"It just becomes too exhausting," Book said about the modification process. "That's why some people walk away. But I've invested too much and given up too much to just let it go."


AP Real Estate Writer J.W. Elphinstone in New York contributed to this report.

Source: AP News

Mochila insert follows...

US homes lost to foreclosure up 25 pct on year

US home repossessions spike in August to highest level since start of mortgage crisis

David Ray Griffin on the 9/11 Cell Phone Calls: Exclusive CBC Interview

The $6 Trillion 401K Grab

In 2008 I came across a disturbing article about 401k and IRA confiscation. The article appeared in the Carolina Journal Online. I’ve been following this closely. In fact as recently as February 1, 2010 I became the 93rd person to provide “Informational Comments” on the Department of Labor’s website. My comment was beyond scathing and is therefore posted without a link to it.

Let’s not mince words: The Social Security “Trust Fund” that FDR started 75 years ago is now a 14 trillion dollar black hole.

We trusted Congress to manage the fund and the morons (fiscally responsible Ron Paul, Paul Ryan and a handful of other good eggs excluded) looted it.

The “Trust Fund” now consists of a bunch of IOU’s that will be passed onto our children. It was spent on the day to day operations of a bloated government. If you or I managed a pension fund and we stole from it - we’d do time. If we used the money we stole to buy votes - we’d do more time.

Like Health Care, Congress can pass laws that they themselves do not have to follow.

The insanity continues: Tomorrow the United States Department of Labor is holding a hearing on options for retirement plans.

Is the Madoff Scandal Paradigmatic?

Too Good to Be True

Erin V. Arvedlund

New York, NY: Portfolio/Penguin, 2009


Andrew Kirtzman

New York, NY: Harper, 2009

No One Would Listen

Harry Markopolos

New York: Wiley, 2010

Madoff With The Money

Jerry Oppenheimer

New York: Wiley 2009

The Madoff Chronicles

Brian Ross

New York, NY: Hyperion, 2009


Deborah and Gerald Strober

Beverly Hills, CA: Phoenix Books, 2009

Madoff’s Other Secret

Sheryl Weinstein

New York, NY: St Martin’s Press, 2009

Reviewed by John Graham and Kevin MacDonald

[Note: A print version of this article will appear in the Summer, 2010 issue of The Occidental Quarterly. Click here for a pdf version of this article.]

Abstract: Initially Bernard Madoff’s record-breaking $65 billion Ponzi scheme was reported in terms of how much harm he had done fellow Jews. Subsequently discussion focused on the ineptitude of the Securities and Exchange Commission in not detecting and shutting down this fraud much earlier.

We contend here that the now extensive literature reveals that the Madoff phenomenon was in fact a massive shift of resources from non-Jews to Jews. Prime beneficiaries extended beyond the Madoff family to a number of other members of the Jewish elite. The scam utilized familiar Jewish social traits to reach the size it did. Far from being protected by SEC ineptitude, it was Madoff’s perceived position as part of the Jewish Establishment that put him beyond the law — by intimidating the SEC. This was accentuated by traditional Jewish inhibitions on reporting Jewish criminality. We suggest that Madoff’s self-destructive as well as socially damaging behavior stemmed ultimately from the conditionality inherent in the Jewish attitude to society at large — and is not unique to him.

* * *

In December 2008 the astonishing news broke of Bernard Madoff’s immense Ponzi scheme — the biggest in history, apparently, with a notional value approaching $65 Billion. This was very rapidly followed by loud complaints by prominent Jewish leaders such as the Anti-Defamation League’s Abe Foxman and the American Jewish Committee’s David Harris, to the effect that the media coverage of this scandal was facilitating anti-Semitism by repeatedly noting that Madoff is Jewish.

To the uninvolved observer, these claims appeared paranoid. The news channels were choked with pitiful and chilling stories of elderly Jews discovering they had been flung into destitution by Madoff, and of Jewish Charities reeling from the blows he had struck them. The well-known among the victims — such as Stephen Spielberg, Mort Zuckerman, and New Jersey Senator Frank Lautenberg’s family — seemed invariably Jewish. Initially the presence of non-Jewish victims was not very apparent. The obvious question was: How could someone do this to his own people? That question could not be asked without acknowledging Madoff’s ethnicity.

For most, probably, the conclusion will have been that this event resembled the depressing procession of stories about clergymen of every creed being involved in pedophilia. Society generates these positions involving trust and power, and from time to time they get occupied by perverts who abuse them.

Subsequently, much fascinating detail has come to light, including the seven books cited above. We suggest here that the Madoff affair does in fact offer important lessons as to the nature of the Jewish community, its relationship with the non-Jewish community, and its influence on Public Policy.

The Madoff facts need to be established.

· Madoff founded Bernard L. Madoff Investment Securities right out of Hofstra College (later University), in November 1960. He focused on dealing in the shares of small firms, not listed on any Exchange — “Over-the-Counter” or “Pink Sheet” stocks (the latter from the color of the daily publication which listed the broker-dealers willing to quote prices in particular equities over the phone). In 1971 a computerized communications network was established which made the quoted prices easily visible (NASDAQ). This evolved through several phases to the point at which it is now arguably as efficient a marketplace as any. Bernard Madoff was in the thick of this development, serving on many industry bodies including as Chairman of NASDAQ itself. In the late 70s Madoff began offering competitive markets in stocks listed on the New York Stock Exchange (which he never joined). By 1989 Arvedlund (45) reports Madoff’s firm was handing 5% of the NYSE volume (others say it reached as high as 10% [Weinstein, 166]). In 2002 there was talk of it being worth $1 billion (Kirtzman, 131).

· This firm was a genuine business and a considerable technological achievement. There seems to be no evidence that the many non-family professionals employed there ever had any inkling that the investment side of the business was a fraud. It also provided perfect cover.

· As soon as he was able, Madoff began taking in “discretionary” accounts from the public. These are accounts where the broker is authorized to act without first consulting the client. Initially, funds were attracted by promising high returns, but in the later years the pitch was fairly modest returns with a very high degree of confidence (“low volatility” — the “Jewish T Bill”). From raising money among New York-area relatives and friends, he moved on to using agents to tap the wealthy across the country. Ultimately, over the last two decades, Madoff was able to use some of the professional fund-allocating operations which have developed with the hedge fund boom (Funds of Funds). Unlike the previous contributors, many of the owners of this money were not American and not Jewish.

· This operation may well have been a fraud right from the start. There is no evidence of trades for the investors for many years. The long number of years involved and the power of compounding means that many of the accounts were bloated with fictitious profits. Some suggest that something around $20 Billion may have been paid in over the years, of which a good deal was paid out, so that most of the $65 Billion investors thought they had at the end was fantasy.

· Madoff’s claimed returns were intrinsically implausible, and in later years numerous investment professionals believed that his activities were fraudulent. This point of view was repeatedly and forcefully brought to the attention of the SEC, in particular by a Boston-based analyst, Harry Markopolos. In a fascinating response, in 2006 the agency finally launched an investigation which scrupulously ignored the investment operation and in November 2007 “found no evidence of fraud” (Arvedlund, 217). Why this absurdity happened is the Public Policy question addressed in this essay.

Transferring Wealth from Non-Jews to Jews

From a sociobiological point of view, the first thing to grasp about the Madoff phenomenon is that it was a large scale transfer of wealth from non-Jews to Jews. This is because of the shift in the Ponzi scheme funding basis at the beginning of the 1990s. The big professional fund raisers (and consequently the biggest creditors) entered then or later: Fairfield-Greenwich ($7.9B), Banco Santander ($3B), Banco Medici ($2.1B), Access International ($1.4B), Tremont/Rye/Kingate ($5.8B) and others. Arvedlund (142) reports these outfits in aggregate were owed some $20 Billion; because of their comparatively late entry and accelerating contributions, a much higher proportion of this loss would represent real cash invested. In addition, the $659 million the Securities Investor Protection Corporation (SIPC) has paid out to Madoff account owners should be included — the SIPC is funded by its member broker-dealers, and so ultimately by its customers.

Fairfield-Greenwich and Access International were focused on the ultra wealthy jet-set/titled European crowd, but most of the other European conduits accessed the general European public. Some Jewish money may have been added via Bank Medici, the Vienna-based vehicle established by one-time US resident and Orthodox Jewess Sonja Kohn, who is rumored to have brought in some Russian Oligarchs (as a result of which she is now in hiding). But even here, via complex arrangements with various banks, the main contributions came from the general public in Europe.

Markopolos asserts that the European losses were substantially more than losses in the United States(114). His book has among its illustrations a charming two-page map detailing the location of the 255 foreign funds of funds in over 40 countries who were Madoffed.

This has effectively put the early investors with Madoff in a strange position. Over the past 20 years, as Kirtzman (140) notes: Hundreds of Bernie Madoff’s investors were retiring early, moving into bigger houses, on the money they madeWhatever else Madoff may have thought about his large entourage of elderly early small investors and their descendents, as Kirtzman says, he could take the view that he was taking care of all of them in their old age(251).

It is simply a fact that many people lived very well for many years from the proceeds of Madoff’s depredations.

This is not to suggest that they had the faintest idea their life styles were in any sense illegitimate and were rooted in fraud. Nor does it mitigate the appalling shock they went through in late 2008, discovering that their Guardian Angel had devoured them. And while the Trustee may have legal logic behind his stance that no recoveries can be obtained in the many cases (reported as over 83% of the direct Madoff Securities accounts) where cash withdrawals exceed the amount paid in, had their money been honestly invested, most could have expected substantial gains, given the securities markets of the last generation. So they have enormous opportunity losses and very real grievances.

But, nevertheless, they were beneficiaries too.

The Jewish Ethnic Nexus That Enabled Madoff’s Fraud

Several writers have discussed the arresting idea that the genetic mutations which supply Ashkenazi Jews with their high intelligence are also those which cause the ravaging of this group with cruel and lethal ailments such as Tay-Sachs and Gaucher’s disease (see here, here, and here). Bernard Madoff was like a Tay-Sachs occurrence within the Jewish community: The characteristics which make them such formidable competitors for resources also rendered them pathetically vulnerable to a Madoff.

Most salient of these was the practice among this otherwise skeptical and independent community to coalesce around rabbinical/guru figures, who are treated virtually as gods, revered, unquestioned, and fiercely defended. Obvious examples are found to this day among the Hasidim. Kevin MacDonald has demonstrated in The Culture of Critique how this pattern imposed itself on Western intellectual life, as seen in the rise of Freudianism, Boasian Anthropology, and the Frankfort School, among others, all equipped with their prophet. “Flying wedge” tactics and conscious intra-group loyalty has made this characteristic exceptionally valuable in seizing control of professional entities such as university departments from the disorganized and atomistic non-Jews.

To many, Madoff was such a deity. “He was like a God” Kirtzman quotes professional Holocaust victim Elie Wiesel saying of Madoff (96). (Wiesel lost most of his savings and his foundation’s endowment to Madoff.) There was a myth that he created around him. That everything was so special, so unique(Kirtzman, 96). Oppenheimer reports a member of an extended family long involved with and heavily damaged by Madoff saying that they regarded Bernie like a messiah. He was spoken of as if godlike(93). The accounts of the stir he created attending Jewish gatherings are almost comic: He was received like visiting royalty, mysterious and unapproachable(Kirtzman, 89).

The consequence was an extremely useful suspension of disbelief.

Infatuations of this type are rare among whites generally, and usually mild and fleeting. This makes them more difficult to organize — but less vulnerable to a Madoff.

A consequence of this ethnocentric infatuation was that would-be whistle-blowers were subject to savage attack, if they were not simply tuned out. Laura Goldman, an investment advisor now resident in Israel, had come to negative conclusions about Madoff and liquidated her own exposure to him. The Strobers relate how when in 2001 both Barrons and the trade publication MAR/Hedge published stories (here and here) insinuating Madoff’s returns were incredible, she mailed copies to contacts in Palm Beach (where the ultra-wealthy Jewish community had become a major funding source for Madoff): “They said that the publications were anti-Semitic — that Jews have more faith in Bernie Madoff than they do in God” (81).

In her own book, the author of the Barrons article (Arvedlund) reports that as a result of her efforts Goldman “was promptly accused of being anti-Semitic by Palm Beach residents… “And I live in Israel!” she noted” (252). This response is a factor to remember when we consider the behavior of the SEC. (The author of the MAR/Hedge article, Michael Ocrant, is Jewish.)

Until quite late in the history of his fraud, Madoff relied on drawing in funds from (wealthier and wealthier) individuals. Mechanically, this was a remarkable achievement. A value in the Madoff literature is the documentation it supplies on the characteristic group loyalty from which Madoff benefitted. Kirtzman notes:

He was a member of the tribe. Jews of his generation were brought up to think of other Jews as extended family members, with a shared responsibility to look out for one another. They felt more comfortable going to Jewish doctors, Jewish lawyers, Jewish accountants. Madoff became known as “the Jewish T-bill.” (73–74)

Kirtzman quotes from a contemporary from Laurelton, Madoff’s home district of Queens:

The Jewish world was very tight and highly networked. … Everything was done through “the phone call”. My brother wanted to go into retailing, so a call was made to Mr. Temona on the board of Lerners. I wanted to transfer to NYU and live in one dorm: a call was made to Professor Levine. (74)

Of course, from the point of view of a non-Jew, this kind of cohesive efficiency makes the Jews lethal competitors in the zero-sum struggle for resources. In the case of Madoff, however, the efficiency turned out to enable the fraud to spread more widely and to be more damaging to the Jewish community itself.

Other characteristics of his victims tended to amplify the Madoff damage. As a broker, rather than a hedge fund, he supplied his clients with pages and pages of transaction history — all fabricated — rather than an overview. Over the years, thousands of hours were evidently sunk by his clients into going through these statements looking for errors — Sheryl Weinstein, the CFO of Hadassah had an assistant committed to the task (Weinstein, 97). A good deal of fanatical seriousness about the investments was thus sublimated. The modest, low double-digit but extremely reliable returns offered in later years were accurately pitched to rational and careful investors. And, sadly, it has to be said that the attitude many brought to middle age from their upbringing increased their vulnerability. As Kirtzman’s Laurelton informant said of her and Madoff’s hometown, “The more money, the better your things…The more money, the more esteem. The more money, the more people looked up to you” (27) — a revealing comment on the importance of financial success within the Jewish community. Like Weinstein, many long-standing Madoff clients refinanced their homes in the easy credit conditions of recent years to maximize their Madoff investments. Many apparently had virtually all their liquidity with Madoff — hence the tales of desperate sales of jewelry in Palm Beach after the arrest.

This passionate intensity about money has worked well historically — but in the Madoff situation, it led to utter disaster.

So did lack of scruple. Kirtzman recounts how a Palm Beach Madoff client, dubious about Madoff’s success, asked his accountant in the early 90s to investigate. The accountant concluded that Madoff was most likely doing something fraudulent, probably front-running (trading ahead of client orders). The client’s response: “I don’t want to hear anything about it” (Kirtzman, 75–77). Clearly, many Madoff accounts thought they were safely benefitting from illegal activity — and did not care.

Jewish networking was also crucial, perhaps ironically, to the Madoff financial Black Hole spreading beyond the Jewish community. Fairfield-Greenwich Group, the biggest funds allocator caught by the implosion, is generally presented as haute WASP because of founder Walter Noel’s social image: but FGG was brought to Madoff by Noel’s partner Jeffrey Tucker, who is Jewish. Arvedlund suggests Tucker met Madoff via his in-laws the Schneiders of Allentown, Pennsylvania, wealthy garment manufacturers (114). Similarly, she says, access to the US annuity product and general hedge fund market came through Tremont Capital Management and its affiliate Rye Investment Management, run by Sandra Manzke and Bob Schulman (83–84). Manzke had other similar interests, one of which, Kingate Global, brought in wealthy Italian families. And also in Europe, besides Sonja Kohn of the imaginatively-named “Bank Medici” already mentioned (Arvedlund, 129–137), there was Union Bancaire Privee and the Safra Banking group run by Edgar de Picciotto and Edmond Safra. Arvedlund says:

De Picciotto and Safra shared similar backgrounds. They were both Sephardic Jews…and…more than just bankers — they were gatekeepers to billions…Once these men had signed off on someone, … the rest of the Swiss banking world would line up to invest, practically without question. (139–140)

What Kirtzman sneeringly describes as “the princes and princesses, dukes and duchesses” (254) who invested with Madoff through FFG and Access International (the founder of which, Rene-Thierry Magnon de la Villehuchet, actually was a French nobleman) and the other members of the “Swiss banking world” who trusted Madoff’s prestigious endorsements were in fact following the old European tradition of the court Jew — “a general financial confidant of a territorial sovereign” (see here, p. 102; see also here). For centuries it was customary for aristocratic landowners, particularly in Eastern Europe, to delegate the task of managing the businesses operations on their estates to Jews, sometimes using the same families for generations. Similarly, throughout German-speaking areas, court Jews typically managed the financial affairs of the nobility, provisioned the military, arranged for loans through Jewish banking families and collected revenues in the form of taxes. Using a Madoff to manage their interests on America’s financial steppes and interface with the barbarous Americans was quite consistent with the long-standing behavior pattern of this social group.

Arvedlund notes that the European capital FGG attracted was of a type known in the hedge fund world as “dumb money” because of its herding habits (117). Of all the feeder fund leaders involved with Madoff, only Magnon de la Villehuchet has committed suicide. Bertrand de la Villehuchet commented, “Madoff wouldn’t understand the reaction of my brother. It was…honor, a word that’s not in his vocabulary” (Ross, 160–161).

Another pattern noted by MacDonald in his study of Jewish social organization is a structural tendency towards the enrichment of its elite. Wealth tended to flow upward within the Jewish community to the upper, scholarly, rabbinical class.1 While these groupings can be plausibly argued to promote the overall interests of the Jewish community as a whole, they also involve heavy transfers of resources within the community from the mass of Jews to a self-selected few — the Rabbinate, in the case of traditional society.

This was dramatically so in the case of the Madoff operation. Health Care entrepreneur Jeffrey Picower holds the prize: Arvedlund reports he and his family over many years withdrew “at least” $5.1 billion of phantom profits as part of a total of $6.7 billion of disbursements (237) (more recently the Madoff Trustee has claimed $7.2 billion). According to Oppenheimer, West Coast “money manager” Stanley Chais and his family are accused by the SEC of pulling out $500 million more than they ever put into Madoff themselves (77–78). (Chais did not tell his clients he was simply placing their money — some $1 billion — with Madoff.) Both Picower and Chais notionally had access to these funds partly because of extraordinarily high un-Madoff-like returns which conveniently appeared in their personal accounts. They also apparently were able to use their Madoff accounts to generate fake tax losses when needed.

The late Norman F. Levy, a New York real estate mogul who died in 1995, is a particularly colorful case. A long time intimate of Madoff’s, he was, according to Kirtzman for some prolonged time getting a daily visit from a Madoff driver carrying a check “usually for millions of dollars. Every now and then they’d be for tens of millions.” What kind of legitimate transaction necessitated this is hard to see. As Kirtzman says, “it’s…plausible that Bernie was using his friend’s bank account to park stolen money” (126–127). (In January, 2010 Levy’s daughters agreed to pay $220 Million to the Madoff liquidator to settle his claims against “the family and its entities.”)

On October 25, 2009 Jeffrey Picower drowned in his Florida swimming pool after a heart attack. This is eerily similar to the 1991 drowning death of Robert Maxwell, the Ruthenian-born Jew and UK publishing entrepreneur, who was shortly afterwards discovered to have looted the pension funds of his public companies of hundreds of millions of pounds.2 As the result of his death, the investigation into Picower’s activities is likely to be crippled. (Recent reports suggest the Picower estate is getting ready to pay the Madoff trustee $2 billion or more to settle.)

Whether Ezra Merkin, the long-time President of the socially elite Fifth Avenue Synagogue, was a member of this small circle of massive Madoff beneficiaries is no doubt a question of considerable interest to his fellow congregants. They are reported to have $2B of exposure to Madoff, much of it through Merkin’s hedge funds. Kirtzman reports that Merkin had $2.4B of his client’s money with Madoff — including that of 30 Jewish charities — but “Of the $470 million in fees he earned from Madoff, Merkin allegedly invested just $9 million back” (Kirtzman, 98).

If not an “insider,” Merkin would belong to a group that immediately came under fire in the aftermath of the collapse — the fundraisers. Besides the professional operations mentioned previously, these included a number of individuals like Robert Jaffe of Palm Beach and the late “Mike” Engler of Minneapolis-St Paul who in Kirtzman’s words

were usually prominent members of the Jewish community, working out of exclusive country clubs. While investors thought they were just friends…they were actually getting a percentage of the business. (89)

Because the apparent inside beneficiaries generally controlled substantial charities which reported large losses to Madoff, they initially escaped much of the opprobrium directed at the money raisers. Possibly the concept of a rogue being a large charitable donor is counterintuitive. But in principle there is no reason why a rogue would not fund charities. Being a philanthropist is in a sense a luxury good and a status symbol — a public marker of having arrived, particularly within the Jewish community.

Jewish Ethnic Networking Props Up Madoff’s Fraud

A remarkable fact that emerges from surveying the literature on Madoff was how widespread the belief was within the professional investment community that the Madoff operation was crooked. This opinion was spread far beyond the saga’s whistle-blowing hero, Harry Markopolos who noted, “The industry knew, there’s no question about that” (176) and his friends, about whom more later.

There were two Madoff theories. One was that intelligence derived from watching the firm’s order flow to its large trading operations gave the investment activity a crucial advantage (Graham remembers being told this — by an ultimate victim — more than 25 years ago.) If true, this would be front-running (taking advantage of a client’s business) and quite illegal. Concern about being exploited in this manner was doubtless why, according to Ross, such big brokerage firms as Merrill Lynch, Goldman Sachs and Morgan Stanley would not do business with Madoff Securities (80).

As it happens, this theory was wrong. Since Madoff did not trade for his investment clients, he did not need this type of inside information. So the SEC was quite safe to focus on this question in its final investigation of 2006–7.

The other theory was that the Madoff Investment arm was crooked because it was to some degree at least a Ponzi scheme. Options specialists were led to this conclusion by realizing that Madoff’s alleged “Collar” or “Split strike” activities

  • could not be replicated to produce the results he claimed.

  • needed to be conducted on an impossibly large scale to accommodate the size of money Madoff was employing

  • mysteriously left no trace at all in the close-knit world of options dealing.

This view was apparently widely held. The Strobers report the above-mentioned David Harris of the American Jewish Committee saying after the arrest

the Madoff name had come up here in the AJC’s investment committee some months ago when someone suggested we ought to explore investing … with Madoff. And the chairman of our investment committee actually said, “No, I think it’s a Ponzi scheme.” He actually used those words to the ten or fifteen people in the meeting. (42)

Arvedlund reports an account by Harry Markopolos of a meeting with Leon Gross, Citigroup’s global head of equity derivatives. Gross told him that “Bernie is a fraud and there’s no way his purported stock and options strategy can possibly beat Treasury bill returns. [Gross] also can’t believe the guy hasn’t been exposed yet” (218).

The famed Jewish co-founder of the Odyssey Partners hedge fund, the late Jack Nash, and his son, Joshua, seem to have had a hobby of denouncing Madoff. Jack Nash liquidated a less-than-two-year investment with Madoff in the early 90s after his son reviewed the Madoff statements and smelled a rat. Arvedlund reports they repeatedly told Ezra Merkin this over several years, to no avail (258–259).

Wall Street, of course, is an environment which encourages intense and exclusive concentration on one’s immediate financial activity. Furthermore, challenging Madoff was predictably dangerous. Arvedlund reports a meeting between the head of Lehman Brother’s alternative investment division and Merkin:

The Lehman guy fired first.

“C’mon, Ezra. You know what’s behind Madoff’s operation, don’t you? Don’t act like you don’t” he said.

Merkin and the man nearly got into a fistfight … and Merkin left Lehman Brothers in a huff. Not long after…the man at Lehman Brothers lost his job. (98)

Sheryl Weinstein, CFO of Hadassah (The Women’s Zionist Organization of Amerca) when it invested with Madoff, has a similarly informative story. In 1995, after several years of Madoff managing their money, new members of the investment committee became restless. “They were implying that maybe Bernie’s methods weren’t quite kosher” (166). A meeting was held in which Madoff succeeded in pacifying the all the board members except one, who apparently himself ran some Hadassah capital.

He later tested Bernie’s investment technique with some of Hadassah’s money. With results in hand, he told the board he could not replicate Bernie’s rate of returns.

The board’s response was to stop using him (Weinstein, 168–169) — not because his performance in his own style of investing was poor, but apparently for having the temerity to question this lion of the Jewish Establishment, Bernard Madoff.

(Hadassah’s case illustrates the arithmetic of long-time Madoff investors. The charity invested some $40 million in the late 80s and early 90s. It withdrew a total $130 million and thought it had $90 million when the end came.)

With so many prominent Jewish investment industry figures apparently aware that something was wrong with Madoff, the question arises: Why did they not turn him in? After all, a big scandal raising doubts about the integrity of independent investment advisors would be bad for everyone’s business, Jew or non-Jew (as it indeed proved to be). Because of Madoff’s high-level social-networking fund-raising techniques, many must have been aware that a great many fellow Jews were likely to be vulnerable (one third of the elite Jewish Palm Beach Country Club are reported to have been Madoff investors (Kirtzman, 245). Some might even have thought such a scandal would best be headed off by the Jews themselves for the sake of their community. (David Harris and the Investment Committee of the American Jewish Committee could also have taken this line — but they did not.) Furthermore, the standing of some of these men was such that action by them would have necessitated a serious response by the authorities.

MacDonald has demonstrated that group strategies forged in the stressful climate of Medieval Europe continue to be highly influential in determining modern Jewish social behavior. For centuries, it was absolutely forbidden to tell the Civil Authorities about law-breaking by a fellow Jew, an offence known as Mesirah (informing). Some took the view that informing should be punishable by death. The concept of mesirah is alive and well amongst strongly traditional Jewish communities to this day — for example recently, in the community of Syrian Jews centered in Brooklyn where a prominent rabbi renounced his son after the son had informed on illegal financial activities within the community. A perusal of their web sites suggests that while there is some thought that, in the modern environment, informing about crimes of violence might be permissible, for other “lesser” offences (such as financial wrongdoing) it is still forbidden. There seems to be no concept that it might actually be a citizen’s duty to report criminal behavior.

Harry Markopolos Exposes Corruption in High Places

Deeply ingrained traditions fade slowly. The clear message of the facts of the Madoff scandal is that Americans generally cannot rely on American Jews to halt financial fraud by someone who is Jewish.

There was, however, a group who simply could not have tried harder to secure action by the authorities on Madoff. The fate of their efforts opens the most important public policy matter pertaining to the Madoff story.

Professional competiveness was what drove Harry Markopolos, a Boston-based options expert, to challenge Madoff. In 1999, he was asked by his employer, which managed options strategies similar to those claimed by Madoff, to figure out how Madoff was getting consistently superior returns. Within hours he decided that the Madoff claims were fraudulent.

Gathering around him an informal group of like-minded professionals, Markopolos spent most of the next decade trying to get the Securities and Exchange Commission to act. Numerous meetings with different officials as well as providing extensive documentation and apparently scores of phone calls and emails produced almost no response. Finally in November 2005 Markopolos submitted a report titled “The World’s Largest Hedge Fund is a Fraud” (on line here [PDF]).

This 19-page document is a nuclear bomb. No one even slightly used to reviewing serious discussions of complex matters could fail to see that it is written by an expert, very carefully thought out, and devastatingly cogent. (Kirtzman — who appears to dislike Markopolos — is quite wrong to describe it as “a dense, rambling thicket … of mathematical formulas, and Wall Street jargon” [197].) One would have thought anyone in the line of responsibility for regulating Madoff would have been absolutely terrified.

The SEC did act. As noted above, in 2006 an investigation was launched. Markopolos was not consulted in any way and Arvedlund quotes a former SEC staff member:

When you look at the closing documents, it seems clear that the Markopolos allegations of Madoff being a Ponzi scheme were never even investigated. (216–217)

In the end the SEC paid itself a kind of fee by demanding that Madoff register as an investment advisor, and in November 2007 terminated the probe — barely a year before the collapse.

What happened?

It has to be said that the SEC compliance operation has evolved into a classical rent-seeking bureaucratic monster, happily and expensively papering files in cooperation with a symbiotic tribe of functionaries inside investment operations and their law firms. A parasite, it is not designed to actually do anything substantive.

Furthermore, dark suspicions are increasingly common that large targets are exempt. Arvedlund quotes Markopolos recounting the remarks of a former SEC official: “The SEC is bureaucratic and political and turns down slam-dunk cases all too often” (199).

But the Madoff case was obviously enormous and the SEC had been presented with a very concrete and serious accusation — which was not difficult to test. And this was only the last and most elaborate of a series of investigations which inexplicably stopped (Ross, 34).

Now it is true that Madoff had ingratiated himself deeply with the SEC. And he was prominent: already he had served 2 terms as NASDAQ chairman. Quite possibly this explains the very odd lack of interest the SEC showed in the Madoff investment management activity after having shut down, in 1992, the unregistered fund-raising operation — exclusively for Madoff — run by the accounting firm of Avellino & Bienes. Over the previous 30 years, this outfit had developed into being Madoff’s main funding source. Ross says:

According to a person involved with the firm at the time, SEC investigators were looking into allegations that Avellino & Bienes were involved in a Ponzi scheme. The investigators discovered that Madoff was handling the investments … but they did not or would not connect the dots that would have exposed Madoff’s role as the true master of the scheme. (134)

Instead, the SEC allowed A&B investors to switch their funds to Madoff Securities directly — rendering nugatory the settlement which required the pool to be returned to the investors.

In the 80s and early 90s, Bernard Madoff was popular with the SEC because of the central role his firm was playing in automating stock trading and competing with the New York Stock Exchange. But by the late 2000s, that was ancient history. Furthermore, the SEC had almost ten years of presentations from Harry Markopolos to consider — and, Markopolos reveals, tips from others too. The scale of the matter was of the first magnitude. Why was there no effective action?

We submit that the answer to this question is the same as to why America is engaged in an unpopular war with the Muslim world with no Congressional dissidence, and why nation-breaking immigration continues — in the midst of recession — with only a little more dissent — and that after the topic had been virtually driven out of public debate for several years. The Bernard Madoff matter was one about which a significant segment of Jewish America cared very much — some for financial reasons, others, perhaps, because of community pride and loyalty. Challenging this group was well known to be extremely dangerous. As in other matters, they awarded themselves a veto, and they used it — as it happened in this case, to their cost. All in all, the Madoff affair and the cover-up is another indication of Jewish power in America.

An insight into this process arose during the 2006–7 SEC investigation. Harry Markopolos, accurately sensing a cover-up, contacted John Wilke, a Wall Street Journal investigative reporter with an exceptionally fine record. Kirtzman reports:

With characteristic overkill, Markopolos bombarded the reporter with documents, contacts, questions for him to ask ….

But the Journal never did investigate Madoff. Markopolos believed it was the fault of “senior editors” at the Journal who “respected and feared” Madoff. (208)

Sadly, Wilke died on May 1st 2009 at 54, of pancreatic cancer. Oppenheimer reports the then WSJ Managing Editor, Paul Steiger, flatly denying having heard of the approach (157). Steiger now heads the heavily Jewish Propublica Foundation, set up by Herb and Marion Sandler who sold their Golden West mortgage operation to Wachovia Bank with ruinous consequences for the latter. Ironically, Propublica, established to promote investigative journalism, has done some valuable work on the Madoff story, particularly the Picower angle (although nothing recently).

In his book, Markopolos reveals that he actually met with and had extensive discussions with Wilke, who seemed very responsive. Throughout 2006, Wilke gave him to believe he was about to start on the story. As late as November Markopolos wrote his “team” that “John told me that his editor has read my Madoff analysis and is very, very excited to start their investigation in January” (166).

But early in 2007 Wilke abruptly cooled off, never actually refusing the story but now raising quibbles. Markopolos (who continued to have a working relationship with Wilke on other stories) says

In my mind, at least, I was convinced that someone high up at the Journal had decided it was too dangerous to go after Bernie Madoff. … I was finally beginning to consider the possibility that Bernie Madoff was untouchable — that he was simply too powerful to be brought down.” (Markopolos, 166–167)

This analysis — as a practical matter effectively true in our opinion — is very different than the cover story generally presented that Madoff survived because of SEC incompetence. And it is not plausible that the Wall Street Journal’s management did not know what was absorbing so much one of their best reporter’s time.

A remarkable insight into how this power works appears in Markopolos’ No One Would Listen. When, in the aftermath, Markopolos was interviewed by David Kotz, the new Inspector general of the SEC, he was surprised to be told that the meeting was part of a criminal investigation and told to take an oath. He was then asked what he knew about Senator Charles Schumer (D-NY) calling the SEC about their Madoff investigation (243).

Markopolos knew nothing, but as he points out “for a middle level SEC employee with ambitions, any case in which an important politician is involved is a case he or she wants to stay far away from” (141).

Bernie Madoff and his sons Andrew and Mark generally maxed out contributing to Schumer’s campaigns. In more recent years Bernard had also contributed significantly to the Democratic Senatorial Campaign Committee and some other Democratic candidates, mainly, like Schumer, Jewish.

But it gets stranger — and more ominous. In September, 2009, Markopolos appeared before the Senate Banking Committee, scheduled to follow H. David Kotz, SEC Inspector General, who was there to discuss his recently-published investigation (PDF) of the SEC’s Madoff failure. There was a recess between the two testimonies and then:

Only Senators Chuck Schumer, who had made a phone call to the SEC, and Jeff Merkley, a Democrat from Washington, returned. Schumer took over the questioning …. The entire room was filled with SEC staffers …. The victims had been shunted to a hearing room … to watch the proceedings on closed circuit television. We couldn’t have picked a more adverse audience. (Markopolos, 261)

Schumer (who apparently felt no need to recuse himself or even disclose that he had intervened on Madoff’s behalf) then ran the session so that Markopolos would be able to speak as little as possible. This became so extreme that the lawyer Markopolos had brought “started handing me cards urging me, ‘Jump in whenever you can’” (Markopolos, 262).

There is nothing to suggest Schumer was actually involved with or even knew Madoff: yet No One Would Listen makes it clear he treated Markopolos with rudely dismissive curtness. Why deprive this genuine public hero of his moment in the sun?

Similarly strange things had happened when Markopolos went (voluntarily) in March 2009 to brief the newly appointed chief of the SEC, Mary Schapiro. David Becker, the career Wall Street lawyer imported the previous month as SEC General Counsel, picked a quarrel over extraneous trivia and threw a tantrum so violent that Markopolos’ lawyer “thought that he was about to come right over that table and go for my throat” (Markopolos, 249). Consequently, the meeting was terminated.

In 1977 the actor Cliff Robertson, seeking to correct an erroneous report to the IRS of income from Columbia Pictures, inadvertently triggered the discovery that the (inevitably Jewish) head of the studio, David Begelman, was a large scale embezzler. As a result, Robertson, then at the height of his career, was blacklisted and got no major movie roles for several years. Evaluating Andrew Kirtzman’s Madoff book Betrayal purely subjectively, one would think Harry Markopolos was the villain. The Schumer and Becker performances are in the same tradition: unrestrained rage against someone deemed to have caused damage to a community member — quite regardless of the ethical facts.

Written after the Kotz report on the SEC/Madoff fiasco was published, Markopolos’ No One Would Listen conveniently adds to the evidence presented in the report, thereby destroying the idea that only ineptitude and dislike of Harry Markopolos protected Madoff. In fact, the SEC had had quite independent and very plausible inputs suggesting Madoff was fraudulent:

  • “In 2003 … an unidentified fund of hedge funds manager alerted the SEC … explaining during a conference call he … ‘couldn’t figure out how he was earning his returns’ …. This was lost in the bureaucracy.” (our emphasis)

  • An intelligent SEC examiner in 2004 looking (as was his right) at internal correspondence at the fearsomely quantitative Renaissance Technologies Hedge Fund pool headed by James Harris Simons found a discussion concluding Madoff’s activities were “inexplicable.” Evidently he forwarded this to his superiors with no result. (Renaissance Technologies itself did nothing either.)

  • In 2005 an anonymous tipster claiming to have withdrawn $5 million said he was “deeply concerned that Madoff is running a very sophisticated fraudulent pyramid scheme.” They even got an anonymous letter in 2008 alleging Madoff was keeping two sets of books! (Markopolos, 257–258)

Quite apart from all this, the SEC 2006–7 investigation itself did produce the information that Madoff had lied about the number of clients he was handling — an issue which drastically alters regulatory requirements. Markopolos says:

“What really bugs me is that the SEC caught Madoff lying to its investigators repeatedly and making false statements to a federal official. This is supposed to carry a five year … maximum sentence; yet they never referred him to the Department of Justice for criminal prosecution.” (161)

Nothing was done.

We submit that the SEC failed to stop Madoff not because it was incompetent, but because it was afraid — of the Jewish Establishment.

Looking Like a Goy: Growing Up in the Jewish Community

While we are focused on the way the Madoff case illuminates and reflects the relationships between Jews and non-Jews, there is also the question of how Madoff the man related to the Jewish people.

Looking back, his childhood contemporaries have realized Madoff could well have come to resent his own people — that he had, in the words of an Oppenheimer informant, an “inner need to screw the system” (87).

In the competitive, upwardly mobile Jewish society of Laurelton, Queens in the 1950s, the Madoff family did not command much respect. They were not prosperous, nor were they involved in a prestigious profession. Bernard himself won no academic laurels — Kirtzman quotes a middle school girlfriend recalling a poignant occasion with him sitting silently through a school lunch at which his circle were comparing and boasting about their report cards (21). He had nothing to boast about. Shortly afterwards she broke up with him: “I didn’t think he was smart enough” (23).

In fact, Madoff had a concrete reason to feel alienated — what Weinstein describes as his “beautiful blue eyes(25). These are not necessarily appreciated in Jewish circles — Graham recalls being curtly told they represented a fault in the bloodline when once asking a Jewish friend about her eye color. Weinstein reports Madoff’s grandmother disliked his High School girlfriend and future wife: “She thought she was a “shiksa”…because Ruth was blond and had blue eyes” (61).

There was no doubt about Ruth Alpern’s Jewishness — the two families were in the same town, virtually neighbors — but Oppenheimer reports a school friend remembering of Ruth that a candy store proprietor was ““shocked — shocked — to learn she wasn’t a gentile because of her goyish look.” Ruth Alpern “looked like a shiksa. She did, absolutely…extremely shiksa looking” (34).

Madoff’s choice of such a partner may have said more about his attitude to his own community than his circle realized. Weinstein reports the Madoffs were not at all observant, and in fact frequently used Yom Kippur as a day to fly to their villa in France (47).

When the British tried to figure out what caused the socially elite and privileged Burgess/Maclean/Philby circle to damage their country so much by spying for the Soviet Union, they found that anguish about minor status blemishes could be argued to have triggered this murderous resentment. Being on the margin of a highly judgmental group can apparently cause extremely anti-social behavior.

Postscript: Where’s the Rest of the Money?

What will be the aftermath? Ross reports that “Investigators believe there could be a billion dollars or more that Madoff had stashed in foreign bank accounts” (207). He also quotes an investigator who noted that

someone who plans ahead so well that he pre-positions his clothes around the world, don’t you think he has some hidden bank accounts around the world too? (89–90)

(Besides wardrobes at his four homes, Ross notes, Madoff maintained steamer trunks of clothes at six hotels around the world.) A recent story in the New York Post quotes a former fellow prisoner alleging Madoff claims to have $9 billion squirreled away.

Beyond the question of the Madoff loot, there is the — if anything even more interesting — question of the apparent enrichment of the non-family insiders, Picower, Chais, Levy — and perhaps others. (The Wall Street Journal has reported a total of “at least eight.”) What was going on here? How did these men come to cooperate? What was Madoff’s motive for cutting them in?

Our prediction is that nothing significant will ever emerge on these questions. Observation of a long list of scandals, from 1967 Israeli attack on the USS Liberty to the dropping of the espionage prosecutions against the American Israel Public Affairs Committee last year, leads inevitably to this conclusion. Thoroughly investigated, the Madoff scandal has the potential to illuminate the economic and political prerogatives usurped in late 20th-century America by what can only be described as the new ruling class. That will not be allowed to happen.

Indeed, an article that appeared too late to include in the print version questioned "whether anyone will be charged with being an accomplice to the fraud....Given the slow pace of the investigation, it is questionable whether the government will ever be able to show that there was anything more than a few willing enablers." This is despite the fact that in at least some of these cases the defendants knowingly committed fraud. For example, in one case, “each woman ‘knowingly perpetuated the fraud,’ but there is no claim that they helped to perpetrate it. This means that once again the government accuses defendants of enabling Mr. Madoff’s fraud but not with having any responsibility for it. It is a bit puzzling why this is only a civil case, and not a criminal indictment.”

If Bernard Madoff has a redeeming quality, it must be the unflinching courage he has shown in refusing to implicate his family in any way. Sheryl Weinstein, his mistress for some years, knew the score: “From our very first lunch, I understood that Bernie was very wrapped up in his family” (57).

So the question is, how could he do this to them?

Absent the almost unprecedented financial crisis of late 2008, Madoff’s fraud might never have been revealed, as Arvedlund reports (265). Markopolos told the House Subcommittee on Capital Markets that Madoff could have gone to $100 Billion (Markopolos, 228). It would probably have outlived him. With the remarkable renaissance in confidence in Hedge Funds in 2009, he very likely would indeed have gone on to new heights. But, eventually, the piper would have had to be paid — especially, as seems plausible on the basis of the literature, if the sons did not know exactly what their father was doing.

Was Madoff so extremely present-oriented that some years in a very warm sun were worth decades of obloquy for his descendents?

Perspective is supplied by the case of one of the most outspoken skeptics about Madoff in Florida, named by Arvedlund as Salomon Konig, a “Fund of Funds” manager who “also hails from the Florida Jewish community.” Konig’s penetrating critique of Madoff was well informed for good reason, as Arvedlund discovered: he left Venezuela in 1993 and is under indictment there for running a Ponzi scheme. Yet he has been able to establish himself in his new country in the financial business (239–240).

Perhaps in the back of Madoff’s mind was the idea — possibly the instinct — that after a few years, perhaps in a different country, maybe speaking a different language, his family would live on, possibly with a new name (surname changes are under way among the Madoff kin) and perhaps with some portion of the loot.

Americans need to ask themselves if parties with this larcenous and nomadic tradition are appropriate stewards of our national institutions.

John Graham (email him) is retired after a career in the financial sector.