Saturday, October 20, 2012

The Miscreants’ Global Bust-Out (Chapter 14): How the Russian Mafia Captured the DTCC — and the American Financial System

The Miscreants’ Global Bust-Out (Chapter 14): How the Russian Mafia Captured the DTCC — and the American Financial System

Posted on 09 June 2011 by Mark Mitchell 

At the beginning of this series I mentioned a report commissioned in 2009 by the Department of Defense Irregular Warfare Support Program. That report stated that there was clear evidence that manipulative short selling had contributed to the financial crisis of 2008.

The evidence, according to the report, included not only the SEC’s woefully incomplete “failures to deliver” data, but also data that suggested that massive volumes of naked short selling had likely been processed through two relatively obscure brokerages, which the authors of the report left unnamed.

One of those two brokerages, I can now report, was Penson Financial, the outfit that that had been identified in 2006 by the Nazerali brothers (hedge fund partners of Yasin al Qadi, Osama bin Laden’s favorite financier), the Russian Mafia, and others in their crowd.

The other brokerage was an outfit in California called Wedbush Morgan. As for the nature of Wedbush’s operation, it is probably not a coincidence that Wedbush referred much of its trading to Bernie Madoff’s criminal brokerage, which (we have seen) was probably covering up its naked short selling liabilities with money fed to Madoff from a cast of financial operators, most with ties to organized crime, some with ties to Russia and (in at least one case) to jihadi terrorist groups.

Penson Financial and Wedbush were first identified by a Wall Street veteran who had collected reams of data on the brokerages’ trading. While investigators were preparing their report for the Department of Defense Irregular Warfare Support Program, they asked to see this data, and determined that it was highly significant.

Although the report’s authors did not publish all that data, Deep Capture has reviewed it closely, and it is quite interesting.

For starters, the data shows that as late as 2006, only moderate volumes went through Penson and Wedbush. But those volumes skyrocketed in 2007, and increased in 2008.

By February 2008, Penson Financial had suddenly become the largest brokerage in the world (by volume). Wedbush Morgan had become the second largest brokerage.

In September 2008 , the month of the financial collapse, Penson and Wedbush traded 23.5 billion shares – nearly twice the volume of their next largest competitor, Goldman Sachs, which traded a mere 12.5 billion shares.

Moreover, the data suggests that most of the massive volume that went through Penson and Wedbush was targeted at the pillars of the American economy – especially the big financial institutions that wobbled or toppled in 2008.

In addition, the sudden increase in volume traded through Wedbush and Penson that year did not correspond with a decrease in volume at other brokerages. That is, traders did not merely shift their business to Penson and Wedbush in the normal course of affairs.

Rather, the numbers suggest that somebody identified these two brokerages and ramped up new volume targeted at Bear Stearns, Lehman Brothers, and a select number of other major financial institutions whose stock prices went into death spirals in 2008, leading to the worst financial crisis since the Great Depression.

And, as the authors of the report for the Defense Department noted, there are good reasons to believe that this volume was illegal, manipulative short selling, perhaps generated by high frequency trading programs.

One reason to believe this is that both Penson and Wedbush are eminently dubious enterprises. These two brokerages have been sanctioned for just about every form of miscreancy — market manipulation, sales of unregistered securities, wash trades (which often go hand-in-hand with naked short selling), and violations of anti-fraud provisions of the federal securities laws.

They have also been sanctioned for violations of a myriad of short selling rules, and were caught ignoring the SEC’s 2008 “Emergency Order” that temporarily cracked down on all forms of naked short selling of stock in America’s major financial institutions.

As the Wall Street veteran noted in the report he supplied to the investigators hired by the Defense Department, there are many other reasons to be wary of these two brokerages. Among them is the fact that both firms use multiple market making symbols when they conduct their trading.

Penson and Wedbush have a total of 76 market making symbols or “identities.” By contrast, Citigroup has only six. Other top brokerages have even fewer.

It is a reasonable assumption that the brokerages had so many market making symbols because they wanted to disguise the origins of their trading.

This conclusion is supported by the fact that both firms used multiple trading platforms, which would require investigators to trace the trading back through a maze of other brokerages.

Meanwhile, it was Penson that pioneered so-called “sponsored access”, which allows traders to bypass stock exchanges and gain direct access to the markets without anyone knowing who transacted the trades. As I have mentioned, experts (including some that gave testimony to Congress) say that “sponsored access” (and the similar service known as “naked access”) is one of the more blatant cracks in the system that can be exploited by financial terrorists.

And it is certainly the case that Penson Financial has made the United States vulnerable to financial terrorism.

In 2009, Penson was fined nearly $500,000 for failing to maintain mechanisms that are mandated by the government to prevent money laundering and market manipulation by terrorists and organized crime. Which will not seem surprising once you know more about Penson and its clients.

* * * * * * * *

One of Penson’s clients was Tuco Trading, the little, unregistered brokerage in Chicago that employed the jihadi Zuhair Karam, and traded for a number of disturbing accounts, many of them based overseas.

By the fall of 2010, for example, I had confirmed the identities of the people in Russia who had set up the Orange Diviner account at Tuco. As noted in earlier chapters of this story, most of them were the top henchmen of Roman Abramovich, who is considered by many to be Russian prime minister Vladimir Putin’s right-hand man.

Another person behind the Orange Diviner account is now “head of international” for a Moscow brokerage (BKS) that is run by the former head of Alfa Bank, which is financing Iran’s nuclear program. And one Orange Diviner trader was a top henchman of Russian Mafia boss Semion Mogilevich. His name was Sergei Maximov and he once helped run YBM Magnex, implicated in the 1999 Russian goverment and Mafia market manipulation scandal that saw billions laundered into the Bank of New York.

In the fall of 2010, I also knew that another account at Tuco had been set up by Warren Sulmasy, former partner of Alain Chalem in Harbor Securities. Chalem, recall, was the Mafia-tied naked short seller who had been murdered execution-style soon after meeting one of Carl Icahn’s first employees, and the day after he had a heated argument with Mikhail Sheferofsky, father of Felix Sater, who had openly declared his intention to kill Chalem.

I will repeat that Felix Sater is a Russian Mafia boss with strong ties to the Russian intelligence services. He escaped jail by telling the U.S. government he was capable of doing arms deals with Al Qaeda. At the time, the U.S. government was hoping someone would buy Osama bin Laden’s Stinger missiles, so that Osama wouldn’t use them to shoot down commercial airliners.

There is no doubt that Felix Sater’s Russian intelligence colleagues (some of whom, we have seen, were allegedly dealing in Afghan heroin supplied by jihadis) had relations with Al Qaeda. But it is doubtful that Felix helped the U.S. government. Certainly, Felix never fulfilled his promise to buy Osama bin Laden’s Stinger missiles, and after escaping jail, he continued his life of crime.

At any rate, it was clear to me in the fall of 2010 that Tuco Trading was associated with this crowd. And I had not forgotten that Felix Sater had once sent a “Message from Russia” to my colleague Patrick Byrne–the message being that the Russians would kill Patrick if he continued to be involved in investigations like this one.

So, right, in the fall of 2010, I had the misfortune to be involved with Patrick in investigations like this one, so I was inquiring as to the origins of two other Tuco Trading accounts (one with 2,000 anonymous subaccounts based in China) that had flooded the U.S. markets with more than 2 billion shares in the month before the 2008 collapse of Bear Stearns.

Because I realize this is a complex story, and because Deep Capture is publishing it as a series over many weeks (meaning that some people might have forgotten or not read earlier chapters), I will abandon all literary pretentions, and instead repeat information from past chapters when it seems relevant in light of new information. Think of this not as a story, but as a collaborative investigation that develops only by reviewing what we already know.

One thing we already know is that most of those 2 billion shares were traded from the 2,000 subaccounts in China, through Tuco, and on to the Lightspeed trading platform, designed by Omar Amanat. And we know that Omar Amanat also founded Datek Securities with finance from Robert Brennan, who was a major figure in the Russian government and Mafia market manipulation scandal that saw billions laundered into the Bank of New York.

Datek’s top trader was Solomon Obstfeld, future hedge fund partner of Martin Schlaff, the former KGB and Stasi agent who has 1) helped launder money for Hamas; 2) bribed Israeli politicians; and 3) done business with Libyan dictator Moammar Qaddaffi and Russian Mafia bosses (such as Michael Chernoy and Mogilevich) who are likely tied to the Russian intelligence services.

Datek’s clearing firm was A.R. Baron, which was also linked to the 1999 scandal that saw the Russian government and Russian Mafia manipulating the U.S. markets and laundering billions into the Bank of New York. In 2001, A.R. Baron was indicted for a massive market manipulation scheme that it conducted in league with the Mafia brokerage D.H. Blair and Felix Sater’s White Rock Partners.

In 1998, the FBI found guns and documents in a locker owned by Felix’s White Rock partner, Eugene Klotsman. These documents linked Felix and his partners to the larger Russian government and Mafia market manipulation and money laundering network and implicated Aleks Paul, a diamond merchant who does business with Ibrahim Bah, who is a Libyan intelligence agent and was, for a time, Al Qaeda’s diamond broker in Africa.

Felix Sater is currently operating an alleged money laundering operation (Bayrock) in partnership with Russian Mafia boss Tamir Sapir, who formerly owned a business that specialized in selling high-tech electronics equipment to KGB operatives in New York. Sapir’s partner in that operation was Semion Kislin, said by the U.S. government to be “member” of Vyacheslav Ivankov’s gang.

Ivankov, known as “Little Japanese” was, in the 1980s, the top boss of the Russian Mafia in the United States. After some time in a U.S. jail (where he shared a cell with Mr. Dvoskin-Lozin-Kozin-Etc., future alleged ring leader of Russian spies), Little Japanese moved back to Russia. In 2009, he was assassinated on a Moscow street after publicly stating that he had been employed by the Russian intelligence services.

Arik Kislin (who, like his uncle, has been named by the U.S. government as being a member of the “Little Japanese” gang) financed a brokerage called Carlin Equities, which was closely tied to Tuco Trading. In addition, Arik Kislin was once a business partner of an Iranian arms dealer and Russian intelligence asset named Babeck Seroush, who was indicted in 1984 for selling military equipment to North Korea.

In the fall of 2010 I had information that another principal at Carlin was a partner in a hedge fund with an Iranian fellow whose family worked at high levels for the Revolutionary Guard in Tehran. One of this Iranian’s closest family members, I had heard, had a long-time relationship with the leader of Palestinian Islamic Jihad and had once employed an Iranian government agent who was trafficking weapons to both Palestinian Islamic Jihad and Hezbollah.

It seemed to me that this Iranian had something to do with those 2 billion shares that were traded through Tuco and onto the Lightspeed trading platform. Those 2 billion shares were, in turn, cleared through Penson Financial, accounting for 20 percent of the volume that had suddenly made Penson the largest brokerage on the planet in February and March, 2008.

I also had information that this Iranian was on close terms with Omar Amanat (designer of the Lightspeed trading platform), and his brother, Irfan. Omar and Irfan Amanat, I knew, had also founded a number of Electronic Communications Networks (Island, Market XT, and many more), which are essentially mini stock exchanges that allow traders to operate in anonymity.

In September 2001, Irfan Amanat and Market XT were caught hammering the markets with massive volumes of wash trades generated by an algorithmic trading program called RLevi2.

Later, Omar Amanat founded Bridges TV, a U.S.-based Islamic television network. In 2009, the CEO of Bridges TV, Muzzammil Hassan, was indicted for chopping of his wife’s head in an apparent honor killing.

Amanat’s partner in Bridges TV was a Hamas operative named Nihad Awad, who had been recorded by the FBI plotting the release from prison of the Blind Sheikh, masterminded the 1993 World Trade Center bombings, famous for his fiery fatwahs commanding the faithful to obliterate the American economy.

In the fall of 2010, I kept calling Zuhair Karam because I suspected that he, too, was on close terms with Omar Amanat. Zuhair confirmed for me that he knew Amanat, though he didn’t yet get into details. He also confirmed that he and his family member (who helps run Chicago’s Bridgeview Mosque) were big supporters of Palestinian Islamic Jihad leader Sami al Arian and Amanat’s partner Nihad Awad.

Zuhair said he thought Sami al-Arian had been wrongly convicted of terrorism charges, as had the Holy Land Foundation (the Hamas front linked to Nihad Awad); Benevolence International (whose officials had contacts with people trying to acquire nukes for Al Qaeda); and other outfits tied to Chicago’s Bridgeview Mosque.

I told Zuhair that I was sympathetic to the jihad, which was true so far as it went. (I agree that the U.S. has become, in the words of the Muslim Brotherhood document used as evidence in the Holy Land trial, something of a “miserable house,” but I am not in favor of nuking it and I think it is a bad idea to destroy the global financial system).

I told Zuhair that I was thinking about converting to Islam, which was true so far as it went. After working on a story like this, one must either sink into despair or adopt a religion, and Islam seems like a good bet these days.

I had a nice talk with Zuhair about the Mahdi, or the Islamic messiah. Then we talked about the Hidden Imam, which is the Shiite interpretation of the Mahdi.

According to Iranian president Mahmoud Ahmedinijad, the Hidden Imam will make his reappearance when the world descends into chaos. And once the Imam returns he will make the world anew, peaceful and wholly Islamic. It is a nice thing to believe.

However, U.S. national security people worry that Ahmedinijad says that some humans (like himself) can hasten the coming of the Hidden Imam, presumably by fomenting the chaos that is the necessary prerequisite to the Imam’s arrival.

Zuhair seemed inclined to believe that the Iranian president was right. I said it certainly seemed to be the case that the world was descending into chaos. Zuhair said there was going to be an apocalypse in Palestine.

I said that Israel was not a democracy, but was a corrupt country whose policies were made by extremists funded by the Russian Mafia. Zuhair said again that there was going to be an apocalypse. I said, “Yep.”

The short of it is, Zuhair and I were getting along well. But when I mentioned that I believed that one of the people who had set up those anonymous accounts in China was an Iranian fellow with ties to the Revolutionary Guard, Palestinian Islamic Jihad, and the Russian Mafia — well, the reader might think that sounds pretty crazy.

But Zuhair didn’t think it was crazy. He just said (again), “Man, I’m just one of the little guys.” And he wouldn’t say more than that.

So I didn’t yet have the confirmation I needed. In fact, I thought maybe it wasn’t true. I thought maybe I was crazy. Later, though, I would get the confirmation that I needed, thanks in part to Zuhair’s cooperation.

But at that time in the fall of 2010, I thought I might not be right about this Iranian guy. So I continued my investigation.

Meanwhile, I confirmed some other things to be true. Some things about Tuco Trading and Penson Financial. But in order for the reader to more fully understand these things, I must describe some events that occurred at the end of 2006.

* * * * * * * *

So it was the end of 2006, and I had ignored the former spy who had told me about the meetings in Costa Rica–meetings where some market manipulators (all with ties to the Mafia) discussed ways in which to destroy some big companies.

I ignored that former spy, so it was only later that I would discover that one of the people at those meetings was Ali Nazerali (hedge fund partner of Yasin al Qadi, Osama bin Laden’s favorite financier).

And it was only later that I would learn that Ali Nazerali and his brother, Shafiq, had held discussions (such as the one at the Cale di Volpe hotel in Sardinia) with the Mogilevich organization about Penson Financial.

After ignoring the former spy, I had met the rabid-dog man, who told me that Mikhael Sheferofsky had argued with Alain Chalem on the night before Chalem’s execution-style death. But I failed to immediately follow up on Sheferofsky’s identity, so I didn’t know that he, like his son Felix Sater, was a Russian Mafia boss tied to the Mogilevich organization, the Nazeralis, and Russian intelligence.

After receiving the Saks Fifth Avenue underpants murder threat (you’ll have to read earlier chapters of this story, if you have not already done so), I was ambushed by the three thugs in a coffee shop. Then the dubious hedge fund Kingsford Capital informed me that it had donated money to Columbia University that would now be used to pay my salary.

That’s when I I lost it. I was a wreck. And so, in December of 2006, I quit, figuring I was out of the journalism game for good.

Soon after, Patrick Byrne received the death threat from Russia (the threat sent by Felix Sater). But Patrick persevered with the investigation, learning of Felix’s ties to the Mogilevich organization (an outfit that stands accused of trying to traffick highly enriched uranium to Al Qaeda).

A year later, Patrick hatched the idea for Deep Capture and now here I am, deep down the rabbit hole, telling you what else was happening while I was convalescing in December, 2006.

One thing happening was that Mufti Al Abbar, the market manipulating colonel in the Libyan army (involved with the Nazerali fund Star Soft) was in North Korea. I don’t know what he was doing in North Korea, but I know for a fact that he was there in December 2006, and people don’t go to North Korea on vacation.

It worries me that some of Al Abbar’s associates (who are more loyal to the United States than they are to their friend) tried to tell U.S. officials that this dangerous market manipulator was in North Korea, but the U.S. officials showed little interest.

In other cases, people in this network have testified against some of Nazerali’s Russian Mafia associates. But the U.S. government let their names leak, and now some of them fear for their lives. One of them, a stock broker and drug trafficker named Paul Combs, was shot in the head as I was preparing this story in 2010. They said it was suicide.

The associates who are still alive seriously mistrust the FBI, which is not good, because maintaining the trust of people who know the underworld up close is the only way to know what the underworld has in store for the United States.

Anyway, Mufti Al Abbar was in North Korea, and Ali Nazerali was in Germany. Nazerali, we know, has done business not only with the Mogilevich organization, but also with the chief of Saudi intelligence, the ruler of Dubai, the Iranian regime, the Gokals (who work for Pakistani intelligence), the Abu Dhabi royals, and La Cosa Nostra.

In addition, together with his brother Shafiq (who met his mistress when he was at the King’s Club with Felix Sater), Nazerali owned Westcap Securities, another brokerage used by Mr. Dvoskin-Lozin-Kozin-Etc, the alleged ring-leader of the ten Russian spies arrested by the FBI in 2010.

Ali Nazerali is a market manipulator of the first order, but in December 2006, he was not in Germany as a hedge fund manager, or as a broker to Russia intelligence operatives — he was in Germany on official business, meeting government leaders in his capacity as CEO of an outfit called the Aga Khan Foundation.

The Aga Khan Foundation is a respected Islamic charity that performs good deeds in the name of His Highness the Aga Khan, the 49th hereditary Imam of the Shia Imami Ismaili Muslims; son of Prince Aly Khan and Princess Tajuddawlah Aly Khan; successor to his grandfather, the 48th hereditary Imam, the Aga Khan Sir Sultan Mahomed Shah; and direct ancestor of the great prophet himself, Mohammed, he who delivered the final proclamations of Allah.

While His Highness, the prophet, and the spirit of holy giving no doubt guide the Aga Khan Foundation, it is not just a charity – it is also a massive business enterprise that owns, among other things, the Cala Di Volpe hotel, and the Pakistan-based Habib Bank.

Habib Bank has been accused of laundering money for Al Qaeda and for Omar Sayed Sheikh, the Jaish-e-Mohammed operative and suspected agent of the Pakistani spy services who handed Wall Street Journal reporter Daniel Pearl to 9-11 mastermind Khalid Sheikh Mohammed, who then (according to Khalid Shiekh Mohammed) sliced off Pearl’s head with a Yemeni knife.

High-level business executive and some government officials in the United States and Europe regularly roll out the red carpets for the Aga Khan Foundation. Apparently, the Western governments are not concerned that in addition to the interesting business partners of its market manipulating CEO, Ali Nazerali, the Aga Khan Foundation maintains close associations with agents of Iran’s Revolutionary Guard, which is tasked with “exporting” Iran’s Islamic revolution by directing the operations of Hezbollah and other jihadi concerns.

The Aga Khan Foundation’s membership and supporters also include top military officers in Syria, such as General Moustapha Sharba, who had a hand in the early stages of the covert nuclear weapons program that Syria was developing with help from North Korea (and probably Iran).

Another Aga Khan Foundation member is Aziz Mohammed Bhai, a Bangladeshi Mafia kingpin who became a billionaire smuggling high-powered weaponry and narcotics into Myanmar and India.

Aziz Mohammed Bhai is one of the Aga Khan Foundation’s more prominent members. He is also alleged by Bangledeshi authorities to have conspired with an Al Qaeda tied terrorist named Sanjidul Islam Imon to assassinate a number of people considered to be enemies of the jihad.

In 2009, Bhai was arrested and charged with the murder of Sohel Chowdhury, who was, according to Bhai, an apostate. Until her untimely death, Ms. Chowdhury had been Bangladesh’s most famous film star.

And how can one not be fascinated by Aziz Mohammed Bhai’s principal henchman, Dawood Ibrahim. He’s the guy we met before, the crony of Dubai’s Sheikh Mo who is also an unofficial member of Al Qaeda, an agent of the Pakistani ISI, and the only person in the world labeled by the U.S. government as both a “Specially Designated Global Terrorist” and a “Foreign Narcotics Kingpin.”

In addition to all that, Ibrahim has been implicated in the trafficking of nuclear weapons. And Ibrahim’s henchman, Naresh Patel, recall, was manipulating the markets in 2008 with wash trades he conducted through Tuco Trading partner Man Financial (which was also a partner of BKS, the Moscow brokerage that employs one of the Orange Diviner principals).

Patel’s trades, of course, were cleared by Penson Financial.

At any rate, back in 2006, Ali Nazerali was meeting government leaders in Germany, Mufti al-Abbar was in North Korea, and some of their closest friends were at a party in Aruba, which is an island off the coast of Venezuela.

Actually, at the time, Aruba was one of the only places outside of the U.S. that was regularly visited by American journalists. That was because a teenager named Natalie Holloway had disappeared after drinking beer with her high school friends on a beach in Aruba. This was a major news event. It captivated America’s “miserable house.”

Meanwhile, in Aruba, the friends of Ali Nazerali and Mufti al-Abbar – I don’t know, maybe nobody gives a shit, maybe I should get a real career, maybe I should be writing the big money stories about missing teenagers, maybe I shouldn’t bother with this at all, but I’ll tell it anyway – Nazerali’s friends were having a party* in Aruba, talking about ways to do serious harm to the U.S. economy.

It was a low-key affair, just some boys drinking vodka by the beach, soaking up the sun, and talking about market manipulation. The host of this party was a fellow who uses the alias Yank Barry, though his real name is Gerard Falovich.

Some of the other boys at the party were key associates of the Mafia capo Phil Abramo. By this time, Abramo had been imprisoned, but he was still considered the “King of Wall Street” He was also the man who had helped merge the Wall Street operations of the Russian Mob and La Cosa Nostra.

You see, Abramo’s brother in law, Alan Longo, who is also a notorious market manipulator, was a capo in the Genovese Mafia, and the Genovese had first brought the Russians to the United States in the early 1980’s. The Russians wanted to get in on the Wall Street action, and through Longo, they met Abramo, who, in the 1980s, hooked the Russians up with a network of US Mafia brokerages, many of which had been funded by Michael Milken or his closest associates.

Yank Barry a.k.a. Falovich is a Russian who is tied to the Dubois Gang, an affiliate of the Sicilian Mafia in Montreal. Also at his party in Aruba was Antonio Commisso, a.k.a. L’avvocatu, or “The Lawyer” – the leader of the Ndrangheta Mafia gang. This is the same fellow who once tried to blow up Irving Kott’s car, but then reconciled at the behest of Ali Nazerali, at which point Kott, Nazerali, and the Mafia opened their BCCI brokerage, First Commerce Securities.

After the party in Aruba wrapped up, Commisso returned to his home in Toronto, and not long after that, he was arrested by the Royal Canadian Mounted Police. He was extradited to Italy, and now lives in an Italian prison, probably harboring fond recollections of that Aruba business vacation, when he and the other boys swallowed one shot of vodka after the next, all afternoon until the sun set, at which point everyone moved to a pool-side bar, where Yank Barry a.k.a. Gerard Falovich began snorting a lot of coke, as was his habit.

After a while, Terry Hunter showed up. He was a hot shot fund manager from Toronto, and he snorted a few lines, started talking shit – all about his latest market manipulations, and how he had his own guy on the floor of the Alberta Stock Exchange. This guy, name of Rory Kidd, would do anything – he’d call out massive orders even when there was no stock available to buy, sell, or borrow, and he’d make sure the exchange records didn’t reveal the nature of the trading.

Hunter could not have said more good things about Rory Kidd, but he said he had something even better to tell the boys. He snorted another line of coke, threw his head back, and began to tell the boys that he had a deal going down with this guy Michael Krause, and Krause had some credibility, he was a guy all the boys needed to know.

And the boys said, yes, they knew Krause already. Hunter said, yeah, they knew Krause, but they had to know Krause, they had to build the relationship because Krause was serious shit–Krause was a man you had to respect. Krause, this Krause — the motherfucker, he’s the most wanted man in Germany.

Actually, his name wasn’t Krause. His real name was Michael Tismer, also known as Michael Von Hohenstein Aragon, and he was yet another subversive with ties to the Mafia. So it goes without saying that he was a big-time stock manipulator and a major narco-trafficker with ties to the Hezbollah Mafia-para-military-jihadi drug smugglers in Paraguay and to Nazrio Moreno Gonzalez, also known as El Mas Loco — the Craziest Fucker of All.

Gonzalez was the leader of La Familia and the Gulf Cartel, which was the de facto government of Michoacán, but the Gulf Cartel was splitting in two, and El Mas Loco was on a killing spree, so this time (among other times) is known in Mexico as the “Year of Blood.”

Michael Tismer a.k.a. Krause a.k.a. Michael Von Hohenstein Aragon had just been arrested down there, somewhere in northern Mexico. But not to worry, said Terry Hunter, he wouldn’t do jail time — Krause had connections. Hell, Krause was screwing the daughter of a Mexican general, Mario Arturo Acosta Chaparro, one of the biggest drug dealers in the land.

In 2010, General Chaparro would take a bullet to the head, but Hunter was right – Tismer wouldn’t do jail time. And at the pool in Aruba, Hunter said what a brilliant crazy motherfucker Tismer was. Hunter said he loved crazy, and Yank Barry a.k.a. Falovich agreed, all the boys by the pool in Aruba agreed — crazy is what it’s all about. You know–live hard, die hard.

That’s right, said Hunter, live hard, and how about that Andy Mann, also known as Joseph Napoli, also known as Anthony Tripoli — there’s a crazy one for you. The mother fucker gets caught smuggling a quarter of a billion dollars worth of Mexican bonds into Canada. He was hand-cuffed by Royal Canadian Mounted Police, but for some reason they let him go — the luck of the crazy.

And then the crazy bond-smuggler went back to Mexico, got arrested again, but he had connections like Tismer a.k.a. Von Hohenstein Aragon had connections, and the Mexicans refused to extradite him. Now, in 2006, he was free, living large in the Caribbean.

And this Andy Anthony Joseph Mann Tripoli Napoli – what was he doing in the Caribbean? Do you know what this crazy fucker was doing in the Caribbean? He was setting up his own Depository Trust and Clearing Corporation – the DTCC of the Caribbean. It’s called Depository Trust Company International Financial Holding.

The boys by the pool loved it, they kept saying how much they loved it — Andy Anthony Joseph Mann Tripoli Napoli was setting up his own DTCC in the Caribbean!

* * * * * * * * *

The real DTCC (Depository Trust and Clearing Corp.) in New York is responsible for overseeing the “clearing and settlement” system. That is, it is supposed to make sure that stocks, bonds and derivatives are properly delivered to their purchasers.

Given this mission, one might think that the DTCC would understand its duties to include making sure that traders aren’t selling phantom stock to manipulate markets. However, the DTCC in New York never did a good job of that, because it is corrupt.

Or as we say at Deep Capture, the place has been “captured” by Wall Street. In fact, the DTCC is not just “captured” by the people it is supposed to be regulating, it is, quite literally, “owned” by the people it is supposed to be regulating.

That is, while it manages settlement for the entire US capital market, the DTCC is privately owned by the big banks who comprise that market. It is as if the Treasury Department was actually owned by a consortium of Goldman Sachs, Morgan Stanley, Merrill Lynch, etc. (not just metaphorically, but actually and legally).

While the DTCC is owned by the big firms whose prompt clearing and settlement it simultaneously oversees, it was built by a man who was tied intimately to the network that this story seeks to expose. That is, the DTCC was founded and built by a man who was in bed with the Russian Mafia and La Cosa Nostra.

The founding president of the DTCC was named Diran Kaloustian, and when he first took that job in the early 1970s, the DTCC had no assets. A year after he set up the DTCC, it had around $25 billion in assets.

By the time of Kaloustian’s untimely death in 2001, the DTCC had assets exceeding $10 trillion – and it was processing trades valued at $1.5 quadrillion every year.

Which is to say, the DTCC was (and is) processing trades valued at more than 30 times the total gross product of the entire planet.

In other words, Diran Kaloustian had an important job. In fact, it is fair to say that few people played a more important role in developing the infrastructure that was supposed to guarantee the proper functioning and safety of the American financial system.

But Kaloustian was a mysterious character. It is even a matter of dispute when, or if, he ever retired from the DTCC. One official at the DTCC has publicly gone to lengths to say that Kaloustian did not have much influence at the DTCC and left his job at an early date. When I called the DTCC to ask its PR officer when, precisely, Kaloustian had resigned, she snarled at me, saying she didn’t know.

Then she hung up on me.

I called back, but she refused to answer the phone.

It is a bit odd to say that the founding president of the DTCC had little influence over the DTCC. Certainly, it was influential of him to build the DTCC into an outfit capable of handling more than quadrillion dollars in trades every year.

And one thing is certain: officials at the DTCC are not to be trusted. They have consistently distorted data, they have covered up problems with thier clearing and settlement system, and they have viciously smeared their critics with outright falsehoods.

I mentioned before that Deep Capture has gotten its hands on a computer that once belonged to Anthony Elgindy (the short seller with ties to the Russian Mafia and to the leaders of multiple jihadi outfits; also said by prosecutors to have had advance knowledge of the 9-11 attacks). Emails and other documents on this computer make it clear that the DTCC was coordinating its propaganda campaigns with Gary Weiss, the corrupt former journalist with ties (decribed in an earlier chapter) to Russian Mafia boss Felix Sater, Elgindy, a suspected foreign spy, and other insalubrious characters.

One of Gary Weiss’s tasks was to hijack (in cahoots with Linda Mack, the suspected spy) the Wikipedia entry on the DTCC. Thanks to these efforts, Wikipedia made it clear that the DTCC kept the clearing and settlement system functioning in perfect order.

As to when Dirian Kaloustian actually left the DTCC, that remains unknown. But forms filed with the Securities and Exchange Commission shortly before his death in 2001, state (perhaps falsely) that Kaloustian was still serving as DTCC president at that time.

Those forms also state that Kaloustian, who was certainly the founding president of the DTCC, and was certainly an influential person at that black box organization, was also a key business partner of Mobsters, most of them among the closest associates of Felix Sater.

That’s Felix Sater, the Russian Mafia boss and market manipulator who threatened to have Patrick Byrne murdered because Patrick was on a crusade to expose weaknesses in the nation’s clearing and settlement system that were being exploited by market manipulators.

For example, DTCC founding president Kaloustian served as chairman of Wasatch International, the president of which was Joe Logan, a fellow who regularly traded in league with Felix Sater’s White Rock Partners. Logan at this time had been named by the FBI as a possible suspect in the murder of Alain Chalem, the Russian Mafia naked short seller who was one of Felix Sater’s closest associates until 1999, when the two men had a falling out and someone fired a lot of bullets into Chalem’s head, face, and ears.

Wasatch International had been a publicly traded shell corporation until it was purchased by Lasalle Holdings, owned by Leslie Greyling, a Mafia-tied trader who was later arrested — along with Michael Milken’s closest business associate, Gene Phillips and a total of 120 Wall Street operators with ties to La Cosa Nostra and the Russian Mafia – in Operation Uptick, which the FBI described as the biggest Mafia bust in history.

Greyling was also involved with Adnan Khashoggi (the Saudi arms dealer who did some damage to the clearing and settlement system when he took down the nation’s largest clearing brokerage, MJK Clearing, with Anthony Elgindy) in a company called Member Service Corp.

In addition, Greyling worked with Khashoggi to build a casino in Gaza, the Palestinian terrority controlled by the Hamas leaders who (recall) hosted Elgindy’s private internet chat site.

Before Chalem was killed, Logan and DTCC founding president Kaloustian resigned from Wasatch and formed Aviation Industries Corporation, which proceeded to acquire a lien of $1.8 million in Kiwi International Airlines from the Moscow-based General Investment Bank (formerly Commercial Bank HELP), an outfit involved in narcotics smuggling and said by sources in Moscow to have once been tied to Felix Sater’s father and the Russian intelligence services. (The bank was later shut down).

Meanwhile, Aviation Industries, the outfit owned by DTCC president Kaloustian and Russian Mafia associate Joe Logan, bought CITA Americas, Inc., an opiate detoxification company that was part-owned by Alain Chalem, the guy who was subsequently murdered.

Aviation Industries also entered into an agreement with an outfit called AIBC Investment Services to raise $5 million to invest in Sun Jet International Airlines. AIBC Investment was controlled by John Doukas, who was then serving as president of White Rock Partners, the outfit controlled by Russian Mafia boss Felix Sater.

Around this time, Doukas was loading a locker with guns and documents. The contents of that locker, registered in the name of Felix Sater’s other partner, Eugene Klotsman, would later link all of these guys to the global stock manipulation and money laundering network deployed by the Russian government and the Russian Mafia until the Bank of New York scandal broke in 1999.

Meanwhile, we know, White Rock’s other partner was in Europe dealing with Alex Paul, the diamond dealer who was doing business with Libyan intelligence agent Ibrahim Bah, Al Qaeda’s diamond broker in Africa. This was not long before Felix Sater avoided prison time by claiming that he was capable of doing an arms deal with Osama bin Laden.

After cutting a deal with Felix’s partners, DTCC founding president Kaloustian’s Aviation Industries merged with Integrated Marketing Professional, Inc, formerly known as Casino Airlink. The largest shareholder in Integrated Marketing was Solomon Obstfeld, the fellow who, in June 2010, would fall out of a window and die on the pavement in front of his Park Avenue apartment.

While Obstfeld was doing business with the DTCC’s founding president, he and his associates were engaged in the death spiral naked short selling (enabled by the DTCC’s lax enforcement) that wrecked countless companies, including, ultimately, Refco, one of the nation’s largest brokerages.

Obstfeld’s hedge fund partner, of course, was Martin Schlaff, the former KGB and Stasi asset who was dealing with the Russian Mafia, Moammar Qaddaffi and Hamas.

Previously, recall, Obstfeld had been the top trader at Datek Securities, founded by Omar Amanat (later a partner with Hamas in an Islamic TV station), and financed by Robert Brennan, implicated in the Russian goverment and Mafia market manipulation scandal that saw $7 billion laundered into the Bank of New York.

Obstfeld’s LH Financial, recall, also perpetrated some death spiral schemes with Yasin al Qadi (Osama bin Laden’s favorite financier) and Isosceles, the fund that employed Russian spy Anna Chapman.

Meanwhile, Obstfeld, like Felix Sater, was involved with Global Securities, the market manipulating outfit with ties to (among others): Anthony Elgindy, Ali Nazerali, and Mr. Dvoskin-Lozin-Kozin-Etc. (alleged ring-leader of Russian spies, including Anna Chapman, who were arrested in 2010).

Obstfeld also helped (see Chapter 13) orchestrate the take-down of National Heritage Life with Shalom Weiss (who owned a nudie bar with the Genovese Mafia) and Eugene Grin/Grinshpon (tied to La Cosa Nostra, the Russian Mafia, and his relative Avinadav Grinshpon, who runs Memorand, the company owned by alleged foreign intelligence asset Lev Leviev). Eugene Grin also used to work for the above-mentioned Robert Brennan.

Let me summarize. DTCC founding president Kaloustian, the man who built and for some time managed what would become the $1.5 quadrillion clearing and settlement system of the United States capital market, was an officer, shareholder, chairman and/or board member of such companies as Wasatch International (president Joe Logan, suspect in murder of Alain Chalem; and close associate of Felix Sater), Aviation Industries Corporation (controlled by Russian Mafia naked short seller Alain Chalem, who was possibly killed by Felix Sater); CITA Americas (Chalem’s opiate detoxification company); AIBC investment (White Rock and, again, Felix Sater) and Integrated Marketing (Solomon Obstfeld, Felix Sater associate whose hedge fund partner was Martin Schlaff, a former KGB and Stasi agent with ties to the Russian Mafia, Hamas and Muammar Qaddafi).

Consider the possibility that these and other characters developed relationships with Mr. Kaloustian in return for Mr. Kaloustian creating mechanisms within the DTCC that would enable them to engage in the manipulative trading for which they were famous. Consider the indiputable fact that the mechanisms he created made it possible for these and affiliated characters to engage in destructive naked short selling.

Consider further that the report for the Department of Defense Irregular Warfare Support Program argued (as have many others) that naked short selling contributed a great deal to an economic crisis that nearly brought the United States to its knees in 2008.

Consider also that the report commissioned by the Defense Department stated that it cannot be ruled out that Wall Street regulatory bodies (including the DTCC) have been compromised by organized crime or even agents of foreign governments that are hostile to the United States.

Then consider the 100% demonstrable fact that the man who built the DTCC – an outfit that is, in essence, the foundation of the American financial system – was an extremely close business associate of the Russian Mafia, the key members of which seem to be inextricably tied to Russia’s state intelligence services.

I think I have also demonstrated clearly that the business partners of the DTCC’s founding president are part of an extremely tight-knit network that includes people who are deeply involved with the Iranian regime, Hamas, Palestinian Islamic Jihad, Saudi intelligence, Pakistani spies, Libya’s dictator, a market manipulator who vacations in North Korea, nuclear weapons traffickers, and Al Qaeda.

If this were fiction, it would be bad fiction, indeed. But it’s not fiction. It’s the truth, at once absurd and deadly serious.

At any rate, back in 2006, Patrick Byrne was making a lot of noise about the DTCC’s failure to prevent short-side market manipulation. Crowds of angry shareholders, meanwhile, were literally protesting in the streets outside the DTCC’s offices, demanding that it reform. The SEC was even putting a little bit of pressure on the DTCC to fix its broken clearing and settlement system.

Perhaps hoping to put an end to all this, Felix Sater delivered his threat to have Patrick Byrne murdered. But the boys at the pool in Aruba were no doubt concerned that the movement for reform was having some effect. They no doubt believed that there was a slight possibility that the DTCC in New York would be forced to become less accommodating to market manipulators.

Hence their excitement about Anthony Andy Mann Tripoli Napoli’s new DTCC in the Carribbean.

But that’s not all they were excited about. They were also excited about Penson Financial, soon to become the biggest brokerage on the planet by virtue of the massive volumes (apparently manipulative short selling targeting the pillars of the American economy) that it would clear for brokerages tied to the Mafia.

They were excited. And before long, Yank Barry a.k.a. Falovich, the host of the party in Aruba, called Ali Nazerali.

To be continued…

* The description of the meeting in Aruba is, like my earlier description of the meeting at the Cale di Volpe hotel, a composite of several meetings and converstations that took place around this time in 2006. It is necessary for me to present it as a single conversation in order to protect my sources, but the scene accurately describes what was said, and by whom, as related to me by people who were present. 

Note: A young expert on transnational issues such as organized crime and terrorism first discovered many of the relationships between the DTCC founding president and organized crime. This investigator also helped unearth information that appears in other chapters of this story. He wishes to remain anonymous, but credit where credit is due. 


Anonymous says:

June 9, 2011 at 3:54 pm

Mark, just a tiny correction:

- Diran took control of the Depository Trust Corporation in 1970 (DTC), not the DTC.
- the DTCC didn’t form until 1999 when the NSCC and DTC merged and many troubles began. The DTC is a subsidiary of the DTCC.
- the DTC doesn’t own the assets. The assets belong to a mysterious private partnership, Cede & Co., which has existed since at least as early as the 1970’s.
- Cede & Co. is nominated to own the shares, but it isn’t mentioned anywhere in the DTC annual report or financial statements and appears to be independent of the DTC in some way.
- Cede & Co. owns most securities in the western world and had voting control over those securities as the ACTUAL (as opposed to BENEFICIAL) owner


Anonymous says:

June 9, 2011 at 3:55 pm

Should be:

- Diran took control of the Depository Trust Corporation in 1970 (DTC), not the DTCC.

Anonymous says:

June 9, 2011 at 4:30 pm

As early as October 1972, Cede was listed as a partnership belonging to unknown partners.

Check the fine print at the bottom of page 53:

Cede & Co. is referenced as the nominee of the Stock Clearing Corporation at that time. 

Cede & Co. is the actual owner of the shares.


Anonymous says:

June 9, 2011 at 4:50 pm

Part 3 is about phantom shares and the role of the DTC.

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