he Miscreants’ Global Bust-Out (Chapter 9): The Collapse of MJK Clearing, a Few Loose Nukes, and a Lot of Self-Destruct CDOs
Posted on 25 May 2011 by Mark Mitchell
It should be clear by now that it is more than plausible that destructive short seller Anthony Elgindy had advance knowledge of the September 11 attacks, just as federal prosecutors claimed.
Either that, or it was a coincidence that Elgindy’s family sponsored the move to the United States of Palestinian Islamic Jihad leader Sami al-Arian, who was also suspected of having advance knowledge of Al Qaeda’s 9-11 atrocity.
It might also have been a coincidence that Elgindy’s brother, Khalid, co-founded the American Muslim Council with Abdurahman Alamoudi, an Al Qaeda operative currently serving a 23 year prison sentence.
In addition, it might have been a coincidence that Elgindy funded Mercy International (later renamed Mercy USA), whose officials provided logistical support to Al Qaeda’s bombings of U.S. embassies in Africa. And it might have been a coincidence that Mercy’s director was a Hamas operative and deputy to the Hamas political chief whose company hosted Elgindy’s private short selling chat site on the internet.
Also, maybe it was a coincidence that Elgindy was in Macedonia, working (in his own words) as an “agent” for an outfit controlled by the Kosovo Liberation Army, which was then being trained by Al Qaeda’s second in command, under the auspices of the IIRO, where Elgindy’s brother was a director.
And it might be a coincidence that the chief commander of the KLA sent a letter thanking Elgindy for flying him to the United States.
Maybe it is yet another coincidence that days prior to September 11, Elgindy told corrupt FBI agent Jeffrey Royer (who was on Elgindy’s payroll) that there was going to be a terrorist attack on September 11.
It could even be a coincidence that on September 10, Elgindy told his Salomon Smith Barney broker that the market was going to lose more than half its value on the following day, September 11. Maybe it was just luck that Elgindy liquidated all of his accounts on September 10.
Of course, that’s a lot of coincidences. And as MIT professor and statistician Josh Tenenbaum once wrote: “some of our greatest feats of scientific discovery depend on coincidences.”
For the scientists, I offer this statistic: One Egyptian fellow named Amr Ibrahim Elgindy, also known as Anthony Elgindy (though he was “Manny Valasco” on the fake passport he used when he tried to flee to Lebanon after he came under investigation for possible connections to Al Qaeda) maimed or destroyed hundreds of American companies, wiping out local communities, and inflicting serious damage to the U.S. economy.
It seems to me that, statistically speaking, Anthony Elgindy was a financial terrorist of the first order.
And there are more data points, more coincidences: For example, Elgindy worked closely with a pack of market manipulators, a great many of whom had ties to jihadis, the Mafia, or rogue states (such as Iran). Most of these market manipulators (see Chapter 8 for details) were, in 2001, trading through Global Securities, a brokerage with ties to the Mafia and Iran.
At least some of these market manipulators also got lucky on September 11, 2001. Among the lucky were Ali Nazerali and his hedge fund partner Yasin al Qadi, both of whom were members of the Elgindy pack.
Just a few weeks before Al Qaeda took down the World Trade Center towers, Nazerali and Yasin al-Qadi listed a company called Imagis on the Toronto stock exchange.
This was good timing because Imagis was ostensibly in the business of selling face recognition technology to law enforcement agencies looking to catch terrorists.
Of course, Yasin al-Qadi was himself a terrorist. In early 2002, the U.S. government labeled Yasin al Qadi a “Specially Desigated Global Terrorist”. In fact, as we have begun to see, Yasin al Qadi was not just a terrorist hedge fund manager. He was Osama bin Laden’s favorite financier.
When 9-11 occurred, Imagis, the anti-terrorism company, became the world’s hottest stock – Nazerali and Osama bin Laden’s favorite financier cashed in. So did their other partners in that deal, such as Ali Kassam and Treyton Thomas.
Ali Kassam is a man of mystery – I don’t know much about him. All I know is he does a lot of business with Ali Nazerali and his brother, Shafiq Nazerali, who also uses the name Shafiq Sultanali Walji.
One of the Nazerali brothers’ deals was a precious metals mining outfit called Even Resources, which merged with Ali Kassam’s Benchmark Technologies in 2001, at which point the Nazeralis and Ali Kassam took Even Resources public and announced that it had a big deal to develop a copper mine with a company called Alujain.
The chairman of Alujain was Prince Nawaf bin Abdul al-Aziz al Saud, who was appointed as the head of Saudi intelligence just days before Al Qaeda’s September 11 attacks. Prince Nawaf’s appointment to be the head of Saudi intelligence was not greeted with enthusiasm in some quarters because he had been an outspoken supporter of the Grand Jihad and was considered to be friendly with Osama bin Laden.
The date of his appointment is, of course, the stuff of conspiracy theories. I don’t see much sense in pondering too many strange coincidences.
But I will say this – it is likely not a coincidence that the head of Saudi intelligence was running scams with the Nazerali brothers.
And make no mistake: Even Resources was a scam. Alujain announced the mining deal as a gift. The announcement caused Even’s stock price to soar in value and the Nazeralis cashed in, but no mine was ever developed.
Meanwhile, it is true that Imagis, the anti-terrorism company, was listed on the Toronto exchange by Ali Nazerali and Osama bin Laden’s favorite financier just weeks before Osama bin Laden attacked New York and Washington. Again, I don’t see much sense in pondering too many strange coincidences, but…well, that’s a damn strange coincidence!
It is also a strange coincidence that Treyton Thomas, who was responsible for promoting Imagis, was married to the same woman as a guy named Norbert Grupe, whose resume (which I have posted at DeepCapture.com) states that he was the CEO of another anti-terrorism company, this one called Innovative American Technology.
Just because Norbert Grupe and Treyton Thomas were both married at the same time to the same person — a woman named Cheryl Stone — does not necessarily mean that Grupe and Thomas are the same person. It could be a strange coincidence. Or it could be some kind of wife-swapping thing.
But it is certainly the case that Mr. Grupe and Mr. Thomas both do a lot of business with the Nazeralis, and they are both associates of the Mogilevich organization, the Russian Mafia outfit that at least tried to sell highly enriched uranium to Al Qaeda.
At any rate, in 2008, Mr. Thomas’s wife’s other husband, Mr. Grupe, was in the Middle East, cutting deals with Sheikh Mo, the ruler of Dubai – the same ruler whose family members were hunting quail with Osama bin Laden soon after Al Qaeda’s 1998 attacks on the U.S. embassies in Africa.
Mr. Grupe was dealing with Sheikh Mo because he is one of the Nazerali brothers’ closest associates, and because the Nazerali brothers are among Sheikh Mo’s closest associates.
The deals that Mrs. Thomas’s other husband, Mr. Grupe, were cutting with Sheikh Mo had to do with an outfit called El Toro Consult, which was (as has since been revealed by European authorities) a massive Ponzi scheme that was being orchestrated by Mr. Grupe (who, come to think of it, probably is the same person as Mr. Thomas).
After El Toro Consult stole people’s money, it laundered the money through Dubai property with the help of Sheikh Mo.
At the time, Mr. Grupe was a convicted felon wanted in the U.S. for grand theft (his mug shot can be viewed at DeepCapture.com). But the leading lights of Dubai – such as the ruler of Dubai, Sheikh Mo (the same Sheikh Mo, recall, who was protecting Mafia and terror kingpin Dawood Ibrahim and Russian Mafia figure Viktor Bout, both tied to Al Qaeda) – had continued to do business with Grupe, as evidenced by emails that Deep Capture has obtained (by means we consider to be reasonably legal).
In one email, sent to El Toro Consult, a business partner informs Mr. Grupe that he has “just finished a meeting with Sire Contracting and Rak Bank.” RAK Bank is the largest financial institution in Ras Al Khaimah, which is part of the United Arab Emirates.
In 2003, a soft coup deposed the Ras Al Khaimah crown prince (who was deemed to be overly friendly with the West) and replaced him with royals aligned with the regime in Iran. The Iran loyalists also removed the crown prince from his post as chairman of RAK Bank and replaced him with Iranian proxies who do business with people like Mr. Grupe of the Mogilevich organization.
In the email, Grupe’s business partner adds that he will carry forth the discussion with RAK Bank and Sire Contracting, and that Sheikh Mo himself “will be at the Monday meeting.”
Sire Contracting is a company sponsored by Sheikh Mo. It is in the construction business, but it diversified (as did Norbert Grupe and Sheikh Mo’s confidants, Ali Nazerali and “Specially Designated Global Terrorist” Yasin al Qadi) into a new line of business, investing in a security company called 4C Controls, Inc, which is ostensibly focused on helping law enforcement catch terrorists.
You might recall that Jonathan Curshen (former trading partner of Anthony Elgindy) hosted meetings in Costa Rica, where he and Ali Nazerali (along with Michael Milken and others in their network) discussed ways in which to destroy some big companies (big companies that were, as we shall see, destroyed with help from people who attended those meetings in Costa Rica).
You might also recall that Curshen was involved with Skyway Communications, an outfit that was partnered with Titan Corp, which also got into the anti-terrorism business shortly before 9-11. That, too, could be a strange coincidence, and needless to say, none of these coincidences have been investigated by law enforcement.
However, as we know, the FBI did begin investigating Anthony Elgindy (trading partner of Curshen, Nazerali and friends) soon after Elgindy’s broker reported his suspicions that Elgindy had advance knowledge of the September 11 attacks.
Meanwhile, in the days and weeks following the Al Qaeda attacks, several things occurred. First, Anthony Elgindy helped destroy the largest clearing firm in the United States, dealing a serious blow to the American economy.
Second, Elgindy told the FBI that it was not he, but some of Michael Milken’s other close associates, who had advance knowledge of the 9-11 attacks.
And third, Elgindy threatened and tried to extort a fellow who had access to nuclear bombs.
I will address these events in order of their importance.
First, the nuclear bombs.
Some weeks after the 9-11 attacks, Elgindy asked the corrupt FBI agent Jeffrey Royer to check the FBI computers for dirt on a guy named Paul Brown, who was the head of a company called Nuclear Solutions.
As prosecutors noted in the Elgindy trial, Royer ran the check and passed information on Brown to another corrupt FBI agent. The second corrupt FBI agent, in turn, passed the information to Elgindy, who, in the words of the prosecutors, used the information “to begin his extortion…”
The prosecutors did not reveal what Elgindy was trying to extort from Paul Brown. It is possible that he was only after information that he would use to manipulate Nuclear Solutions’ stock price.
However, according to prosecutors, Elgindy did not just extort information, he also “threatened” Paul Brown. And given Elgindy’s ties to the Grand Jihad and the Russian Mafia, Nuclear Solutions was an interesting target.
In fact, it was a company that had, some months previously, received a contract from the Los Alamos nuclear weapons facility. And in fulfilling that contract, Nuclear Solutions was gaining access to decommissioned nuclear bombs.
Nuclear Solutions was going to destroy the nuclear bombs and convert the radioactive waste into clean energy. It is not clear that the bombs were converted into clean energy, but it might be significant that after the corrupt FBI agent ran his computer check, the other FBI agent seems to have given Elgindy information that Paul Brown was suspected of committing a crime.
At least, Elgindy stated (perhaps exaggerating a bit, as Elgindy tended to do) on his private website that he knew that Brown was a “convicted felon”.
To this date, it remains unclear what (if any) crime Brown committed, but it seems worth noting that soon after Nuclear Solutions got its first contract, Los Alamos was embroiled in multiple scandals involving the disappearance of nuclear secrets and equipment used in the production of nuclear weapons.
Leaving aside the important question of whether Paul Brown was in the FBI’s computers because he had something to do with the vanishing nuclear secrets, it is a matter of natural concern that Anthony Elgindy was in this man’s office, issuing any sort of threat.
That is, it is a matter of concern that a guy with ties to the Grand Jihad and the Russian Mafia was threatening a man who might be a convicted felon, and certainly had access to radioactive materials, and might have had his hands on nuclear weapons technology that had vanished and was unaccounted for. That just does not sound like a stable situation to me. Call me madcap.
At any rate, according to court documents, on the day after Elgindy asked the corrupt FBI agents to check the FBI’s computers for dirt on Paul Brown (the guy who was supposed to dispose of the nuclear bombs), Elgindy asked the corrupt FBI agents to run a computer check on his friend Adnan Khashoggi, the famous, shady arms dealer.
It seemed that Elgindy wanted to know whether the FBI was watching Khashoggi.
I wish I could ask Brown (the guy with the nukes) about all this, but a few weeks after Elgindy was threatening him, Brown died in a car accident. The media reported that he had lost control of his car on icy streets in rural New York.
After this tragedy, Elgindy posted a message on his private internet chat site, notifying his associates that Brown was now: “worm food.”
* * * * * * * *
It is unclear that Elgindy’s request for FBI information on Khashoggi had anything to do with the nuclear bombs. What is clear is that some weeks earlier – indeed, just days before the September 11 attacks – Elgindy and Khashoggi began to perpetrate a scheme that managed, a few days later, to do considerable damage to the U.S. economy.
In the summer of 2001, Khashoggi was running a little California telemarketing company called GenesisIntermedia, which was, in fact, a scam with little in the way of real business. It was unusual for Khashoggi to be involved in such a small-time scam, considering that nobody was more big-time than Khashoggi.
As I have mentioned, Khashoggi had been the single richest man in the world and a central figure in some of history’s biggest scandals – BCCI, Iran-Contra, the collapse of Bangkok Bank of Commerce, just to name a few.
Khashoggi, as we know, is a close associate of Libyan dictator Muammar Qaddafi (for whom he used to work as a mediator). We can assume that the Elgindy family was also acquainted with Qaddafi, since Abdurahman Alamoudi, the Al Qaeda operative who founded the American Muslim Council with Khalid Elgindy, was arrested at Heathrow when customs officials found, stuffed in a secret compartment of his suitcase, $350,000 in cash that he had received from Qaddafi.
Larry Kolb, Khashoggi’s son-in-law, has written that Dawood Ibrahim, the Al Qaeda money man who was then helping the Pakistani nuclear scientist A.Q. Khan (“Father of the Islamic Bomb”) proliferate nuclear weapons technology to Libya and Iran, once gave Khashoggi a $1 million check simply because Ibrahim was honored to meet Khashoggi.
According to Kolb, Khashoggi told him (Kolb) that he (Khashoggi) did not know who Ibrahim was, and he did not cash the check. Kolb says that after Ibrahim wrote the $1 million check, Kolb escorted Ibrahim to nightclubs in New York, but never saw him again. Kolb seems to be an honest guy, but it is possible that Khashoggi did not tell him the full story.
In any case, Khashoggi was on close terms with AQ Khan. He also had brotherly relations with the regime in Iran. That’s why he was the key figure in the Iran-Contra scandal, which saw Khashoggi scamming the U.S. with a bogus deal under which the Iranian regime was supposed to secure the release of American hostages being held by Iran’s proxies, Hezbollah and Palestinian Islamic Jihad (a leader of which had just been settled in the United States by the Elgindy family).
We can hope Elgindy’s brush with nuclear bombs had nothing to do with Elgindy’s jihadi associates, or with Khashoggi’s vast arms dealing empire, a principal client of which is Iran.
At any rate, the SEC determined that GenesisIntermedia was (what else?) a small-time “pump and dump” fraud. And perhaps owing to Khashoggi’s relationships with the American elite (which tends to swoon for Saudi billionaires, no matter how sketchy they are), Khashoggi was never subjected to any punishment other than a small fine.
Which is a shame, because GenesisIntermedia was, in fact, much more than a small-time fraud. It was a massive fraud that caused the destruction of the largest clearing firm in America, thereby necessitating the biggest payout in the history of the Securities Investor Protection Corporation.
Like many such cataclysms, this disaster was orchestrated with help from others in the Milken network. Khashoggi himself had, of course, been a close associate of Milken since the 1980s, when he was involved (along with Ali Nazerali and his relatives) in BCCI and the Saudi intelligence outfit Capcom, which conducted trading (much of it manipulative) worth $90 billion (an astounding sum at that time) through Milken’s shop at Drexel Burnham.
Anthony Elgindy, as we have seen, was also a close associate of Milken, and was caught destroying at least 20 companies with the son of Edward Thorp, whose hedge fund and brokerage operation had been perhaps the most important component of Milken’s stock manipulation network in the 1980s.
But in orchestrating the destruction of America’s largest clearing firm, Elgindy and Khashoggi had the assistance of other Milken cronies, including a woman named Valerie Red Horse, who had (in the 1980s) been Milken’s office manager at Drexel Burnham.
Others involved in the scheme included Curshen client and Hamas-supporter Ramy al-Batrawi; and Rafi Khan, the son of the Pakistani diplomat (or ISI spy, depending on whom you ask). They, recall, were among the pack who traded through Global Securities.
Rafi Khan, meanwhile, was a pricipal at JB Oxford, the Mafia brokerage founded by Ali Nazerali’s BCCI partner Irving Kott.
Khan was responsible for promoting GenesisIntermedia’s stock during the summer of 2001. Ramy al-Batrawi ran the company’s day-to-day operations. And Elgindy was paid by Khashoggi to naked short sell GenesisIntermedia’s stock, and to trash the company on his private internet chat site (the one hosted by Hamas).
Why would Khashoggi pay someone to naked short sell his own company? That is a good question, and in the answer, we will see the dangers that naked short selling poses to the financial system. We will see how loopholes in the clearing and settlement system make it possible for one little company to bring down America’s largest clearing firm.
The scheme worked like this: Khashoggi and al-Batrawi lent GenesisIntermedia’s stock to Native Nations, a small brokerage owned by Valerie Red Horse, the woman who had been Milken’s office manager at Drexel.
Native Nations, in turn, lent the shares to America’s largest clearing firm, MJK Clearing, where Khashoggi and Red Horse had a cooperative ally named Thomas Brooks, who was later charged by the SEC for helping to create the conditions for MJK’s demise.
Thanks to Brooks’ cooperation, shares in Khashoggi’s little telemarketing company (GenesisIntermedia) now represented a quarter of the assets of MJK Clearing – which, again, was the largest clearing brokerage in America.
Moreover, Brooks had not only paid Native Nations more than $130 million in collateral for those shares, but he had also taken the outrageously strange step of agreeing that Native Nations would not have to pay back any of that collateral if the price of the stock were to decline.
Typically a brokerage that lends shares to another brokerage receives collateral from the borrowing brokerage, but agrees to pay back to the borrowing brokerage “marks”, or a percentage of the collateral, with the percentage depending on how far the stock price falls.
After receiving the GenesisIntermedia shares, MJK Clearing lent them out to other brokerages, most notably Wedbush Morgan (which referred most of its trades to Bernie Madoff’s criminal naked short selling brokerage).
At Wedbush Morgan, the GenesisIntermedia stock was handled by a fellow named Kevin Beadles, who used to work with Khashoggi partner Rafi Khan at JB Oxford, the Mafia brokerage controlled by Nazerali’s BCCI partner Irving Kott.
MJK’s deal with Wedbush and other brokerages to which it lent shares was more typical. MJK would have to pay “marks”, so if the stock price dropped, MJK would have to top up its collateral to Wedbush and the other brokerages, but Native Nations would owe nothing to MJK.
Having established this happy state of affairs, Khashoggi gave the go ahead to Elgindy (who, remember, had been paid by Khashoggi), and Elgindy, along with others in his pack (including the traders who had passwords to his private internet chat site), unleashed a wave of naked short selling, flooding the market with phantom GenesisIntermedia shares.
As a result, of course, GenesisIntermedia’s stock price crashed.
The clueless SEC, of course, said the drop in the stock price was probably the result of the 9-11 attacks, but given that GenesisIntermedia’s stock began to nosedive on September 7 (the Friday before Tuesday, September 11); and given that it lost nearly half its value (far more than was lost by the overall market) in the week after the Al Qaeda attacks; and given that it then dropped to zero, it is a lively possibility that the naked short selling contributed to the death spiral.
And the death spiral left MJK Clearing in the lurch. MJK had to pay out its marks to Wedbush and other brokerages, but got nothing from Native Nations, which, a week after the 9-11 attacks, conveniently went out of business, declaring bankruptcy.
Let me summarize in straightforward English: Native Nations gave $130 million worth of stock to MJK Clearing, and essentially borrowed from MJK $130 million against it, but with a special deal, whereby if the value of the stock dropped, Native Nations did not have to top up its collateral (that is, pay back any of the $130 million it had received). MJK then loaned this “stock” to Wedbush Morgan and others, but without the special deal.
Elgindy then naked short sold the stock from one end while Khasshogi and Ramy al-Batrawi bemoaned Genesis’s imminent demise from the other. The stock price crashed so Wedbush Morgan needed to be topped up by MJK Clearing, who could not do it.
Meanwhile, one step upstream, Native Nations declared bankruptcy. A whole lot of money had been looted from the system, and the companies through which it had been looted had blown up, so no one could tell where it went.
It seemed doubtful that Native Nations was actually bankrupt because it seemed to have been set up specifically to lend GenesisIntermedia’s shares, and it still had MJK’s $130 million.
As I mentioned, the SEC, rather amazingly, never deemed this scheme to be anything more than a simple “pump and dump” fraud. GenesisIntermedia was certaintly pumped by Rafi Khan in the summer of 2001, but no regulator seems to have asked why Khashoggi would have suddenly decided in early September to destroy his own company(GenesisIntermedia) with help from Elgindy.
And while there is no direct evidence that Khashoggi paid off the cooperative employee of MJK, one has to wonder how in the world Native Nations was able to wangle that strange agreement not to pay MJK “marks’ – and why Native Nations conveniently went out of business, ensuring that none of that $130 million would ever be returned to MJK. (Without the bankruptcy, MJK could have received at least a partial refund by buying Genesis shares on the open market before they went to zero, and returning them to Native Nations).
Red Horse says that she went bankrupt because she had paid Khashoggi a similar amount – around $130 million — in collateral for the shares that Khashoggi originally lent to her, and he didn’t give the collateral back. If that is the case, why did she not press charges? And why was Khashoggi not prosecuted for grand theft? My best bet is that Red Horse kept that $130 million as payment for her participation in this scheme.
And, without a doubt, one way or another, someone involved with GenesisIntermedia wangled that deal that made the survival of the largest clearing firm in America entirely dependent on the stock price of one little company (GenesisIntermedia) that didn’t even have a viable product.
Khashoggi, Elgindy and Valerie Red Horse had structured things so that if they wiped out Genesis (a tiny firm), then MJK (the largest clearing firm in the US) would go down with it.
This is a bit complicated, so let me repeat the key facts: A cleverly constructed financial hand grenade (GenesisIntermedia) was inserted into the heart of the largest clearing firm in America (MJK). Then the pin was pulled on September 7, 2001 (the Friday before 9-11).
The scheme was conducted by Khashoggi (rogue Saudi arms dealer with ties to Iran and Arab intelligence agencies); Ramy al-Batrawi (funder of Hamas); Rafi Khan (funder of Hamas, and son of a Pakistani spy or diplomat); and Valerie Red Horse (former office manager for Milken, who once conducted $90 billion in largely manipulative trading for Capcom, the outfit tied to Khashoggi, Saudi intelligence, and Ali Nazerali, partner of Osama bin Laden’s favorite financier).
Also key to the scheme, Amr Ibrahim Elgindy, known as Anthony, an Egyptian who was 1) a key figure among a pack of destructive short sellers; 2) tied directly to the leaders of Palestinian Islamic Jihad, Hamas, and the Kosovo Liberation Army; and 3) the brother of Khalid Elgindy, who co-founded the Muslim American Council with a convicted Al Qaeda operative named Abdurahman Alamoudi while serving as a board member of IIRO, the overseas offices of which were Al Qaeda fronts.
The IIRO office in the Phillippines was managed by Osama bin Laden’s brother in law, a top Al Qaeda operative who trained the Abu Sayyaff terrorist group. The IIRO offices in Kosovo and Macedonia served as cover for Ayman al Zawahiri, who trained the Kosovo Liberation Army and is now Osama bin Laden’s likely successor as the leader of Al Qaeda. Zawahiri’s brother was a top official, along with Anthony Elgindy’s brother at the IIRO.
Elgindy and Khashoggi and their crowd were able to manufacture the MJK Clearing disaster because there was nothing preventing brokerages from lending out infinite numbers of shares. Not only was Native Nations loaning more shares to MJK than actually existed (thereby increasing MJK’s collateral; and thereby ensuring that those shares could never be delivered, or settled, once Native went bankrupt), but Wedbush (through Madoff’s operation) was also selling more shares than actually existed on the orders of its naked short selling clients.
Without strict rules accounting for the number of shares in circulation, and rules ensuring that each share sold is immediately delivered, it is remarkably easy to create a death spiral in a little company. And with all the excess lending of shares, one death spiral can knock out one of the biggest brokerages in the nation.
Why would Khashoggi and Elgindy want America’s biggest clearing firm to destruct just days after the September 11 attacks? It is possible that the scheme was nothing more than a monumentally brazen theft, and Khashoggi, who is worth many billions of dollars, simply wanted another few million in the bank. Maybe he needed one more private airplane.
However, I strongly suggest that we view this at least as a scenario showing how an act of financial terrorism might play out. The fact that the scheme played out in the days immediately before and after 9-11 (an event predicted by Elgindy), and the fact that it knocked out the nation’s largest clearing firm, lends credibility to the notion that this was part of a combination of punches being thrown against the United States.
It is, perhaps, worth recalling that at this same time in September 2001, Irfan Amanat, who is tied to the same Hamas and Palestinian Islamic Jihad operatives who were on such close terms with Elgindy, used his RLevi2 computer program to unleash a massively destructive attack on the overall markets.
* * * * * * * * *
Elgindy was ultimately sentenced to 11 years in prison on charges of market manipulation and bribing FBI agents (GenesisIntermedia did not figure in his charges). But before he was sentenced, and before the Russian Mafia chopped off his finger, Elgindy seemed willing to cooperate with authorities.
By this time he knew that he was suspected of having advance knowledge of the September 11 attacks, and he was telling the FBI that its suspicions about him were wrong. However, he was also suggesting that he knew who did have advance knowledge of Al Qaeda’s plans.
As is revealed in court documents, Elgindy told the FBI that to understand who had such knowledge, the bureau should examine trading in the stock of a Real Estate Investment Trust (REIT) called Vornado Realty Trust.
Most likely, Elgindy was referring to the fact that two weeks before the 9-11 attacks, Vornado, a public company whose stock was closely held by a man named Steven Roth, had hastily issued around $150 million in new shares.
Of course, Elgindy is not the most reliable person in the world. It is entirely possible that Vornado’s stock issuance had nothing to do with 9-11, and that Elgindy was merely trying to distract the FBI from investigating his own depredations.
It is, indeed, strange that Elgindy could say that he had no idea about the imminent terrorist attacks, and at the same time say that he was aware of people who did know.
In any case, it seems to me that all evidence suggests that Elgindy knew what Al Qaeda was planning. And though we cannot take Elgindy’s word that Vornado and Steven Roth had advance knowledge, we can guess with some degree of confidence that Elgindy told people (like his Salomon broker, for example) that something big was coming.
And I will say this – Steven Roth, who is one of Michael Milken’s closest associates, had really good timing.
Not only did Steven Roth sell all those shares in August 2001, but Steven Roth partially owned and served as an investment advisor to Imagis, the anti-terrorism company that “Specially Designated Global Terrorist” Yasin al Qadi (Osama bin Laden’s favorite financier) and his pal Ali Nazerali listed on the Toronto stock exchange right before the 9-11 attacks.
Imagis did not announce Roth’s involvement until after the attacks, but he invested on time. The attacks made Imagis the hottest stock on the planet – and Roth (and his terrorist associate) made a bundle.
* ** * * * * *
Ack…I should have paid attention to what that former spy told me in 2006. It wasn’t just that he told me that Michael Milken and some of his closest associates were planning to take down some big companies, and that this could have implications for the health of the U.S. economy.
It wasn’t just that he told me that these people were having secret meetings in Costa Rica – meetings I now know were hosted by one of Anthony Elgindy’s closest associates, Jonathan Curshen.
It wasn’t just that – it was that the former spy gave me some documents and said that these documents were important to understanding the Milken network’s methods.
I did not take a close look at those documents until it was too late, but when I did take a look at them, I saw that they suggested that members of the Milken network had for the past few years focused much of their energies on buying large blocks of shares in real estate companies, especially so-called Real Estate Investment Trusts, or REITs.
After buying the shares in the REITs, the Milken cronies would then flip the stock amongst each other to manipulate the price. Meanwhile, they would threaten and harass management of the REITs, load the REITs with debt, loot the money, and get the REITs to issue new stock. Sometimes, they would seek to destroy the REITs, no doubt short selling the company on the way down.
This fit the pattern of the Mafia-style “bust-outs” that I have described. As one example, the former spy noted the case of a REIT called Hallwood Realty. In 2000, Hallwood’s management had filed a lawsuit arguing that a pack of closely affiliated investors had secretly sought to gain control over the company in order to loot its cash and manipulate its stock.
The former spy believed that Milken himself was involved in this scheme (the spy was almost certainly right about that), but the lawsuit had not named Milken. Instead, it had named some of Milken’s closest associates – most notably, hedge fund manager William Ackman and Steven Roth, owner of Vornado Realty Trust, the outfit that sold all those shares before the 9-11 attacks.
At the time of the Hallwood Realty lawsuit in 2000, Ackman ran a hedge fund called Gotham Partners. The largest investors in Gotham were Dirk Ziff, who runs a hedge fund called Och-Ziff Capital Management; Martin Peretz, who is best known as the former owner of the New Republic Magazine; and another Milken crony named Andrew Farkas.
Dirk Ziff is one of the few dozen people who are among Milken’s closest associates. SEC filings show that Ziff’s hedge fund regularly trades in league with Milken’s other closest associates, including SAC Capital’s Steve Cohen (the guy who, in the 1980s, helped run the Mafia brokerage Gruntal Securities and was investigated by the SEC for trading on inside information given to him by Milken’s shop at Drexel; and who, as I write in 2011, is the principal target of the FBI’s largest-ever investigation into insider trading).
In 2010, the creditors of Lehman Brothers filed a lawsuit against Ziff’s hedge fund, along with SAC Capital and a hedge fund called Citadel, alleging that the three hedge funds had engaged in manipulative short selling that contributed to Lehman’s collapse in 2008.
They weren’t the only ones who were supsect. Lines Overseas Management, the outfit tied to Ali Nazerali and Ivan Boesky (crony of the regime in Iran, Russian Mafia associate, and Milken’s most famous criminal co-conspirator), was also pounding Lehman. So was the above-mentioned Ackman (who had since shuttered Gotham and was running a new hedge fund). Other short sellers who attacked Lehman will feature prominently in upcoming chapters.
In the 1980s, Peretz (the other Gotham investor) had been a big investor in the hedge fund of Michael Steinhardt (son of the biggest Mafia fence in America, self-admitted funnel for Genovese Mob family money into Wall Street).
Peretz also conducted a significant amount of business with Steinhardt’s other big investors, Marc Rich (the guy tied to the Russian Mafia and indicted for illegal trading with Iran), and the above-mentioned Ivan Boesky. When Boesky was indicted, Peretz vigorously defended him in the New Republic.
Ackman (the guy who was managing Gotham in 2000) now runs Pershing Square, a hedge fund best known for raiding companies in league with Nelson Peltz, who, in the 1980s, was a key figure (along with a select number of Mafia-tied financiers whom I introduced earlier) in Milken’s junk bond merry-go-round.
At the time in 2006 when I first met the former spy, the above-mentioned Farkas was a co-owner of CharterMac, which was then one of the largest mortgage companies in America. Another co-owner of CharterMac was Ivan Boesky’s relative, Stuart Boesky. Stuart might, in fact, be Ivan Boesky’s brother (they bear a striking resemblance), but he refused to confirm one way or another when I contacted him.
Stuart Boesky and Andrew Farkas were not only owners of CharterMac, which generated mountains of bad mortgages for the self-destruct CDOs that would collapse the mortgage and property markets in 2007, but they were also principals at Tricadia, a firm that worked with short sellers in the Milken network to create and market those self-destruct CDOs to, among others, Bear Stearns and other now-deceased banks.
Indeed, Stuart Boesky’s firm, Tricadia, was one of the single biggest generators of self-destruct CDOs. And the firm marketed nothing else. Just CDOs that were deliberately designed to self-destruct.
So to summarize: a single network of close associates contained the financiers who mass produced the leverage (sub-prime mortgages); and packaged up the leverage (mortgage backed securities); and generated the derivatives on the mass produced packages of leverage (synthetic CDOs). And that same network contains the financiers who bet (be selling short) that it was all going to topple.
That is what a post-modern bust-out looks like, writ large.
Stuart Boesky and Farkas originally ventured into the real estate business with finance from Steven Roth, the fellow who owned Vornado Realty Trust (and also owned part of the anti-terrorism company listed on the Toronto exchange by “Specially Designated Global Terrorist” Yasin al Qadi and Ali Nazerali).
In 2006, that former spy said the Milken network’s plans to destroy big companies had something to do with mortgages, collateralized debt obligations, and REITs. He specifically mentioned Tricadia and Vornado Realty Trust, the outfit controlled by Steven Roth (the same Vornado named by Elgindy when he started cooperating with the FBI’s 9-11 investigation).
The former spy wasn’t completely clear on how it was all supposed to work, but by 2010, equipped with the above information, and having spent two years investigating the financial crisis, I was beginning to see how it worked, and I was beginning to understand who some of the key players were.
A number of these players (for example, Vornado’s Steven Roth, and “Specially Designated Global Terrorist” Yasin al Qadi’s other partner, Ali Nazerali) were among the people who had met with Milken and Curshen in Costa Rica.
Also at those meetings, recall, was Kevin Ingram, the former head of the Goldman Sachs mortgage-backed securities desk, who had earlier been caught laundering money for an Egyptian arms dealer who was suspected of having ties to Al Qaeda and a Pakistani shopping for nuclear weapons components.
By the fall of 2010, I knew that Ingram had helped mastermind the self-destruct CDO scam. I knew that the Milken network was deeply tied to the Mafia, rogue states, and some jihadi financiers. I was also making headway with Zuhair Karam, the jihadi at Tuco Trading who seemed to have knowledge about a certain Iranian who might have helped take down Bear Stearns.
But I had yet to fully understand the role of REITs such as Vornado Realty Trust. And I still had much more to learn about the jihadi-Mafia nexus, and what this nexus had to do with mortgages, CDOs, synthetic derivatives, manipulative short selling, and the biggest brokerage in America.
That is, I had yet to learn all I needed to know about what the jihadi-Mafia nexus, with the possible assist of some rogue states, had to do with the financial crisis of 2008.
In upcoming chapters, I will tell you what else I learned about 2008 because if the U.S. government doesn’t get its act together, there will be another crisis, and this one will be much worse.