The Miscreants’ Global Bust-Out (Chapter 7): The Bernie Madoff Cover-Up, the Blind Sheikh, and the RLevi2 Algorithmic Market Manipulation Machine
Posted on 20 May 2011 by Mark Mitchell
As should be clear by now, the premise of this story is that a network of affiliated hedge funds and brokerages have done considerable damage to the financial markets. It should also be clear that most of the people in this network have ties to organized crime, and some have done a considerable amount of business with rogue states and jihadi outfits.
The damage caused by this network will be more fully quantified in upcoming chapters, but first let us become better acquainted with more of the network’s key operators. Towards this end, it will be instructive to consider what happened to the remains of the brokerage that was controlled by Bernie Madoff.
Authorities never fully investigated Madoff’s brokerage even though Madoff’s co-conspirators (Mobsters, dangerous Russians, people tied to the regime in Iran, folks like Al Qaeda Golden Chain member Sheikh Mahfouz, and other close associates of Michael Milken) were likely feeding Madoff’s Ponzi in order to cover up his brokerage’s manipulative trading.
The government’s investigation seems to have come to an end in 2010, shortly after the arrest of Daniel Bonventre, the fellow responsible for transferring at least $750 million of Ponzi money to Madoff’s “clearing and settlement” operation (i.e. the operation that transacted any manipulative trading that occurred).
As I have mentioned, often when criminal operations in this network come under investigation, they are sold to others in the network. The goal seems to be to discourage the Feds from continuing their investigation. As it were, Madoff’s brokerage (which no doubt consisted largely of liabilities, in the form of securities sold short but never delivered) was purchased in an auction that took place in June, 2009.
That auction was odd in many ways, one of which is that it may have been rigged.
Three brokerages attended the auction, only one of which made a bid. One of the observing brokerages was Guzman & Co, owned by Leopoldo Guzman, who had recently been serving as chief investment officer of the Gulf Investments Company, a shariah-compliant Saudi-owned outfit in Kuwait.
The other observing brokerage was Aleo Capital Markets. I haven’t been able to find out much about that firm except that it is run by David Weisberger, former CEO of Lava Trading.
Lava Trading is part of a larger group called SunGard, which was spun off from the Sun Oil Company. Sungard has been at the forefront of providing trading platforms to “shariah-compliant” financial institutions in the Middle East.
In 2008, Sungard sponsored a “Gala Networking Reception” where it was declared that “Islamic [shariah] finance can be the model for the global economy.” The keynote speaker at this event was the CEO of a 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 companies that were owned by Osama bin Laden.
The House of Islamic Money’s board members included Haydar Mohamed bin Laden, Osama’s brother; and “Specially Designated Global Terrorist” Yasin al Qadi (Osama bin Laden’s favorite financier). One of its subsidiaries, Shamal Islamic Bank, was run by Abdul Jalil Batterjee, who was also the chairman of an outfit that controlled Benevolence International, the Al Qaeda front that had contacts with people trying to obtain nuclear weapons for the Grand Jihad.
SunGard supplies trading platforms to several brokerages that have been charged by FINRA with deploying those trading platforms for the purposes of manipulative naked short selling. SunGard was also found to be “systematically” reporting short sales as long sales in the summer of 2007 – a habit that accompanies manipulative trading.
SunGard, meanwhile, owns a brokerage called Assent. Many of Assent’s traders were, in 2008, also trading through Zuhair Karam’s Tuco Trading, accounting for some of that brokerage’s large volume.
At Tuco, recall, there were several interesting accounts. One was the Orange Diviner account, controlled by the top henchmen of Roman Abramovich (the Russian prime minister’s right-hand man) and Russian Mafia kingpin Semion Mogilevich. Also involved with Orange Diviner were people affiliated with Alfa Group, the outfit that is funding Iran’s nuclear program.
Two other Tuco accounts traded 2 billion shares (equal to 20 percent of the volume at the biggest brokerage on the planet). One of those two accounts contained more than 2,000 anonymous sub-accounts based in China.
In the fall of 2010, I had received a tip that the accounts responsible for those 2 billion shares had been set up by an Iranian fellow with high-level ties to the Revolutionary Guard and Palestinian Islamic Jihad (whose leader in the U.S. was taking directions from Iranian diplomats to the UN).
However, Tuco’s Zuhair Karam had yet to help me confirm the identity of that Iranian.
But I did know that some traders at Assent (the Sungard outfit, a number of whose traders were also operating through Tuco) were involved with a brokerage called Carlin Equities. Another person involved with Carlin was Arik Kislin, whom the U.S. government has named as being a “member” of the gang run by Vyacheslav Ivankov, or “Little Japanese” – the top boss of the Russian Mafia in the United States during the 1980s.
In 2009, Ivankov was assassinated on a Moscow street after admitting that he had long been employed by the Russian intelligence services. Meanwhile, Kislin and a Russian Mafia figure named Michael Chernoy (sometimes spelled Mikhael Cherney) were partners in a money laundering outfit called Trans Commodities, which has been linked to the Russian government.
In addition, Kislin was named by the FBI as an associate of an Iranian arms dealer named Babeck Seroush, who operated out of Moscow and worked with the GRU, Russia’s military intelligence agency. In 1984, prosecutors for the Southern District of New York indicted Seroush for smuggling semiconductors and military-issue night-vision goggles to North Korea. Kislin has admitted that he has done business with Seroush.
Assent, the outfit with some traders who are associated with Carlin (the Kislin-tied brokerage), is affiliated in other ways with Tuco Trading. For example, a brokerage called Lightspeed (which had a partnership with Tuco and provided Tuco with one of its trading platforms) referred trades to Assent, which in turn referred trades to a Texas outfit called Penson Financial, and a California brokerage called Wedbush Morgan.
Wedbush, meanwhile, referred most of its trades onwards to Bernard L. Madoff Investment Securities LLC.
In other words, employees of a brokerage tied to a Russian Mafiosi (a former partner of an Iranian arms dealer who has done business with Russian intelligence and North Korea) made trades that were passed down a line of Mafia- and jihadi-linked brokerages and, in many cases, ultimately executed by Bernie Madoff.
So to summarize: The auction for Madoff’s brokerage was attended by three brokerages. One of those brokerages (Guzman & Co) was owned by a fellow who had most recently been working for a Saudi outfit in Kuwait.
The second brokerage (Aleo) was owned by the former CEO of an outfit (Lava Trading) that was a subsidiary of SunGard, which has ties to the jihadi House of Islamic Money and also owns Assent, a number of whose traders operated through Lighstpeed. Many of Assent’s traders also operated through Zuhair Karam’s Tuco (which deployed the Lightspeed trading platform); and through Carlin Equities, the outfit tied to Russian Mafia figure Arik Kislin.
Although they attended the auction, Aleo and Guzman did not bid for Madoff’s brokerage, and most likely attended the auction simply to ensure that Madoff’s brokerage would, in fact, be sold to the third brokerage in attendance. That third brokerage was Surge Trading, and in the end, Surge did indeed buy Madoff’s operation.
At the time of this writing, Surge Trading’s accounting firm had refused to sign off on its financial statements due to unspecified problems relating to its purchase of Madoff’s brokerage. Could it be that those problems have to do with Surges’s efforts to cover-up the liabilities in the form of “securities sold but not yet delivered” that Madoff’s brokerage would have accrued from generating “failures to deliver” in order to help its clients manipulate down the markets?
I don’t know. Apparently, it’s a big secret. But it seems to be a good bet, given that there could be no possible reason (other than to hide liabilities that pointed to a massive financial crime) why a brokerage would want to buy the operations of the world’s most famous financial criminal.
Surge Trading opened for business not long before buying Madoff’s brokerage. Indeed, it is posssible that it was set up for no other reason than to buy the Madoff operation. And there is no question that Surge Trading is part of the close-knit network that is the subject of this multi-chapter story.
That is, it is part of the network whose key operators include criminals (including Madoff himself) who are tied to either Michael Milken, organized crime, jihadis, rogue states, or all of the above.
Surge Trading is run byFrank Petrilli, former vice president of a brokerage called Datek Securities (also known as Datek Online). In 1999, the SEC charged Datek with running trading accounts for a guy named Martin Clainey, except that Clainey wasn’t his real name.
His real name was Phillip Gurian, and he was the right hand man to a Decalvacante Mafia family capo named Phil Abramo, who was one of America’s most notorious market manipulators, known in Mafia circles as the “King of Wall Street.”
Abramo has been charged for multiple market manipulation crimes, and was at the center of one of the biggest naked short selling cases of all time. In that case it was determined that Abramo and his short selling crew destroyed dozens of companies that had been given death spiral finance by a brokerage called Hanover Sterling, which was controlled by the Genovese Mafia.
In 2003, Abramo was indicted for murder.
In addition to catering to the Abramo boys, Datek also had a partnership with A.R. Baron, the Mafia outfit that was (recall) financed by Milken crony Zev Wolfson and later charged by the DOJ with manipulating stocks in league with a host of La Cosa Nostra characters and Russian Mafia boss Felix Sater’s White Rock Partners.
A.R. Baron was Datek’s clearing firm, responsible for ensuring delivery of any shares sold short by Datek. Later, Datek’s clearing firm was J.B. Oxford, a Mafia brokerage controlled by Russian oligarch Boris Berezovsky (at this point still the “Godfather of the Kremlin”) and Irving Kott, who, recall, was Ali Nazerali’s partner in First Commerce, the BCCI brokerage. Also involved with First Commerce (according to a former employee): Phil Abramo.
That was before Ali Nazerali started a hedge fund, Valor Invest, in partnership with Yasin al Qadi (Osama bin Laden’s favorite financier).
Datek also did quite a lot of business with one Joseph Gutnick, who was an important figure in the ultra-orthodox Lubavitch Hasidic movement in Israel. Mr. Gutnick was long known in Israel as the Goldener Rebbe, or the Golden Rabbi, because he ran several extremely generous charities that played key roles in securing the elections of a succession of Israeli prime ministers.
The grateful leader of the Lubavitchers, the late Rabbi Menachem Mendel Schneerson, once predicted that Gutnick would discover diamonds and gold in the Australian desert – a prediction that Mr. Gutnick included in promotional videos that he showed to his Datek brokers, who referred to him as “Diamond Joe.”
In 1993, Mr. Gutnick was among the most ardent Israeli opponents of the Oslo Peace Accords between the Israeli government and the Palestinian Liberation Organization). Mr. Gutnkik and his charities later orchestrated much of the Israeli building in occupied territories of Palestine, helping to provoke Palestinian radicalism and the rise of Hamas and Palestinian Islamic Jihad.
In 1999, Gutnick was exposed by Barron’s magazine for using his charities to launder money and manipulate stocks for such characters as Judah Wernick, the Milken crony who was (as we have seen) indicted by the DOJ for his role in a $200 million stock manipulation scheme that he ran with Milken crony Randolph Pace, who would later be implicated in the scandal that saw the Russian Mafia and Russian government laundering billions of dollars through the Bank of New York.
Datek was founded in the 1980s by two brothers, Irfan and Omar Amanat. Omar Amanat was also the founder of Lightspeed, one of the outfits that provided a trading platform to Tuco Trading. Those 2 billion shares (equal to 20 percent of the volume of the largest brokerage on the planet) that were traded through two accounts at Tuco were largely transacted on the Lightspeed platform (which, recall, also transacted trades for Sungard’s Assent and Carlin Equities, the outfit tied to Russian Mobster Arik Kislin).
In the fall of 2010, I had not yet received confirmation that a certain Iranian fellow was behind the two accounts that traded the 2 billion shares. But I knew that Omar Amanat (founder of Datek; and designer of Tuco’s Lightspeed, which transacted a large portion of those 2 billion shares) was also the founder of Bridges TV, an American television network devoted to broadcasting Islamic teachings and other programming that is ostensibly of interest to Muslims.
There is, of course, nothing wrong with Islamic television. It’s better than “Dukes of Hazard” reruns. I include Bridges TV in this story only because people choose their business partners and the company they keep, and it is probably no coincidence that Omar Amanat (founder of Datek and Lightspeed) chose as his partners in Bridges TV two men – Muzzammil Hassan and Nihad Awad.
Mr. Hassan served as Bridges CEO until he chopped off his wife’s head.
Mr. Hassan chopped off his wife’s head apparently because he believed that it was a matter of honor to chop off the head of a disobedient wife. This would have been legal in Taliban-ruled Afghanistan, but it’s against the law in California, so Mr. Hassan is now in prison.
Meanwhile, Mr. Awad, the other partner in Bridges, is a jihadi who is a member of both Hamas and the Muslim Brotherhood. He is a close associate of Palestinian Islamic Jihad leader Sami-al-Arian (who took orders from Iranian agents in New York) and the Blind Sheikh, mastermind of the 1993 terrorist attacks on the World Trade Center.
Mr. Amanat knew this when he chose Mr. Awad as his partner because Mr. Awad had been the chief propagandist for Hamas in the United States, and he was under investigation (and soon to be named as an unindicted co-conspirator) in the government’s case against the Holy Land Foundation, which was the principal front for Hamas in the United States.
Court documents from that case noted also that Mr. Awad had attended a secret meeting for 20 Hamas leaders that was held in 1993 at a Marriot Hotel in Philadelphia. The FBI secretly monitored and recorded this meeting, so we know who was there, and what was said.
There is one thing the people at this meeting did not say – the word, “Hamas.” Instead, they said, “Samah,” which is Hamas spelled backwards, an attempt to use coded language to disguise the purpose of this meeting, which was to advance the Hamas political agenda and figure out ways to derail the Oslo Peace Accords.
Perhaps they even had assistance in this effort from Diamond Joe a.k.a. the Golden Rabbi. Spend some time in any war zone and you will see avowed enemies collaborating to fuel the conflict from which both sides profit. It is, in fact, widely accepted that Israeli politicians (largely funded by criminals like Diamond Joe) were at this time nurturing Hamas as an alternative to the Palestinian Liberation Organization.
The Hamas leaders at the secret meeting in Philadelpia also discussed ways to advance the “Grand Jihad” to “sabotage the West’s miserable house from within.” The Muslim Brotherhood document that described that Grand Jihad was presented by prosecutors in the Holy Land Foundation case. (Hamas is a creation of the Muslim Brotherhood).
One of the attendees at the secret Hamas meeting, Abu Baker, noted that the jihad against the United States would have to be conducted by stealth. “War is deception,” he said. “Deceive, camouflage…Deceive your enemy.”
Nihad Awad (future partner of Lightspeed and Datek Securities founder Omar Amanat) was at the secret meeting in his capacity as the deputy director of the Islamic Association of Palestine, which was the propaganda arm of Hamas in the United States, principally tasked with that “deception” and “camouflage.”
Also at the meeting was Awad’s boss, Islamic Asssociation of Palestine President Omar Ahmad. The FBI recorded Amad and Awad plotting ways to keep the Blind Sheikh out of prison, despite the Blind Sheikh having been implicated in the 1993 World Trade Center attack.
Which is not surprising because the Blind Sheikh (Osama bin Laden’s spiritual inspiration) had been living in Omar Ahmad’s house (free room and board) while he was plotting other atrocities, including the “Day of Terror” plot to blow up multiple New York landmarks. This, recall, is the same Blind Sheikh who first called on jihadis to destroy American corporations and the American economy.
Datek Securites co-founder Irfan Amanat (brother of Oman) is also on close terms with the top officials of Hamas and Palestinian Islamic Jihad. Irfan now lives in Dubai, where he is a partner in MNA Partners, which is run by Kamal Tayara, a founder off the Alarabiya News Channel.
Alarabiya is better than most American news networks in that it actually reports the news. However, it tends to give disproportionate attention to the “atrocities” committed by American troops in Iraq, while stressing that Al Qaeda’s crimes pale in comparison.
I do not mean to suggest that Omar and Irfan Amanat are terrorists. But they definitely know terrorists, and are on exceedingly good terms with some of them.
It is therefore of possible concern that aside from founding Datek and Lightspeed, Omar and Irfan Amanat founded Island, the largest Electronic Communications Network (ECN) in America. In fact, they founded or served as key consultants to nearly every other major ECN in the nation.
Since ECNs act like their own private stock exchanges and enable stock manipulators to operate in anonymity, they are cited by U.S. government agencies as among the bigger loopholes that could be exploited by financial terrorists.
As it were, Irfan Amanat used one of his Electronic Communications Networks to engage in a massive market manipulation scheme. And it was precisely the sort of scheme that worries experts in threat finance.
This scheme was carried out in September 2001, in the days before and after the Al Qaeda attacks on the World Trade Center. While the timing may have been a coincidence, there is no question that Mr. Amanat’s attacks damaged the markets.
The scheme involved MarketXT, a trading firm and ECN founded by Irfan Amanat and his brother Omar. According to the SEC, in September 2001, Irfan Amanat and MarketXT deployed “a [computer] program without any arbitrage features…The program, dubbed ‘RLevi2’, automatically placed buy or sell orders at timed intervals…In other words, wash trades and matched orders were the result of the program’s design.”
Strangely, the SEC wrote that Irfan’s massive volumes of wash trades were “market manipulation” but it did not charge him with that crime. In response to the SEC’s claim that this was a “market manipulation” scheme, Mr. Amanat said that his RLevi2 computer program was not meant to crash the markets (as it appeared), but was instead designed “solely to generate tape rebates” (i.e. rebates that stock exchanges pay to traders who generate massive volumes).
The SEC clearly did not accept this explanation. That’s why it stated unequivocally in its charges against Amanat that he had “manipulated the markets.” But the SEC seems incapable of ever actually charging anyone for market manipulation, and so the Commission charged Amanat only with using wash trades to generate tape rebates.
Mr. Amanat’s scheme (like the one that Al Qaeda man Naresh Patel ran through Man Financial) was, in fact, blatant market manipulation – a scheme that created the illusion of massive volume, and severely damaged stock prices by specifically targeting Exchange Traded Funds (ETFs).
As I noted at the outset of this story, threat finance experts worry about ETFs because they contain stocks across a given industry, and their high leverage makes them ideal tools through which to manipulate the markets. The more leverage, the more damage manipulative trading can inflict.
Indeed, it might be worth asking whether some ETFs were created to help short-side market manipulators crash markets. This is because the man who invented ETFs might be tied to the Russian Mafia. And because the second biggest creator of ETFs is definitely tied to the Mafia.
The biggest player in the world of ETFs is Michael Sapir. He invented them. He is also, I believe, a relative of Russian Mafia boss Tamir Sapir, who runs an outfit called The Sapir Organization. Tamir Sapir is also a partner in Bayrock, the alleged money laundering outfit run by Russian Mafia boss Felix Sater (the guy whose Russian intelligence contacts were going to buy Stinger missiles from Al Qaeda after his brokerage was indicted for manipulating the markets with La Cosa Nostra and Datek’s clearing firm, A.R. Baron).
By his own admission, Sapir used to be primarily in the business of selling electronics equipment to KGB operatives in New York. His partner in the electronics business was Semion Kislin, uncle of the above-mentioned Arik Kislin (tied to Carlin Equities). Like his nephew, Semion has been named by the U.S. government as an associate Vyacheslav Ivankov, one-time top boss of the Russian Mafia in the United States.
Ivankov, also known as Yaponchik (“Little Japanese”), was the sort of criminal who inspires fear and wonderment at what a human can become, a mass murderer who would brag to his associates that he made his victims die slow and excruciating deaths. As I mentioned, he was assassinated on a Moscow street in 2009, shortly after revealing that he had long been employed by the Russian intelligence services.
Note: I do not have a birth certificate or DNA test confirming the relationship between the two Sapirs, so there is a chance that I am mistaken about this. But I am going to go out on a limb and report it anyway because some of Michael Milken’s associates have told me that the two men are related, and because Michael Sapir’s spokesman refused to deny the relationship on the record.
I asked Tamir’s spokesman if he would confirm or deny the relationship with Michael. Actually, “spokesman” was not his official title, and that’s probably not the right word to describe him. He sounded more like the sort of fellow one would be likely to meet under a bridge near the New York harbor, in the middle of the night.
At any rate, he didn’t answer my question. He said “The Sapir Organization is very private. We don’t provide that sort of information.”
Then — “click” — he hung up the phone.
The other innovator of ETFs, and the second biggest provider of them after Mr. Sapir, is Michael Steinhardt’s Wisdom Tree Investors. Steinhardt (I noted previously) is the son of the “biggest Mafia fence in America” (as the Manhattan DA put it). Steinhardt himself has disclosed that he started his first hedge fund with money from the Genovese Mafia and two fellows (Marc Rich and Ivan Boesky) who were on close terms with the Russian Mafia and the regime in Iran.
Steinhardt’s partner in Wisdom Tree is the son of Saul Steinberg, who in addition to being a key player in the junk bond merry go round that Michael Milken ran in the 1980s, also ran a fund with finance from Zev Wolfson, the guy who financed the above-mentioned A.R. Baron (Datek’s clearing firm) and numerous other Mafia brokerages mentioned in earlier chapters.
So, another summary: In September 2001, Irfan Amanat was busted for using his ECN and his “RLevi2” computer program to generate massive volumes of wash trades (the same sorts of wash trades conducted in 2008 through Man Financial by Al Qaeda man Naresh Patel). Mr. Amanat was doing this, the SEC said, to “manipulate the markets.”
But the SEC did not charge Mr. Amanat for manipulating the markets. It charged him for generating massive volumes of wash trades (which manipulate the markets). So while stating that Amanat was “manipulating the markets”, the SEC also states that Amanat’s only purpose was to generate rebates from the exchanges.
Which makes no sense, because Amanat wasn’t just churning stocks, he was specifically targeting Michael Steinhardt and Michael Sapir’s highly leveraged ETFs, trying to inflict as much damage as possible.
Is Mr. Amanat a financial terrorist? I know he is (like most of the other characters mentioned so far) part of the Milken network, and that’s all I need to know to suspect that he is a threat to the national security of our “miserable house.” Decide for yourself.
However, it might be wise to keep an eye on someone whom the SEC found “manipulat[ing] the markets” at the time of the collapse of the World Trade Center, and who has also does business with a Hamas operative (Nihad Awad) who plotted to keep from prison the Blind Sheikh, mastermind of the first attack on the World Trade Center. This after the Blind Sheikh had been living in the house of Awad’s boss, issuing fiery sermons commanding jihadis to destroy the U.S. economy.
And I’d like to stress this: Two critical functions of the U.S. financial system (ETFs and ECNs) can be quite easily turned into weapons, and are primarily controlled by people who have exceedingly close relationships with the Mafia, jihadis, and rogue states. This seems problematic.
Of course, when Omar Amanat’s Datek came under investigation for its ties to Mafia characters like Martin Clainey (a.k.a. Phillip Gurian), it was quickly purchased by one of Milken’s closest associates, a guy named Steven Schonfeld, who was formerly a principal at the Milken-financed Blinder, Robinson (the outfit known as Blind’em and Rob’em, indicted by the DOJ for manipulating stocks with the likes of Mafia capo Thomas Quinn).
Schonfeld bought all of the assets of Datek (including the executives who had handled the accounts of the Mafia) and folded them into a new outfit called Heartland.
Schonfeld is now the owner of one of the nation’s largest hedge fund and brokerage empires. He also has a securities rap sheet a mile long, having been fined by the Financial Industry Regulatory Authority for everything from naked short selling to bribing stock loan executives at major brokerages.
Once paid off by Schonfeld, the stock loan guys would routinely vouch that there was stock available to be borrowed (the necessary prerequisite for a legal short sale), when in fact there was no such stock. A hedge fund manager doing this is participating in a large scale market-demolition operation. Indeed, it seems to me that Schonfeld belongs in jail.
Since Schonfeld is one of Michael Milken’s closest associates, it is unsurprising that SEC filings show that his trading regularly replicates that of others in the network, including SAC Capital’s Steve Cohen (former trading partner of Russian Mafia figure Felix Sater) and the Man Group, feeder to the Madoff Ponzi and owner of Man Financial (which, like Lightspeed, provided a trading platform to Tuco).
It is also worth noting that in 2008, Schonfeld was a co-owner of Lightspeed, the Omar Amanat outfit that provided Tuco Trading with one of its trading platforms, and transacted a large portion of those 2 billion shares in the month before the 2008 collapse of Bear Stearns.
There are many reasons to believe that the trading conducted through Lightspeed was manipulative short selling. One reason to believe this is that FINRA ultimately fined Lightspeed after finding that at the height of the financial collapse in September 2008, Lightspeed had transacted massive volumes of “short sales of financial institution securities on behalf of customers in contravention of the Commission’s [the SEC’s] emergency order of September 18, 2008 that provided that ‘all persons are prohibited from short selling any publicly traded securities of any included financial firm.’”
In other words, Lightspeed’s clients were attacking the big banks in violation of an SEC “Emergency Order” meant to prevent such attacks from worsening a devastating financial crises. Many of those banks, of course, collapsed or almost collapsed, and the financial crisis got a lot worse.
FINRA is supposed to refer such cases to the DOJ and the SEC, which are supposed to investigate further and decide whether to press criminal or civil charges. But before the SEC or the DOJ could investigate this case, Schonfeld sold Lightspeed to Penson Financial (clearing firm for Tuco Trading).
Meanwhile, as we know, the former vice president of Datek (Omar Amanat’s Mafia outfit, purchased by Schonfeld when it came under investigation) bought Bernie Madoff’s operation, ensuring that nobody would investigate how all of these brokerages were tied together and processed massive volumes of manipulative trades at the height of the financial crisis in 2008.
In the fall of 2010, I was beginning to understand how this network was tied together, so I called the jihadi and Tuco trader Zuhair Karam again. This time Zuhair was a little bit more forthcoming. He confirmed that he knew Omar Amanat and many of those Hamas leaders who attended the secret meeting in 1993. He suggested that my tip about an Iranian being behind those 2 billion shares might be right, but he still would not elaborate.
Only later would I confirm the identity of that Iranian. But after talking to Zuhair, I recalled some information that a former (and foreign, not American) spy had given me in 2006 when I first began investigating the Milken network. The former spy had spent a number of years tracking the Milken network, but when I met him, I did not realize the importance of what he was telling me.
In 2006 this former spy was telling me, in a nutshell, that the Milken network was going to wreck the economy.
I pretty much ignored that former spy, and did not return to his information until the fall of 2010, when it was too late. This is one of my life’s great regrets.
What, precisely, did that former foreign spy tell me? How did I come to meet him in the first place? Well, this requires some explanation.
To be continued…
Re: The Miscreants’ Global Bust-Out Chapter 1 -
Post by sandi66 on May 21, 2011, 5:41am
Some background on Bridges TV ...
Bridges TV is a Muslim television network headquartered in Buffalo, New York. Premiering nationally in November 2004, it was the first American Muslim television network to broadcast in the English language.
Designed to counter negative stereotypes of Muslims, the network has received attention from publications and media venues such as Variety, NBC News, the Voice of America, Columbus Dispatch, Detroit Free Press, San Jose Mercury News, Rochester Democrat & Chronicle The Buffalo News and Canadian Press.
By focusing its content on the experiences of the estimated eight million Muslims living in North America, Bridges TV differentiates itself from such foreign language programming as Geo TV (which broadcasts in Urdu), Prime TV (which broadcasts in Urdu) and Arab Radio and Television Network (which broadcasts in Arabic). Around the time of its inception, the network announced that it would seek to feature sitcoms that represent American Muslim family life in a positive way and identified The Cosby Show as a model for such programming.
In late 2005, Bridges TV started airing "Current Issues", a show produced in Lafayette, Louisiana about Palestinian and other Middle Eastern concerns. The Palestinian American host, Hesham Tillawi, is known both for vocalizing criticism against Israel's treatment of Arabs and Muslims. The Anti-Defamation League called his show "a megaphone for Holocaust deniers and white supremacists seeking to broadcast their hatred and anti-Semitism into American homes with a "who's who" of notable American antisemites including David Duke, Willis Carto, Edgar J. Steele, Mark Weber, and Bradley Smith.
Another program shown on Bridges TV, "American Pilgrimage", featured Rabbi Brad Hirschfield visiting homes and mosques of leading imams and Muslim religious thinkers across North America in cities including Halifax, Detroit, San Francisco, New York City and Washington, DC. The series has been described as "groundbreaking" and has been characterized as having a "Charlie Rose meets Charles Kuralt" format.
World heavyweight champion Muhammad Ali, a subscriber and spokesperson for the network, said "Bridges TV gives American Muslims a voice of their own on the airwaves for Americans of all races and religions to hear." Network official expressed the opinion that a channel like Bridges TV was long overdue and market research sponsored by the network revealed American Muslims' willingness to pay as much as $10 per month above and beyond their current cable television or satellite television fee for the channel.
Omar Amanat, the network's primary investor, is an American businessman and entrepreneur born in Queens, New York to Muslim parents who had emigrated from India. According to Amanat:
I realized that the only way to undo misconceptions was to create our own media forum from which our stories and culture would be shared with the world. Other cultural groups have gained acceptance and increased understanding through the forum of media. Why can't Muslims do the same?
Muzzammil S. Hassan, founder and CEO of Bridges TV, expressed belief "that moderate Muslims cannot identify with the extreme stereotypes often depicted in Hollywood productions" and said "They think they are not accurately portrayed...Bridges TV gives American Muslims a voice and will depict them in everyday, real life situations." Hassan also said he hoped the Bridges TV network would balance negative portrayals of Muslims following the attacks on September 11, 2001.
In February 2009, Hassan was arrested and charged with beheading his estranged wife Aasiya Zubair who also worked for Bridges TV. Her decapitated body was found at the TV station. Dr. Khalid Qazi, president of the Muslim Public Affairs Council of Western New York and a friend of the couple, said that Hassan "was worried about the station's future...He was stressed" and added "Domestic violence is despicable, and Islam condones it in no way whatever." Shortly after the arrest of Muzzammil Hassan, Bridges TV posted the following notice on their website:
Bridges TV is deeply shocked and saddened by the murder of Aasiya [Zubair] Hassan and subsequent arrest of Muzzammil Hassan. Our deepest condolences and prayers go out to the families of the victim. We request that their right to privacy be respected.
In the aftermath of Aasiya Zubair Hassan's death, Bridges TV shut down its news operations for three months, although it continued to present other programming. The news operation has since resumed, and the network continues to operate, although on a smaller scale than previously projected. As of May 2010, the network reported that it was carried in 4 million homes in two dozen markets. Hassan was convicted in February 2011 of second-degree murder.
1.^ a b c d e News aljazeerah.info: First American Muslim Television Channel Announced by Bridges Network
2.^ a b Press Release: Bridges TV Debuts American Muslim Television Network in English Nationwide on November 30, 2004
3.^ a b c CNN: Founder of Islamic TV station accused of beheading wife (February 16, 2009)
4.^ a b c d Catholic Online: U.S. Muslim Beheads Wife (2/17/2009)
5.^ Anti-Defamation League: Hesham Tillawi / “Current Issues”
6.^ National Jewish Center for Learning and Leadership: American Pilgrimage
7.^ Sign On San Diego: Bridges TV (May 7, 2003 )
8.^ WorldNetDaily.com: Muslim TV coming to America (May 02, 2003)
9.^ a b TV boss Muzzammil Hassan found guilty of beheading wife BBC News. February 7, 2011.
10.^ a b New York Daily News Muslim TV mogul Muzzammil Hassan's alleged beheading of wife, Aasiya Hassan, may be 'honor killing' (February 17th 2009)
11.^ Buffalo News (02/13/09)
12.^ Muslim TV exec accused of beheading wife in NY AP, 2009-02-17
13.^ Neale Gulley (February 7, 2011). "Western New York man found guilty of beheading wife". Reuters. Archived from the original on February 7, 2011.
14.^ Bridges TV Accessed 17 February 2009
15.^ Jay Tokazs, "Bridges TV rebuilds from tragedy", Buffalo News, February 13, 2010.
16.^ "Bridges TV survives crime of NY founder's death", AP at Salon.com, May 3, 2010.
Re: The Miscreants’ Global Bust-Out Chapter 1 -
Post by sandi66 on May 21, 2011, 5:58am
American Muslim Life Style Network - 8 million Muslims
Bridges TV - Muzzamil Hassan NBC Brian Williams reports 12/9/04
Re: The Miscreants’ Global Bust-Out Chapter 1 -
Post by sandi66 on May 21, 2011, 6:06am
Steven chonfeld - Datek
Last Man Standing
Susan Kitchens and Michael K. Ozanian, 05.23.05
Steven Schonfeld claims to run the biggest and most successful day trading firm left. Is he really any good?
You remember those day trading banditos of the late 1990s. Most of them were particularly fond of Internet stocks and were incinerated when the Nasdaq blew up in 2000. But not all of them. One big one survives, and, if you believe his story, is prospering: Steven Schonfeld.
Schonfeld oversees a harem of semi-independent traders who use his equipment, his software and his capital, sharing profits with him and paying him trading commissions. This operation yielded revenue of $200 million last year, he says, on which he netted 15% before taxes. Schonfeld says he has outlived his competitors because "we are infinitely better. We're more reputable than any firms out there because of a great regulatory track record."
Which isn't saying much. The Schonfeld Group, with headquarters in Jericho, N.Y. and trading operations in New York and Florida, has racked up its share of admonitions and fines. In 1999 the New York Stock Exchange accused him, among other things, of extending $23 million in credit from his personal funds to set up customer accounts; maintaining inaccurate books and records; and allowing nonregistered employees to perform the duties of registered representatives. Punishment: a $1.3 million fine and a 30-day industry suspension. Schonfeld says he stopped the practices in question immediately, even though he believed they were "legal and responsible." Since 2000 he has been fined at least twice by the National Association of Securities Dealers for violations of rules on Nasdaq's small order execution system, or SOES, a mechanism for orders of up to 1,000 shares to be executed immediately at a marketmaker's announced quotes.
To traditional marketmaking firms like Merrill Lynch, Morgan Stanley and their ilk, the day traders were looked down on as conniving villains who created unnecessary chaos and cost them millions in potential fees. To smaller investors, they were heroes, equal-market-opportunity providers who exploited excessive spreads between the bid and ask prices of over-the-counter stocks.
Nowadays most of the frenzy has fizzled out. Schonfeld, a fast-talking Long Islander, evokes a bit of nostalgia as he insists that he is here to stay, despite depressed profit margins and an iffy market. He still counts on his so-called proprietary traders, those who trade on his firm's account, for the majority of his firm's revenues. He claims to be adding more traders all the time, but their contributions to overall revenues are declining, from 98% five years ago to 60% today, says Andrew Fishman, Schonfeld Group's president.
Schonfeld, 45, got his start in day trading in the mid-1980s. The son of a fabricmaker in New York City's garment district, Schonfeld graduated with a business degree from Emory University and returned to New York. There, according to NASDdocuments, he took a job as a broker at Blinder, Robinson, the now-defunct penny stock peddler whose founder, Meyer Blinder, was convicted in 1992 of wire fraud and money laundering. After five years Schonfeld left for Prudential Bache Securities. While there, he started trading stocks for himself. To track his progress, he created a database of his first 50,000 trades, searching for patterns of success (among the variables: time of day, length of holding, industry sector). With $400,000, Schonfeld set up shop in Great Neck, N.Y. in 1988. He hired a couple of friends, assessed their trading habits and recorded them in one of his myriad databases. Schonfeld still holds in excess of 90% of his firm.
Day trading is a game of leverage. Outfits like Schonfeld's often exercise approximately 10-to-1 buying leverage on the firm's net capital, that being roughly the same as net worth. Day trading companies let their traders use this buying power on an intra-day basis to buy on steep margin, much steeper than they could get from an ordinary retail account at a Merrill Lynch or a Charles Schwab & Co. Day trading firms can escape the usual margin limits as long as they have the capital to cover any potential losses at the end of the day.
Most day trading firms required their customers to put up $25,000 in order to tap into the firm's buying power; traders could keep all their profits and, of course, had to eat the losses. Schonfeld was different: His traders didn't have to ante up. Instead, he distributed his firm's buying power electronically to individual accounts. He would keep between 35% and 40% of their profits, plus fees charged as commissions. Schonfeld would also pick up 100% of any trading losses. Traders hit the screens only after Schonfeld put them through a boot camp of sorts, where they did paper trades and learned how to use the firm's programs. Key program: a filtering tool called Schon-site, which lets traders screen for such variables as volatility, liquidity, industry sector, individual markets and price.
Schonfeld retained complete control of the risk via his computerized system, monitoring every move by his hundreds of captive traders. Since Schonfeld participated in a trader's upside as well as his commission fees,"It was a brilliant, commission-churning business that heavily stacked the odds in favor of the house," says someone who once did business with the firm. Schonfeld also took the hit on losing traders, but those who lost money were shut down quickly. Between 1999 and 2001, Schonfeld says, he paid out $685 million to 1,100 traders who worked for him.
That's tough to verify, given how closely day trading firms hold their numbers. The Securities & Exchange Commission doesn't require them to file quarterly income statements, balance sheets or statements of cash flows, as public companies must. They're obliged only to report their balance sheets once a year; once a month they file net capital reports.
Still, a financial snapshot emerges from Schonfeld Securities, the arm that does trading with Schonfeld's capital. Once the main engine of Schonfeld Group, the securities unit is in decline. Its assets shrank from $2.5 billion on Mar. 31, 2000 to $670 million four years later. Over the same period net capital dropped from $110 million (4.5% of assets) to $24 million (3.6% of assets). Moreover, an income statement for fiscal 2003, perhaps mistakenly filed, notes that the firm lost $25 million on $106 million in revenue. Fishman, the president of Schonfeld Group, predicts brighter days. "We have trading technology in place so that if the market gets healthier," he says, profits will soar.
Fishman says that looking at the securities unit's finances "doesn't paint the whole picture," because the unit now accounts for less than half Schonfeld's $1.3 billion or so in assets and $200 million in revenues. He does concede that the profit margin on the house trading has fallen from 33% in the late 1990s to 10% today. (Meaning: For every $100 made from stock price gains, $90 is eaten up in overhead and fees to trading networks like Archipelago.)
Schonfeld Group has shifted more into commissions, which now account for around 25% of Schonfeld's revenue, up from almost nothing five years ago. That alone won't save the firm, since commission rates have been falling--from $20 per 1,000 shares in the early 1990s to an industry average of $5 today. Schonfeld charges retail customers, who do not work for him but use his systems, $3 to $5. "Used to be that every day was a big money day," says a former day trader at Datek Securities. "Now it's about not losing money, holding on until you can make a little bit of money."
That seems to be Schonfeld's problem. Since 2000 Schonfeld's total revenue has plunged from $600 million to $200 million. Fishman concedes that Schonfeld Group expects to see flat revenues and thinner margins overall this year.
To survive, Schonfeld needs more bodies--traders who can churn stocks and create commissions. That was the impetus behind his most controversial acquisition to date: Heartland Securities, once one of the biggest day trading houses, with 300 traders. At the time of Schonfeld's bid, in January 2003, Heartland was nearing bankruptcy and the SEC had accused its principals of carrying out fraudulent trading practices, first at Datek Securities, and later at Heartland, which took over Datek's business. The complaint alleged that Heartland and some of its executives--including Sheldon Maschler, his son Erik and technology wiz Jeffrey Citron (founder of a private trading system called Island and today head of the Internet telecom firm Vonage)--had devised and used a "fraudulent scheme" to exploit the SOES system for illegal trading. According to the SEC, they covered up the scheme by creating false trading accounts and filing fake reports with regulators. Sheldon Maschler was fined $29.2 million and Citron $22.5 million--among the largest penalties ever levied by the agency against individuals. Schonfeld acquired the distressed company's assets--its traders, computers and software systems. He inherited none of Heartland's legal woes, but Schonfeld brought on several former Heartland executives, including Lee Maschler, Erik's brother.
Whatever its sordid past, Schonfeld wanted Heartland. Nine days after the SEC's complaint, he locked up the assets in a nondisclosure agreement with the Maschlers--which essentially prevented Heartland from seeking bids from anyone else during a two-month period, say the company's creditors. Those creditors also complained that Schonfeld imposed an "egregiously high" breakup fee, equal to 20% of the cash portion of the purchase price, or $300,000; reasonable fees, they argued, ranged from 0.65% to 3%. Over the objections of its creditors, the bankruptcy judge allowed Heartland to sell its assets for $4.2 million, including $2.7 million in assumed debt, to Schonfeld and another firm, Trillium Trading.
Trillium, it turns out, was headed by Lee Maschler, who was also an equity owner of Heartland. That apparent conflict of interest rankled creditors, who felt they couldn't get a fair deal. But "at a certain point," says the creditors' attorney, Stuart Komrower in Hackensack, N.J., "people just wanted to put the deal behind them." Schonfeld took a 50% equity stake in Trillium; Lee Maschler became a principal of Schonfeld Group. The deal "was a good business opportunity to grow the firm," says Schonfeld. But why associate himself with a company tainted by fraud? "Good question," says Fishman.
-- We should have stated that Lee Maschler is a registered representative of Schonfeld & Co. LLC, not a principal of Schonfeld Group Holdings. Our chart accompanying the story should have noted that Schonfeld Group trades an average of 135 million shares daily, not that it clears 135 million trades a day. As reported, Schonfeld Securities, the company's largest unit, lost $25 million in 2003. --EDS
Re: The Miscreants’ Global Bust-Out Chapter 1 -
Post by sandi66 on May 21, 2011, 6:14am
Omar Amanat - MPAC Foundation Media Awards
Muslim Public Affairs Council Foundation Executive Producer of Kite Runner, The Visitor, Charlie Wilson's War, Darfur Now, Omar Amanat with 17th Annual Media Awards Recognizing Voices of Courage & Conscience.
From the DeepCapture Chapter 7 write up...
Is Mr. Amanat a financial terrorist? I know he is (like most of the other characters mentioned so far) part of the Milken network, and that’s all I need to know to suspect that he is a threat to the national security of our “miserable house.” Decide for yourself.
Omar S. Amanat is an American who has worked as an entrepreneur in the online trading industry and in the media industry.
After graduating from the University of Pennsylvania's business school in 1995, he worked for a year at the online trading firm Datek Online. Afterward, he moved to Texas and partnered with Philip Berber on a prototype online trading system called Cyber-Block, before moving to New York to start Tradescape. In 2002, E*Trade acquired Tradescape for $276 million. As a result of his work in the online trading industry, he was named one of Wall Street's "Top Ten Most Influential Technologists".
Amanat worked as a spokesman for Bridges TV before its debut, where he advocated for Muslims to undo negative misperceptions of themselves in media. He co-founded a film fund and production company affiliated with the United Nations called the Alliance of Civilizations Media Fund. Amanat commissioned Harvard Medical School to research the physiological effects on minorities who watch images of violence being perpetrated on fellow minorities.
He sits on the Board of Malaria No More and has been an executive producer of films including The Visitor, Darfur Now, Smart People, and The Mysteries of Pittsburgh.
1.^ a b Matthew Goldstein Tradescape Becomes a Contender SmartMoney. March 13, 2000. Accessed February 9, 2011.
2.^ a b c Business Week http://investing.businessweek.com/resear....Solutions%20Inc
3.^ "E*Trade Shareholder Filing: S.E.C 10-Q Quarterly Report" (PDF). shareholder.com. June 30, 2002.
4.^ Jay Tokasz (December 20, 2004). "Muslim TV Network Debuted Amid Litigation". Buffalo News: p. B.3.
5.^ News aljazeerah.info: First American Muslim Television Channel Announced by Bridges Network
6.^ Oprah Winfrey http://www.oprah.com/oprahradio/Global-Philanthropist-Omar-Amanat
7.^ Ten Young Visionaries http://islamicamagazine.com/?p=722
8.^ UN Alliance of Civilizations Research http://www.unaoc.org/repository/thematic_media.pdf
9.^ a b c d http://www.imdb.com/name/nm2713368/