The Miscreants’ Global Bust-Out (Chapter 20): Uhm, Mr. President, We Might Have a Problem…
Posted on 25 July 2011 by Mark Mitchell
Back to Tuco Trading, the little brokerage in Chicago that had not even registered with the authorities. The completely obscure and eminently illegal, tiny little brokerage whose clientele consisted largely of heavyweight traders from places like Iran and Saudi Arabia, Russia, Pakistan, and Venezuela.
Many of Tuco’s clients resided overseas–Moscow, Dubai, China, and Ukraine. Some in locales even more exotic: Cozumel and Azerbaijan, Dagestan and Ras al Khaimah. Of course, there were some Americans, too. But these Americans were among the most powerful financial criminals in the nation. Most of them were tied to the Mob.
We have seen that in 2008, the year of the financial crisis, another obscure brokerage, Penson Financial, became, literally overnight, the largest brokerage in the world by volume, most of which was manipulative short selling targeting the big banks and other companies critical to the stability of the American financial system.
The strange trading that went through Penson was evidence enough there was an attack on the U.S. financial markets in 2008. But was it merely a criminal attack, or an act of financial terrorism? Was the attack coordinated? Or was it individual traders acting on their own?
Ultimately, it might be impossible to answer these questions. Motivations are difficult to discern. But we know (from earlier chapters of this series) that Penson Financial was built with considerable help from people who had ties to jihadi terrorist groups, organized crime, and foreign governments that are hostile to the United States. We know also that an overwhelming number of Penson’s key clients had similar relationships.
And as of early 2008, Penson’s most important client was none other than Tuco Trading–that weird, little brokerage in Chicago. Indeed, Tuco was more than a client. Penson did not merely clear all of Tuco’s trades. As we will see, Penson dealt directly with many of the interesting people who had accounts at Tuco. Indeed, Penson made Tuco—a tiny brokerage that had, for good reason, chosen not to register with the authorities–an integral part of its overall operation.
And a thoroughly peculiar operation it was.
As I mentioned, Tuco was trading for more than 100 accounts. Just two of those accounts alone generated more than 20 percent of the volume (most of it short selling of financial stocks) that had suddenly made Penson Financial the largest brokerage on the planet in the month before the 2008 collapse of Bear Stearns.
The short selling of financial stocks transacted by Penson was as much as five times the short selling of financial stocks by Wall Street’s top five brokerages. Put another way, those two accounts at Tuco Trading transacted short selling volume exceeding that of the somewhat more famous Goldman Sachs.
Tuco was shut down on March 9, 2008 by an “Emergency Order” of the SEC, and the case was taken over by Tuco’s court-appointed bankruptcy receiver, who immediately noticed the large volumes from those two accounts, one of which (the receiver noted with urgency) contained more than 2,000 secret subaccounts located in China. However, the receiver had a stroke before he could finish his investigation, so we don’t know how much volume was generated by the many other accounts at Tuco.
But we know it was significant.
We can also assume that the people who controlled those accounts continued to trade through Tuco’s partner brokerages (all of which cleared trades through Penson) after Tuco was shut down. Certainly, the data shows that Penson’s volumes did not decrease with Tuco’s closure. To the contrary, Penson transacted ever greater volumes of manipulative short selling in the months leading up to and including September, 2008, when the financial system melted down.
So it is time to review what we already know about Tuco, and add some new information. The repetition of a few key facts may (again) seem tedious to those who have good memories and have read earlier chapters of this series. But this is not a book. It is not even a story. It is an ongoing investigation, a sort of forensic (albeit imperfect) science. We have to carefully recollect what we already know in order to judge the relevance of new evidence.
So, here’s what we know: Tuco Trading was a little, unregistered brokerage in Chicago with more than 100 accounts, one of them a strange account called Orange Diviner, which was controlled by the top henchmen of Roman Abramovich (arguably the most powerful man in Russia) and Semion Mogilevich (the leading figure in Russian organized crime and the most dangerous mobster in the world, involved in everything from market manipulation to manslaughter and the trafficking of radioactive materials).
In 1999, Abramovich and Boris Berezovsky (who jointly operated a vast business empire that controlled Russia’s media and minerals, and much of its radioactive materials) orchestrated the 1999 rise to power of Vladimir Putin, who was then the head of the FSB, successor agency to the KGB. Today, of course, Putin is prime minister of Russia.
Berezovsky has apparently had a falling out with Putin, though some in Russia speculate that the two men are still close. People in Russia whisper about the Abu Dhabi royals serving as messengers between Berezovsky and Putin. Just rumors, perhaps. The truth is, nobody knows. Nothing about these relationships is clear. But here’s a good rule: Beware the murk.
Berezovsky now resides in London, as did his employee, Alexander Litvinenko, a former FSB operative killed in 2006 with radioactive polonium-210. That was soon after Litvinenko charged the Russian government with having ties to Al Qaeda. The Russian government denied this charge, stating that it was Litvinenko and Berezovsky who had ties with jihadi terrorist groups. Who knows what the truth is? But remember the rule: Beware the murk.
Whatever the truth, few doubt that Abramovich retains his position as the modern-day Rasputin, his mystic money driving the siloviki, which is the elite cadre of current and former intelligence operatives (including Putin) who occupy the most important positions in the Russian government. In other words, we must assume (as many U.S. officials do) that Abramovich is part of Russia’s intelligence apparatus, helping to define his nation’s murky geopolitical agenda.
We might assume the same of Abramovich’s top henchmen, the principal figures behind the Orange Diviner account. It is also a certainty (as U.S. diplomats have suggested, and I have demonstrated) that the Mogilevich organization (also linked to the Orange Diviner account) is tied in with the Russian intelligence services.
It was soon after Mogilevich tried to sell highly enriched uranium to Al Qaeda operatives in Europe that the British government declared him to be the “most dangerous mobster in the world.” When Mogilevich orchestrated a massive stock fraud called YBM Magnex (which was linked to a 1999 scandal that saw the Russian government working in cahoots with the Russian Mafia to manipulate the U.S. markets and launder billions of dollars through the Bank of New York), the FBI put Mogilevich on top of its list of “Most Wanted” criminals.
Mogilevich currently resides in Moscow under the protection of the Russian government, which has refused to extradite him or even admit that he has committed any serious crimes. One of his top henchmen, Sergey Maksimov, lives in Ukraine, where he enjoys similar protections, probably at the behest of the Russian government. Maksimov, a former top executive at YBM Magnex, was one of the people behind the Orange Diviner account at Tuco Trading.
Alexei Ivin set up the Orange Diviner account at Tuco (a little, unregistered brokerage in Chicago) whole he was also serving as “head of international” at a big Moscow outfit called BrokerKreditServis, which is a joint venture with the state-run Vnesheconombank, said by the Heritage Foundation (citing U.S. officials) to be effectively controlled by the FSB, Russia’s main intelligence agency.
As of 2008, BrokerKreditServis (which does quite a lot of business with Iran) was run by Dmitry Peshnev Podolskiy, former head of Alfa Bank. It was likely at the behest of the Russian government that Alfa Bank came to be a key financier of Iran’s nuclear program.
BrokerKreditServis, meanwhile, maintains an important partnership with U.S. brokerage Man Financial, which, in 2008, provided Tuco with one of its trading platforms. This is the same Man Financial that transacted (in 2008) massive volumes of manipulative wash trades for Naresh Patel, a prominent member of D-Company, the Al Qaeda affiliate whose membership received paramilitary training from the Pakistani intelligence services.
There is some dispute as to whether Naresh Patel’s organization is still called D-Company, but I will continue to refer to it as D-Company since no new name has emerged. The leader of D-Company, Dawood Ibrahim, is the biggest investor on the Karachi stock exchange. In addition, he has been linked to the trafficking of nuclear weapons technology to Iran and North Korea.
D-Company does a lot of business with the Mogilevich organization. And like Mogilevich, Dawood Ibrahim is often referred to as “the most dangerous man in the world.” Suffice it to say, they’re both dangerous. Ibrahim’s henchman Naresh Patel (the guy who was trading through Man Financial) was a key money manager for Al Qaeda.
When it transacted Patel’s trades, Man Financial’s head of trading control, Neda Nabavi had set up an Iranian social club called Shabeh Jomeh with two others: Babek Talebi and Tamilla Ghodsi. Talebi was a board member of National Iranian American Council, shown to be a front for the Iranian regime’s lobbying efforts in the United States. Ghodsi was a board member at the Razi Health Foundation, which was funded by the Alavi Foundation, an Iranian government front indicted by the DOJ for espionage in 2009.
I don’t want to make too much of that. I have no evidence that Nabavi, Man Financial’s head of trading control, is tied directly to the Iranian regime. It could be that she has done no worse than failing to “control” the manipulative trading of Man Financial’s dangerous clientele, including D-Company.
But outfits like the National Iranian American Council and Shabeh Jomeh are instructive guides to Iranian social networks, and social networks are sometimes important. They might, at any rate, explain why any investigation of Tuco Trading—and those two accounts that generated short selling volume exceeding that of Goldman Sachs–inevitably leads back to either Iran or its ally, Russia.
MB Trading, a unit of Terra Nova Financial, provided Tuco with another its trading platforms. MB Trading was, as of 2008, the only U.S. brokerage ever to have been caught (by the SEC) illegally doing business with Iran.
Terra Nova’s head of trading operations, Behruz Afshar, meanwhile, was loading precious metals on Condor Air cargo planes in partnership with his relative, Hamayoun Afshar (who was charged with money laundering) and Ghazaros Ghazarossin (who had ties to Hezbollah, the jihadi outfit founded and directed by the Iranian regime).
Please have a look at earlier chapters of this series to see that all such statements have been established as fact with supporting documentation and additional detail. When reviewing information that has already been covered in earlier chapters, I will continue to do so without rehashing all the evidence.
I know this series is long and I know it is not exactly something you’ll want to take to the beach, so I don’t fully expect that all of my readers will have navigated every chapter. But I will proceed to repeat some facts without all of the supporting evidence in hopes that doubters will at least glance back at earlier chapters to see that all of the supporting evidence is there .
As readers of previous chapters know, an outfit called Lightspeed provided Tuco with another of its trading platforms. That trading platform had been designed by Omar Amanat, who played a key role in developing many of Penson Financial’s other client relationships.
Amanat is a member of the Muslim Brotherhood who founded an Islamic television network (BridgesTV) with Nihad Awad, a member of Hamas (which is a proxy of Iran); and Muzzammil Hassan (who, in 2009, chopped off his wife’s head in an apparent honor killing, in California).
Awad and Amanat had close relationships with Palestinian Islamic Jihad leaders Sami al Arian and Ramadan Abdallah Shaleh. Sami al Arian was a founding director of the Islamic Society of North America (ISNA), named (along with Awad of Bridges TV) as an unindicted co-conspirator in the DOJ’s case against the Holy Land Foundation, a front for Hamas. Like the above-mentioned Alavi Foundation, Sami al Arian and Shaleh both took directions (according to the DOJ) from Iranian government agents stationed in New York.
Awad and Amanat also had close relationships with the Blind Sheikh, who masterminded the 1993 World Trade Center bombing while living in the home of Awad’s immediate boss, Omar Ahmad. Former CIA director James Woolsey and others have suggested that there is reason to believe that the Blind Sheikh had contact with Iranian government agents in New York while he was masterminding his terrorism.
All of these people (Awad, Amanat, Ahmad, Sami al Arian, Shaleh) also had close ties to several Al Qaeda leaders. One of them was Anwar al Awlaki, an American-born imam now residing in Yemen. He has been linked to multiple terrorist atrocities, including the 2009 “Underwear Bomber” attempt to take down a plane over Detroit; the 2009 Fort Hood massacre; the 2010 attempt to explode a bomb in Times Square, and the 2001 September 11 attacks.
Another Al Qaeda friend of Amanat and Awad was Adurahman Alamoudi, who is currently serving a 29 year sentence for financing Al Qaeda and plotting, with another Al Qaeda operative and Libyan leader Muammar Qadaffi, to assassinate the crown prince of Saudi Arabia.
This is in no way to suggest that Amanat and Awad are Al Qaeda. But Al Qaeda might be beside the point. The real threat is the larger jihadi movement. And among the key figures in that movement are Awad and his partner, Omar Amanat (founder of Tuco’s Lightspeed trading platform).
Tuco Trading itself was founded by Gus Katsafaros and Robert Lechman. Katsafaros (who is also known as Gus Constantinos and Gus Peter) had formerly been a principal at Sort Securities, which, like Lightspeed, had been founded by the above-mentioned Omar Amanat. Robert Lechman had previously been a principal at Crescent Securities, an outfit founded by Talat Othman, who was a director of the Bridgeview Mosque in Chicago.
The Bridgeview Mosque is controlled by the Muslim Brotherhood. It is an affiliate of ISNA (named, along with BridgesTV co-founder Awad, as an unindicted co-conspirator in the Holy Land Foundation terror finance case). Unsurprisingly, the Bridgeview Mosque was one of the principal financiers of Palestinian Islamic Jihad leaders Ramadan Abdallah Shaleh and Sami al Arian (the terrorists who were taking orders from Iranian agents in New York).
In addition, the Bridgeview Mosque was tied to Al Qaeda fronts such as the Chicago-based Benevolence International, which had (according to the DOJ) contacts with people trying to buy nuclear weapons from organized criminals in Russia.
One of Tuco Trading’s employees was Zuhair Karam, whose family member is (with Talat Othman and a few others) among the people who run the Bridgeview Mosque.
Before I proceed, though, I want to stress that I do not consider people to be guilty by association. Indeed, one of Talat Othman’s closest friends was the guest of honor at my wedding. This Othman friend is a genuine patriot and man of great integrity. Othman has done business with plenty of others (including even President George Bush) who have nothing to do with this investigation.
A mere affiliation is not enough to make it into this story. Nor is it enough to be a mere jihadi. However, I will continue to name people who are not only tied to terrorists and hostile governments, but have also caused damage to the American economy.
As I mentioned, Zuhair Karam’s family helps run the Bridgeview Mosque, which has financed terrorism. Zuhair is also a producer of jihadi propaganda. He is (by his own admission) among the closest associates of the Palestinian Islamic Jihad leaders who were taking directions from Iranian government agents in New York. (See Chapter 1 and Chapter 2 for Zuhair’s many other jihadi affiliations).
In the summer of 2010, I suspected that Zuhair had helped set up those two accounts at Tuco Trading—the two accounts that generated manipulative short selling exceeding the total short selling volume of Goldman Sachs. But Zuhair had told me that he was “just one of the little guys”—and I believed him. Aside from that, I wasn’t sure what to believe.
I knew that the person most responsible for setting up those two accounts was an Iranian fellow named Pejman Hamidi. In addition, I had some sources who were telling me strange things.
One source told me that Hamidi had some kind of relationship with a certain Mikhael Semenko, who was among ten Russian spies whom the FBI had arrested in the summer of 2010. Another source told me that one of Hamidi’s closest relatives had been a key mentor to Palestinian Islamic Jihad leader Ramadan Abdallah Shaleh, and had later employed an undercover Iranian government agent who was shipping weapons to Palestinian Islamic Jihad and Hezbollah.
I had also come to believe (correctly, as it turned out) that Hamidi’s immediate family worked for the Revolutionary Guard, which is the Iranian government outfit tasked with “exporting” the Islamic revolution by training and directing the operations of Iran’s terrorist proxies, such as Hezbollah, Hamas, and Palestinian Islamic Jihad. It is also a near certainty (judging by the statements of some former U.S. government officials and evidence presented in earlier chapters) that the Revolutionary Guard has provided some degree of assistance to Al Qaeda.
My sources were tied in closely with a larger network of people with similar relationships, so I was inclined to believe them. The information about the Russian spy seemed to be supported by the fact that both Hamidi and Semenko (the Russian spy) were members of an outfit called the World Affairs Council. But given the nature of this information, I could not rely on the sources alone. I would have to confirm the information with Zuhair Karam and Hamidi themselves. I would have to get them to admit that it was true.
When I first called Zuhair, and asked if he could help with my investigation of Tuco Trading, he was not cooperative. Zuhair seemed to think I was somehow connected to the FBI. He seemed, in fact, to think he was the target of an FBI investigation. And he was quite defiant, saying, “The FBI…the FBI…let them come, see if I care.”
The truth, of course, was that I didn’t work for the FBI. I had never set foot in an FBI office. I don’t even have a gun. I once tried to buy a gun, but the store told me their inventory had been cleared out by people expecting the country to disintegrate into chaos and anarchy. In any case, I doubt that the FBI would let me purchase a gun, much less hire me.
I am nothing but an investigative journalist, happily exiled from the mainstream media that once employed me. My office is in a crappy apartment, located around the corner from a homeless shelter in a low-rent district on the Chicago border. When I first spoke with Zuhair, I was wearing my pajamas.
After that, I had a lot of other conversations with Zuhair. In every instance, I was wearing my pajamas.
However, one can accomplish a lot in his pajamas. Indeed, it is my opinion that investigators wearing pajamas are sometimes more productive than regulators who wear expensive suits. This is because many regulators in suits hope to score jobs with the criminal financial operators whom they are supposed to be regulating. And this tends to limit their effectiveness.
I also knew an important rule: it is not effective to simply ask people if they have, say, done business with the government of Iran. The usual answer to such questions is: “No.”
So while I continued to have general discussions with Zuhair, I didn’t ask him questions about those two Tuco accounts. I thought the best strategy might be to first collect as much additional information as possible. If I were able to present Zuhair with almost the full story, and lots of incriminating details, I could convince him that, in fact, I already knew the story in its entirety.
Faced with someone who seemed to know the whole story, Zuhair would, I figured, confirm that it was true. Most likely, he would attempt to come up with some alternative explanation for the facts. But the facts themselves would be confirmed. So, I continued my research into Tuco Trading and Hamidi (the Iranian fellow who set up the two accounts). And I learned a lot.
One thing I learned was that many of Tuco’s traders hailed from the Middle East, and a lot of them were simultaneously traders for a brokerage called Assent, LLC, which (like Tuco and its other partner brokerages) cleared its trades through Penson Financial. Assent, LLC is unit of an outfit called SunGard, which is one of the world’s largest providers of “shariah compliant” trading platforms.
As documented by Patrick Sookhdeo, an expert on Islamic finance (he is the author of the book, “Understanding Shari’a Finance“), “shariah compliant” finance was spearheaded by the Muslim Brotherhood, and most of the major “shariah compliant” financial firms in the world are in some way affiliated with the Brotherhood (which publicly professes to be opposed to violence, though it created Hamas, and has served as the breeding ground for most of the world’s jihadi terrorist outfits, including Al Qaeda).
Violent or not, there is no question that the Muslim Brotherhood is waging what Brotherhood spiritual leader Yusuf al-Qaradawi regularly refers to as a “Financial Jihad.” And when addressing Muslim audiences (as opposed to infidel reporters and Western government officials), Brotherhood leaders make it clear that their goal is to undermine the United States.
In the terror-finance case that named Hamas operative Nihad Awad (BridgesTV partner of Omar Amanat, who designed Tuco’s Lightspeed platform) as an unindicted co-conspirator, prosecutors presented as evidence a Brotherhood document stating that the Brotherhood’s goal (like that of the regime in Iran) was to “sabotage” America’s “miserable house” from within.
The U.S. government’s official policy is to embrace the Muslim Brotherhood as a reasonable alternative to violent jihad. Meanwhile, those who holler that the Muslim Brotherhood and shariah law are existential threats to the United States are widely derided as “Islamophobic” wing-nuts who wish merely to fuel hysteria and promote a clash of cultures.
There is nothing wrong with showing respect to the Brotherhood and negotiating in good faith. And there is some truth to the wing-nut theory. It is not the case (as many critics of the Brotherhood and Islam would have it) that Brotherhood infiltrators are successfully transforming the United States into a nation ruled by shariah law.
To the contrary, far from embracing Islam, America seems (as the Brotherhood correctly observes) entirely committed to being a “miserable house” with all that it entails–television networks that air entertaining trash rather than the sermons of bearded imams; endless strip malls crowded with men who are too emasculated to have four wives (and the one wife each of them has stubbornly refuses to wear a burka); a popularly elected and utterly licentious democracy; and a ruling class of greedy infidel financiers.
However, anyone who cares about the economic future of their children should be aware that Muslim Brotherhood financial firms have the firepower to achieve a considerable amount of “sabotage”. All the more so given that there are plenty of greedy infidel financiers willing to help, and not so many government officials (in this licentious democracy) who are inclined to stop them.
In 2008, SunGard (owner of Assent, many of whose employees traded through Tuco) sponsored a “Gala Networking Reception” where it was declared (echoing the Muslim Brotherhood) that “Islamic [shariah] finance can be the model for the global economy.”
The keynote speaker at this event was the CEO of the secretive financial labyrinth known as Dar Al-Maal Al-Islami, or “The House of Islamic Money.” Victims of the September 11 attacks have sued The House of Islamic Money, noting that it kept accounts for Wael Jalaidan, a founder of Al Qaeda, and that it has done business with multiple companies that were owned by Osama bin Laden.
One of The House of Islamic Money’s subsidiaries, Shamal Islamic Bank, was run by Abdul Jalil Batterjee, who was also the chairman of Benevolence International, the outfit linked (as is Tuco Trading) to the Bridgeview Mosque in Chicago. Again, according to federal prosecutors, Benevolence International was an Al Qaeda front that had contacts with people looking to buy nuclear weapons from organized criminals in Russia.
Another of The House of Islamic Money’s subsidiaries, Faisal Finance, was controlled by “Specially Designated Global Terrorist” Yasin al Qadi, who was also a board member of the House of Islamic Money, and was involved with Benevolence International while he ran the Muwafaq Foundation, which was (according to the U.S. Treasury Department) an “Al Qaeda front.”
Until 1999, recall, Yasin al Qadi also controlled a “soap” company called Global Chemical, which was, in fact, a chemical weapons and explosives factory located in a Chicago warehouse district not far from the Bridgeview Mosque, whose directors were among Yasin al Qadi’s close associates.
Later, Yasin al Qadi controlled a precious metals mining outfit called MIT Minmit, which was (as of 2007) run by Michael Nolan, then CEO of the Chicago-based Terra Nova Financial (the outfit that provided Tuco with one of its trading platforms and was caught doing illegal business with Iran).
In 2009, the SEC investigated SunGard (owner of Assent, many of whose traders were operating through Tuco Trading) because it suspected that SunGard, like Terra Nova, had ties to Iran.
It is extremely rare for the SEC to ask U.S. financial firms about their ties to Iran, but the SEC sent Sungard a letter that read as follows: “Please describe to us the nature and extent of your…contacts with Cuba, Iran, Syria or Sudan…or other contacts you have with the governments of those countries…We also note a 2008 news article on Islamic banking that discusses the fact that some Iranian banks may have used System Access’s products.”
SunGard replied that System Access (the SunGard unit that provides some of its trading platforms) had sold its “non-U.S. SYMBOLS software to [the Iranian, government-owned] Bank Karafin…and to the Central Bank of Sudan.” However, SunGard claimed that the deals were done prior to its purchase of System Access. According to SunGard, the Iranian bank still used the software, but it was no longer maintained by SunGard.
Meanwhile, SunGard said that individuals in Iran received “publicly available information materials” from Sungard and had attended Sungard “conferences”, but the company did not “anticipate” having additional customer relationships in Iran. The SunGard response was somewhat vague. It did not answer the SEC’s question about any “contacts” that SunGard might have had with the Iranian government.
But the SEC asked no further questions and ended its investigation. This is how it works. The SEC receives credible information that a financial firm has ties to Iran, so the SEC asks the financial firm if it is doing business with the Iranian government. The financial firms says, “No,” and that’s the end of the investigation.
I’m still investigating, but the fact that SunGard disseminated information to Iran and admitted to holding conferences for people in Iran (while failing to answer the question as to whether those people were government officials) suggests that it was, perhaps, developing some kind of relationship with the Iranian regime.
There are many ways that a U.S. brokerage operation can develop business with the Iranian government without actually having the Iranian regime as a customer. It could be as simple as providing the regime with “publicly available” information that an Iranian government account at, say, BrokerKreditServis in Moscow, would trade through “shariah compliant” Assent brokers at the unregistered Tuco, onto the Man Financial (BrokerKreditServis) trading platform, and onwards to Penson, which would “clear” the trades.
If this were the case, the Iranian government would understand a definition of “shariah compliant” short selling that was written in stone by the Muslim Brotherhood just a few years ago. Under that definition, “shariah compliant” brokers do not borrow shares before selling them short, ostensibly because borrowing with interest is prohibited by the Koran.
In fact, the Koran (which I have read several times over) has no such prohibition. But these “shariah compliant” short sellers are in hot demand. Rather than borrow shares, they simply sell shares that they do not yet possess. That is, they engage in so-called “naked” short selling, creating what the Economist magazine (in a story that was about naked short selling generally) has referred to as “phantom” shares. That’s artificial supply, and it sinks U.S. stock prices.
I repeat: this service is in hot demand. There is an entire industry of Middle Eastern banks and U.S. financial firms that cater to them by providing “shariah compliant” short selling, which is, by definition, manipulative naked short selling.
Of course, in most instances naked short selling is against the rules. Therefore, jihadi financiers have two options. First, they can tell the SEC that Muslims have no choice but to naked short the markets, and under this guise of Islamic jurisprudence, they can ask the SEC to grant them special permission to create a “shariah compliant” naked short selling trading platform.
Amazingly, the SEC has granted that permission to one financier, Sheikh Yusuf DeLorenzo, who set up the Al Safi Trust naked short selling platform. Sheikh DeLorenzo (we know from earlier chapters) spent his formative years working with the Pakistani intelligence services to set up a network of madrassahs to train Pakistan-based jihadi terrorist groups.
Shiekh DeLorenzo’s naked short selling outfit is affiliated with ISNA, the organization that was named (along with BridgesTV co-founder Nihad Awad) as an unindicted coconspirator in the government’s case against the Holy Land Foundation (a front for Hamas). After working for Pakistani intelligence, Sheikh DeLorenzo (a close associate of Omar Amanat, who designed Tuco’s Lightspeed trading platform) moved to the U.S., where he co-founded an Islamic organization called GSISS with Abdurrahman Alamoudi (Al Qaeda operative who plotted an assasination with Muammar Qadaffi).
Aside from being an Al Qaeda operative, Alamoudi was a sophisticated financier and the scion of one of Saudi Arabia’s wealthiest families. He was, of course, a client of Penson Financial. Which is, of course, the second option for jihadi financial financiers wishing to crash the markets with shariah compliant naked short selling.
That is, they can simply break the rules, ideally by conducting their naked short selling through some unregistered brokerage (like Tuco Trading) that is staffed with “shariah compliant” brokers (like Zuhair Karam or the guys from SunGard’s Assent). Typically, this brokerage will have a cooperative trading platform (like Omar Amanat’s Lightspeed) that “clears” its trades through Penson Finacial, which simply fails to deliver (or “clear”) the phantom stock.
I do not know for a fact that the Assent (SunGard) traders at Tuco Trading were engaged in “shariah compliant” short selling from Iran (via BrokerKreditServis in Moscow, or wherever). I merely wish to point out that when U.S. financial firms seem to have had contacts with the Iran (which SunGard certainly did), investigating the precise nature of those contacts is more complicated than asking the firms if they have signed an official business deal with the Ayatollah.
And whatever the truth about SunGard’s relationship with Iran, it was certainly doing business with The House of Islamic Money. Sources who have been otherwise reliable say that The House of Islamic Money was, in fact, trading through SunGard subsidiary Assent (many of whose employees were conducting their trading through Tuco).
Indeed, it is likely that the House of Islamic Money accounted for some portion of the massive (and manipulative) short selling volume that had, in 2008, suddenly made Penson Financial the largest brokerage on the planet. My reliable sources add that The House of Islamic Money was trading not only for Al Qaeda financiers, but also the regime in Iran. And my sources are almost certainly correct when they say that people tied to the regime in Iran were pumping large volumes of manipulative short selling through Penson.
To begin to understand why my sources are credible on this score, we need first to remember that Ali Nazerali played a key role (along with the above-mentioned Omar Amanat) in building Penson Financial’s key subsidiary (Computer Clearing Services) and also in developing Penson Financial’s strange client relationships, including the one it had with Tuco Trading and with the people (including the Iranian Pejman Hamidi) who set up those two accounts that generated short selling volume exceeding that of Goldman Sachs.
I have discussed Ali Nazerali at length in earlier chapters, but a quick review of his biography is in order. For example, we must remember that Ali Nazerali ran a hedge fund (Valor Invest) in partnership with “Specially Designated Global Terrorist” Yasin al Qadi (who has been: a board member of The House of Islamic Money; owner of the Terra Nova Financial CEO’s precious metals mining outfit; close associate of the Bridgeview Mosque directors; close associate of Lightspeed’s Omar Amanat; and Osama bin Laden’s favorite financier).
One of the board members of Valor Invest (the Ali Nazerali and Yasin Al Qadi hedge fund) was a shadowy Swiss financier named Pierre Besuchet, who was also a board member of Yasin al Qadi’s Faisal Finance. In addition, Besuchet (among the many infidel financiers who have done business with Al Qaeda financiers) was a board member (along with Yasin al Qadi) at The House of Islamic Money (an Al Qaeda bank).
Ali Nazerali, of course, also had a close relationship with The House of Islamic Money. And he was on eminently close terms with The House of Islamic Money’s founders, including not only Yasin al Qadi, but also the brother of Prince Turki bin Faisal bin Abdul-Aziz, then the head of Saudi intelligence.
In 2001, Nazerali perpetrated a stock fraud (Even Resources) with Prince Anwar bin Abdul al-Aziz al Saud, who had just been named the new head of Saudi intelligence. Nazerali was also involved (in the 1980s) with Capcom, the BCCI subsidiary that was controlled by Saudi intelligence and implicated (by a U.S. Congressional committee) in the manipulation of the U.S. markets and an attempt to seize control of U.S. telecommunications companies, likely for the purpose of espionage.
In addition, Nazerali was once the top employee of Abbas Goal (Pakistani intelligence asset; key financial advisor to the regime in Iran). Gokal was Nazerali’s most important mentor, and the two men remain the closest of associates today—one reason why Nazerali has been able to do a considerable amount of business with the Iranian regime.
Many experts (including some who now run the State Department) assume that it is impossible that Sunnis (eg., Al Qaeda and the Saudi founders of The House of Islamic Money) could ever collaborate with Shiites (like the ayatollahs in Iran), much less with the Ismailis (said by leading Sunni clerics to be among the most heretical Shiite sects).
But Nazerali is evidence enough that it is dangerous to hold simplistic assumptions about supposedly unsurpassable divisions in the Muslim world. Nazerali is a leading Ismaili Muslim and the long-time CEO of the Aga Khan Foundation, set up by the Aga Khan, who is believed (by Ismailis) to be the “Imam of the Time”–the human manifestation of truth.
Sunnis (especially the Salafis of Saudi Arabia) often say that the Aga Khan is a religious abomination, for there is only one truth, and that is Allah. For other reasons, the ayatollahs in Iran claim to abhor the Aga Khan. Yet the Aga Khan Foundation (as we have seen) has close ties to the Sunni-dominated Pakistani intelligence services, segments of the regime in Iran, Hashemite generals in the Syrian army, D-Company, and Salafi financiers of Al Qaeda.
Meanwhile, Nazerali (the Aga Khan’s emissary) seems perfectly capable of doing business with both the Shiite ayatollahs and the Salafis who dominate the Saudi intelligence services. His mentor, Abbas Gokal, is a Sunni, but nonetheless continues to serve as a top financial advisor to the Iranian regime, comprised largely of devout Shiites preparing for the apocalyptic return of the Hidden Imam (who was a Shiite, and according to lore, will wipe out heretics like the Aga Khan).
Nazerali himself spent his early years working with Pakistani intelligence to deliver weapons to the mujahedeen. Just as the mujahedeen was then a collaborative effort of Sunnis and Shiites, so too is the current jihadi movement. That’s why Hamas (all Sunni) is a proxy of the Iranian regime (mostly Shiite). I don’t mean for this chapter to be a lesson in religion, but there are some people in government who simply cannot fathom that Shiites and Sunnis could work together to inflict damage on the U.S. economy.
They have a short memory. In the world of financial crime, the close cooperation of Sunnis and Shiites has been evident since the 1970s and 1980s, when the Bank of Credit and Commerce International (BCCI) wrought massive destruction on the global financial system. BCCI (perhaps the most criminal bank ever to have operated) was founded by Agha Hasan Abedi (a Pakistani Shiite) in partnership with Abu Dhabi royal famliy (devout Sunnis).
BCCI’s CEO was Swaleh Naqvi, a relative of Ali Nazerali. Like Nazerali, Naqvi was an Ismaili “heretic.”
As we know, Ali Nazerali was a key figure in BCCI. We also know that BCCI’s founding shareholders and top executives masterminded the 1973 oil embargo, which was an act of economic warfare against the United States—retaliation for America’s support of Israel in the 1973 Arab-Israeli war. It was warfare that had the dual advantage of crippling the U.S. economy and enriching BCCI, which banked much of the increased oil revenue derived from the embargo.
As I have shown in earlier chapters, the old BCCI network (which included jihadi terrorist groups, Marxist terrorist groups, La Cosa Nostra, Russian organized crime, multiple rogue intelligence operatives, America’s most notorious financial criminals, and several hostile governments, including the one in Iran) is essential to understanding the origins and clientele of Penson Financial. And as we will see in greater detail in coming chapters, this network certainly made the financial crisis much worse than it had to be.
I know I do myself no favors by even mentioning BCCI (the facts of BCCI were once just facts, but they have since been incorporated into so many conspiracy theories that it has gotten to the point where simply mentioning the facts seems a bit nutty), but…well, whatever, call me nutty. I will proceed to repeat some other nutty facts because they are true.
As we know, some of the manipulative short selling volume that went through Penson in 2008 came from Star Soft, a fund that Ali Nazerali set up in partnership with: 1) the ruling family of Dubai (formerly founding shareholders of BCCI); 2) Mufti Al Abbar (the man in charge of organizing the manipulation of the U.S. markets for Libyan leader Muammar Qadaffi); and 3) members of the Mogilevich organization (tied to Russian intelligence).
Among the Mogilevich henchmen involved with Nazerali’s Star Soft was Vitali Leiba. He and Sergey Maksimov (one of the people behind the Orange Diviner account at Tuco Trading) were both formerly top executives at YBM Magnex (Mogilevich outfit linked to Russian government money laundering in 1999).
For the purposes of our discussion of Tuco Trading, it might also be worth recalling that Nazerali was a key client of Lines Overseas Management, which transacted massive volumes of trading through a brokerage called Vfinance, which cleared the trades through Penson Financial.
Among the other clients whom Nazerali introduced to Lines Overseas were: Vitali Leiba (YBM Magnex); Felix Sater (Russian Mafia boss who is tied the Russian intelligence services; and who escaped jail by telling the U.S. government he had access to Osama bin Laden); Christopher Metsos (one of the ten Russian spies arrested by the FBI in 2010); and Yvgeny Dvoskin (the alleged ring-leader of those ten Russian spies).
Vfinance (which referred Lines Overseas trading to Penson) had been founded with finance from Balmore Investments, which was run by Martin Schlaff and Solomon Obstfeld.
Obstfeld had previously been the top trader at Datek Securities, founded by Omar Amanat (the Muslim Brotherhood figure who designed Lightspeed, one of Tuco’s trading platforms). Datek was (see earlier chapters) linked in multiple ways to the 1999 scandal that saw the Russian government working in cahoots with the Russian Mafia (especially the Mogilevich organization) to manipulate U.S. stocks and launder billions through the Bank of New York.
Also linked to that scandal (see Chapter 10 for details) was the above-mentioned Felix Sater, who ran a brokerage (White Rock Partners) that was indicted in 2000 for manipulating stocks with Datek’s clearing firm (A.R. Baron) and five members of La Cosa Nostra. The scandal involved a few others, including Datek financier Robert Brennan and Nazerali’s former employer and principal mentor Abbas Gokal (key Pakistani intelligence asset; financial advisor to the regime in Iran).
Given that Obstfeld was then the top trader at Datek, it should not be surprising to learn that his future hedge fund partner, Martin Schlaff (financier, with Obstfeld, of Vfinance), had also been linked to the Russian government market manipulation in the late 1990s. Schlaff is a former KGB and Stasi asset, a one-time business partner of Semion Mogilevich, and one of Vladimir Putin’s closest cronies.
Schlaff and Obstfeld are close associates of Nazerali and have (as we saw in earlier chapters) participated in death spiral, naked short selling schemes with Nazerali’s hedge fund partner Yasin al Qadi (Osama bin Laden’s favorite financier). Schlaff, like Nazerali partner Mufti al Abbar, is a also a key financial advisor to Muammar Qaddafi (who plotted to assassinate the crown prince of Saudi Arabia with his other financial advisor, Al Qaeda operative Alamoudi, who was an associate of all these characters).
Schlaff and Obstfeld (like Amanat) also have close ties to Hamas, and helped Hamas launder money through U.S. brokerage Refco, which (like Balmore Investments) was an affiliate of the Austrian bank BAWAG. Schlaff and Obstfeld also brokered BAWAG’s business relationships with the Iranian regime, the Libyan government, and various Muslim Brotherhood funds.
Again, all of this has been covered in detail in previous chapters, but I repeat some of it (without the detail) because this network is important to understanding the massive volumes that went through Tuco Trading.
In 2005, Refco collapsed as a result of a scandal that saw Refco helping BAWAG cover up bad loans that it had made (at the behest of Schlaff and Obstfeld) to Palestinian terrorist Yasir Arafat, while BAWAG helped Refco cover up “failures to deliver” liabilities that it had accrued as a result of transacting manipulative naked short selling for a large cast of closely affiliated “death spiral” hedge funds (such as those controlled by Schlaff, Obstfeld, Yasin al Qadi, and Al Nazerali) that were tied to both jihadi outfits and Russian organized crime.
In the 1990s, Nazerali and his friend Soleiman Rashid (whose brother runs a Hamas cell in Haifa), secured a job for Mark Valentine at a brokerage called Thomson Kernaghan. Under Valentine’s direction, Thompson Kernaghan forged a close business relationships with Nazerali’s hedge fund partner, “Specially Designated Global Terrorist” Yasin al Qadi (Osama bin Laden’s favorite financier).
Thompson Kernaghan (which, along with Balmore, provided the start-up finance for the above-mentioned Vfinance) also did a considerable amount of business with Schlaff, Obstfeld, and others in their network. Meanwhile, Mark Valentine was a partner in Navigator Asset Management, a hedge fund that employed Anna Chapman, who was another of those ten Russian spies arrested in 2010.
It might, therefore, be significant that Thompson Kernaghan was, for all intents and purposes, an affiliate of three other brokerages: Pacific International, Centex and Global Securities. Centex was controlled by Yvgeny Dvoskin (the alleged ring-leader of those ten Russian spies). Global Securities, we know, was affiliated with the Iranian government’s Assa Corporation, a unit of the Alavi Foundation (both Assa and Alavi were indicted for espionage in 2009).
The key figure at Pacific International was Jonathan Curshen, who later went on to run Penson client Red Sea Management in Costa Rica, where he chose to locate his offices in the same building that housed the Israeli embassy while he and his clientele (see earlier chapters) were funding Hamas, the jihadi outfit whose stated mission is to wipe Israel off the face of the map. Curshen, recall, also led the white knight bid to buy Mogilevich’s YBM Magnex.
As of 2006, a former intelligence operative who had spent much of his career tracking Hamas and other jihadi terrorist groups was monitoring meetings that Jonathan Curshen was hosting in Costa Rica. Among the people at these meetings were Ali Nazerali; and Gene Phillips, proprietor of Sinex, which was: 1) central to the 1999 Russian government and Mogilevich market manipulation scandal; and 2) tied to Bank al Taqwa, said by the U.S. Treasury to have “set up Al Qaeda’s main operating base in Europe”).
Phillips was also the proprietor of Interfirst, an early Penson Financial client whose president, Ronald Steinhart, sat on Penson’s board of directors.
Also at those Costa Rica meetings: Kevin Ingram, former head of Goldman Sachs mortgage-backed securities desk. In 2001, Ingram was indicted for laundering money for an Egyptian named Diaa Mohsen who was tied to Al Qaeda and Pakistani intelligence. Undercover FBI agents posing as rogue Pakistani intelligence operatives caught Mohsen trying to deliver nuclear weapons components to Al Qaeda via Pakistani intelligence.
The meetings in Costa Rica were focused on discussing strategies for destroying some big companies. Later chapters of this series will discuss some big companies that were, in fact, destroyed by people at those meetings. But for now, let us focus on Ali Nazerali (one of the people at those meetings) and that strange little brokerage Tuco Trading.
As I mentioned, Nazerali had been closely involved those other strange, little brokerages: Thompson Kernaghan, Global Securities, Pacific International, and Centex. Global Securities was founded by Art Smolensky and managed by several Iranian nationals, including Aarif Jamani (later a client of Curshen’s Costa Rica outfit). When Nazerali’s brother, Shafiq, decided to settle in Canada, Smolensky sponspored Shafiq’s resident application with the Canadian government.
These brokerages–Global, Centex, Thomson Kernaghan, and Pacific International–catered to precisely the same select clientele of destructive short sellers, most tied to either jihadi terrorist groups, Iran, Russian intelligence, Russian organized crime, or all the above. See previous chapters for the full list, but I for the purposes of this discussion, I will remind you that one of those clients was Amr Ibrahim Elgindy.
Amr Ibrahim Elgindy (also known as Anthony Elgindy) had previously been a principal at a Russian Mafia brokerage called Blinder, Robinson. After his arrest in 2002, DOJ prosecutors argued that Elgindy had ties to Al Qaeda and advance knowledge of the September 11 attacks.
Elgindy was not ultimately convicted on terrorism charges (he’s now serving 11 years for market manipulation and bribing FBI agents), but his prosecutors were spot-on correct. Elgindy was intimately tied (see earlier chapters for extensive details) to multiple Al Qaeda operatives.
To cite just one example, Elgindy’s brother, Khalid, and Al Qaeda operative Abdurrahman Alamoudi co-founded an outfit called the American Muslim Council around the same time that Alamoudi founded GSISS with Sheikh DeLorenzo (future founder of the Al Safi Trust naked short selling platform). Soon after, of course, Alamoudi and Qaddafi hatched their plot to assassinate the crown prince of Saudi Arabia.
I hate to attribute information to anonymous sources, but I feel it is important to mention that I have sources who have witnessed meetings attended by Al Qaeda operative Alamoudi, Omar Amanat (founder of Tuco’s Lightspeed trading platform) and Anthony Elgindy. There is plenty of publicly available evidence to convince me that my sources are telling the truth.
For example, Nihad Awad (Amanat’s BridgesTV partner) was a key advisor to the American Muslim Council (founded by Khalid Elgindy and Alamoudi).
In addition, Anthony Elgindy (like his associate, Omar Amanat) had extremely close relationships with the leaders of Palestinian Islamic Jihad. It was the Elgindy family who originally settled Palestinian Islamic Jihad leader Sami al Arian in the United States, at which point Sami al Arian and PIJ co-leader Shaleh began taking directions (as did the Assa Corporation, an affiliate of Global Securities) from Iranian government agents in New York.
Anthony Elgindy also sponsored travels to the United States for Enver Hoxha, leader of the Kosovo Liberation Army, which was then being trained by Al Qaeda leaders working undercover as officials of the International Islamic Relief Organization (IIRO). Omar Amanat (founder of Tuco Trading’s Lightspeed platform) has done a lot of work for the IIRO. And Elgindy’s brother, Khalid, was (with Alamoudi) a member of the IIRO’s board of directors.
The evidence is also clear that Anthony Elgindy had close business relationships with Hamas leaders (including Omar Ahmad, host to the Blind Shiekh; and Nihad Awad, partner of Lightspeed’s Omar Amanat) who attended a 1993 secret Hamas meeting (recorded by the FBI) in Philadelphia. The transcripts of this meeting were presented by prosecutors as evidence (along with the Muslim Brotherhood document outlining a strategy to “sabotage” our “miserable house”” from within) in their case against the Holy Land Foundation.
Among the Hamas operatives at that secret meeting was Ghassan Elashi, who owned (in partnership with Hamas political chief Mousa Abu Marzook) a company called Infocom. Infocom was later charged with financing terrorism and conducting illegal transactions with the governments of Libya and Sudan. Prior to that, this key Hamas company hosted a private internet chat site on which Elgindy and closely affiliated short sellers plotted the destruction of hundreds of American companies.
A man who is now a member of the DeepCapture team gained access to that private internet chat site and printed out thousands of pages of transcripts. Thanks to that man’s efforts, Elgindy is in jail, but I repeat all this because those “affiliated short sellers” are still in business. They have done immense damage to the U.S. economy, and it cannot be ruled out that some of them are motivated by more than money.
Indeed, having studied this crowd for upwards of five years, and not being one to jump to conclusions (one reason it has taken me five years to say this), I believe that we must seriously consider the possibility that some of these market manipulators are politically motivated financial terrorists with an agenda to undermine the American economy.
As I mentioned, it was at the behest of Ali Nazerali and Soleiman Rashid that Mark Valentine (one of the most detructive short sellers ever to operate) became chairman of the criminal brokerage Thomson Kernaghan. Valentine’s qualification for that job (the qualification that caught the attention of Nazerali and Rashid) was that he was the son of the Canadian ambassador to Saudi Arabia.
Nazerali and Rashid go to great lengths to develop relationships in the diplomatic community. Which would be odd if they were mere simply market manipulators, but we have seen that they are anything but ordinary financial criminals.
And for the purposes of this discussion, we must recall that in addition to being the former top employee of Abbas Gokal (a key figure in the Pakistani intelligence apparatus); and in addition to having been involved with Capcom (Saudi intelligence outfit accused of espionage); and in addition to doing business with Russian spies; Nazerali was also a key financier of a brokerage called JB Oxford.
JB Oxford was founded in the late 1990s by Nazerali’s BCCI partner Irving Kott, with additional finance from Boris Berezovsky (“Godfather of the Kremlin”). At this time Berezovsky was also considering buying Solomon Smith Barney, then one of the nation’s largest investment banks, in a deal that was being brokered by Nazerali’s associate, the above-mentioned Felix Sater (tied to Russian intelligence; and supposedly Osama bin Laden).
In 2005, JB Oxford sold its clearing operation to Computer Clearing Services, which had (at the behest of Nazerali and Omar Amanat) also picked up Global Securities and Thomson Kernaghan as clients. Soon after, in a deal brokered by Omar Amanat and his brother, Irfan (who almost certainly worked with Ali Nazerali on this), Penson Financial bought Computer Clearing Services, paving the way for Penson’s strange relationship with Tuco Trading and Tuco’s clientele.
As we know, an Iranian fellow named Pejman Hamidi set up two Tuco accounts that generated more short selling volume than Goldman Sachs in the month before the 2008 collapse of Bear Stearns. One of those accounts was called Lanai (which contained more than 2,000 subaccounts located in China). The other account was called T3 Capital.
Hamidi set up the T3 Capital account in his capacity as “head of institutional trading” for an outfit by that same name, T3 Capital. Another person involved with T3 Capital was Felix Garcia, who had previously been a principal at JB Oxford (the Nazerali-financed outfit that was folded into Penson Financial).
Meanwhile, a trader named Ferdinand Ledesma was in China, helping set up the 2,000 secret subaccounts that would be folded into Hamidi’s Lanai account at Tuco. Ledesma had help in China from Janelle Yan, who worked for a Singaporean company called TSH Corporation, specialized in: 1) “Firearms simulator training”; and 2) “Ordnance and explosive disposal.”
Ledesma (who hails from the Phillippines) had been one of Anthony Elgindy’s short selling partners until the FBI began investigating Elgindy’s ties to Al Qaeda. Back in the 1980s, Ledesma and Elgindy had both been principals at Blinder, Robinson, the Russian Mafia brokerage indicted for manipulating stocks with numberous mobsters (Thomas Quinn, a capo in the Genovese Mafia family, to name just one).
The other key principal at Blinder, Robinson was Steven Schonfeld (later a co-owner of Omar Amanat’s Lightspeed, and a board member at Penson Financial). Schonfeld also helped set up Tuco Trading.
We must review some other facts about this network. Remember, for one, that the other key principal at JB Oxford (Nazerali financed brokerage) was Rafi Khan, who, of course worked closely with JB Oxford principal Felix Garcia (later of T3 Capital).
Rafi Khan is the son of a Pakistani diplomat (and intelligence operative, according to Khan’s close associates). Rafi’s brother was,until recently, a wanted criminal in Egypt because authorities in that country believed he was tied to Al Qaeda affiliate Gama’a al Islamiyya, which was founded by the Blind Shiekh (Omar Amanat friend who mastermind the 1993 World Trade Center bombing).
Among JB Oxford’s key clientele were brokerages (some of which I have named in earlier chapters, others of which I name below) financed by Saudi arms dealer Adnan Khashoggi. Back in the 1980s, Khashoggi and his partner, Manuchar Ghorbinafar (an Iranian intelligence asset and arms dealer), famously stiffed the United States in the arms for hostages deal they brokered between the U.S. and Iran.
To this day, Khashoggi (like Nazerali) maintains extremely close relationships with the regime in Iran. Khashoggi was also involved (with Nazerali) in Capcom (the Saudi intelligence outfit accused by Congress of espionage).
In addition, Khashoggi (like his associates Martin Schlaff, Abdurrahman Alamoudi, and Mufti al Abbar) was, as of 2008, a key financial advisor to Libyan leader Muammar Qaddafi.
JB Oxford’s vice president in charge of clearing and settlement had been Kevin Beadles, who later became the top clearing and settlement executive at Wedbush Morgan, a relatively obscure brokerage in California. Wedbush Morgan provided Tuco Trading with another its trading platforms.
And in 2008, Wedbush Morgan suddenly became the second largest brokerage in the world, by virtue of volume that (like Penson’s volume) was mostly short selling targeting the big banks and other companies important to the stability of the financial system.
I have only just begun to dig into Wedbush Morgan clientele, but given that its trading correlated so closely with that of Penson, it is likely that the two brokerages catered to the same clientele. And we know for a fact that all of the people named in this chapter were clients of Penson Financial (which was essentially the reconstituted JB Oxford).
We also know that a number of these people–Khashoggi, Rafi Khan, Beadles (who played a bit part, possibly unwittingly) and Anthony Elgindy, along with a few others, such as Rami El-Betrawi, who was another funder of Hamas through the Holy Land Foundation–orchestrated a successful scheme (timed to coincide with Al Qaeda’s attacks on September 11, 2001) to destroy MJK Clearing, then the largest clearing brokerage in America.
Re: The Miscreants’ Global Bust-Out Chap 1 - 19
Post by sandi66 on Jul 26, 2011, 2:25pm
See Chapter 9 for the full story of the MJK take-down, but it suffices to say that it involved naked short selling; it wiped out more than 10,000 brokerage accounts; it necessitated the biggest payout in the history of the Securities Investor Protection Corporation; and it was more than likely an act of financial terrorism meant to augment the economic damage caused by Al Qaeda’s destruction of the World Trade Center, which was targeted because Al Qaeda believed it was the engine and locus of American economic power.
Most of the people—Rafi Khan, Rami El-Betrawi, Anthony Elgindy, Adnan Khashoggi—who carried out the likely financial terrorism that took down MJK Clearing had been (like Ali Nazerali) among the select clientele of Global Securities (linked to an Iranian government espionage outfit) and the brokerages affiliated with Global. They were (along with Global’s Aarif Jamani) also clients of Jonathan Curshen’s outfit in Costa Rica.
Given that all of these people were clients of Penson Financial, it can be assumed that they accounted for some portion of the massive volume that suddenly made Penson the largest brokerage on the planet in 2008. And given that nearly all that new volume was short selling targeting American banks and other pillars of the U.S. economy, it is fair to assume that these characters were (along with the Tuco account-holders and the others mentioned in earlier chapters) attacking the U.S. financial system, contributing to the 2008 meltdown.
The only questions (again) are: 1) Did they coordinate their attacks? and, 2) What were their motives?
By 2010, I was beginning to believe that there was some degree of coordination. Indeed, I was beginning to wonder whether there had been an informal joint effort—involving the Iranian regime, the Russian government, people tied to jihadi terrorist groups, and maybe others, such as Pakistan and Libya—to develop relationships with a network of criminal brokerages (namely, Penson Financial and outfits, like Tuco, that cleared through Penson) in order that they could more easily inflict damage on the American economy.
I will admit that by the fall of 2010, I was pretty far down the rabbit hole. So perhaps it was a stretch to imagine such a scenario. But in my defense, I will say that I had not reached any definite conclusions. I merely wondered. And wondering is a perfectly healthy thing to do.
Indeed, it would be wise for U.S. regulators and national security officials to wonder about such things, even if they are only outlying scenarios. That was my thinking when it came to my attention that the immediate family of Pejman Hamidi—the fellow who directed the efforts to set up the Lanai and the T3 accounts—were members of the Revolutionary Guard. And that was my thinking as I continued by investigation—an investigation that ultimately took me to a cigar lounge 30 miles outside of Chicago.
When I went to the cigar lounge, I was not wearing my pajamas. I was wearing a button-down shirt and telling an Armenian guy named Rafi that I was in the oil business.
In other words, I was violating the journalistic “ethics” that they teach at the major newspapers. According to these “ethics” (which did not exist back in the day when the media conducted real investigations), journalists are not supposed to work undercover. Instead, they are supposed announce themselves as journalists and ask their interviewees whether the interviewees have violated any ethics.
The typically ethical media interview goes something like this: “Hi, Mr. Madoff, I’m with the New York Times. Are you running a $50 billion Ponzi scheme? Because if you are, the Times is going to say you’re evil…Oh, you’re not? Didn’t think so, because you’re a really successful and prominent man.”
This is one reason why the ethical media does not expose many unethical people.
Anyway, I am not particularly skilled at working undercover. I get jittery and stutter a lot. My face turns red. But I think Rafi the American believed that I was an oilman, albeit one with a nervous disposition. And Rafi sort of helped me learn more about an Iranian exotic gems dealer. Rafi also told me about his friend, who is tied in with the Mob.
And why was I in a cigar lounge talking to an Armenian guy named Rafi about the Mob and an Iranian exotic gems dealer? This requires some explanation.
As we know, Tuco Trading had several partner brokerages that provided the trading platforms on which Tuco’s massive volumes of short selling were transacted. One of these was Lightspeed, founded by Omar Amanat (tied to Iranian proxies Hamas and Palestinian Islamic Jihad, among others). Another was Man Financial (partner of BrokerKreditServis, a Moscow outfit with ties to Iran and Russian intelligence). And then there was Terra Nova, also tied to Iran.
The only Tuco partner brokerage I have not yet described is ViewTrade, which provided Tuco with another one of its trading platforms. ViewTrade was controlled by John Dombrowski, who previously worked at high levels for two brokerages – HJ Meyers and Barron Chase – that were part of the familiar network (see earlier chapters) of brokerages that were tied to organized crime and wrought havoc on the markets in the 1980s and 1990s.
Barron Chase was an especially colorful place. It was tied to La Cosa Nostra and the Russian Mafia, and it was charged by prosecutors with the usual crimes–market manipulation, money laundering, and extortion. But it was also charged with conspiracy to commit kidnapping.
According to federal indictments, Barron Chase’s other principals included Arthur Gunning, an associate of the Colombo Mafia family; Craig Marino, a soldier in the Genovese Mafia family; Ronald Giallanzo, a soldier in the Bonanno Mafia family; and Joseph Baudanza, a capo in the Colombo Mafia family. Baudanza’s son, John, became a Lucchese Mafia soldier after he married the daughter of the Lucchese family’s head honcho.
Barron Chase’s other principal, Zakaria Abdul Rhaman Ghalayini, helped seal the brokerage’s relationship with Global Capital, which was a unit of Global Securities, the outfit affiliated with the Iranian government’s Assa Corporation (which, like its parent, the Alavi Foundation, was indicted for espionage in 2009).
All of these people were also principals at Centex. Which is not suprising because the owner of Centex, Yvgeny Dvoskin, was also a co-owner of Barron Chase. Dvoksin, of course, is the alleged ring-leader of ten Russian spies arrested in 2010.
After leaving Barron Chase, John Dombrowski (future owner of Tuco partner ViewTrade) went to work for an outfit called Global American Incorporated.
I’m not sure whether Global American was affiliated with Global Securities, but it certainly boasted similar relationships. One of its principals was Muhammed Ashraf, who had been an executive at the Assa Corporation (the Iranian espionage outfit). Ashraf was also involved with Sterling Management, which was part of what FBI investigators have called the “SAAR Network” of financial firms that fund jihadi terrorist groups.
The proprietor of Sterling Management was and still is (the FBI raided the offices of these people, but failed to put any of them in jail) Yaqub Mirza, bagman in the U.S. for Yasin al Qadi (Osama bin Laden’s favorite financer; hedge fund partner of Ali Nazerali).
Muhammad Ashraf was also an executive of Yasin al Qadi’s BMI Inc., the outfit that invested in Global Chemical (explosives and chemical weapons factory in Chicago), soon after being implicated for funding Al Qaeda’s 1998 attack on two U.S. embassies in Africa. In addition, Ashraf was involved (as was Yasin al Qadi) with Bank al Taqwa (which set up Al Qaeda’s main operating base in Europe).
Global American was founded by Zaid Abdelnour, a New York hedge fund manager with a 30,000-man paramilitary army in Lebanon. Really, that’s true. For now, you’ll have to take my word for it.
I will return to Adelnour (with full details about his paramiltary army) in later chapters. But I will note now that Abdelnour’s Iparamilitary army is (despite Abdelnour’s assurances to the contrary) aligned with Hezbollah. And like Hezbollah, Abdelnour’s army likely receives finance from Iran’s Revolutionary Guard.
I’ll also note that Abdelnour is part of a network of closely affiliated short sellers that includes Rakesh Saxena (leader of the Marxist Naxalite terrorist group in India), Raj Ratatnam (formerly a key financier of the Tamil Tigers terrorist group in Sri Lanka); Adnan Khashoggi, Ali Nazerali, and all the others mentioned above.
Naturally, Abdelnour is yet another client of Penson Financial.
At any rate, in 2008, Dombrowski was no longer working for the guy with a paramilitary army in Lebanon. He was no longer employed by an alleged ring-leader of Russian spies at a brokerage whose other principals were top Mob bosses charged with conspiracy to commit kidnapping.
Instead, he had founded ViewTrade, which provided one of Tuco’s trading platforms.
Meanwhile, ViewTrade had hired some people who brought with them a number of accounts, sixteen of which had corporate officers who, according to FINRA, had “suspicious backgrounds and engaged in low priced security transactions that should have warranted further investigation.”
More specifically, FINRA stated that ViewTrade’s trading for these 16 accounts (held by some larger number of people with “suspicious backgrounds”) violated the Patriot Act in that ViewTrade had failed to “monitor for red flags that signal possible money laundering or terrorist financing.”
Although FINRA identified possible “terrorist financing”, and although it was apparent that these possible terrorists had manipulated the markets with their low-priced securities transactions, our federal regulators did not conduct any the “further investigation” that was so clearly “warranted.” At any rate, none of the possible terrorists were sanctioned, much less incarcerted.
Nor did regulators shut down ViewTrade, a brokerage whose clientele included a quite large number of people whose “suspicious backgrounds” gave FINRA reason to believe that they might be terrorists.
Of course, Tuco Trading and all of its other partner brokerages had a lot of clients with “suspicious backgrounds.” As we know, the last of Tuco’s trading platforms was provided by Terra Nova Financial, which not only had ties to Iran, but also transacted (at the height of the financial crisis in September, 2008) massive volumes of computer-generated “erroneous” (manipulative) short sales for a man named Hsu Tung Lee, who was in business with Roman Maev, a former official in the Soviet nuclear weapons program.
In 2008, Maev had just been named Russia’s honorary consul to Canada.
When I first learned of Hsu Teng Lee’s ties to Roman Maev, I thought it was incidental, and it might well be. But by the fall of 2010, anything seemed possible. After all, I had learned that a lot of the ten Russian spies arrested in the summer of 2010 were trading through Penson Financial and had ties to the network that I was investigating.
There was Russian spy Anna Chapman, employed by Navigator Asset Management (where Nazerali protégé Mark Valentine was a partner). And there was the fact Nazerali had introduced to Lines Overseas Management the Russian spies Christopher Metsos and Yvgeny Dvoskin (alleged ring-leader of the spies, and former employer of the man who founded ViewTrade).
In addition, I knew that another of the Russian spies, Lydia Guryev, had held meetings (discussed in early chapters of this series) with Alan Patricof, who is a close crony of Ali Nazerali. As I mentioned in those earlier chapters, Patricof was also the closest American crony of another Nazerali friend, Hassan Namazee (son of an Iranian diplomat caught selling fake securities in league with Westminster Securities, an outfit affiliated with the above-mentioned Felix Sater, who is tied to Russian intelligence).
Meanwhile, I was still stewing on the information that Pejman Hamidi, the Iranian fellow who set up the two strange Tuco accounts—T3 Capital and Lanai—had a relationship with the Russian spy Mikhail Semenko. Sources had told me that T3 Capital was, in fact, tied directly to the Russian government. I wasn’t yet sure that was true…but I had to wonder.
I knew from Tuco’s bankruptcy receiver that the lawyer for Hamidi’s Lanai account was a man named Dan Gibby. In 2008, Gibby and Hamidi had founded a trading outfit called “Egoose” in partnership with Roy Jazayeri, an Iranian exotic gems dealer who did a lot of business in Armenia and had recently brought former Russian premier Mikhail Gorbachev to Trenton, Ohio. In fact, Jazayeri had brought Gorbachev to America on several occasions.
Prior to becoming involved with Egoose and the Lanai account, Gibby had been a principal at Terra Nova Financial, the outfit that transacted the massive volumes of “erroneous” short sales for Hsu Tung Lee. I wasn’t sure about the Hsu Tung Lee/Russia angle, but I knew that Terra Nova’s ties to Iran were not incidental.
At least, it seemed significant that while the SEC was investigating Terra Nova’s ties to Iran, Terra Nova’s head of trading operations was loading those Condor Air cargo planes with precious metals, and Terra Nova’s CEO was running a precious metals mining outfit with Ali Nazerali’s hedge fund partner, Yasin al Qadi (Osama bin Laden’s favorite financier).
And, of course, there was the fact that Terra Nova seemed to be tied to maniacal jihadi warlords in Afghanistan. Recall from earlier chapters that Christian Doloc, Terra Nova’s executive board director and chief technology officer, had helped his former employer, Chicago stock trader Joe Ritchie, orchestrate an ultimately unsuccessful coup in Afghanistan with a narco-trafficking warlord named Abdul Haq, who was a proxy of Iran and Russia.
In 1996, a New York hedge fund manager named Mansur Ijaz brokered a deal that saw Al Qaeda moving its headquarters from Sudan to Afghanistan. Under this deal, Sudan would expel, but not arrest Osama bin Laden. And bin Laden would be given shelter in Afghanistan by warlord Yunus Khalis, whose deputy was Abdul Haq.
Not long after Joe Ritchie and Abdul Haq plotted their coup in Afghanistan, Mansur Ijaz, the guy who brokered the Al Qaeda move, became a client of Terra Nova Financial. At this time (2001), Ijaz was also a client of Global Securities (tied to the Iranian espionage outfit). As of 2008, Ijaz was client of both Terra Nova and Penson Financial.
Joe Ritchie’s coup attempt probably had something to do with his ties to the governments of Iran and Russia. Richie was especially close to Mikhail Gorbachev and to Gorbachev’s chief economic advisor Abel Aganbegyan, who had once remarked that “my dear friend Joe Ritchie is able to use socialist principals and still make a profit.”
As it happened, Aganbegyan was also making a substantial profit, most of it from business he was doing with the Armenian Mafia and Iran. In addition to doing business together, Aganbegyan worked with Iran and the Armenian Mafia (which is essentially a proxy of Iran) to instigate Armenia’s war with Azerbaijan over the disputed region of Ngorno Karabakh.
Truth is stranger than fiction, so I’ll let you know that while Hamidi’s Egoose partner Roy Jazayari (the exotic gems dealer) was with Mikhail Gorbachev in Ohio, Russian Mafia boss Egor Chernov (associate of Ali Nazerali) and Alexander Gorbachev (relative of the former Russian premier, Mikhail) were in Bangkok, preparing to tour some Mafia brokerages controlled by David Cordova (business partner of Otumfuo Osei Tutu II, King of the Ashanti people).
I first met Cordova back in 2001, soon after he had his first audience with the King of the Ashanti people. Cordova and the King of the Ashanti people were setting up a brokerage in Ghana. The brokerage in Ghana was supposed to complement the network of Mafia-tied Bangkok brokerages, all of which focused on manipulating U.S. stocks.
These brokerages regularly change names and move to new office space to avoid regulatory scrutiny, but Bangkok brokerages that Cordova has been involved with in the past include Kensington Capital, the Brinton Group, Sigama Capital, and Interactive Asset Management.
Back in 2001, Cordova was also hawking a fake AIDS cure with a famous Mafia debt collector named Bernie Sandow. In addition, Cordova told me that he was thinking of hiring a hit man to murder a stock broker by the name of Danny Sterk, who was former mercenary.
Sterk had fought in Cambodia and in many of Africa’s most brutal wars—Sierra Leone, Congo, and Liberia, just to name a few. When I lived in Bangkok, Sterk was well known for having threatened to kill an airline ticketing agent because the agent had refused to allow Sterk’s dog to sit with him on a flight to Kinshasa.
This network of brokerages in Bangkok was, until 2007, affiliated with General Commerce Bank, the Austria-based outfit discussed in Chapter 19 of this series. The people behind General Commerce included Adnan Khashoggi, Sherman Mazur, and Rakesh Saxena—all of whom were (along with Nazerali, Elgindy and a few others) were among the closely affiliated short sellers who used to comprise the select clientele of Centex (controlled by Yvgeny Dvoskin, alleged ring-leader of Russian spies); Thomson Kernaghan (Mark Valentine); Pacific International (Curshen); and Global Securities (tied to the Assa Corporation, an Iranian espionage outfit).
Also involved with the Bangkok brokerages was Phil Gurian, right hand man to DeCalvacante Mafia boss Phillip Abramo, who was known in these circles as the “King of Wall Street.” Gurian was, meanwhile, a client of Datek Securities, founded by Omar Amanat (designer of Tuco’s Lightspeed platform).
When Gurian’s relationship with Datek came under federal scrutiny, the Datek principals who had dealt with Gurian spun out some of Datek’s assets into a new brokerage, Heartland Securities, which was quickly bought by Steven Schonfeld (co-owner of Lightspeed).
As we know, the General Commerce Bank brokerages cleared their trades through JB Oxford (founded by Nazerali’s BCCI partner Irving Kott; financed by Nazerali and Boris Berezovsky, “Godfather of the Kremlin”). And they became Penson Financial clients in 2005, when JB Oxford’s clearing operation was sold to Computer Clearing Services, the outfit that became Penson’s principal subsidiary that same year.
Most of the people involved with these brokerages are among history’s most destructive financial criminals. Khashoggi, Saxena and Mazur were all linked to the 1997 collapse of Bangkok Bank of Commerce, which precipitated the most devastating financial crisis that Asia has ever experienced. In 2009, Saxena was extradited from Canada to Thailand to face charges for his role in that disaster.
In addition to being a destructive financial criminal and short seller, Saxena was (as I have mentioned) also a leader of India’s Marxist Naxalite rebels (linked to Al Qaeda affiliate Lashkar-e-Tayyiba, which is part of the Pakistani intelligence apparatus). In 1997, Saxena tried to orchestrate a coup in Sierra Leone with a band of mercenaries that included the future stock trader Danny Sterk (the guy who loves his dog).
According to the British parliament, the coup was part of an effort to secure diamond concessions. Which makes sense, given that Saxena was a business partner of Ibrahim Bah, who was one of Muammar Qaddafi’s most important intelligence operatives, responsible for stirring up conflicts in Africa. Bah was also the principal broker of diamond deals between Sierra Leone rebel forces and Al Qaeda.
At any rate, in 2005, the Russian Mafia boss Egor Chernov was in Bangkok with Alexander Gorbachev and a few others. Chernov had traveled to Bangkok from Moscow, where he shared office space with the A.C. Nuclear Opportunities Fund, run by Andrey Cherkasenko, sponsor of the Miss Atom beauty contest, which gives prizes to the prettiest girls connected to the business of selling radioactive isotopes.
Cherkesenko (like the fellow running Man Financial partner BrokerKreditServis, whose “head of international” set up the Orange Diviner account at Tuco Trading) had previously run Alfa bank, and was one of the principal financiers of Iran’s nuclear program.
Chernov, meanwhile, was among the clients (the others being Russian spies) whom Ali Nazerali introduced to Lines Overseas Management and Vfinance. Recall that the Vfinance broker who handled their trades was Gustavo Chacin, who once constructed a chemical weapons plant for Muammar Qaddafi in partnership with Ihsan Barbouti. (Barbouti aslo transferred nuclear technology to Iran, and was tied to Ramzi Yousef, who carried out the 1993 World Trade Center bombing that was masterminded by the Blind Sheikh).
In 2006, Chernov and his close associate Ali Nazerali had arranged for the Mafia-tied Yank Barry (a.k.a. Gerald Falovich) to open a tobacco litigation foundation in partnership with Sergei Chemezov, a Russian intelligence operative and arms dealer who has been sanctioned for illegally selling S-300 ground-to-air missiles (among other sophisticated weaponry) to the regime in Iran.
Again, all of this is documented (with more detail and evidence) in earlier chapters. But it is worth repeating in light of new information that follows.
Chernov is a mobster tied to the Mogilevich organization. When he used to travel to Bangkok, he was considered a representative of the Russian government, and was escorted from the airport in police convoys, sirens wailing, traffic forced to pull to the side of the road.
This could be because, like Alexander Gorbachev (who spends several months a year at his luxury villa in Bangkok), Chernov is a relative of the former Russian premier. Chernov’s sister is judge Marina Gorbacheva, who was Russian president Vladimir Putin’s closest ally in the Russian judicial system until she was caught running a fake passport ring in cahoots with her brother, Chernov.
The FBI’s investigation into that fake passport ring was (as we have seen) linked to an investigation into Chernov’s murder of Rex Judd (whom Yank Barry a.k.a. Falovich had recently bailed out of jail). A source who used to work closely with Chernov has told me that the FBI has arrested Chernov, and he is now awaiting trial. I do not yet know what the charges are.
But I do know that Chernov lured Rex Judd to Thailand, drugged him, and then left him to drown in the sea off the coast of Pattaya, a party town south of Bangkok.
And the story of another Chernov adventure in Thailand might provide additional insight into the bizarre relationship that he and his cronies had with Penson Financial and its clients. Back in 2003, Chernov was on one of his regular trips to Bangkok, hanging out with Alexander Gorbachev, and attending his usual round of meetings with the local network of Mafia brokerages.
A lot of the Cordova-affiliated brokerages were run by John Keeley (who was a fugitive from the law when I first talked to him in 2001, but escaped doing time in a Thai prison by bribing the right people). Among other achievements, Keeley was a member of the Irish Republican Army, which, in its heyday, received much of its training from Yasir Arafat’s Palestinian terrorist group and Iran’s Revolutionary Guard.
Since he was a member of a terrorist group, it seems natural enough that Keeley also orchestrated a pump and dump fraud (Oasis Resorts International) with help from Gary Coleman, the diminutive star of the American sit-com television program “Different Strokes.” Coleman (“What’cha talkin’ about, Willis”) is no longer in show business.
At any rate, after checking in with the local Mafia brokerages, Chernov hung out in Bangkok for a while, swilling vodka from morning to night, as was his habit. Eventually, he headed to Pattaya to meet with Thomas White, who was best known as the chairman of White Pacific Securities, sister company of Computer Clearing Services, the outfit that would, in 2005, absorb JB Oxford’s clearing business and then become Penson Financial’s most important subsidiary. With that deal, White Pacific also became part of Penson.
It is not exactly clear what transpired next, but somehow or another, Thomas White ended up in a Thai prison. After that, he was extradited to Mexico to face charges of having sex with underage boys. But while he was languishing in a Mexican prison, it emerged that he might not have had sex with underage boys after all. Instead, it appeared that he had been framed by a cast of characters that might have included Egor Chernov, and certainly included a San Francisco attorney named David Replogle and a young Mexican man named Daniel Garcia.
As Garcia himself would later admit, he and Replogle traveled to Mexico on multiple occasions to recruit Mexican boys to act as plaintiffs against White. In transcripts that are part of another legal case, Garcia said that Replogle paid off the Mexican boys to say they had had sex with White.
“The second [Replogle] signed up the first kid,” said Garcia, “there were tons coming out of the woodwork smelling money. And from day one, [Replogle] was giving these kids cash…But it quickly escalated to where he was paying for all of their living expenses, giving them a weekly or monthly allowance…he has basically been supporting almost 30 of these kids over the past couple of years.”
Meanwhile, prosecutors in California issued a felony complaint alleging that Garcia and Replogle were involved in a scheme to steal money from a man named Cliff Lambert, who subsequently disappeared. In 2008, Replogle was indicted for murdering Lambert. And, in 2008, it was assumed that the reason for White being set up had something to do with the nature of his business, which had since been absorbed by Penson Financial.
As of 2008, White’s former top employee at White Pacific, Irene Shen, was the second in command of clearing and settlement at Penson Financial. Shen’s boss, recall, was Christopher Sandel, who had previously been a principal and senior vice president in charge of clearing and settlement at JB Oxford’s predecessor firm, Adler Coleman (which, like JB Oxford, had been founded by Nazerali’s BCCI partner Irving Kott, and financed by Nazerali and Boris Berezovsky).
I knew parts of this strange story by the summer of 2010. That same summer, things got stranger when Paul Combs was found with a bullet hole in his head. Combs (also known as Aleksander Stanslawov) was a narco-trafficker and a key witness in the famous “Danger Road” case against a former Maimi police officer turned Mafia hit man who had murdered three other narco-traffickers (who got their drugs from Combs) on a remote stretch of highway known as “Danger Road” in the Florida Everglades.
Combs had been a friend of Chernov but turned on him after Rex Judd was killed. Recall that Combs had gone so far as to spray paint the garage of Chernov’s Utah mansion with the words: “Egor Chernov Killed Rex Judd. Russian Maggot!”
In addition to being a narco-trafficker, Combs was a stock broker for DBS Securities, whose chief operating officer in Singapore, Frank Wong, had (perhaps unwittingly) helped Chernov lure another of his victims to Thailand by writing a letter (posted at DeepCapture.com) inviting the victim to his (Wong’s) beach-side villa, where the victim would have the opportunity to meet with Chernov and other Russian dignitaries, including Anatoly Chabak, who is the biggest outside shareholder in Roman Abramovich’s Evraz Group.
Wong also arranged for Chernov and the Russian dignitaries to naked short U.S. stocks that had been listed on the Singapore stock exchange. But that wasn’t the only manipulative short selling perpetrated by this crowd. By the fall of 2010, I was beginning to better understand the relationships that some of these people had with Tuco Trading, the tiny, unregistered brokerage in Chicago.
The top executives of Abramovich’s Evraz Group, for example, were among the people behind the Orange Diviner account. And, of course, I had learned about this network’s ties to the T3 and Lanai accounts, which transacted manipulative short selling in volumes exceeding those of Goldman Sachs.
I was also beginning to learn more about the Iranian Pejman Hamidi, who had set up those two Tuco accounts – Lanai and T3. As we know, one of Hamidi’s colleagues at T3 Capital was Felix Garcia, who had been a principal (along with Rafi Khan) at JB Oxford.
And we know that Anthony Elgindy’s former trading partner Ferdinand Ledesma was in China, helping set up the 2,000 secret subaccounts for Hamidi’s Lanai account. As we will see in a moment, Lanai and T3 had a special relationship with the Lightspeed trading platform (designed by Omar Amanat, partner of Hamas, friend of the Blind Sheikh, owner of brokerage linked to Russian government market manipulation, etc.)
In addition to Lightspeed, Omar Amanat founded Momentum Securities. The top trader at Momentum Securities was, for many years, Kirk Kazazian, who also headed up the Armenian Fund USA, an outfit that is devoted to supporting Armenia in Ngorno Karabakh. In fact, the United Nation’s has sanctioned the Armenia Fund (which receives much of its funding from Iran) for falsifying information about Armenia’s terroritorial rights in Ngorno Karaback.
Amanat’s other top trader (at Datek Securities) was, of course, Solomon Obstfeld (tied, along with his future hedge fund partner Martin Schlaff, to Iran, Libya, Hamas, Yasir Arafat, Vladimir Putin, and Mogilevich).
Back in 1999, Momentum Securities and the affiliated All-Tech Investments were Penson Financial’s first clients. All-Tech Investments was founded by Harvey Houtkin, who also controlled Rushmore Investments, which was a founding shareholder of Terra Nova Financial (Tuco partner whose executives are tied, variously, to Iran, Hezbollah, maniacal jihadi warlords, and Osama bin Laden’s favorite financier). In 2008, Houtkin also owned another brokerage, Domestic Securities, which cleared trades through Penson Financial.
In 2009, when Naresh Patel (Al Qaeda money man; member of D-Company, which is a Pakistani intelligence affiliate) was charged with transacting (at the height of the 2008 financial crisis) massive volumes of manipulative wash trades through Tuco partner Man Financial, FINRA was investigating Houtkin’s Domestic Securities for serial violations of short selling rules during the financial crisis of 2008.
FINRA was also investigating more “supsicious” people who were trading through Domestic. A year earlier, Domestic had been sanctioned for violating the “International Money Laundering and Anti-Terrorist Financing Act of 2001”
In this case, FINRA just said the trading though Domestic was “suspicious”. But apparently nobody sought to apprehend the “suspicious” traders. So we don’t know who they were. It’s a mystery.
The other mystery that remains unsolved concerns Mark Barton’s 1999 assassination of nine traders at Momentum Securities (founded by Amanat) and the affiliated All-Tech Investments (founded by Houtkin).
Recall from earlier chapters of this series that Barton (a trader for both Momentum and All-Tech) had a “soap” company, TLC Manufacturing, that seemed (like Yasin al Qadi’s “soap” company, Global Chemical) to have done nothing other than stockpile chemicals for use in making explosives (though, according to the cops, it might have also been in the methamphetamine business, too).
Recall also that several of the traders Barton killed or wounded had access to either nuclear weapons (in the case of James Jordan); or radioactive materials (the Pakistani Dean Delawalla, who was on his way to Iran); or the Los Alamos nuclear weapons facility (the Iranian Jamshid Havash, who also trafficked in automatic weaponry and was on his way to Iran when he died).
As readers of earlier chapters might also remember, Barton narrowly missed killing All-Tech’s Iranian manager, Jaillal Irani Ramoutar, who had previously been a principal at Hanover Sterling, a brokerage controlled (according to the DOJ) by Russian organized crime and the Genovese Mafia. Hanover Sterling’s clearing firm, we know, was Adler Coleman (the Kott-Nazerali-Berezovksy operation that was renamed JB Oxford and later folded into Penson Financial).
In fact, Adler Coleman and Hanover Sterling were essentially two subsidiaries of the same corrupt organization. Hanover Sterling provided unwitting companies with death spiral finance. Then a collection of affiliated short sellers (the Al Qaeda-tied Anthony Elgindy and others in his crew) naked shorted the companies out of existence, with their trades cleared through Adler Coleman.
When the Feds began investigating (they arrested one of the short sellers, Mafia capo Phillip Abramo, the “King of Wall Street”, and charged him with market manipulation and murder), the operation simply shut down, with Adler and Hanover declaring bankruptcy, only to reconstitute themselves as JB Oxford.
At any rate, key to this operation had been Hanover principal Jaillal Irani Ramoutar. Soon after Hanover went bankrupt, Omar Amanat (tied to Hamas, the Blind Shiekh, etc.) got Ramoutar a job as manager at All-Tech, where Ramoutar was almost murdered (along with the radioactive traders who were scheduled on flights to Iran) by Mark Barton, the Momentum and All-Tech Trader who was stockpiling explosives.
Fortunately, Ramoutar recovered from that ordeal and later hooked up with his Iranian friend Pejman Hamidi. By late 2007, Hamidi (likely with help from Ramoutar) was directing efforts to set up those two accounts (Lanai and T3) that would soon beat out Goldman Sachs by virtue of their massive volumes of short selling.
Meanwhile, Hamidi and Ramoutar founded a trading outfit called Pristine Capital in partnership with two shadowy Venezuelan operators, Oliver Valez and Charles Vaccarao. Valez had helped set up Tuco Trading.
Vaccarao has worked as a “government relations” consultant, though it’s unclear which governments he was consulting. He is famous for his sometimes public rants, reminiscent of Hugo Chavez and Mahmoud Ahmedinijad, asserting that America is a “criminal state.”
I don’t know if America is a criminal state, but such assertions are worthy of note when it is not Obama campaign volunteers chanting them, but a shadowy Venezuelan market manipulating and government consulting partner of an Iranian whose family members were working for the Revolutionary Guard and employing terrorists while this same Iranian was preparing to use two accounts at an unregistered brokerage to bombard the U.S. markets with manipulative short selling in volumes exceeding those of Goldman Sachs, broker to the most powerful hedge fund managers in America.
How do I know Hamidi’s immediate family members worked for the Revolutionary Guard? How do I know that one of his closest family members mentored the leader of Palestinian Islamic Jihad and employed a terrorist and an undercover Iranian government agent who was shipping weapons to Hezbollah? Well, Hamidi told me, though I’m not sure he meant to do so.
I will elaborate, but first you must endure my story about Rafi the Armenian. Also, a story about some suspicious people in Latvia who hacked into the computers of America’s biggest stock brokerages.
Rafi is not, in fact, among the main characters in this story. So far as I know, he doesn’t manipulate the markets. He owns a cigar shop, around 30 miles outside of Chicago.
But I had heard that Hamidi’s other partner, Roy Jazayeri (the exotic gems dealer who brought Mikhail Gorbachev to the U.S.), sometimes hung out at Rafi’s cigar shop. And when he was there, he would meet with an Iranian-Armenian guy named Mark Gavoor and an Armenian fellow named Dro Yerevante Kholamian, who was tied in with the Mob.
Or so I’d heard. I wanted Rafi to tell me if it were true.
I wanted Rafi to tell me because Mark Gavoor’s son had recently married the daughter of a woman named Ida Tjeknavorian, who had been the chief economist at the Alavi Foundation (the Iranian government outfit indicted in 2009 for espionage). This is the same Alavi Foundation that controlled the Assa Corporation (also convicted of espionage, previously linked to Global Securities). And it is the same Alavi Foundation that was, like Palestinian Islamic Jihad’s leaders, taking directions from Iranian government agents stationed in New York.
Mrs. Tjeknavorian’s sister, Atchuk, meanwhile, had been a top diplomat at the United Nations Industrial Development Organization. I didn’t know whether that was relevant. And truth be told, I didn’t know whether Ms. Tjeknavorian work as chief economist of the Alavi Foundation was important. It was possible that she worked for the Alavi Foundation before the 1979 Islamic revolution, in which case she would have been working for an American ally, which is what Iran was before the Ayatollah took over.
More interesting, perhaps, was Dro Yerevante Kholamian. He owned a brokerage called Spike Financial Services, and FINRA had fined Spike for transacting large volumes of (manipulative) naked short selling at the height of the financial crisis in August and September of 2008. Spike’s clearing firm, of course, was Penson Financial.
Meanwhile, one of the principals at Spike was a fellow named Fredrick Douglas, who was simultaneously running the day-to-day operations of Tuco Trading. Naturally, Douglas had played a key role in helping the powerful Russians set up the Orange Diviner account. And he had worked with Hamidi to set up the Lanai and T3 accounts.
As I mentioned, the Tuco bankruptcy receiver had a stroke before he could finish investigating the Orange Diviner account. But he wrote at length about the dealings between Frederick, the two Hamidi accounts, and Penson Financial.
For example, he noted that “ T3 had a unique relationship with Tuco in that Tuco did not charge it any Commissions…Tuco benefited, however, in that T3’s large trading volume allowed Tuco to obtain lower rates from Lightspeed [the trading platform designed by Omar Amanat, tied to Hamas, Palestinian Islamic Jihad, the Blind Sheikh, etc.].”
Moreover, “T3 charged its individual traders commissions. The commissions would be collected by Penson, paid to GLB [Tuco’s parent], and in turn, paid to Frederick [Douglas Frederick, the man who ran Tuco’s day-to-day operations], and Frederick would then forward that amount to T3.”
That is, after Hamidi set up the accounts, Penson and Frederick dealt directly with the people (including Hamidi) who traded through those accounts. This means that Penson and Tuco cannot claim (as brokerages often do when confronted about their “suspicious” clients) that they did not know whom they were serving.
Recognizing Frederick’s role in this affair, I set out to learn more about him. What I learned is that prior to joining Tuco, Frederick was a principal at a little brokerage called NT Securities. That operation was run by guy named Timothy Doc Pham.
Timothy Doc Pham is a bit of mystery. I haven’t been able to find much information about him, other than the fact that he sits on the board of a Vietnamese company called Cavico, and most of the other board members of Cavico are Vietnamese army generals who work for Vietnam’s Ministry of Defense.
Nothing wrong with that. I myself did quite a lot of business with Vietnam’s Ministry of Defense, back when I was running the Ho Chi Minh City operations of a consulting firm that was the first American company to open an office in Vietnam after the war. It was, at that time, simply smart business to affiliate one’s company with the Vietnamese military.
More interesting than Timothy Doc Pham are NT Securities other principals—namely, Frederick (future manager of Tuco Trading) and three others: Michael Teryazos, Keith Massey and Michael Paciorek.
Mr. Teryazos had previously worked as a senior vice president at SE Global, a brokerage that was affiliated with Computer Clearing Services, the outfit that was folded into Penson.
SE Global was controlled by two men: Bruno Wu, who is one of the richest people in China; and Yucheng Ding, who was the chief economist for the securities arm of CITIC, the Chinese state-run investment vehicle.
CITIC is a massive operation that does business with countless Americans, most of whom are ordinary business people, but it is possibly worth noting in the context the other information that I will present, that there is evidence that CITIC is an instrument of the Chinese military.
For example, a company called Poly Technologies, which was registered as a CITIC subsidiary, was revealed some years ago to be the primary commercial arm of the People’s Liberation Army Equipment Sub Department. U.S. undercover agents posing as Mafia figures were able to purchase more than 2,000 Ak-47 machine guns from Poly Technologies, and the company’s U.S. subsidiary illegally shipped advanced radar systems, minicomputers, and communications equipment for use in the PLA’s UH-60 Blackhawk helicopters.
Again, that might be nothing. But Computer Clearing Services (Penson’s principal subsidiary as of 2005) had many similar relationships. For example, one of Penson’s new clients (as a result of the CCS deal) was (and still is) a brokerage called Etech, which is closely affiliated with SE Global. Etech is controlled by a prominent businessman named Gareth Chang.
When the CITIC/Poly Technology scandal broke, Gareth Chang, in his capacity as a member of the advisory board at the Rand Corporation’s Center for Asia-Pacific Policy, quickly authored a report detailing the scandal and noting the “participation of high-level cadre children (‘princelings’), such as [former Chinese leader] Deng Xiaoping’s son-in-law He Ping, in the arms trade.”
It is likely that Chang authored this report to divert attention away from his own close relationships with the Chinese government and Deng Xiaoping’s family members. Indeed, as nobody knew at the time when Chang authored his report, Chang had become the central figure in what has since been described as one of the biggest losses of American military secrets since World War II.
In the 1930s, Chang’s uncle led the Chinese Nationalist’s negotiations with the communists and developed a close relationship with Deng Xiaoping. Gareth Chang (owner of Etech) later built on this relationship and became a close confidant of Deng’s children (the “princelings”) and the Chinese government.
In the 1990s, Chang went to work for the U.S. company Hughes Electronics (which, I will note as a disclaimer, was then one of my clients in Vietnam, though I no longer have any affiliation). While Chang was working for Hughes, a Hughes satellite called Apstar 2 crashed in a test flight. Soon after, Chang began pressing Hughes executives to share information with the Chinese.
In a memo to Hughes executives, Chang wrote: “We need to personally share our findings with the Chinese leadership. A senior Hughes executive…should meet with General Shen [Rougjun] of COSTIND and Chairman Liu of CASC before anything is said to the media [regarding Apstar and other Hughes equipment].”
There was no reason whatsoever for Hughes to be talking to the Chinese about Apstar.
But Chang had already developed a close relationship with General Shen Rougjun. And in time, Chang even managed to secure a job at Hughes Electronics for Shen’s son, Shen Jun. At the behest of Chang and Shen Jun, Hughes proceeded to funnel Hughes military secrets to General Shen Rougjun.
Soon after, the State Department charged Hughes Electronics with 123 violations of the law for transferring rocket and satellite data to China, thereby enabling the Chinese to build new warheads, and significantly modernize its ICBM force. Chang himself was not charged, but it is clear that he was the guy who instigated the transfers—and, again, this was one of the biggest loss of U.S. military secrets in history.
I do not mean to suggest that China had a hand in the U.S. financial crisis. To the contrary, China (unlike Iran, the jihadis, and the subversive Mafia-intelligence apparatus that runs Russia) has a big stake in the prevailing order and the health of the global financial system. It seems to me that China is a natural ally of the United States.
But having spent a part of my career in China, I can say that Chinese government officials are extremely smart and, for the most part, they do right by their people.
Just as the United States takes precautions, it would be in China’s common sense interest to build an offensive capability on the off chance that relations between the U.S. and China were to go sour. And one way to do that would be to build relationships with criminal brokerages that would be willing (if necessary) to participate in a financial attack.
China is not a hostile adversary of the United States. But like those that are hostile to the U.S., it seems (judging by Etech, SE Global and many similar examples) to have taken note of a gaping crack in the American financial system. That crack is the clearing and settlement system (of which Penson Financial is a prominent component) that enables ill-intentioned traders to manipulate the markets by short selling stock that they don’t intend to deliver.
Anyway, after working for the CITIC affiliated SE Global, Mr. Teryazos moved to NT Securities, where he hooked up with Douglas Frederick (future manager of Tuco Trading). He also hooked up with Michael Paciorek and Keith Massey. These guys were the people who effectively ran NT Securities, and three of them – Teryazos, Paciorek, and Massey – went on to found an outfit called Pinnacle Capital Markets.
In March 2007, the Securities and Exchange Commission announced an “Emergency Order” shutting down a Pinnacle Capital Markets account that had been set up through JSC Parex Bank in Latvia. The SEC said that for more than a year, “foreign based unknown traders” tied to the Pinnacle Latvia account had been hacking into the computer systems at E-Trade, TD America, ScottTrade, Vanguard Brokerage Services, Fidelity Investments, Merrill Lynch, and Charles Schwab.
Having hacked the computers, the “foreign based unknown traders” accessed personal brokerage accounts and sold all the shares in those accounts. Somehow key to this “high tech market manipulation scheme” (as the SEC called it) was the account that the Latvian JSC Parex Bank held at Pinnacle.
In typical fashion, the SEC said nothing more that made any sense. For starters, the SEC called this a “pump and dump” fraud. In fact, it calls almost everything a “pump and dump” fraud, because a “pump” is easy to understand, and it is perceived as small-time fraud — and so long as the SEC refers to the hacking of computers and the year-long infiltration of countless personal accounts at America’s largest broker-dealers as nothing more than a “pump and dump”, nobody will panic.
What the SEC did not explain is how the markets could possibly have been “pumped” by traders who were breaking into peoples’ accounts and selling all the shares they could get their hands on. Clearly, a pump did not feature prominently in this scam. What mattered was the dump – and, most likely, the point was to put downward pressure on the markets.
Moreover, it is likely that what the hackers were selling were not actual shares. They were simply creating computer blips that indicated a sale of shares, while other blips showed that the shares were still held by the unwitting victims. In other words, the hackers were flooding the markets with phantom stock.
The computer hacking was scary, but what made this scheme possible was the fact that regulators and clearing firms (such as Penson, which, of course, cleared the Pinnacle trades) do not enforce delivery of real shares. If the computer says a share has been delivered, the share is said to have been delivered, never mind if what is being sold is nothing more than phantom stock.
In this case, the same stock that was sitting (according to the computers) in the personal accounts at the big broker dealers was also sitting (according to the computers) in the accounts at Pinnacle, and then sold (according to the computers) through Penson, which (according to Penson’s computers) cleared the stock to other buyers who then held the stock (according to the computers) when in fact, they had actually obtained nothing.
Meanwhile, though, the boards would have shown massive selling of stock—the kind of selling that can trigger a panic and a collapse in prices. And though the SEC said the computer hacking had been occurring for more than a year, it managed to press charges for only the “high-tech market manipulation” that occurred over a two week period (presumably the two weeks when the SEC finanlly noticed what was happening).
So the extent of the damage done over the course of the full year is unknown.
This is what DeepCapture means when we talk about a “crack in the financial system.” There is nothing to prevent “unknown foreign traders” from selling, and failing to deliver, virtually unlimited amounts of essentially “phantom” stock. And when confronted with this obvious crack in the financial system and the brokerages responsible, the SEC seems incapable of doing anything about it (other than putting under investigation the person who brings them this news).
When the SEC discovered the computer hacking, it issued an “Emergency Order” shutting down the Latvian account at Pinnacle, but it took no action against Pinnacle for processing trades in shares that did not exist, and it took no action against Penson, which cleared the trades. At the time, the SEC was still claiming that naked short selling (which is what this was, in essence) rarely occurred.
In September 2008, the SEC issued another “Emergency Order” stating (with bureaucratic language that didn’t get straight to the point, though the message was clear) that naked short selling was causing the financial system to implode. Still, it has managed to prosecute no more than a half-dozen cases of short-side manipulation.
The SEC has also apparently never got around to figuring out the identities of those “foreign based unknown traders” that were manipulating the markets through Pinnacle. This would have required someone at the SEC to contact that bank in Latvia, and I assure you, the SEC would not go to the trouble of finding Latvia on a map.
Alternatively, it could have asked Pinnacle and Penson who the traders were, but the SEC doesn’t hassle criminal brokerages.
After the SEC failed to prosecute Pinnacle for its role in what the SEC called an international “high-tech manipulation” scandal, Pinnacle, of course, went happily on its way, continuing to process trades for an untold number of criminal but “unknown foreign” traders.
In 2008, FINRA fined Pinnacle for systematically violating the Patriot Act by failing to implement mechanisms to prevent the brokerage from being used by what FINRA calls “suspicious” traders – i.e. either the Mafia, terrorists, or rogue states. But the fine was, of course, minimal, and the SEC never acted.
Really, the SEC needs to be dismantled and the job of monitoring some of these brokerages needs to be handed over to the national security agencies. The problem is that severe.
Of course, the SEC was moved to shut down Tuco Trading by “Emergency Order,” but to my knowledge, it has never made any effort to prosecute the people who transacted the massive volumes of manipulative short selling that went though that weird, little brokerage. Nor does the SEC seem inclined to prosecute any of Tuco’s partner brokerages, which no doubt continued to do business with Tuco’s suspicious clientele after Tuco was shut down.
Recall that while ViewTrade, for one, was dealing with suspicious terrorists, Tuco Trading opened another suspicious account, this one for Warren Sulmasy. As we know from earlier chapters, Sulmasy previously owned the Russian Mafia brokerage Harbor Securities in partnership with Alain Chalem, who was executed in his New Jersey mansion in 2001, shortly after the above-mentioned Russian Mafia boss Felix Sater (tied to Russian intelligence) threatened to kill him, and one day after Chalem and Felix’s father (also tied to Russian intelligence) had a fierce argument.
While Sulmasy was getting situated at Tuco, Pejman Hamidi, was, of course, setting up the Lanai and T3 accounts. Soon after, we know, Ferdinand Ledesma (former partner of the Russian Mafia and Anthony Elgindy, the guy tied to Palestinian Islamic Jihad, Al Qaeda, Hamas, and the Kosovo Liberation Army) was in China setting up the more than 2,000 subaccounts for Hamidi’s Lanai.
Around the same time, Hamidi founded another trading outfit with Jaillal Irani Ramoutar, the Iranian fellow had worked for the Mafia brokerage Hanover Sterling (clearing trades for the Nazerali-financed Adler Coleman) before he moved to All-Tech, where he was almost killed by Mark Barton. The new outfit founded by Hamidi and Ramoutar was called Formation Trading. Their partner in Formation was Jamie Caputo, who was simultaneously working for a brokerage called Carlin Equities.
Carlin, which has been fined (lightly) by FINRA for naked short selling, was financed by Arik Kislin. We’ve met Kislin before. He’s the “member” (according to the DOJ) of Vyacheslav Ivankov’s Mafia gang. Ivankov, recall, was otherwise known as “Little Japanese” – and he was assassinated on a Moscow street in 2009, shortly after revealing that he had been employed by the Russian intelligence services.
Kislin is the nephew of Semyon Kislin, another member of the Little Japanese Mafia gang. By his own admission, Semyon used to sell high-tech electronics equipment to KGB operatives stationed in New York. His partner in that operation was Russian Mafia boss Tamir Sapir, who is now the above-mentioned Felix Sater’s partner in a money laundering operation called Bayrock.
Kislin was also a long-time business partner of Babeck Seroush, an Iranian arms dealer who was tied to Russian intelligence. In 1984, Seroush was indicted for smuggling microchips for nuclear missile guidance systems from the United States to North Korea, via Moscow.
Soon after, Arik Kislin spent time in jail for money laundering. His cellmate was none other than Yvgeny Dvoskin (later alleged to be the ring-leader of the ten Russian spies arrested in 2010).
The manager of Carlin Equities is Aleksandr Shvartz. It is hard to know why he is allowed to operate a brokerage, given that he has been prosecuted for a money laundering scheme that he perpetrated with Aleks Paul, an exotic gems dealer who was linked (by the DOJ) to a market manipulation and money laundering scheme perpetrated by the above-mentioned Felix Sater and A.R. Baron (former clearing firm of Omar Amanat’s Datek Securities).
Aleks Paul, like the above-mentioned Rakesh Saxena, has done business with Ibrahim Bah, the Libyan intelligence operative who brokered Al Qaeda’s diamond deals in Sierra Leone. As we saw in earlier chapters, the DOJ’s 2001 indictment of Paul, Felix Sater and A.R. Baron was part of a larger DOJ investigation into a network of brokerages that were helping the Russian government and the Mogilevich organization manipulate the U.S. markets and launder money through the Bank of New York.
At any rate, Hamidi set up Egoose with Roy Jazayeri, the exotic gems dealer, and he set up those other operations with Jaillal Irani Ramoutar, the Venezuelans, and the guy who was working for Arik Kislin’s brokerage. Meanwhile, Hamidi set up the Lanai and the T3 accounts at Tuco.
At the same time, Hamidi registered himself at a brokerage called First New York Securities, controlled by Dan Cherniak, who had, in the 1980s, been (along with the above-mentioned Felix Sater) one of the select partner-traders who effectively ran a Mafia brokerage called Gruntal Securities.
Recall from earlier chapters that one of Gruntal’s clients was the Gambino organized crime family, and another of the brokerage’s partner-traders, Maurice Gross, had (according to the New York attorney general) conspired with a Pakistani fellow named Mohammad Ali Khan to alight with some of the Gambinos’ cash.
First New York Securities was set up with capital from a fund called Infinity, which had previously been invested in a SAAR Network terror-finance company called Newcom. Also invested in Newcom was the Isosceles Fund, which then employed Anna Chapman (one of the ten Russian spies arrested in 2009). Other investors in Newcom included Asif Mohammad Khan and the above-mentioned Muhammad Ashraf, formerly of the Assa Corporation (Iranian outfit indicted for espionage).
So, right. By late 2010, I had put together much of this story. And I had been to see Rafi the Armenian at his cigar lounge 30 miles outside of Chicago. Rafi confirmed that Mark Gavoor (whose son married the daughter of the Alavi Foundation’s chief economist) and Dro Yerevante Kholamian (owner of naked short selling outfit Spike Trading, which employed Tuco manager Douglas Frederick) regularly met at the cigar lounge.
When I asked Rafi whether he had heard these guys talking to an Iranian exotic gems dealer about plans to crush the markets, Rafi concluded that I might not be an oilman after all. He gave me an odd look. Then he sold me a $25 cigar and disappeared into the backroom.
So I never found out whether Roy Jazayari (the exotic gems dealer) had met with the other guys.
But I figured I had enough to start calling the jihadi Zuhair Karam again. As expected, Zuhair became cooperative after I told him the full story. He confirmed that my information was correct. And when I told Zuhair that I knew that his family were financiers of Palestinian Islamic Jihad leaders, he didn’t deny it. He said that Palestinian Islamic Jihad was a legitimate political group.
I also told Zuhair that I knew that he had worked with Hamidi to set up the T3 and Lanai account. I wasn’t sure about that, but since I knew a lot of other stuff, Zuhair figured I must have known about his involvement with the two accounts. He said he had helped Hamidi, but insisted (as he had in our earlier discussions) that he had been “just one of the little guys,’ and didn’t know what the accounts were for.
That was enough. It was time to call Hamidi. By this time, I had found a court case stating that some of Hamidi’s family members were big shots at the Ministry of Energy in Tehran. So I started with that—I said I was interested in the Iranian oil business, and I told Hamidi I thought he could help me because his family worked for the Ministry of Energy.
Hamidi seemed surprised that I knew about his family, but he graciously agreed to tell me what he knew. After talking about the oil business in Iran for about an hour, I told Hamidi we had a common friend—Zuhair Karam. I said I knew from Zuhair that Hamidi’s family worked for the Revolutionary Guard. I said that I was pleased to learn this because I was planning to travel to Iran and it would be a big help if I could meet with the Guard.
Re: The Miscreants’ Global Bust-Out Chap 1 - 19
Post by sandi66 on Jul 26, 2011, 2:25pm
Hamidi stammered a bit. Finally, he said that, yes, his family worked for the Guard, but he didn’t think it would be possible for me to meet them. I said that was fine, but maybe there was something else he could help me with. I said I knew that he had worked with T3 Capital and I knew that the Russian government was involved with T3. I said I was interested in knowing more about the Russians—were they really government? Mafia? Or what?
Hamidi stammered again. He said, “Uh, Russian government…Russian government. Ok, yes, Russian government…I mean, Russian Mafia…I don’t know. The Russians, yes, there were some Russians at T3, they kept to themselves. What they were doing…it was top-secret.”
“Right,” I said, “that’s what Mikhail Semenko told me. You know Semenko, don’t you? Semenko told me he knew you.”
Hamidi said, “Semenko…”
“Yeah,” I said, “at the World Affairs Council.”
“Uh,” said Hamidi.
“Yeah, Semenko said he told me he knew you.”
“He said that?”
“Yeah, I was surprised when I saw the news…I mean, I didn’t know he was a Russian spy. But you knew him pretty well, didn’t you?”
“Uh…Semenko…I mean, yes, I met him…at the World Affairs Council.”
I said, “right.”
Then I told Hamidi I knew he’d been shorting the markets big-time before Bear Stearns went down—I said I had heard he’d made a bundle.
Hamidi stammered some more. Then he recovered himself and said—yeah, he was even standing on his desk, shouting out sell orders.
I said, “Nice.”
I figured that was enough for the time being, so I told Hamidi I was really interested in learning more about oil and hoped we could stay in touch. I said it would be great if he could tell me anything more about the Russians at T3.
He said, “Uh, the Russians…the Russians…”
Hamidi seemed a bit confused by this conversation. He kept saying, “The Russians…” But he didn’t say more after that. So I told Mr. Hamidi I wouldn’t take any more of his time. I said I hoped that we could continue the conversation in the coming days.
He said–yes, absolutely, call anytime.
The next day, I wrote an email to Hamidi reminding him that I would like to know more about the Russians. Hamidi said he would see if he could get me some names of the Russians. I wrote back, basically just saying, thanks for your time, and, by the way, I think Israel’s 1982 invasion of Lebanon helped create Hezbollah.
Two days later, I received a 2,000 word email from Mr. Hamidi that began, “Did you know that [Israeli Prime Minister] Netanyahu is 1/2 Persian and is totally fluent in Farsi, not only speaking but writing it as well? Another mind blowing fact. And the entire Iraqi government is Persian…Underneath the surface, the US and Iran and Israel are great allies, trying to consolidate power into the hands of the Iranians…”
Then he mentioned the movie “Syriana” and said, “I believe firmly that the US government funds films through front companies owned by the CIA. There’s proof of this everywhere.” However, Mr. Hamidi suggested that Iran’s foreign service was craftier than the American foreign services. He said Iranian diplomats are “the world’s smartest negotiators,” which is probably true.
Mr. Hamidi added that Islam is a “truly horrific religion that seems designed by the devil himself.” He said that Iran hates the Russians, but the Russians are, in effect, stooges for Iran. He added that Iranian president “Ahmedinijad is a plant, a mole, to take down the clerical establishment because the clerical establishment has gone corrupt…”
Mr. Hamidi concluded, “Lastly, I have a surprise for you…” The surprise was that he had a cousin who was “against the clerical regime.” But, he said, the regime “constantly invites [my cousin] back to Iran to lecture at the University of Tehran. He’s untouchable because his father is one of the richest men. I call my cousin Anoush.”
Hamidi said that maybe he would introduce me to Anoush. If I were to meet Anoush, he said, I would have to remember that Anoush was an important man.
I thought we had a good conversation going, so I sent Mr. Hamidi another email, trying to be a bit provocative, outlining some strange views on the Iran-Israel relationship. Then (perhaps a bit too hastily) I sent him another email with an attached document that listed the names of all the people who had accounts at Tuco Trading.
I didn’t write much in the email, just a simple question – “Do you know any of these people?”
I never heard back from Mr. Hamidi again. He stopped answering my emails.
Mr. Hamidi seemed to me to be a young man, who was still learning to conceal his surprise. Much to Mr. Hamidi’s credit, he seemed not yet to have honed his skills at deception and dissembling. And he was somewhat discombobulated because, of course, he didn’t know who the hell I was.
Maybe his confusion as to my identity and intentions explains why he seemed to be clumsily hiding information and at the same time revealing information. His somewhat overdone claim to despise Islam, going so far as to call it the religion of the devil, can be interpreted either as attempt to conceal his real beliefs, or an attempt to curry favor with an American.
Alternatively, maybe he really does despise Islam. They call Iran the Islamic Republic, but plenty of people who support the Iranian government are not religious. I do not know what to make of Mr. Hamidi’s concerns about CIA front companies. Maybe he thought I was a pajama-wearing CIA operative.
Or maybe he was just making small talk. I don’t know.
Mr. Hamidi’s statement that Iranian president Ahmedinijad is a “mole” who is going to take down the clerical establishment is one that has been floated by Ahmedinijad’s regime itself. Another theory quietly encouraged by Ahmedinijad’s team is that all the president’s talk about the return of the Hidden Imam is in fact evidence that he is opposed to the clerical regime. After all, according to Islamic lore, when the Hidden Imam returns, the first thing he will do is eliminate corrupt clerics.
Ahmedinijad’s people began floating these theories after the 2009 street protests in Tehran. Their goal was apparently to focus the opposition on the Ayatollah while allowing Ahmedinijad to have it both ways, suggesting to the clerics that he was a stalwart of the regime, while also letting on that he was an anti-establishmentarian. Nowadays, Ahmedinijad seems to be trying to calm the restless Iranian population by suggesting (counter-intuitively, though perhaps correctly) that he is, in fact, a potential friend of those who oppose clerical rule.
As for Mr. Hamidi’s insistence that Iran and Israel are natural allies – well, that is counterintuitive, too, but it is certainly not out of the question considering that the two countries have secretly cooperated in the past. For example, in the Iran-Contra scandal, the TOW missiles that the U.S. sold to Iran (as part of the deal brokered by Khashoggi) were delivered through Israeli channels.
Trita Parsi, founder of the National Iranian American Council (the above-mentioned front for the Iranian regime) has written a book suggesting that Iran has secretly built relations with Israel, so perhaps this is a message that is being quietly floated by the Islamic regime, even as Ahmedinijad publicly proclaims his desire to drive Israel “into the sea.”
Indeed, it is possible that officials in both Iran and Israel work together to maintain the status-quo of low intensity conflict and semi-chaos in southern Lebanon, Gaza, and the West Bank. The chaos boosts Iran’s influence and enables Hezbollah to continue its narco-trafficking and other criminal activities unhindered. By the same token, the conflict boosts the profile of Iran’s proxy, Hamas, and allows Israeli politicians to flaunt their toughness in the face of war.
Many of these Israeli politicians (such as foreign minister Avignor Lieberman) receive most of their campaign funding from Russian mobsters who hold Israeli passports. The Mob’s businesses, such as drug running and shady casinos (like the one that the above-mentioned Martin Schlaff built for Yasir Arafat while bribing successive Israeli politicians) also flourish in the state of semi-chaos.
The bottom line is this: I called Mr. Hamidi to talk about oil. I let on that I knew the Russian government was involved with T3. I told Hamidi I knew he was acquainted with a Russian spy, and I said that I aware Hamidi had been massively shorting the markets before the collapse of Bear Stearns.
I then sent Mr. Hamidi an email asking again about the Russians. He, in return, sent me a long diatribe about Iranian foreign policy.
It seems to me that this diatribe echoed the messages that are quietly delivered by at least some factions of the Iranian government, the same government that employs Mr. Hamidi’s family members. I do not know what he thought he was dealing with, but for some reason (either to curry favor with me, or to make a show of appearing that he had nothing to hide), he told me that his cousin was Anoush, and that it would be advantageous for me to meet Anoush.
Then, suddenly, Mr. Hamidi seemed to have second thoughts and cut off all communication with me. Or maybe it was his intention from the start to send one political diatribe and end the conversation with that.
Either way, I subsequently did some research to find out more about Anoush. And as it turned out, Anoush was a pretty interesting guy.
Anoush’s full name is Anoushiravan Ehteshami, and he is a professor and the head of the Middle East program at Durham University, a prestigious school in England. While Mr. Hamidi was getting those accounts set up in 2008, Professor Ehteshami was embroiled in a controversy. It seems he organized a panel discussion at Durham University about Iran and stacked the panel with people tied to the Iranian regime. Some anti-regime Iranian students were upset, and were staging protests.
The students would have been angrier still if they’d known that Professor Ehteshami, in his capacity as the head of the university’s Middle East Studies program, had formed a joint venture agreement with the Iranian regime which basically ensured that studies of Iran produced by the university would be conducted in partnership with the Iranian embassy. (If you care to read it, I have posted a copy of the joint venture agreement at DeepCapture.com).
Perhaps also unknown to the students was the fact that Professor Ehteshami had hired Hadi Soleimanpour as a research assistant. While working as a research assistant at Durham University, Soleimanpour, a former Iranian abassador to Argentina, was indicted in Argentina for directing a 1994 Hezbollah terrorist attack on a Jewish community center in Buenos Aires. In fact, that synagogue bombing was one of the most deadly Iran-Hezbollah terrorist operations ever conducted.
Years earlier, Professor Ehteshami had served as doctoral advisor to Ramadan Abdallah Shaleh, who later joined Sami al Arian at the University of South Florida, from where Shaleh and Sami al Arian co-directed the U.S. operations of Palestinian Islamic Jihad. (These are the guys who were taking directions from Iranian government agents in New York).
By the time Sami al-Arian was jailed on terrorism charges, Shaleh (Ehteshami’s doctoral student) was labeled by the U.S. government as a “Specially Designated Global Terrorist” and had moved to Syria, from where he is (with help from Iran) still waging war as the top leader of Palestinian Islamic Jihad.
These are the same Palestinian Islamic Jihad leaders who were on close terms with Omar Amanat (designer of Tuco’s Lightspeed trading platform); Tuco employee Zuhair Karam (whose family financed Palestinian Islamic Jihad, while Zuhair helped set up the Lanai and T3 accounts at Tuco); and Anthony Elgindy (the destructive short seller whose family brought Sami al-Arian to the University of South Florida, where he teamed up with Professor Ehteshami’s recent doctoral graduate Mr. Saleh).
In addition to receiving directions from Iranian government agents in New York, Mr. Shaleh and Sami al-Arian were (according to Mr. Shaleh himself) receiving by far the biggest chunk of their funding from the International Institute of Islamic Thought, a SAAR Network outfit where Sheikh Yusuf DeLorenzo served as a board director. (DeLorenzo, recall, was the Elgindy and Amanat pal who founded the Al Safi Trust naked short selling platform. Previously, he ran GSISS, with Al Qaeda operative Alamoudi).
In 2008, Professor Ehteshami was (in addition to employing a terrorist) doing work for the Cordoba Foundation. A U.K. non-profit organization called the Centre for Social Cohesion (citing, among others, David Cameron, now prime minister of Britain), has reported that the Cordoba Foundation is a Muslim Brotherhood front with ties to Anwar al Awlaki (the Al Qaeda leader who was a close associate of Omar Amanat before he was implicated in the September 11 attacks and fled to Yemen).
The Cordoba Foundation denied the charges, noting that Cameron had made them in a speech before the Community Security Trust, which is (according to the Cordoba Foundation) a “well-known pro-Zionist organization.”
In addition, Professor Ehteshami is a close associate of Bijan Khajehpour, a London-based Iranian businessman who (recall from earlier chapters) had employed one of the people who set up the National Iranian American Council, a front for the Iranian government. (An NIAC’s board member, recall, co-founded an Iranian social networking organization with Man Financial’s vice president of trading control).
The NIAC (like the Assa Corporation and Palestinian Islamic Jihad’s leaders) took directions from Iranian government agents stationed in New York.
Of course, it is possible that Professor Ehteshami is an opponent of some or all of the factions that comprise the regime in Iran. Professor Ehteshami certainly claims to “oppose” clerical rule. But Iran is a complicated place. Some “opponents”, like former president Akbar Hashemi Rafsanjani, who is believed to have had a hand in the 2009 street protests in Tehran, are, to some extent, actually formulating Iranian policies. And, as I mentioned, president Ahmedinijad himself is quietly suggesting that he, too, is an opponent of clerical rule.
Many other “opponents” are, in fact, employed by the regime, a regime that might be fracturing, but a regime that is nonetheless united in opposition to the United States. In addition to supporting the “democracy” movement in Iran, Mr. Rafsanjani was also, during his time as president, responsible for ordering more overseas terrorist attacks (including the one in Argentina that was directed by Professor Ehteshami’s special research assistant and many of others targeting Americans) than any other Iranian leader.
In any case, if Professor Ehteshami were an opponent of the regime, as opposed to being a component of some faction of the regime, it is unlikely that he would have hired a “former” Iranian government official named Nosratollah Tajik to work at his university. But Professor Ehteshami did, indeed, hire Mr. Tajik. He hired Mr. Tajik to be the “Honorary Fellow” of his university’s Middle East department.
While Mr. Tajik was working as Professor Ehteshami’s Honorary Fellow, he was being watched by undercover U.S. government operatives and the Israeli Mossad. This is because Mr. Tajik had previously been one of the principal Iranian government agents responsible for recruiting Hezbollah soldiers and training them for terrorist operations around the world.
As the U.S. and Israeli agents watched, they discovered that Mr. Tajik wasn’t doing the sort of work that university Honorary Fellows usually do. Instead, he was spending his time trying to acquire a Millennium 35 mm naval gun system with anti-guided missile capabilities, which he intended to deliver to Hezbollah.
He also spent $3 million acquiring night-vision binoculars and laser-guided machine guns, and tried to ship them to Hamas and to Professor Ehteshami’s former doctoral student, the guy who runs Palestinian Islamic Jihad.
Ultimately, the British arrested Mr. Tajik, and deported him back to Iran.
Under Professor Ehteshami’s guidance, Durham University became so intertwined with the regime in Iran that it came to the notice of the U.S. embassy. In documents unveiled by Wikileaks, U.S. diplomats note that members of the Revolutionary Guard had visited the university. Apparently, the U.S. embassy believed that U.S. diplomats could use Durham University as “political cover” to make contact with Iranian officials who might be opposed to clerical rule.
None of which is to suggest that Mr. Hamidi himself was working for the Iranian government. I have no secretly recorded tapes of Mr. Hamidi orchestrating his short selling with the Revolutionary Guard, or the Iranian undercover operatives working for his cousin, whom he calls “Anoush.”
I tell Mr. Hamidi’s story, however, to show that there is nothing more than a phone call to a close relative standing between a guy who was running Millennium 35 mm naval gun systems to Hezbollah, and a guy who had two accounts (one with 2,000 secret subaccounts in China) ready to bombard the U.S. markets with manipulative short selling in volumes equal to the total short selling volume transacted by Goldman Sachs.
I tell this story merely to note that it is not entirely typical for an Iranian whose other family members work for the Revolutionary Guard to set up trading outfits in partnership with shadowy Venezuelans, the Russian government, and people working for Mafia brokerages (one of which was financed by a Russian intelligence asset who did business with an Iranian arms dealer who’d been indicted for trafficking nuclear weapons components to North Korea).
Nor is it typical for an Iranian with these sorts of relationships to flood the markets with manipulative short selling (equal to the total short selling volume of Goldman Sachs) through a little unregistered brokerage in Chicago whose trading platforms and clearing services were provided by people with eminently close ties to the Russian government, the Iranian regime, Palestinian Islamic Jihad, the Blind Sheikh, an Al Qaeda operative who plotted an assassination with Muammar Qaddafi, the Mogilevich organization, Hamas, Pakistani intelligence, Saudi intelligence, the House of Islamic Money, a 30,000 man paramilitary army in Lebanon, maniacal jihadi warlords, and Osama bin Laden’s favorite financier.
Given that the Lanai and T3 volume was so massive, it is likely that it was generated by a high-frequency algorithmic computers, some of them hooked up to those 2,000 Lanai sub-accounts in China. But we don’t know who else was trading through those accounts in China. It could have been other Iranians. It could have been anyone – that’s what is scary.
And I will stress: the massive short selling transacted by Hamidi’s two accounts appears (judging by the data from Penson Financial, which cleared the trades) to have targeted the big banks and other pillars of the American economy. And this unbelievably massive volume was all transacted in the month before the 2008 collapse of Bear Stearns.
So far as I can tell, the SEC never conducted a thorough investigation of Tuco. Apparently, the Commission shut the brokerage down by “Emergency Order” only because it had so massively exceeded margin limits. Tuco’s founders disappeared. One of the brokerage’s silent owners, Michael Kestler, headed to Cozumel, an island off of Mexico, where he now manages a bar called Mezcalitos.
So, yes, I tell this story because it seems kind of strange. Also, because this kind of crap happens in the markets and nobody investigates. Not the SEC. Not the media. Nobody.
The big volumes at Penson (large portions of which obviously came from Tuco) were mentioned (without specifically naming the brokerages) in that report for the Defense Department’s Irregular Warfare Support Program – the report I mentioned in the first chapter of this series. And I know that the authors of that report are aware of the T3 and the Lanai accounts, though perhaps not who was behind them.
But I have no idea if anyone in the government is taking that report seriously. Indeed, as far as I can tell, the only person monitoring this story with any regularity is a guy (me) who works in his pajamas.
To be continued…