The Miscreants’ Global Bust-Out (Chapter 19): How the Mafia-Jihadi Nexus Made Penson Financial the Biggest Brokerage on the Planet
Posted on 09 July 2011 by Mark Mitchell
It is time we know more about this strange outfit Penson Financial.
For most of its existence, it seemed there was no reason whatsoever to pay any attention to Penson. To be sure, it was no titan of Wall Street. It was an obscure little brokerage–in Texas. Calling its volumes “moderate” would have been charitable. They were, in fact, tiny.
That changed at the end of 2007, when Penson Financial became, literally overnight, the single biggest brokerage on the planet Earth. In terms of volume, no brokerage was bigger. No brokerage had more power to move the markets. Not Goldman Sachs. Not anyone.
In 2008, Penson Financial retained that status—the biggest and most powerful brokerage on the planet Earth. Indeed, it got even bigger. Its volumes continued to soar, peaking in the fall of 2008, as the financial system melted down, a calamity which this nation almost did not survive (as U.S. officials, including Treasury Secretary Hank Paulson, made clear at the time).
By this point, it seems everyone knows the cause of that financial crisis—weak banks. Too much leverage, too much exposure to mortgages and property.
DeepCapture agrees with that viewpoint, but thinks that there is a “rest of the story” to be explored. In later chapters of this series, we will do that, and will come to better understand why the mortgage markets collapsed, and how how the banks got so weak.
What we will see is this: there were people who wanted the banks to be weak. Those people went to great lengths to ensure that the banks’ leveraged balance sheets were loaded with bad property and toxic mortgage derivatives.
But by 2008, it suffices to say—the banks were weak. There are some intelligent people who believe that banks like Bear Stearns and Lehman Brothers were so weak that it was inevitable that they would collapse.
But on September 18, 2008, the SEC issued an “Emergency Order” stating that the collapse or near collapse of every major bank in the nation was by no means inevitable. According to the SEC, the problem–the “Emergency” — was that manipulative short selling had caused the banks’ stocks to go into death spirals, making it impossible for even the healthier among them to raise new capital.
Regardless of whether you agree with that assessment, you must at least accept the proposition that short-sellers would have been motivated to make the situation worse than it otherwise would be. Indeed, you must consider the possibility that malicious or profit-seeking traders orchestrated an attack on the American financial system.
As it happens, that is not just a possibility. It is a certainty. We know it is a certainty, because a well-placed Wall Street veteran compiled the data that proves it. He provided reams of data that show that nearly all of the new volume that suddenly made Penson Financial the largest brokerage on the planet in 2008 was manipulative short selling targeting the big banks and a select number of other companies that were critical to the stability of the financial system.
It is not only the data that suggests that the short selling was manipulative. It is the Financial Industry Regulatory Authority (FINRA), which has sanctioned Penson Financial and nearly all of its key partner brokerages (i.e. the brokerages that referred their trades to Penson, accounting for much of its large volume) for gross violations of short selling rules at the height of the financial crisis.
Make no mistake: This was not random money managers simply making bets. It was an attack on the American financial markets. It is impossible to know for certain whether there was coordination among the various perpetrators, but we do know that the most of the perpetrators deployed Penson Financial.
That is, most manipulative short selling targeting financial stocks in 2008 was transacted by Penson Financial or brokerages that cleared their trades through Penson. Indeed, in 2008, Penson Financial transacted manipulative short selling of financial stocks in volumes that exceeded the total short selling volumes of the top five Wall Street brokerages–combined.
So we must ask: What is Penson Financial? Where did it come from? And who were its clients?
The answer is that Penson Financial was built almost entirely from brokerages tied to organized crime. And nearly all of its major clients (the traders and partner brokerages that accounted for most of Penson’s massive volumes) are tied to one or more of the following:
1) the Mafia
2) jihadi terrorist groups
3) hostile foreign governments, including those of Iran and Russia.
There was a time when I would have found this hard to believe. But after many years investigating the strange features of the American markets, I finally reached the same conclusion that Admiral Dennis Blair, then Director of National Intelligence, articulated in his 2009 report to Congress.
In that report, Admiral Blair stated that there was a “dangerous nexus” between organized crime, terrorist outfits, and some hostile governments. Admiral Blair also stated that organized crime had vastly increased its “penetration of legitimate financial and commercial markets…raising the risk of significant damage to the global financial system.”
Unfortunately, the Director of National Intelligence does not regulate the markets. That’s the job of the SEC, which has shown no inclination to do anything about the problem. So it is left to us amateurs to tell the story of Penson Financial, an outfit that sits smack in the center of a “dangerous nexus” that was (and still is) looking to do “significant damage to the global financial system.”
Penson Financial was founded in 1999 by Philip Pendergraft, a former employee of a brokerage called Southwest Securities. Another former employee of Southwest, Bob Garrett, has claimed that Southwest had ties to the Mafia and that it specialized in transacting manipulative naked short selling for its clients. Certainly, its clients did have ties to the Mafia, and some of those clients later became clients of Penson Financial.
Penson’s first clients in 1999 were Momentum Securities and the affiliated All-Tech Investments. Momentum was controlled by Omar Amanat and his brother, Irfan.
I have discussed the Amanat brothers in earlier chapters, but I am going to repeat some facts and introduce some new facts because the Amanats played key roles in building Penson Financial. They brokered many of Penson’s future client relationships, and they pioneered the services that made Penson so attractive to a “dangerous nexus” of market manipulators.
In 1999, the Amanats owned not only Momentum, but also Datek Securities. which would soon become another one of Penson Financial’s early clients. The top trader at Datek Securities was Solomon Obstfeld, who would later run a death spiral, naked short selling hedge fund called LH Financial. Obstfeld’s partner in LH Financial was Martin Schlaff, a close associate of the Amanats.
Schlaff is a former KGB and Stasi asset who worked with Vladmir Putin in East Germany, back when Putin was a KGB operative there. Putin, of course, is now prime minister of Russia, and Schlaff remains one of Putin’s closest cronies.
In addition, Schlaff has done a lot of business with Russian Mafia kingpins Semion Mogilevich and Michael Chernoy, both of whom are key figures in the Russian intelligence aparatus. The Mogilevich organization, meanwhile, does a considerable amount of business with jihadi terrorist groups. On at least one occassion, the Mogilevich organization tried to sell highly enriched uranium to Al Qaeda.
I realize that statements that people are tied to the Mafia, Russian intelligence and Al Qaeda seem hard to believe when they are read in isolation. I encourage readers who are new to this series to review earlier chapters to see that all such statements have been fully supported in excruciating (perhaps even “tedious”) detail.
In those earlier chapters, readers will also find evidence that Schlaff is a key financial advisor to Libyan dictator Muammar Qaddafi. In 2000, Schlaff brokered a deal that saw Israel allowing Qaddafi to provide material support to Hamas, the jihadi terrorist group and Iran proxy that controls the Gaza strip. Schlaff (as we know from earlier chapters) also laundered Hamas money through Refco, then one of the largest brokerages in America.
Schlaff and Obstfeld were partners in not only LH Financial, but also Balmore Investments. Both of these hedge funds were units of an Austrian bank called BAWAG, which was closely affiliated with Refco. Meanwhile, BAWAG had business relationships (brokered by Schlaff and Obstfeld) with the Iranian regime, the Libyan regime, and Middle Eastern financial firms linked to the Muslim Brotherhood (which created Hamas).
In October 2005, Refco collapsed as a result of a scandal that saw Refco helping BAWAG cover up bad loans (brokered by Schlaff) to Palestinian terrorist Yasir Arafat, while BAWAG helped Refco cover up “failures to deliver” liabilities that it had accrued as a result of transacting manipulative naked short selling for a select number of closely affiliated hedge funds, including those run by Schlaff and Obstfeld.
Thanks to the Amanats, Schlaff and Obstfeld would be key clients of Penson Financial in 2008. To understand who some of Penson’s other key clients were, we need to return to 1999, the year Penson was founded. As I mentioned, the Amanats were at the time operating Momentum Securities (Penson’s first client) and Datek Securities.
Datek would become a Penson client in 2000, after Datek’s clearing firm, A.R. Baron, was indicted for manipulating stocks with five members of La Cosa Nostra and the Amanats’ close associate, Felix Sater, a Russian Mafia boss who is member of the Mogilevich organization. Sater, like others in the Mogilevich organization, is closely tied the Russian intelligence services.
Indeed, Sater escaped doing jail time for market manipulation by promising the U.S. government that he could use his Russian intelligence affiliations to help the CIA relieve Osama bin Laden of his Stinger Missile arsenal. Sater never fulfilled that promise, and the Mogilvevich organization continued to do business with Al Qaeda.
The indictment of Sater and Datek’s clearing firm was part of a larger investigation that began in1998, when the DOJ came to realize that the Russian government was working in cahoots with the Russian Mafia (especially, the Mogilevich organization) and a network of brokerages affiliated with organized crime to manipulate the U.S. markets and launder billions of dollars through the Bank of New York.
Also indicted as part of the DOJ’s investigation into that scandal was Robert Brennan, who had been the principal financier of the Amanats’ Datek Securities.
Central to that scandal, meanwhile, was Sinex Securities, which helped the Russian government and the Mogilevich organization manipulate stocks and launder around $3.9 billion into the Bank of New York. As discussed in earlier chapters, it is also likely that Sinex was working with Bank Al Taqwa, which had (according to the U.S. Treasury) “set up Al Qaeda’s main operating base in Europe” while laundering money through the Bank of New York.
Certainly, Gene Phillips, the proprietor of Sinex, was involved (at times, along with Solomon Obstfeld and Martin Schlaff) in a number of other business ventures with Yasin al Qadi, who had been one of the principal financiers of Bank Al Taqwa. In 2001, the U.S. government would name Yasin al Qadi as a “Specially Designated Global Terrorist.” Indeed, as earlier chapters of this story make clear, Yasin al Qadi was Osama bin Laden’s favorite financier.
Yasin al Qadi’s bagman, Yaqub Mirza was the central U.S.-based figure in what government investigators referred to as the “SAAR Network” (or, sometimes, the “Safa Group”) of financial entities that were funding Al Qaeda, Hamas, Palestinian Islamic Jihad, and other terrorist groups. As of 2001, Robert Gold, director of Sinex (since renamed National Alliance Securities) was simultaneously a partner of Yaqub Mirza in a SAAR Network outfit called SVC Financial.
The man who controlled Sinex, Gene Phillips, was arrested in 2000 as part of Operation Uptick, then the largest Mafia bust in FBI history. The Operation Uptick investigation grew out of the DOJ’s earlier investigation of the scandal that saw the Russian government and the Russian Mafia manipulating the markets. But Phillips was ultimately acquitted.
Meanwhile, Phillips controlled a brokerage called Interfirst, which became another of Penson Financial’s first clients. Interfirst president Ronald Steinhardt, sat on Penson’s board of directors from 1999 though the financial crisis of 2008.
Interfirst was introduced to Penson by the Amanat brothers, who had close ties to the same crew of Russian organized crime figures and terrorist financiers, such as Yaqub Miraz and Yasin al Qadi. Indeed, the Amanats are full-fledged members of the Muslim Brotherhood.
In this capacity, the Amanats had, as of 2001, come to be close acquaintances of a number of other terrorist luminaries. One associate of the Amanats was Abdurahman Alamoudi, an Al Qaeda operative now serving a 29 year jail sentence on charges of financing terrorism and hatching a plot with two other Al Qaeda operatives and Muammar Qaddafi to assassinate the crown prince of Saudi Arabia.
Another associate of the Amanats was Palestinian Islamic Jihad leader Sami Al Arian, who was (according to the DOJ) taking orders from Iranian government agents stationed in New York. Sami al Arian was also suspected by FBI investigators of providing support to some of Al Qaeda’s September 11 hijackers.
Meanwhile, U.S. government investigators concluded that an American-born fellow named Anwar al Awlaki had certainly supported a number of the September 11 hijackers. He is now a top Al Qaeda leader based in Yemen. But before he escaped the U.S., he was a close associate of the Amanats, who knew him as a result of their involvement with the directors of Virginia’s Dar Al-Hijrah mosque, where Awlaki was the head cleric.
Of course, many law-abiding people were friendly with some of these characters. Before it was known that they were Al Qaeda operatives, Anwar al Awlaki and Abdurahman Alamoudi were even courted by high-ranking U.S. government officials. I do not mean to suggest that the Amanats are terrorists. But they are not exactly naive U.S. government officials, either. They have knowingly associated themselves with a dangerous crowd.
In 2005, Omar Amanat founded Bridges TV, an Islamic television station, in partnership with Muzzammil Hassan and a Hamas operative named Nihad Awad. In 2009, Hassan, who served as CEO of Bridges TV, chopped off his wife’s head in an honor killing. Police found the head stashed in Bridges TV’s California offices.
As the Amanats surely knew, Bridges TV’s other co-founder, Nihad Awad, was soon to be named an unindicted co-conspirator in the U.S. government’s case against the Holy Land Foundation, a front for Hamas (which, like Sami al Arian’s Palestinian Islamic Jihad, is a proxy of the Iranian regime). As part of that case, the DOJ presented a transcript of a secret meeting that leaders of Hamas had held in 1993 at a Marriot Hotel in Philadelphia.
I have already described that meeting, but I will remind you that it was attended by Bridges TV co-founder Nihad Awad, who was then deputy director of a Hamas front called the Islamic Association for Palestine (IAP). Also in attendance was Omar Ahmad, the IAP’s director.
Ahmad had recently provided a bedroom in his home to Omar Abdel Rahman (a.k.a. the “Blind Sheikh”). While living in Ahmad’s home, the Blind Sheikh masterminded the World Trade Center bombing and the subsequent “Day of Terror” plot to blow up multiple New York landmarks.
At this time, the Blind Sheikh also became the first Muslim cleric to issue a fiery fatwah commanding jihadis to destroy the American economy. Which might have been a red flag to U.S. financial regulators, given that the Blind Sheikh had lots of friends who were capable of inflicting serious harm on the U.S. economy, among them the Amanats, founders of Datek, Momentum, and, later, numerous other financial firms.
Of course, one of DeepCapture’s theses is that making such inductive leaps is not the trump suit of U.S. financial regulators.
In addition to founding multiple financial firms, the Amanats were the pioneers of so-called “sponsored access,” a service (first provided by Penson Financial) that gives traders direct and anonymous access to the U.S. markets, bypassing the major exchanges.
In 2009 testimony before the House Committee on Homeland Security, experts cited “sponsored access” as one of the key vulnerabilities that could be exploited by financial terrorists and foreign governments wishing to deploy manipulative short selling as a means of economic warfare against the United States.
The Amanats also founded most of the nation’s major Electronic Communications Networks (ECNs), which, like “sponsored access,” give traders direct access to the markets. ECNs have been cited by numerous experts as key vulnerabilities of the financial system and possible contributing factors in the May, 2010 Flash Crash and dozens of similar events that have seen individual stocks suddenly nosedive to zero.
In September 2001, Irfan Amanat deployed one of his ECNs (MarketXT) and a high-frequency trading program called RLevi2 in a massive market manipulation scheme that targeted highly leveraged exchange traded funds (ETFs) for maximum impact. The SEC eventually charged Amanat and Market XT for this, and called it “market manipulation,” which is a federal crime. But, natrually, the SEC never refered this crime to the DOJ for criminal prosecution.
Also in September 2001, the Amanats’ close associate, Amr Ibrahim (a.k.a. Anthony) Elgindy launched a naked short selling attack (timed to coincide with Al Qaeda’s September 11 atrocity) as part of a successful scheme to destroy MJK Clearing, then the largest clearing brokerage in America. (The details of the MJK Clearing story can be found in Chapter 9 of this series.)
When Elgindy was indicted in 2002 for market manipulation (MJK Clearing did not figure in his indictment), prosecutors argued that Elgindy was tied to Al Qaeda and had advance knowledge of the September 11 attacks. Previous chapters of this story provide ample evidence that Elgindy did, indeed, have ties to Al Qaeda. As just one example, his brother, Khalid Elgindy, co-founded an Islamic organization with the above-mentioned Al Qaeda operative, Abdurahman Alamoudi.
Prosecutors in the Elgindy trial also noted that Elgindy had “threatened” and “tried to extort” Paul Brown, owner of Nuclear Solutions, a company that had a contract with the Las Alamos nuclear weapons facility to recycle atomic bombs into clean energy.
Elgindy conducted much of his naked short selling through a Costa Rica outfit called Terra Nova, which was a unit of Jonathan Curshen’s Red Sea Management. Curshen had been a long-time trading partner of Elgindy and he was a close associate of the Amanats. In 1999, at the Amanats’ urging, Terra Nova and Red Sea Management had become clients of…yes, you guessed it, Penson Financial.
That same year, 1999, Curshen made a white knight bid to buy YBM Magnex, a massive stock fraud controlled by Russian Mafia kingpin Semion Mogilevich. YBM Magnex (like the people involved with the Amanats’ Datek Securities) was linked to the 1999 scandal that saw the Russian government working in cahoots with the Russian Mafia to manipulate the U.S. markets and launder money through the Bank of New York.
For some reason, Curshen (who is discussed at length in Chapter 8, Chapter 9, Chapter 13, and elsewhere in this series), had chosen to locate his San Jose offices in the same small building that housed the Israeli embassy. That could have been a coincidence, but it is worth recalling that tax filings show that Curshen (through an outfit called Skyway Trading) was meanwhile donating money to the Holy Land Foundation, the Hamas front linked to Nihad Awad, co-founder of Bridges TV.
The stated mission of Hamas (and its supporters in Iran) is to wipe Israel off the face of the map.
Many of Curshen’s clients (who were clearing their trades through Penson Financial) also funded Hamas. These included (just to name a few) notorious market manipulators Rafi Khan, Rami El-Betrawi, Adnan Khashoggi, and the above-mentioned Anthony Elgindy.
Recall that all of these market manipulators were involved (along with Native Nations, whose director also worked for the above-mentioned Sinex Securities) in the September 2001 take-down of MJK Clearing. And all would remain key clients of Penson Financial through 2008, when Penson became the largest clearing brokerage in America.
Each of these market manipulators were (like the Amanats) close associates of Sami al Arian, the Palestinian Islamic Jihad leader who took directions from Iranian government agents in New York. (Elgindy’s family, recall, had brought Sami al Arian to the United States and supported his operations until both Elgindy and Sami al Arian came under investigation after September 11, 2001).
In addition, all of these market manipulators were (like Sami al Arian) close associates of the Hamas leaders who had attended that secret meeting in Philadelphia, back in 1993. It is worth identifying a few more of those Hamas leaders, if only to dispel the notion that Hamas and the Muslim Brotherhood (which founded Hamas) do not pose a threat to the national security of the United States.
One person at the Hamas meeting in Philadelphia was Mohammad Salah, who was deputy to Mousa Abu Marzook, currently Hamas political chief, resident of Syria. Both Salah and Marzook have been named by the U.S. .government as “Specially Designated Global Terrorists.”
Marzook founded Infocom, the company that hosted Anthony Elgindy’s private internet chat site, on which Elgindy and other closely affiliated short sellers plotted the destruction of many hundreds of American public companies (as has been discussed in numerous places on DeepCapture, and as is evident from transcripts of those private internet discussions, which are all safely in DeepCapture’s possession).
Salah has testified in court that his Quranic Literary Institute in Chicago received $820,000 from “Specially Designated Global Terrorist” Yasin al Qadi (Osama bin Laden’s favorite financier) and that money (transferred through Yasin al Qadi’s BMI Inc.) was used to train jihadis in the handling of deadly toxins and “basic chemical materials for the preparation of bombs and explosives.”
As of 1999, when Penson Financial opened for business, Yasin al Qadi (a close associate of Penson’s first clients) also owned Global Chemical, a Chicago company that was ostensibly in the business of making soap, but was (as government forensics experts testified later that year) actually stockpiling ingredients for the manufacture of explosives and chemical weapons.
Another person at the secret Hamas meeting was Ismail Elbarasse, who was (according to Salah’s testimony) Marzook’s bagman. Elbarasse was later identified (by U.S. officials and counter-terrorism experts) as being a key figure, along with Yasin al Qadi (Osama bin Laden’s favorite financier), in the SAAR Network (also known as the Safa Group) of financial entities that have funded terrorist outfits, including Al Qaeda.
Another figure in the SAAR Network: Nihad Awad (co-fouder of Bridges TV).
That’s the same SAAR Network named after it founder, Sheikh Sulaiman Abdul Aziz al-Rajhi (whose initials are S.A.A.R.). Shiekh Rajhi was, in addition, a financier of Benevolence International, an Al Qaeda front that had (according to the DOJ) contacts with people who were attempting to buy nuclear weapons from organized criminals in Russia.
In 2008, Shiekh SAAR (the wealthiest man in Saudi Arabia) was a client of…yes, you already know–Penson Financial.
Meanwhile, Penson Financial had acquired other client relationships as a result of a 2006 deal that Penson did with a criminal named Steven Schonfeld. That deal saw Penson purchasing Schonfeld’s clearing operations, while Schonfeld became a large Penson shareholder and a member of Penson’s board of directors.
Schonfeld’s large brokerage and hedge fund operation had a FINRA rap-sheet a mile long documenting his career as a serial market manipulator. He had been sanctioned for everything from naked short selling to routinely marking short sales as long sales (which is, incidentally, just a different name for naked short selling).
But thanks to the wonders of the regulatory regime overseeing our nation’s capital markets, Schonfeld had never faced criminal prosecution.
Back in 2003, Schonfeld had bought an outfit called Heartland Securities, which had been founded by former principals of the Amanats’ Datek Securities when those principals (a fellow named Sheldon Mashler and others) came under investigation for doing business with the Mafia.
For example, while at Datek, the principals (all later employees of Schonfeld) had traded accounts held by man who was using the alias Martin Clainey, though his real name was Phillip Gurian. And Gurian was the right-hand man of DeCalvacante Mafia boss Phillip Abramo, known in Mafia circles as the “King of Wall Street” because he was, until his imprisonment on charges of murder and market manipulation, one of the most notorious criminal short sellers in the land.
When Schonfeld sold his clearing operation to Penson Financial, he was caught up in a massive scandal that saw Schonfeld and his associates bribing stock loan executives at major banks. There is really only one reason to bribe stock loan executives, and that is to induce them to facilitate short sales of stock that has not been borrowed. Which is, once again, a short-side market manipulation otherwise known as “naked short selling”.
As we have seen, when financial firms are embroiled in scandals, their owners often sell the firms to others in thier network to escape further scrutiny. This likely explains why Schonfeld (who was a business partner of the Amanats’ in multiple other ventures) sold his clearing operation (the operation that was bribing stock loan executives) to Penson.
The clients that Penson acquired as a result of the Schoneld deal were, of course, some of American’s most notorious market manipulators, most with ties to Russian organized crime. I will return to them in a later chapter, but for now it is enough to recall that Schonfeld was formerly a principal (along with the Al Qaeda-tied Anthony Elgindy) at Blinder, Robinson, a Russian Mafia brokerage that was indicted for manipulating stocks with a multitude of organized crime figures, including Genovese Mafia capo Thomas Quinn.
Schonfeld is also part of tight-knit network of hedge fund managers, all of them (including the above-mentioned Gene Phillips) among the closest associates of the famous financial criminal Michael Milken (one-time financier of Blinder, Robinson).
Earlier chapters of this series made it eminently clear that Milken and all of the hedge fund managers who are his close associates have ties to organized crime. Several of them (e.g. Steve Cohen of SAC Capital) had previously been among the select partner-traders who effectively ran a Mafia brokerage called Gruntal Securities.
One of those Gruntal partner-traders had been Felix Sater, the Russian Mafia boss with ties to Russian intelligence. While still at Gruntal, Felix was charged, but not jailed, for stabbing a trader in the face with the broken stem of a wine glass (actually a martini glass, according to his associates). After leaving Gruntal, Felix founded White Rock Partners, the outfit that was indicted for manipulating stocks with A.R. Baron (clearing firm for the Amanats’ Datek Securities) and five members of La Cosa Nostra.
The head of Gruntal’s options department, recall, had been Carl Icahn. He went on to found his own fund with finance from Michael Milken and Zev Wolfson (financier of A.R. Baron and multiple other Mafia brokerages). Upon launching his fund, Icahn quickly hired five people, three of whom I’ll mention now.
The first was Alan Umbria. In addition to being a trader, Umbria was the front-man for Genovese Mafia restaurants, such as The Court of the Three Sisters. As related in earlier chapters, Umbria was also involved with people like Louis Micelli, a stock broker who was (until his mysterious death in 2005) trafficking cocaine in league with Hezbollah, a terrorist organization (founded and directed by the regime in Iran) that doubles as a narco-trafficking Mafia outfit.
The second Ichan hire was Allen Barry Witz. According to the FBI, Witz was the last person to see his close associate, Alain Chalem, before Chalem was executed in his New Jersey mansion.
Chalem was a notorious naked short seller who ran two Russian Mafia brokerages, Harbor Securities and Toluca Pacific. Recall that Harbor’s co-founder, Warren Sulmasy, was, in 2008, shorting the markets through Tuco Trading, which cleared his trades through Penson Financial.
Recall also that Chalem was murdered shortly after the above-mentioned Felix Sater threatened to have him killed, and one day after Chalem had a fierce argument with Felix Sater’s father, a Russian Mafia figure who is also closely tied to Russian intelligence.
The third of Icahn’s early hires, Harvey Houtkin, later controlled All Tech Investments, which was affiliated with the Amanats’ Momentum Securities. All-Tech and Momentum, we know, were Penson Financial’s first two clients.
Houtkin also controlled an outfit called Rushmore Capital, which was among the founding shareholders of Terra Nova Financial, another client of…Penson Financial. Terra Nova was covered in Chapter 18 of this series, but I will remind you that Terra Nova was, as of 2008, the only U.S. brokerage to have been caught doing business with Iran.
The head of trading operations at Terra Nova, recall, was an Iranian fellow named Behruz Afshar. In addition to running Terra Nova’s trading operations, Afshar was a co-owner of Afshar, Inc., which was loading Condor Air cargo planes with precious metals, destination unknown. Afshar’s partners in that operation included his relative Hamayoun Afshar (who was jailed for money laundering) and Ghazaros Ghazarossin (who had ties to Hezbollah).
This is the same Terra Nova whose CEO, Michael Nolan, was (until 2007) simultaneously running a precious metals mining outfit controlled by “Specially Designated Global Terrorist” Yasin al Qadi (Osama bin Laden’s favorite financier).
Also involved with Terra Nova were the Amanats, the brothers who founded Momentum Securities and Datek Securities, and who were most responsible for building Penson Financial’s client relationships. Thanks to the Amanats, Terra Nova became (along with Penson) one of the leading providers of “sponsored access”–the service that was identified (eg. in testimony before the House Committee on Homeland Security) as a key vulnerabilty that could be exploited by financial terrorists or foreign goverments (such as Iran) wishing to wage economic warfare against the United States.
Meanwhile, the Amanats had served as key consultants to an outfit called Computer Clearing Services. In this capacity they brokered CCS’s partnership with Global Securities, which had catered to a select clientele of closely affiliated short sellers. I’ll return to them in a moment, but before I do, I’ll remind you that Global Securities was affiliated with the New York-based Assa Corporation, an Iranian government front that was indicted in 2009 for espionage and funding Iran’s nuclear weapons program.
The Assa Corporation was unit of the Alavi Foundation. Like Palestinian Islamic Jihad leader Sami al Arian (close associate of the Amanats), the Assa Corporation and Alavi took their directions from Iranian government agents stationed in New York.
In 1996, the New York Daily News reported that the FBI suspected that Assa Corporatoin (Alavi Foundation) executives were plotting to smuggle nuclear materials into the U.S. for use in a terrorist attack against a major American city.
Given all of this information, perhaps it will not seem entirely crazy of me to relate to you a story about an unfortunate event that occured in 1999, shortly after Penson Financial was founded, with the Amanats’ Momentum Securities and the affiliated All-Tech Investments as its first clients.
It was not a good time for these brokerages. In July of that year, 1999, Mark Barton, a trader for Mometum Securities and All-Tech Investments, wrote a letter stating (in part): “I don’t plan to live very much longer. Just long enough to kill the people who greedily sought my destruction.”
After writing that letter, Barton walked into All-Tech’s Atlanta offices with a Colt .45 in one hand, and a Glock 9 mm in the other. His first stop was the desk of All-Tech’s manager, an Iranian fellow named Jaillal Irani Ramoutar, who had previously been a principal at Hanover Sterling, a brokerage controlled (according to the DOJ) by Russian organized crime and the Genovese Mafia family.
Ramoutar was fortunate to have been away from his desk, so he did not die. However, Barton killed three other All-Tech traders that day. And when he was finished at All-Tech, he walked across the street to Momentum Securities and killed six of their traders.
Among the dead were a Pakistani trader named Dean Delawalla and an Iranian trader named Jamshid Havash, both of whom had in their possession airline tickets–destination Tehran, Islamic Republic of Iran.
In addition to his work as a trader, Dean Delawalla owned a company called Tech 2100, which was warehousing medical equipment that contained radioactive isotopes. Much of the illegal trafficking in radioactive materials that can be used in dirty bombs involves the purchase or theft of medical equipment that contains such materials.
I have no evidence that Delawalla was such a trafficker, but a number of the others killed by Barton had interesting backgrounds.
Havash, the other victim with a ticket to Iran, was no mere trader. He also owned a company, Get the Lead Out, Inc., that wholesaled Ak-47s and other automatic weaponry. Meanwhile, Havash had worked for Lockwood Greene Technologies. In that capacity, he helped build a facility at the Los Alamos nuclear weapons laboratory.
I don’t want to wander too far into the realm of conspiracy theory, but I do think it is worth identifying traders who 1) traffic in machine guns; and 2) work for criminal brokerages tied to the Mafia and jihadis; 3) have family members (as Havash did) who work for the terrorist sponsoring Iranian regime; and 4) have achieved access to American nuclear weapons facilities.
Barton also shot Momentum trader James Jordan, but Jordan survived. He continued to work as a trader at Momentum while running a company called Radioactive Isolation Consortium, which (like Nuclear Solutions, the outfit targeted by Anthony Elgindy) advertised itself as providing safe treatments for “extremely hazardous, high-level radioactive wastes stored at the Department of Energy’s nuclear weapons production facilities,” including Los Alamos.
The Department of Energy has since issued a report that casts doubt on the reliability of Mr. Jordan’s treatment procedures, though nobody has accused him of putting nukes to ill use. Still, one hopes that the jihadi and mobster friends of Momentum Securities founder Omar Amanat are nowhere near Mr. Jordan.
Of course, it is possible that there is nothing strange about a mad gunman (Mark Barton) seeking to kill proprietary day traders with access to nuclear materials. And it might be a mere coincidence that two of those traders were on their way to Iran. But one need not be of unsound mind to notice such coincidences, which keep piling up.
The press reported that Mark Barton was just your typical deranged gunman on a murder spree. After the murders, he was shot and killed by police at a gas station. Later, his wife and children were found dead. Somebody had smashed in the kids’ heads with a hammer and drowned them in a bathtub. A note (purportedly written by Barton) was found. In the note, Barton admitted that he had killed his kids.
According to the press, Barton suffered from a high-degree of mental stress as the result of losing a few thousand dollars trading at Momentum and All-Tech. He cracked. It was just stress. That’s why he smashed in the heads of his children with a hammer, rather that shoot them with his Glock 9 mm. And that’s also why he murdered the radioactive traders.
Maybe that’s all there was to it.
But there are more coincidences.
In addition to being a murderous trader, Barton owned a company that was ostensibly in the business of making soap. One Momentum trader said that the soap is what made Barton crack. Barton “was always stressed out about his soap,” said the trader.
That could be right. But Barton’s company, TLC Manufacturing, didn’t really make soap. It merely stockpiled a chemical called sulfuric acid. This chemical is sometimes used to make soap, but it is also used to make large bombs.
Recall that Amanat associate Yasin al Qadi (later known as a “Specially Designated Global Terrorist”) was, at this time in 1999, also invested in a “soap” company. That “soap” company, Global Chemical, was, in fact, a bomb and chemical weapons factory. And like TLC Manufacturing, it was stockpiling sulfuric acid.
Given that TLC Manufacturing never produced any soap (and was stockpiling no other ingredients that could be used to make soap), it seems fair to ask whether Barton or his associates were intending to blow something up.
Again, I don’t mean to wander too far into the realm of conspiracy theory, but one thing is certain: TLC Manufacturing was no ordinary company. An Atlanta police officer who investigated TLC says it was also warehousing chemicals that were intended for use in the production of methamphetamines.
So maybe Barton was just “stressed out about his soap.” But one could imagine a scenario where he was not doing things like stockpiling bomb chemicals and producing methamphetamines all on his own. With that scenario in mind, DeepCapture will go out on a limb and say that Barton had business partners who were probably bad people.
And maybe it was those bad people who murdered Barton’s family and did so in a deliberately brutal manner, smashing the kids’ heads in with a hammer, drowning them in the bathtub.
Maybe the bad people forced Barton to write that note admitting to the murders of his children, or maybe they wrote the note themselves. Maybe Barton was involved in something with the Iranians he killed, and with Jaillal Irani Ramoutar, the Iranian who was, luckily, away from his desk when Barton came to murder him.
Maybe the interest of some of these people in nukes was not coincidental, and maybe it was related to Barton’s bomb factory.
Maybe. The truth is, I really don’t know. This is one mystery that has, perhaps, thinned out to nothing.
But another coincidence. After the murder spree, a funeral service was held for all the dead traders. The Amanats and the families of Havash and Delawalla, the radioactive traders who were on their way to Iran, invited a man named Shams Bhaloo to give the eulogy for the Muslim traders who were killed.
In response to inquiries from the press, Shams Bhaloo described himself only as a “friend of the Islamic community.”
Certainly, Shams Bhaloo was a close friends with the dead men, and he was a close friend of Momentum Securities founders Omar and Irfan Amanat.
Shams Bhaloo had other friends, including the Iranian government. This is because Shams Bhaloo gave that eulogy in his capacity as an official with the Aga Khan Foundation, which has close ties to regime in Tehran.
In addition, the Aga Khan Foundation owns the Pakistan-based Habib Bank, which has been named by U.S. officials as a financier of Al Qaeda.
Moreover, the Habib Bank laundered money for Omar Sayed Shiekh, the Jaish-e-Mohammed operative who kidnapped Wall Street Journal reporter Daniel Pearl in 2002. Shiekh reportedly handed Pearl to September 11 mastermind Khalid Sheikh Mohammed, who (according to Mohammed) personally sliced off Pearl’s head with a Yemeni knife.
Multiple accounts suggest that Omar Sayed Sheikh was also a Pakistani intelligence operative who worked closely with Dawood Ibrahim, whose organized crime outfit, D-Company, is, for all intents and purposes, part of Al Qaeda. Ibrahim and D-Company (which also does a lot of business with Habib Bank) have been implicated in multiple terrorist atrocities, including the 2008 Mumbai attack that killed 175 people, five of them Americans.
Also implicated in that attack was Lashkar-e-Tayibba, an affiliate of Al Qaeda, D-Company, and Pakistani intelligence. In recent years, Laskhar has launched several attacks on Pakistani nuclear facilities in an apparent effort to acquire highly enriched uranium.
The top henchmen of D-Company have received paramilitary training from Pakistan’s intelligence services, and Dawood Ibrahim now lives in Karachi under the full protection of the ISI, Pakistan’s main intelligence agency.
Both D-Company and Omar Sayed Sheikh were also linked by U.S. officials to the nuclear proliferation network of A.Q. Khan (known in Pakistan as the “Father of the Islamic Bomb”). In that capacity, D-Company helped Khan deliver nuclear weapons technology to Iran and Libya.
How many more names in the matrix? I shudder to think, but here’s a photo of Shams Bhaloo with some of his Aga Khan friends.
That’s Shams Bhaloo – the handsome fellow in the middle, second row. One down from Shams Bhaloo (second row, far right) is Aziz Mohammed Bhai, a key Aga Khan official and the top D-Company henchman in Bangladesh.
Bhai traffics in weapons and narcotics across the Myanmar border, and has been identified by Indian officials as a trafficker of nuclear weapons technology. According to the Bangladeshi government, Bhai has also conspired with Al Qaeda operatives to carry out a number of assassinations, including the murder of Sohel Chowdhury, then Bangladesh’s most famous movie star.
D-Company is the biggest investor on the Karachi stock exchange, well versed in the art of market manipulation. Recall that another top D-Company henchman, Naresh Patel, was indicted by the DOJ for transacting (in 2008) massive volumes of manipulative wash trades through Man Financial, which referred all the trades to …. now let’s not always see the same hands… Penson Financial.
By the end of this story, it will no longer seem like a coincidence that Penson has transacted trades for D-Company.
Back to the photo of Shams Bhaloo, who gave the eulogy for the dead radioactive traders. In the front row, first on the left, you can see Moustapha Sharba, a general in the Syrian army. It is believed that Sharba was involved with Syria’s covert efforts, coordinated with North Korea (and maybe Iran), to acquire the capacity to exterminate its enemies with nuclear weapons.
Coincidences? Yes, perhaps. It’s a small world, and nobody is guilty by association. But it should be recalled that the CEO of the Aga Khan Foundation was Ali Nazerali, who then ran a hedge fund (Valor Invest) in partnership with Yasin al Qadi (Osama bin Laden’s favorite financier and founder of Global Chemical, the “soap” company that was preparing to manufacture explosives and chemical weapons).
I have written extensively about Ali Nazerali in earlier chapters, but it seems worth repeating parts of his story. Because, as it happens, Nazerali’s story converges with the story of Momentum Securities founders Omar and Irfan Amanat. And it is in the convergence of these stories that we can learn more about the clientele whose massive trading volumes made Penson Financial the largest brokerage on the planet in 2008.
Ali Nazerali got his start as an arms dealer to the mujahedeen. Later, Nazerali was the top employee of Abbas Gokal, a Pakistani intelligence asset who now resides in Tehran, where he serves as an important financial advisor to the Iranian regime.
In the 1970s and 1980s, Nazerali and Gokal were important figures in the Bank of Credit and Commerce International (BCCI), the massive criminal enterprise that did business with everyone from La Cosa Nostra and the Russian Mafia to Columbian drug cartels and the agents of multiple intelligence services. In addition, as a money laundering expert told the Los Angeles Times, “BCCI did dirty work for every major terrorist service in the world.”
Gokal (who did jail time for his role in BCCI crimes) controlled the Gokal Group, which was BCCI’s most important subsidiary. Meanwhile, Nazerali and his relative, Swaleh Naqvi (who served as BCCI’s CEO) were involved, along with Adnan Khashoggi (a client of Jonathan Curshen’s Red Sea Management), with BCCI subsidiary Capcom, which was controlled by the Saudi intelligence services.
In 1991, a U.S. Congressional committee concluded that Capcom had manipulated the U.S. markets and sought control of U.S. telecommunications companies, most likely for the purposes of espionage.
In addition, Nazerali, his relative Naqvi, and organized crime figure Irving Kott controlled BCCI subsidiary First Commerce Securities, which manipulated the U.S. markets from its base in the Netherlands. After First Commerce was shut down by the Dutch authorities, Kott founded another brokerage, Adler Coleman, with finance from Nazerali and Boris Berezovsky.
In 1996, Forbes magazine would describe Berezovsky as the “Godfather of the Kremlin”, an allusion to his influence with the Russian government and his Mafia ways. In 1999, the above-mentioned Russian mobster Felix Sater tried to broker a deal for Berezovsky to buy Salomon Smith Barney, then one of the largest investment banks in the U.S.
Berezovsky’s business empire was a joint venture with Roman Abramovich. In 2006, while the Abu Dhabi royal family (founding shareholders of BCCI) were brokering the separation of Abramovich and Berezovsky’s business empire, a Berezovsky employee named Alexander Litvinenko was been poisoned and killed with radioactive polonium-210.
Perhaps that is besides the point, but these people often find themselves at the center of strange occurrences.
It was strange, for example, that in 2008, Abramovich’s top henchmen and a Mogilevich henchman (Sergey Maksimov, former exectutive of the above-mentioned YBM Magnex) had opened an account at a tiny, utterly obscure U.S. brokerage that had not even bothered to register itself with the authorities.
That brokerage was Tuco Trading, which deployed the Lightspeed trading platform (designed by Momentum founder Omar Amanat), and cleared all its trades through…Penson Financial.
Recall from earlier chapters that in 2006, Nazerali formed a fund, Star Soft, in partnership with members of the the Mogilevich organization (including Vitali Leiba, former executive of YBM Magnex), and Mufti al Abbar, who was an honorary colonel in the Libyan army, and the man in charge of manipulating the markets for Libyan dictator Muammar Qaddafi.
As of 2008, Star Soft was trading through…Penson Financial. Indeed, Nazerali’s involvement with Penson was extensive, owing to his earlier role in financing (with Berezovsky and organized crime figure Irving Kott) the brokerage Adler Coleman.
One of Adler Coleman’s principal purposes was to clear trades for Hanover Sterling, which was (as the DOJ later determined) controlled by Russian organized crime and the Genovese Mafia family. One of Hanover’s principals was Genovese Mafia capo Alphonse “Allie Shades” Malagone.
Hanover, we know, had another key principal: Jaillal Irani Ramoutar, who later became manager of All-Tech Investments and narrowly missed being assassinated by Mark Barton.
Remember that name: Jaillal Irani Ramoutar. Because he will reappear in a later discussion of two accounts at Tuco Trading that were set up by an Iranian with ties to Russian intelligence, the Revolutionary Guard and Palestinian Islamic Jihad. Those two accounts alone generated 20 percent of Penson’s massive volume in early 2008, so they deserve a chapter of their own.
But first, a bit more about Adler Coleman, the outfit that was clearing Ramoutar’s trades back in the 1990s.
Adler Coleman and Hanover Sterling declared bankruptcy in 1995, when they came under scrutiny for their role in a massive short selling scandal. The media has consistently misreported the facts of this scandal, but it involved Hanover Sterling giving death spiral finance to dozens of companies that were subsequently naked shorted out of existence by a pack of closely affiliated short sellers that included DeCalvacante Mafia capo Phil Abramo, his right-hand man Phil Gurian, and Amr Ibrahim Elgindy (the guy tied to Al Qaeda, Hamas, Palestinian Islamic Jihad, and the Russian Mob).
Recall that all of these market manipulators were close associates of the Amanats. One of them, Phil Gurian, had accounts at the Amanats’ Datek Securities. As noted in earlier chapters, Abramo and Gurian had also been involved with Nazerali’s BCCI venture, First Commerce Securities.
After the bankruptcy, Adler Coleman was reconstituted under a new name, JB Oxford, and Kott (still working in cahoots with Nazerali) brought aboard several people to help run the operation. One of these people was Rafi Khan, a future client of Curshen’s Costa Rica outfit, Red Sea management. By 2008, Khan was trading directly though…Penson Financial.
Khan is the son of a Pakistani diplomat said (by Khan’s close associates) to be affiliated with Pakistani intelligence. And until recently, the Egyptian government had an arrest warrant out for Khan’s brother, Ayub, said by the Egyptians to be tied to Gama’a al-Islamiyya, another Al Qaeda affiliate.
In 1997, Gama’a al-Islamiyya machine gunned and hacked to death 58 foreign tourists, many of them American, at a temple in Luxor, Egypt. A founder of Gama’a al-Islamiya was Omar Abdel Rahman (a.k.a. “the Blind Sheikh”), the cleric who masterminded (with Khalid Sheikh Mohammed’s nephew, Ramzi Yousef) the 1993 World Trade Center attack and issued a fiery fatwah commanding jihadis to destroy the American economy.
For close to ten years, JB Oxford (the Nazerali-Kott outfit that employed Khan) lived up to its reputation as one of the most notorious brokerages on Wall Street, clearing trades for a whole network of outfits—such as Stratton Oakmont, Biltmore Securities, Monroe Parker, and Greenway Capital—that would, in various DOJ cases, be linked to organized crime.
In 2005, with the DOJ zeroing in, JB Oxford’s clearing operations were shifted to Computer Clearing Services, the outfit whose business relationships were brokered by the Amanats. That same year, Computer Clearing Services and all of JB Oxford’s client relationships were sold to…Penson Financial.
Indeed, Computer Clearing Services (essentially, the new Adler Coleman and JB Oxford) became Penson Financial’s principal subsidiary, responsible for “clearing and settling” client short sales. That is, CCS was responsible for ensuring that stock sold short through Penson was “cleared and settled”–i.e. delivered. Or, in this case, not delivered (the principal feature of manipulative short selling being that shares “fail to deliver.”)
As of 2008, Penson Financial’s top executive in charge of “clearing and settlement” was Christopher Sandel. He had previously been vice president of “clearing and settlement” for CCS’s predecessor firm, Adler Coleman, where he worked for Adler’s founders (Nazerali, Kott, Berezovsky), and spent much of his time failing to deliver stock sold short by the likes of Hanover Sterling principals Alphonse “Allie Shades” Malagone, Jaillal Irani Ramoutar, and the Russian Mafia.
As I mentioned, the Amanat brothers, Irfan and Omar, had been key consultants to Computer Clearing Services. And it was the Amanats (probably in cahoots with Nazerali, a close associate of the Amanats) who brokered the sale of CCS to Penson Financial. It was also the Amanats who brokered many of CCS’s client relationships, including the one that it had with that Iran-linked outfit, Global Securities.
Global Securities had been founded by Art Smolensky, but was managed by three Iranian nationals: Aarif Jamani, Nashrulla Jamani, and Ferzana Jamani. These guys were also clients of Curshen’s Costa Rica outfit, Red Sea Management.
Given Global Securites affiliation with the Assa Corporation (the Iranian outfit indicted for espionage in 2009), and given the jihadi affiliations of Curshen’s other clientele (not to mention his own donations to Hamas), it does seem a bit odd that he would locate his offfices in the same building that housed the Israeli embassy.
At any rate, Global Securities catered to a select clientele of closely affiliated short selllers, all of whom had interesting backgrounds. One of them was, of course, Ali Nazerali. Another was Anthony Elgindy, the Al Qaeda-tied short seller who plotted the destruction of hundreds of American public companies on a private internet chat site hosted by a company owned by Hamas political chief Marzook.
Elgindy was jailed in 2005, but all of Global’s other clients remained clients of Global’s partner brokerage Computer Clearing Services. And all were key clients of Penson Financial from 2005 (when Penson purchased CCS) through 2008 (when Penson suddenly became the largest brokerage on the planet by volume).
Among these former Global clients (now Penson clients) were the above-mentioned Rami El-Betrawi, Rafi Khan (formerly of JB Oxford), and Adnan Khashoggi, all of whom were also clients of Curhen’s Costa Rica operation.
Khashoggi (like Penson clients Mufti al Abbar and Martin Schlaff) was, as of 2008, an important advisor to Libyan dictator Muammar Qaddafi. Khashoggi is also a long-time business partner of Iranian intelligence asset and arms dealer Manuchar Ghorbanifar.
In addition, Khashoggi has been linked to nearly every major scandal of the past three decades, from Iran-Contra to BCCI and Capcom (with Nazerali), to the 1997 collapse of Bangkok Bank of Commerce (which triggered a devastating financial crisis in Asia), to the take-down of MJK Clearing, orchestrated with Anthony Elgindy, Rafi Khan and the others.
Other new Penson clients (all former clients of Global) were Sherman Mazur and Rakesh Saxena, both of whom had been tied to the collapse of Bangkok Bank of Commerce and were the key figures (along with Khashoggi) behind yet another massive financial scandal–General Commerce Bank, an outfit in Austria that declared insolvency in 2005 admist revelation of its ties a global network of Mafia brokerages that specialized in manipulating the markets.
Most of the Mafia brokerages (Eastbrokers and Chech Industries, formerly known as Stratton Oakmont, just to name a couple) had cleared their trades through the Kott-Nazerali outfit JB Oxford and its successor firm, Computer Clearing Services. And with Penson’s 2005 purchase of CCS, they, of course, became clients of…Penson Financial.
This was not a coincidence. We are looking at a network of closely affiliated market manipulators. While it is impossible to know the extent to which all of these market manipulators have coordinated their trades, it is clear that they work together.
Just to cite one example, Sherman Mazur, one of the figures behind General Commerce, is now facing a civil lawsuit for manipulating stocks with Phil Gurian, the mobster who was a client of Amanat’s Datek Securities and who was (along with Elgindy) short selling companies that received death spiral finance from Hanover Sterling (partner brokerage of Adler Coleman).
Rakesh Saxena (another of the Penson 2008 clients formerly associated Global Securities and General Commerce) was one of the world’s most destructive short-side market manipulators. He was also a leader of the Marxist Naxalite rebel group in India, tied (by Indian authorities) to D-Company and Al Qaeda affiliate Lashkar-e-Tayyiba.
In 2009, Saxena was deported from Canada to Thailand to face charges for his role in the Bank Bank of Commerce collapse. Thai authorities have also linkied Saxena to multiple death threats and at least one attempted homicide. Meanwhile, Russian media has reported that Saxena’s manipulative trading of bonds and currency derivatives contributed to the 1998 collapse of the Russian economy–a disaster that helped bring Vladimir Putin to power a year later.
For further details about Saxena, see earlier chapters. Those chapters also contain details about Global’s other clients (all later clients of Penson). These included: Rene Hamouth (funder of Hamas); Suleiman Rashid (whose brother runs a Hamas cell in Haifa); and Mansur Ijaz (manager of global investment funds, and lobbyist for the Pakistani government).
All of these characters are major-league and eminently notorious short sellers, fully capable of sinking markets. All have strong relationships with regime in Iran. Mansur Ijaz, meanwhile, has deep connections with many of the jihadi terrorist groups in Pakistan, and he has said that he knew Osama bin Laden. Back in 19996, Ijaz brokered the deal that saw Al Qaeda moving its headquarters from Sudan to Afghanistan.
It is difficult to know the details of that deal, but the result was clear: Sudan agreed to expel, but not arrest bin Laden and his crew, while Al Qaeda was given sanctuary in Afghanistan by warlords Gulbuddin Hekmatyar and Yunis Khalis (whose deputy Abdul Haq, we know from Chapter 18, would later plot a coup with the Chicago stock trader Joe Ritchie and the future executive director of the above-mentioned Terra Nova Financial).
In 2002, Wall Street Journal reporter Daniel Pearl set out to investigate the ties that bind some jihadi terrorist outfits with Pakistani intelligence, D-Company, and nuclear weapons proliferators. Pearl’s first stop–Mansur Ijaz.
It was Ijaz who helped Pearl set up the meetings with the jihadis who subsequently kidnapped Pearl. Soon after, of course, someone cut off Pearl’s head. Khalid Shiekh Mohammed, mastermind of the September 11 attacks, has said that it was he who did the deed.
In an interview with Richard Miniter (incidentally, Miniter and I both formerly held the job of Wall Street Journal editorial page writer in Brussels), Mansur Ijaz said that his father had worked for the Pakistini nuclear weapons program, and also worked for a time as a nuclear weapons scientist in Virginia. I do not know more than that, but sincerely hope to have the opportunity to meet with Ijaz before my next trip to Pakistan.
In his interview with Miniter, Ijaz expresssed regret that Pearl was killed, and said that he had offered to help the Wall Street Journal secure Pearl’s release from his jihadi captors. The Wall Street Joural’s editors concluded that Ijaz was not trustworthy.
Re: The Miscreants’ Global Bust-Out Chap 1 - 18
Post by sandi66 on Jul 10, 2011, 2:39pm
But whatever and whoever Mansur Ijaz is (other than a somewhat mysterious hedge fund manager who seems to pop up at the center of interesting events, and has intimate ties with jihadi terrorists), it is somehow unsurprising that he was among the select and equally unusual traders associated with the strange brokerage, Global Securities (the clients of which were key clients of Penson Financial in 2008).
Other Global clients (Penson clients as of 2008) were tied to Russian organized crime. Most were tied to Russian intelligence. One of them was the above-mentioned Felix Sater. Another was Yvgeny Dvoskin, alleged (see earlier chapters) to be the ring-leader of ten Russian spies arrested by the FBI in 2010.
Arik Kislin was also a Global client. In addition, he was a “member” (according to the FBI) of Vyacheslav Ivankov’s Russian Mafia gang. Ivankov was assassinated on a Moscow street in 2009, after admitting that he worked for the Russian intelligence services.
Kislin, meanwhile, has admitted to being a one-time business partner of Babeck Seroush, an Iranian arms dealer with ties to the Russian intelligence services and the regime in North Korea. Again, you can find complete documentation of these facts in earlier chapters.
If you manage to get through all those chapters, I encourage you to turn next to the book “Who Killed Daniel Pearl?”–which is one of the best works of investigative journalism focusing on the jihad, perhaps because it was written by Bernard-Henri Levy, whose first profession was not journalism, but philosophy.
Following in Pearl’s footsteps, Bernard-Henri Levy (“BHL” to his friends) came to explore parts of the network that is explored in this story. In so doing, Levy came to see the ties that bind rogue intelligence operatives, terrorists, mobsters, nuclear weapons traffickers, and (at one point in Levy’s story) short sellers.
Having been thus illuminated, Levy described it as being: “…sucked into the hole, swallowed in this matrix, carried off on this nightmare ride…” Which is a pretty fair description of how I felt some years into this investigation–”sucked into the hole, swallowed in this matrix.”
And so, in the fall of 2010, I kept calling Zuhair Karam.
As you might recall, Zuhair Karam is a producer of jihadi propaganda and a former employee of Tuco Trading. It was at Tuco that Jaillal Irani Ramoutar and another Iranian had two accounts that generated more than 20 percent of the short selling volume cleared by Penson Financial in the month before the 2008 collapse of Bear Stearns.
As I mentioned, those two accounts will get a chapter of their own. But suffice it to say, Zuhair knew the Iranians, and he knew the others in the “matrix” — or the “nexus” as the National Intelligence Director would call it.
Zuhair knew the jihadis and the Russian mobsters who were trading through Penson Financial. He knew the whole crowd: the Blind Shiekh, the leaders of Palestinian Islamic Jihad, the Hamas operatives who were at the secret meeting in Philadelphia, the Al Qaeda front organizations that were shopping for nukes; and…Ali Nazerali.
I find Nazerali to be endlessly fascinating. Indeed, he veritably defines the “matrix.” And not only was he a key client of Penson Financial (and the financier of Adler Coleman and JB Oxford, which were folded into Penson with the 2005 purchase of Computer Clearing Services) but he also played an important role in developing a lot of Penson’s other client relationships.
So I can’t help but reiterate Nazerali’s key business relationships, some of which I have mentioned in this chapter, others of which were covered in earlier chapters, and nearly all of which pertain to the business of market manipulation.
Nazerali’s business partners have included: 1) the Mogilevich organization (instrument of Russian intelligence; tried to sell highly enriched uranium to Al Qaeda); 2) Osama bin Laden’s favorite financier (Yasin al Qadi); 3) Mufti al Abbar, chief market manipulator for Muammar Qadaffi (recall that al Abbar also “vacationed” in North Korea in 2006); 4) Abbas Gokal (Pakistani intelligence asset and key financial adisor to the Iranian regime); 5) Habib Bank (bankers to Daniel Pearl’s kidnappers and D-Company, among others).
There are more: 6) Sergei Chemezov (Russian intelligence operative and Russian’s chief arms dealer, once in charge of the Luch nuclear weapons facility); 7) DeCalvacante Mafia capo Phil Abramo (known as the “King of Wall Street”); Boris Berezovsky (former “Godfather of the Kremlin”) 9) Roman Abramovich (current “Godfather of the Kremlin”); 10) the Abu Dhabi royal family; 11) the ruler of Dubai.
And the list goes on: 12) the head of Saudi intelligence (Nazerali partner in the stock scam Even Resources); 13) Adnan Khashoggi (Capcom); 14) the Ndrangheta Mafia organization in Italy; 15) an impressive number of securities traders who are also narco-traffickers (such as Paul Combs, until Combs was whacked by Nazerali’s mobster friend Egor Chernov); 16) the Mafia brokerages that cleared their trades through Adler Coleman and JB Oxford…and, of course, 17) BCCI, the greatest criminal bank of all time, controlled by future financiers of Al Qaeda.
It has occured to me that Penson Financial became, in effect, the new BCCI–the go-to operation for the global conglomeration of crime. The one-stop financial shop for the “dangerous nexus” (in the words of Admiral Blair) that has “penetrated legitimate financial and commercial markets…raising the risk of significant damage to the global financial system.” Or as we at DeepCapture like to call it, “the matrix.”
Another Penson Financial client in 2008: Sheikh Khalid bin Mahfouz, who had paid a fine of more than $200 million to settle charges for his role in the BCCI affair. Until his death in 2009, Mahfouz was one of Saudi Arabia’s wealthiest financiers. He was also the founder (with Ali Nazerali’s hedge fund partner, “Specially Designated Global Terrorist” Yasin al Qadi) of the Muwafaq Foundation, said by the U.S. Treasury to be “an Al Qaeda front.”
In addition, Shiekh Mahfouz provided finance to Mohamed Loay Bayazeed, who (according to the FBI) met with Russian mobsters in an attempt to “obtain uranium for Osama bin Laden for the purpose of developing a nuclear weapon.”
Another Penson client in 2008 was Shiekh Ahmed Turki Yamani, one-time financier of Benevolence International, the Al Qaeda front said by the DOJ to have had contacts with people who were trying to buy nuclear weapons from organized criminals in Russia.
Sheikh Yamani, whose Investcorp operates more than 100 hedge funds in the United States, was not only a founding shareholder of BCCI, he was also a former Saudi Minister of Petroleum who played a key role in implementing the 1973 oil embargo as a form of economic warfare against the United States. That embargo was masterminded by the Abu Dhabi royal family, also among the founding shareholders of BCCI; and also, as of 2008, clients of—Penson Financial.
Another Penson client: a Bermuda-based brokerage and hedge fund outfit called Lines Overseas Management. Who was trading through Lines Overseas? We know some of them already: Ali Nazerali, the Mogilevich organization, and Nazerali’s other close associate–Ivan Boesky.
That’s Ivan Boesky, who spent 1979-1980 in Iran building relationships with the Islamic regime; and who, in the 1980s, before his indictment on multiple counts of securities fraud, worked with Marc Rich (indicted for trading with Iran during the Iran-hostage crisis) out of offices that they rented from the Alavi Foundation, the Iranian goverment front (and Global Securities affiliate) indicted for espionage and funding Iran’s nuclear weapons program.
In 2008, Lines Overseas transacted (on behalf of its clients) massive volumes of short selling through a brokerage called Vfinance, which cleared all its trades through Penson Financial. A Vfinance broker says that even back in 2006 Lines Overseas “trading over the U.S. markets was more than the trading of most regional banks…[Vfinance] either accumulated or liquidated millions of shares a day for them”
Vfinance was set up with funding from several financial firms, one of which was Balmore Investments, the outfit controlled byMartin Schlaff (former KGB and Stasi asset; crony of Vladimir Putin and Muammar Qadaffi; money launderer for Hamas; partner of Semion Mogilevich).
Also involved in setting up Vfinance: Thomson Kernaghan, a Mafia brokerage that was, as of 2000, run by future Penson Financial client Mark Valentine, a criminal short seller (busted in Operation Bermuda Short) who got his job at Thomson Kernaghan at the behest of Soleiman Rashid and his pal…Ali Nazerali.
Thomson Kernaghan was the principal underwriter for multiple ventures developed by Nazerali’s hedge fund partner, “Specially Designated Global Terrorist” Yasin al Qadi (who, recall, has done plenty of business with Schlaff and other Penson clients). Meanwhile, Valentine was a parter in Navigator Asset Management, employer of Anna Chapman, among the ten Russian spies arrested by the FBI in 2010.
Given that Navigator was a Penson client, it might be significant that Lines Overseas Management’s clients included: Christopher Metsos, one of the ten Russian spies arrested in 2010; and Yvgeny Dvoskin, alleged ring-leader of those ten Russian spies. Their trades were referred to Vfinance, which cleared the trades through Penson Financial.
According to FINRA (which, in typical fashion, did nothing more than level a small fine), much of the volume that Vfinance transacted through Penson at the height of the financial crisis was manipulative naked short selling.
The naked short selling conducted on behalf of Lines Overseas Management’s clientele was handled by two Vfinance brokers: Zayed Mustafa and Gustavo Chacin.
I don’t know much about Mustafa. Gustavo Chacin operates out of Panama. He hails from Venezuela. We will learn about a few more Venezuelan market manipulators in coming chapters. No discussion of the “matrix” is complete without reference to Venezuela–ally of Iran, training ground for Iran’s terrorist proxies.
Gustavo’s brother is German Chacin, a wheeler-dealer married (perhaps strategically) to Trilby Lundberg, daughter of one of the world’s biggest oil traders, Dan Lundberg.
I say “strategically” because Trilby’s family members have loudly objected to the marriage, saying that Chacin has used Trilby to get close to her father and to fish for confidential information about his oil trading. Meanwhile, German Chacin claims to be a consultant specialized in monitoring for acts of financial terrorism–particularly attacks that target the commodities markets.
This reminds me a bit of Imagis, the anti-terrorism company (see earlier chapters of this series) that Ali Nazerali founded with “Specially Designated Global Terrorist” Yasin al Qadi. It reminds me of the other anti-terrorism companies linked to people in the matrix: like Johnathan Curshen’s Skyway; and Innovative American Technology, run for a time by Mogilivech organization man (and Nazerali crony) Norbert Grupe.
At any rate, Gustavo and German Chacin are part of the matrix–the small world that is the underworld of mobsters and market manipulators, terrorists and nuclear traffickers.
In the 1980s, the Chacin brothers owned several companies – including Tal Technologies and TK-7 Corporation – that helped an Iraqi financier named Ihsan Barbouti fulfil a contract to build a chemical weapons plant in Rabat, Libya for Muammar Qaddafi.
In addition to building chemical weapons plants, Barbouti had (according to multiple books written on the subject) extensive ties to Ramzi Yousef, who carried out the 1993 terrorist attack (masterminded by the Blind Sheikh) on the World Trade Center.
Barbouti also worked with A.Q. Khan (“Father of the Islamic Bomb”) to transfer nuclear weapons technology to Libya and Iran. When the U.S. government began investigating Barbouti in 1989, the Chacins sued Barbouti, claiming (rather implausibly) that he had tricked them into providing support to Libya’s chemical weapons facility.
Soon after, Barbouti disappeared. His family said he was dead, and held a funeral in Britain.
However, as Britain’s Independent newspaper later reported, there was much suspicion that Barbouti had faked his death to avoid prosecution.
Whatever the truth, Barbouti left behind a New York and Texas-based company called IBI, Inc, which had been linked to the chemical weapons deal in Libya. That company changed hands a couple of times before 1999, at which point it was purchased by a stock brokerage that had been founded earlier that year.
The brokerage that bought Barbouti’s chemical weapons company was… wait for it, wait for it …..Penson Financial.
To be continued…
Re: The Miscreants’ Global Bust-Out Chap 1 - 19
Post by sandi66 on Jul 23, 2011, 12:40pm
Decisions & Orders
Document Sub-category: Decisions
Document No.: 2011/07/18
Subject: Amr I. Elgindy (also known as Anthony Elgindy, Tony Elgindy and Anthony Pacific) [Decision]
Published Date: 07/18/2011
Effective Date: 07/18/2011
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2011 BCSECCOM 343
Amr I. Elgindy
(also known as Anthony Elgindy, Tony Elgindy and Anthony Pacific)
Section 161 of the Securities Act, RSBC 1996, c. 418
¶ 1 This is an order under sections 161(1) of the Securities Act,RSBC 1996, c. 418.
¶ 2 On January 24, 2005, the United States District Court for the Eastern District of New York convicted Amr I. Elgindy (also known as Anthony Elgindy, Tony Elgindy and Anthony Pacific) of offences arising from transactions, business or courses of conduct related to securities.
¶ 3 From March 2000 to May 2002, Elgindy engaged in insider trading, manipulation and extortion thereby committing numerous federal criminal offences. He engaged in illegal insider trading by selling shares short based on undisclosed negative material information about companies that he stole from the government. Then he manipulated the shares when he disseminated the undisclosed information, as well false and misleading information that caused the share prices to drop. During this period, he extorted shares and other things of value from persons associated with the companies targeted for short selling and manipulation.
¶ 4 On June 19, 2006, Elgindy was sentenced to 135 months imprisonment, three years of supervised release, and was ordered to pay forfeiture in the amount of US$1,568,000.
¶ 5 On December 16, 2010 the executive director issued a further amended notice of hearing alleging Elgindy’s conduct was contrary to the public interest
¶ 6 In the notice, the executive director asked us to hear questions of liability and sanction at the same time and to have the hearing conducted in writing only. We so rule.
¶ 7 After considering staff’s and Elgindy’s submissions, we find Elgindy’s conduct described in the notice contrary to the public interest, and considering it to be in the public interest, we order:
1. under section 161(1)(b) of the Act, that Elgindy cease trading in, and is prohibited from purchasing, securities and exchange contracts permanently, except that he may trade and purchase securities through accounts in his name at a registered dealer;
2. under section 161(1)(d)(i) and (ii) of the Act, that Elgindy resign any position he holds as, and is permanently prohibited from becoming or acting as, a director of any issuer, registrant or investment fund manager;
3. under section 161(1)(d)(iii) of the Act, that Elgindy is permanently prohibited from becoming or acting as a registrant, investment fund manager or promoter;
4. under section 161(1)(d)(iv) of the Act, that Elgindy is permanently prohibited from acting in a management or consultative capacity in connection with activities in the securities market; and
5. under section 161(1(d)(v) of the Act, that Elgindy is permanently prohibited from engaging in investor relations activities.
¶ 8 July 18, 2011
¶ 9 For the Commission