National Debt Soars to Highest Level Since WWII
July 1st, 2010Via: USA Today:
The federal debt will represent 62% of the nation’s economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.
The Insane Overuse of Antibiotics in Industrial Meat Production
June 30th, 2010This is another one for your Captain Obvious file folder.
Also, if you’re concerned about issues like this, and try to eat clean food, you might be mentally ill. Have a nice day, and make sure to take your happy pills with your ammonia burger.
Via: New York Times:
Federal food regulators took a tentative step Monday toward banning a common use of penicillin and tetracycline in the water and feed given cattle, chickens and pigs in hopes of slowing the growing scourge of killer bacteria.
But the Food and Drug Administration has tried without success for more than three decades to ban such uses. In the past, Congress has stepped in at the urging of agricultural interests and stopped the agency from acting.
In the battle between public health and agriculture, the guys with the cowboy hats generally win.
The F.D.A. released a policy document stating that agricultural uses of antibiotics should be limited to assuring animal health, and that veterinarians should be involved in the drugs’ uses.
While doing nothing to change the present oversight of antibiotics, the document is the first signal in years that the agency intends to rejoin the battle to crack down on agricultural uses of antibiotics that many infectious disease experts oppose.
Dr. Joshua M. Sharfstein, the agency’s principal deputy commissioner, refused at a news conference to give details about when the agency would take more concrete steps.
“We believe this is a public health issue of some urgency,” Dr. Sharfstein said. “We’re looking to see some progress soon.”
About 100,000 people die every year from hospital-acquired infections caused by bacteria that, because of overuse of antibiotics, have developed resistance to the usual remedies and cannot be killed with them. Many others die from superbugs contracted outside hospitals.
How many deaths can be attributed to agricultural uses of antibiotics?
“I don’t think anyone knows that number,” said Dr. James Johnson, a professor of medicine at the University of Minnesota, “but I think it’s substantial.”
Antibiotics are used in agriculture for three reasons: to promote animal growth, prevent illness and treat sickness. How antibiotics in feed and water help to fatten animals is not entirely clear.
The industrialization of animal husbandry has increased processors’ dependence on antibiotics because factory farm animals tend to be sicker and feed-lot diets can encourage bacterial infections.
The Union of Concerned Scientists estimated in 2001 that 84 percent of all antibiotics were used in agriculture and that 70 percent were used simply to promote animal growth, not to treat or prevent illness. The Animal Health Institute, a trade association, estimated that 13 percent of agricultural antibiotics were used to promote growth.
Research Credit: Miraculix
Science Historian Cracks the ‘Plato Code’
June 30th, 2010Via: PhysOrg:
A science historian at The University of Manchester has cracked “The Plato Code” – the long disputed secret messages hidden in the great philosopher’s writings.
Plato was the Einstein of Greece’s Golden Age and his work founded Western culture and science. Dr Jay Kennedy’s findings are set to revolutionise the history of the origins of Western thought.
Dr Kennedy, whose findings are published in the leading US journal Apeiron, reveals that Plato used a regular pattern of symbols, inherited from the ancient followers of Pythagoras, to give his books a musical structure. A century earlier, Pythagoras had declared that the planets and stars made an inaudible music, a ‘harmony of the spheres’. Plato imitated this hidden music in his books.
The hidden codes show that Plato anticipated the Scientific Revolution 2,000 years before Isaac Newton, discovering its most important idea – the book of nature is written in the language of mathematics. The decoded messages also open up a surprising way to unite science and religion. The awe and beauty we feel in nature, Plato says, shows that it is divine; discovering the scientific order of nature is getting closer to God. This could transform today’s culture wars between science and religion.
“Plato’s books played a major role in founding Western culture but they are mysterious and end in riddles,” Dr Kennedy, at Manchester’s Faculty of Life Sciences explains.
“In antiquity, many of his followers said the books contained hidden layers of meaning and secret codes, but this was rejected by modern scholars.
“It is a long and exciting story, but basically I cracked the code. I have shown rigorously that the books do contain codes and symbols and that unraveling them reveals the hidden philosophy of Plato.
“This is a true discovery, not simply reinterpretation.”
This will transform the early history of Western thought, and especially the histories of ancient science, mathematics, music, and philosophy.
Dr Kennedy spent five years studying Plato’s writing and found that in his best-known work the Republic he placed clusters of words related to music after each twelfth of the text – at one-twelfth, two-twelfths, etc. This regular pattern represented the twelve notes of a Greek musical scale. Some notes were harmonic, others dissonant. At the locations of the harmonic notes he described sounds associated with love or laughter, while the locations of dissonant notes were marked with screeching sounds or war or death. This musical code was key to cracking Plato’s entire symbolic system.
Dr Kennedy, a researcher in the Centre for the History of Science, Technology and Medicine, says: “As we read his books, our emotions follow the ups and downs of a musical scale. Plato plays his readers like musical instruments.”
However Plato did not design his secret patterns purely for pleasure – it was for his own safety. Plato’s ideas were a dangerous threat to Greek religion. He said that mathematical laws and not the gods controlled the universe. Plato’s own teacher had been executed for heresy. Secrecy was normal in ancient times, especially for esoteric and religious knowledge, but for Plato it was a matter of life and death. Encoding his ideas in secret patterns was the only way to be safe.
Plato led a dramatic and fascinating life. Born four centuries before Christ, when Sparta defeated plague-ravaged Athens, he wrote 30 books and founded the world’s first university, called the Academy. He was a feminist, allowing women to study at the Academy, the first great defender of romantic love (as opposed to marriages arranged for political or financial reasons) and defended homosexuality in his books. In addition, he was captured by pirates and sold into slavery before being ransomed by friends.
Dr Kennedy explains: “Plato’s importance cannot be overstated. He shifted humanity from a warrior society to a wisdom society. Today our heroes are Einstein and Shakespeare – and not knights in shining armour – because of him.”
Over the years Dr Kennedy carefully peeled back layer after symbolic layer, sharing each step in lectures in Manchester and with experts in the UK and US.
He recalls: “There was no Rosetta Stone. To announce a result like this I needed rigorous, independent proofs based on crystal-clear evidence.
“The result was amazing – it was like opening a tomb and finding new set of gospels written by Jesus Christ himself.
“Plato is smiling. He sent us a time capsule.”
Dr Kennedy’s findings are not only surprising and important; they overthrow conventional wisdom on Plato. Modern historians have always denied that there were codes; now Dr Kennedy has proved otherwise.
He adds: “This is the beginning of something big. It will take a generation to work out the implications. All 2,000 pages contain undetected symbols.”
Plato quoted:
“Be kind, for everyone you meet is fighting a hard battle.”
“If women are expected to do the same work as men, we must teach them the same things.”
“Ignorance: the root of all evil.”
“Only the dead have seen the end of war.”
“The price good men pay for indifference to publiuc affairs is to be ruled by evil men.”
“Wise men talk because they have something to say; fools, because they have to say something.”
UN: Scrap Dollar as Sole Reserve Currency
June 30th, 2010SDRs blah blah. It’s a meta fiat currency. In other words, out of the frying pan and into the fire.
Via: Reuters:
A new United Nations report released on Tuesday calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value.
But several European officials attending a high-level meeting of the U.N. Economic and Social Council countered by saying that the market, not politicians, would determine what currencies countries would keep on hand for reserves.
“The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency,” the U.N. World Economic and Social Survey 2010 said.
The report says that developing countries have been hit by the U.S. dollar’s loss of value in recent years.
“Motivated in part by needs for self-insurance against volatility in commodity markets and capital flows, many developing countries accumulated vast amounts of such (U.S. dollar) reserves during the 2000s,” it said.
The report supports replacing the dollar with the International Monetary Fund’s special drawing rights (SDRs), an international reserve asset that is used as a unit of payment on IMF loans and is made up of a basket of currencies.
“A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency,” the U.N. report said.
The report said a new reserve system “must not be based on a single currency or even multiple national currencies but instead, should permit the emission of international liquidity — such as SDRs — to create a more stable global financial system.”
Dumbing Down Society Part I: Foods, Beverages and Meds
June 30th, 2010Via: Vigilant Citizen:
Scientific data has been proving for years that governments around the world are tolerating the selling of many products which have a direct and negative effect on cognitive and physical health.
Cryptogon Reader Signs Up for Hosting with BlueHost
June 30th, 2010Thanks to the owner of edenresearchlab.com, for signing up for hosting with BlueHost. Cryptogon received $90.
Cryptogon Readers Send Contributions
June 30th, 2010Thank you to everyone who sent a contribution over the last couple of weeks in May.
Eileen $50
RH $20
MW $20
MS CA$25
BU $50
DR NZ$50
TG $20
Trading in Citigroup Shares Halted for Five Minutes
June 30th, 2010Anyone who trades ES with a depth of market tool: Did you notice anything weird happening with the sizes today? As you know, my network situation isn’t the best (understatement), but for a fraction of a second, a couple of times today, I noticed that the bid and ask sizes on each level of the DOM blinked zero. I might not have even noticed it, but I have histograms enabled for the sizes and they all just disappeared for a fraction of a second. In the past, when the network has crapped out, the DOM just froze, with all the sizes displaying the last data received.
This was on ESU10.
I just assumed that it was some new network problem, but, after reading this, I’d like to hear from any other ES traders who might have seen anything weird with the sizes today.
Via: Bloomberg:
A 17 percent plunge in Citigroup Inc. today triggered a five-minute trading pause, making the bank the second company halted by the two-week-old circuit- breaker program created to prevent market panics.
The order that caused the slump, 8,820 shares of Citigroup that crossed for $3.3174 at 1:03:51 p.m. in New York, was canceled, according to data compiled by Bloomberg. The stock changed hands for $3.80 when trading resumed, compared with yesterday’s close of $4, as U.S. stocks posted the biggest losses in three weeks.
Regulators are seeking to prevent declines in one or more securities from causing volatility to snowball, prompting a cascade of losses across markets. During the May 6 rout that erased $862 billion in value from U.S. equities in less than 20 minutes, ETFs and companies such as Accenture Plc fell as much as 99 percent. The Securities and Exchange Commission and Commodity Futures Trading Commission said the plunge may have been fueled by curbs that applied on some venues and not others.
“It’s great that the circuit breaker picked it up and stopped everything, but how is an order that size allowed to print so far below where it’s trading?” said Alec Levine, an options strategist at Wallachbeth Capital LLC in New York. “If you did that for every stock you could effectively shut down the stock market.”
Banks Financing Mexico Gangs Admitted in Wells Fargo Deal
June 29th, 2010That there is institutional collusion with drug traffickers is the stuff of Captain Obvious at this late stage of the game, but this Bloomberg piece is pretty good.
All the bold is from me; just noting parts that stood out.
Full text below.
Via: Bloomberg:
Banks Financing Mexico Gangs Admitted in Wells Fargo Deal
By Michael Smith – Jun 29, 2010
Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.
They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.
The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets reports in its August 2010 issue.
This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers — including the cash used to buy four planes that shipped a total of 22 tons of cocaine.
The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.
‘Blatant Disregard’
Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.
Since 2006, more than 22,000 people have been killed in drug-related battles that have raged mostly along the 2,000-mile (3,200-kilometer) border that Mexico shares with the U.S. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid- June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.
Rondolfo Torre, the leading candidate for governor in the Mexican border state of Tamaulipas, was gunned down yesterday, less than a week before elections in which violence related to drug trafficking was a central issue.
45,000 Troops
Mexican President Felipe Calderon vowed to crush the drug cartels when he took office in December 2006, and he’s since deployed 45,000 troops to fight the cartels. They’ve had little success.
Among the dead are police, soldiers, journalists and ordinary citizens. The U.S. has pledged Mexico $1.1 billion in the past two years to aid in the fight against narcotics cartels.
In May, President Barack Obama said he’d send 1,200 National Guard troops, adding to the 17,400 agents on the U.S. side of the border to help stem drug traffic and illegal immigration.
Behind the carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans. The cartels have built a network of dealers in 231 U.S. cities from coast to coast, taking in about $39 billion in sales annually, according to the Justice Department.
‘You’re Missing the Point’
Twenty million people in the U.S. regularly use illegal drugs, spurring street crime and wrecking families. Narcotics cost the U.S. economy $215 billion a year — enough to cover health care for 30.9 million Americans — in overburdened courts, prisons and hospitals and lost productivity, the department says.
“It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network.
“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods says.
Cleansing Dirty Cash
Wachovia is just one of the U.S. and European banks that have been used for drug money laundering. For the past two decades, Latin American drug traffickers have gone to U.S. banks to cleanse their dirty cash, says Paul Campo, head of the U.S. Drug Enforcement Administration’s financial crimes unit.
Miami-based American Express Bank International paid fines in both 1994 and 2007 after admitting it had failed to spot and report drug dealers laundering money through its accounts. Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings.
Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009. Mexican drug dealers used shell companies to open accounts at London-based HSBC Holdings Plc, Europe’s biggest bank by assets, an investigation by the Mexican Finance Ministry found.
Following Rules
Those two banks weren’t accused of wrongdoing. Bank of America spokeswoman Shirley Norton and HSBC spokesman Roy Caple say laws bar them from discussing specific clients. They say their banks strictly follow the government rules.
“Bank of America takes its anti-money-laundering responsibilities very seriously,” Norton says.
A Mexican judge on Jan. 22 accused the owners of six centros cambiarios, or money changers, in Culiacan and Tijuana of laundering drug funds through their accounts at the Mexican units of Banco Santander SA, Citigroup Inc. and HSBC, according to court documents filed in the case.
The money changers are in jail while being tried. Citigroup, HSBC and Santander, which is the largest Spanish bank by assets, weren’t accused of any wrongdoing. The three banks say Mexican law bars them from commenting on the case, adding that they each carefully enforce anti-money-laundering programs.
HSBC has stopped accepting dollar deposits in Mexico, and Citigroup no longer allows noncustomers to change dollars there. Citigroup detected suspicious activity in the Tijuana accounts, reported it to regulators and closed the accounts, Citigroup spokesman Paulo Carreno says.
Criminal Empires
On June 15, the Mexican Finance Ministry announced it would set limits for banks on cash deposits in dollars.
Mexico’s drug cartels have become multinational criminal enterprises.
Some of the gangs have delved into other illegal activities such as gunrunning, kidnapping and smuggling people across the border, as well as into seemingly legitimate areas such as trucking, travel services and air cargo transport, according to the Justice Department’s National Drug Intelligence Center.
These criminal empires have no choice but to use the global banking system to finance their businesses, Mexican Senator Felipe Gonzalez says.
“With so much cash, the only way to move this money is through the banks,” says Gonzalez, who represents a central Mexican state and chairs the senate public safety committee.
Gonzalez, a member of Calderon’s National Action Party, carries a .38 revolver for personal protection.
“I know this won’t stop the narcos when they come through that door with machine guns,” he says, pointing to the entrance to his office. “But at least I’ll take one with me.”
Subprime Losses
No bank has been more closely connected with Mexican money laundering than Wachovia. Founded in 1879, Wachovia became the largest bank by assets in the southeastern U.S. by 1900. After the Great Depression, some people in North Carolina called the bank “Walk-Over-Ya” because it had foreclosed on farms in the region.
By 2008, Wachovia was the sixth-largest U.S. lender, and it faced $26 billion in losses from subprime mortgage loans. That cost Wachovia Chief Executive Officer Kennedy Thompson his job in June 2008.
Six months later, San Francisco-based Wells Fargo, which dates from 1852, bought Wachovia for $12.7 billion, creating the largest network of bank branches in the U.S. Thompson, who now works for private-equity firm Aquiline Capital Partners LLC in New York, declined to comment.
As Wachovia’s balance sheet was bleeding, its legal woes were mounting. In the three years leading up to Wachovia’s agreement with the Justice Department, grand juries served the bank with 6,700 subpoenas requesting information.
Not Quick Enough
The bank didn’t react quickly enough to the prosecutors’ requests and failed to hire enough investigators, the U.S. Treasury Department said in March. After a 22-month investigation, the Justice Department on March 12 charged Wachovia with violating the Bank Secrecy Act by failing to run an effective anti-money-laundering program.
Five days later, Wells Fargo promised in a Miami federal courtroom to revamp its detection systems. Wachovia’s new owner paid $160 million in fines and penalties, less than 2 percent of its $12.3 billion profit in 2009.
If Wells Fargo keeps its pledge, the U.S. government will, according to the agreement, drop all charges against the bank in March 2011.
Wells Fargo regrets that some of Wachovia’s former anti- money-laundering efforts fell short, spokeswoman Mary Eshet says. Wells Fargo has invested $42 million in the past three years to improve its anti-money-laundering program and has been working with regulators, she says.
‘Significantly Upgraded’
“We have substantially increased the caliber and number of staff in our international investigations group, and we also significantly upgraded the monitoring software,” Eshet says. The agreement bars the bank from contesting or contradicting the facts in its admission.
The bank declined to answer specific questions, including how much it made by handling $378.4 billion — including $4 billion of cash-from Mexican exchange companies.
The 1970 Bank Secrecy Act requires banks to report all cash transactions above $10,000 to regulators and to tell the government about other suspected money-laundering activity. Big banks employ hundreds of investigators and spend millions of dollars on software programs to scour accounts.
No big U.S. bank — Wells Fargo included — has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.
‘No Capacity to Regulate’
Large banks are protected from indictments by a variant of the too-big-to-fail theory.
Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.
The theory is like a get-out-of-jail-free card for big banks, Blum says.
“There’s no capacity to regulate or punish them because they’re too big to be threatened with failure,” Blum says. “They seem to be willing to do anything that improves their bottom line, until they’re caught.”
Wachovia’s run-in with federal prosecutors hasn’t troubled investors. Wells Fargo’s stock traded at $30.86 on March 24, up 1 percent in the week after the March 17 agreement was announced.
Moving money is central to the drug trade — from the cash that people tape to their bodies as they cross the U.S.-Mexican border to the $100,000 wire transfers they send from Mexican exchange houses to big U.S. banks.
‘Doesn’t Stop Anyone’
In Tijuana, 15 miles south of San Diego, Gustavo Rojas has lived for a quarter of a century in a shack in the shadow of the 10-foot-high (3-meter-high) steel border fence that separates the U.S. and Mexico there. He points to holes burrowed under the barrier.
“They go across with drugs and come back with cash,” Rojas, 75, says. “This fence doesn’t stop anyone.”
Drug money moves back and forth across the border in an endless cycle. In the U.S., couriers take the cash from drug sales to Mexico — as much as $29 billion a year, according to U.S. Immigration and Customs Enforcement. That would be about 319 tons of $100 bills.
They hide it in cars and trucks to smuggle into Mexico. There, cartels pay people to deposit some of the cash into Mexican banks and branches of international banks. The narcos launder much of what’s left through money changers.
The Money Changers
Anyone who has been to Mexico is familiar with these street-corner money changers; Mexican regulators say there are at least 3,000 of them from Tijuana to Cancun, usually displaying large signs advertising the day’s dollar-peso exchange rate.
Mexican banks are regulated by the National Banking and Securities Commission, which has an anti-money-laundering unit; the money changers are policed by Mexico’s Tax Service Administration, which has no such unit.
By law, the money changers have to demand identification from anyone exchanging more than $500. They also have to report transactions higher than $5,000 to regulators.
The cartels get around these requirements by employing legions of individuals — including relatives, maids and gardeners — to convert small amounts of dollars into pesos or to make deposits in local banks. After that, cartels wire the money to a multinational bank.
The Smurfs
The people making the small money exchanges are known as Smurfs, after the cartoon characters.
“They can use an army of people like Smurfs and go through $1 million before lunchtime,” says Jerry Robinette, who oversees U.S. Immigration and Customs Enforcement operations along the border in east Texas.
The U.S. Treasury has been warning banks about big Mexican- currency-exchange firms laundering drug money since 1996. By 2004, many U.S. banks had closed their accounts with these companies, which are known as casas de cambio.
Wachovia ignored warnings by regulators and police, according to the deferred-prosecution agreement.
“As early as 2004, Wachovia understood the risk,” the bank admitted in court. “Despite these warnings, Wachovia remained in the business.”
One customer that Wachovia took on in 2004 was Casa de Cambio Puebla SA, a Puebla, Mexico-based currency-exchange company. Pedro Alatorre, who ran a Puebla branch in Mexico City, had created front companies for cartels, according to a pending Mexican criminal case against him.
Federal Indictment
A federal grand jury in Miami indicted Puebla, Alatorre and three other executives in February 2008 for drug trafficking and money laundering. In May 2008, the Justice Department sought extradition of the suspects, saying they used shell firms to launder $720 million through U.S. banks.
Alatorre has been in a Mexican jail for 2 1/2 years. He denies any wrongdoing, his lawyer Mauricio Moreno says. Alatorre has made no court-filed responses in the U.S.
During the period in which Wachovia admitted to moving money out of Mexico for Puebla, couriers carrying clear plastic bags stuffed with cash went to the branch Alatorre ran at the Mexico City airport, according to surveillance reports by Mexican police.
Alatorre opened accounts at HSBC on behalf of front companies, Mexican investigators found.
Puebla executives used the stolen identities of 74 people to launder money through Wachovia accounts, Mexican prosecutors say in court-filed reports.
‘Never Reported’
“Wachovia handled all the transfers, and they never reported any as suspicious,” says Jose Luis Marmolejo, a former head of the Mexican attorney general’s financial crimes unit who is now in private practice.
In November 2005 and January 2006, Wachovia transferred a total of $300,000 from Puebla to a Bank of America account in Oklahoma City, according to information in the Alatorre cases in the U.S. and Mexico.
Drug smugglers used the funds to buy the DC-9 through Oklahoma City aircraft broker U.S. Aircraft Titles Inc., according to financial records cited in the Mexican criminal case. U.S. Aircraft Titles President Sue White declined to comment.
On April 5, 2006, a pilot flew the plane from St. Petersburg, Florida, to Caracas to pick up the cocaine, according to the DEA. Five days later, troops seized the plane in Ciudad del Carmen and burned the drugs at a nearby army base.
‘Wachovia Knew’
“I am sure Wachovia knew what was going on,” says Marmolejo, who oversaw the criminal investigation into Wachovia’s customers. “It went on too long and they made too much money not to have known.”
At Wachovia’s anti-money-laundering unit in London, Woods and his colleague Jim DeFazio, in Charlotte, say they suspected that drug dealers were using the bank to move funds.
Woods, a former Scotland Yard investigator, spotted illegible signatures and other suspicious markings on traveler’s checks from Mexican exchange companies, he said in a September 2008 letter to the U.K. Financial Services Authority. He sent copies of the letter to the DEA and Treasury Department in the U.S.
Woods, 45, says his bosses instructed him to keep quiet and tried to have him fired, according to his letter to the FSA. In one meeting, a bank official insisted Woods shouldn’t have filed suspicious activity reports to the government, as both U.S. and U.K. laws require.
‘I Was Shocked’
“I was shocked by the content and outcome of the meeting and genuinely traumatized,” Woods wrote.
In the U.S., DeFazio, who had been a Federal Bureau of Investigation agent for 21 years, says he told bank executives in 2005 that the DEA was probing the transfers through Wachovia to buy the planes.
Bank executives spurned recommendations to close suspicious accounts, DeFazio, 63, says.
“I think they looked at the money and said, ‘The hell with it. We’re going to bring it in, and look at all the money we’ll make,’” DeFazio says.
DeFazio retired in 2008.
“I didn’t want anything from them,” he says. “I just wanted to get out.”
Woods, who resigned from Wachovia in May 2009, now advises banks on how to combat money laundering. He declined to discuss details of Wachovia’s actions.
U.S. Comptroller of the Currency John Dugan told Woods in a March 19 letter his efforts had helped the U.S. build its case against Wachovia.
‘Great Courage’
“You demonstrated great courage and integrity by speaking up when you saw problems,” Dugan wrote.
It was the Puebla investigation that led U.S. authorities to the broader probe of Wachovia. On May 16, 2007, DEA agents conducted a raid of Wachovia’s international banking offices in Miami. They had a court order to seize Puebla’s accounts.
U.S. prosecutors and investigators then scrutinized the bank’s dealings with Mexican-currency-exchange firms. That led to the March deferred-prosecution agreement.
With Puebla’s Wachovia accounts seized, Alatorre and his partners shifted their laundering scheme to HSBC, according to financial documents cited in the Mexican criminal case against Alatorre.
In the three weeks after the DEA raided Wachovia, two of Alatorre’s front companies, Grupo ETPB SA and Grupo Rahero SC, made 12 cash deposits totaling $1 million at an HSBC Mexican branch, Mexican investigators found.
Another Drug Plane
The funds financed a Beechcraft King Air 200 plane that police seized on Dec. 29, 2007, in Cuernavaca, 50 miles south of Mexico City, according to information in the case against Alatorre.
For years, federal authorities watched as the wife and daughter of Oscar Oropeza, a drug smuggler working for the Matamoros-based Gulf Cartel, deposited stacks of cash at a Bank of America branch on Boca Chica Boulevard in Brownsville, Texas, less than 3 miles from the border.
Investigator Robinette sits in his pickup truck across the street from that branch. It’s a one-story, tan stucco building next to a Kentucky Fried Chicken outlet. Robinette discusses the Oropeza case with Tom Salazar, an agent who investigated the family.
“Everybody in there knew who they were — the tellers, everyone,” Salazar says. “The bank never came to us, though.”
New Meaning
The Oropeza case gives a new, literal meaning to the term money laundering. Oropeza’s wife, Tina Marie, and daughter Paulina Marie deposited stashes of $20 bills several times a day into Bank of America accounts, Salazar says. Bank employees got to know the Oropezas by the smell of their money.
“I asked the tellers what they were talking about, and they said the money had this sweet smell like Bounce, those sheets you throw into the dryer,” Salazar says. “They told me that when they opened the vault, the smell of Bounce just poured out.”
Oropeza, 48, was arrested 820 miles from Brownsville. On May 31, 2007, police in Saraland, Alabama, stopped him on a traffic violation. Checking his record, they learned of the investigation in Texas.
They searched the van and discovered 84 kilograms (185 pounds) of cocaine hidden under a false floor. That allowed federal agents to freeze Oropeza’s bank accounts and search his marble-floored home in Brownsville, Robinette says. Inside, investigators found a supply of Bounce alongside the clothes dryer.
Guilty Pleas
All three Oropezas pleaded guilty in U.S. District Court in Brownsville to drug and money-laundering charges in March and April 2008. Oscar Oropeza was sentenced to 15 years in prison; his wife was ordered to serve 10 months and his daughter got 6 months.
Bank of America’s Norton says, “We not only fulfilled our regulatory obligation, but we proactively worked with law enforcement on these matters.”
Prosecutors have tried to halt money laundering at American Express Bank International twice. In 1994, the bank, then a subsidiary of New York-based American Express Co., pledged not to allow money laundering again after two employees were convicted in a criminal case involving drug trafficker Juan Garcia Abrego.
In 1994, the bank paid $14 million to settle. Five years later, drug money again flowed through American Express Bank. Between 1999 and 2004, the bank failed to stop clients from laundering $55 million of narcotics funds, the bank admitted in a deferred-prosecution agreement in August 2007.
Western Union
It paid $65 million to the U.S. and promised not to break the law again. The government dismissed the criminal charge a year later. American Express sold the bank to London-based Standard Chartered PLC in February 2008 for $823 million.
Banks aren’t the only financial institutions that have turned a blind eye to drug cartels in moving illicit funds. Western Union Co., the world’s largest money transfer firm, agreed to pay $94 million in February 2010 to settle civil and criminal investigations by the Arizona attorney general’s office.
Undercover state police posing as drug dealers bribed Western Union employees to illegally transfer money, says Cameron Holmes, an assistant attorney general.
“Their allegiance was to the smugglers,” Holmes says. “What they thought about during work was ‘How may I please my highest- spending customers the most?’”
Smudged Fingerprints
Workers in more than 20 Western Union offices allowed the customers to use multiple names, pass fictitious identifications and smudge their fingerprints on documents, investigators say in court records.
“In all the time we did undercover operations, we never once had a bribe turned down,” says Holmes, citing court affidavits.
Western Union has made significant improvements, it complies with anti-money-laundering laws and works closely with regulators and police, spokesman Tom Fitzgerald says.
For four years, Mexican authorities have been fighting a losing battle against the cartels. The police are often two steps behind the criminals. Near the southeastern corner of Texas, in Matamoros, more than 50 combat troops surround a police station.
Officers take two suspected drug traffickers inside for questioning. Nearby, two young men wearing white T-shirts and baggy pants watch and whisper into radios. These are los halcones (the falcons), whose job is to let the cartel bosses know what the police are doing.
‘Only Way’
While the police are outmaneuvered and outgunned, ordinary Mexicans live in fear. Rojas, the man who lives in the Tijuana slum near the border fence, recalls cowering in his home as smugglers shot it out with the police.
“The only way to survive is to stay out of the way and hope the violence, the bullets, don’t come for you,” Rojas says.
To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. That’s how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says.
“They are multinational businesses, after all,” says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. “And they cannot work without a bank.”
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Research Credit: ofgoatsandmen
Tesla Raises $226 Million in 1st U.S. Carmaker IPO in 54 Years
June 29th, 2010Via: Bloomberg:
Tesla Motors Inc., the electric car company that hasn’t posted a profit, advanced as much as 12 percent after raising $226 million in the first initial public offering of a U.S. automaker in a half century.
The maker of the $109,000 electric Roadster bought by Brad Pitt and George Clooney rose to $19 before paring gains to $17.82 as of 11:40 a.m. New York time in Nasdaq Stock Market trading. The company sold 13.3 million shares at $17 each yesterday after offering them for $14 to $16, according to a statement and a Securities and Exchange Commission filing. The Palo Alto, California-based company will use proceeds to pay for factories and possible acquisitions.
The IPO was the first by an American car company since Ford Motor Co. in 1956. Chief Executive Officer Elon Musk, who has staked his personal fortune to Tesla after making almost $300 million selling PayPal Inc. and Zip2 Corp., is using the offering to fund a startup that expects to lose more money in the next two years as it tries to build a battery-powered sedan.
