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PROFITS OF DEATH -- INSIDER
TRADING AND 9-11
by
Tom Flocco – Edited by Michael C.
Ruppert
[© Copyright 2001. From The
Wilderness Publications, www.copvcia.com.
All Rights Reserved. May be recopied, distributed or posted on the
worldwide web for non-profit purposes only.]
FTW, December 6, 2001 -- On October 9th,
FTW broke a story on insider trading connected to the 9-11 attacks on the
World Trade Center that sparked worldwide controversy. In that story we
reported how the Israeli Herzliyya Institute for Counterterrorism had
documented that unknown individuals -- with accurate foreknowledge of the
attacks -- had purchased an obvious and unusually large number of “put”
options on United and American Airlines shortly before the attacks.
Additional companies hit hard by the
insider trading included Axa Re(insurance) and Munich Re as well as
American investment giants Merrill Lynch and Morgan Stanley.
Put options are essentially a bet
that a stock’s price will fall abruptly. The seller, having entered into
a time-specific contract with a buyer, does not need to own the actual
shares at the time the contract is purchased. Therefore, if a holder of
the put option has a contract to sell a stock such as American Airlines
for (e.g.) $100 a share on a Friday and the stock falls to $50 on
Wednesday, they can purchase the stock, sell it on Friday and double their
money. The person on the other end of the contract (the call) has an
obligation to buy the shares at the agreed upon price. The bank handling
the transaction as a broker is the only entity knowing the identities of
both parties.
FTW also revealed that the A.B.
Brown (Alex Brown) investment arm of the banking giant Deutschebank/A.B.
Brown had been headed until 1998 by the man who is now the Executive
Director of the Central Intelligence Agency – A.B. “Buzzy” Krongard.
In fact, Krongard is but one name in a long history of CIA
interconnections to stock trading and the world’s financial markets. We
also discussed, in detail, the evidence indicating that the CIA and other
intelligence agencies monitor stock trading in real time for the purpose
of identifying potential attacks of any nature that might damage the U.S.
economy.
The original FTW story is located
at:
http://www.fromthewilderness.com/free/ww3/10_09_01_krongard.html.
Critics of FTW’s initial story -
not having read any of five related stories dating back to an October 2000
piece on PROMIS software - claimed that we had not made the links to
establish culpability. But we knew that the links were there, that our
case was solid, and that new evidence would not go undiscovered for long.
Now, investigative reporter
Tom Flocco digs deep and strikes pay dirt in a three-part series that
reveals not only deeper links between the CIA, Wall Street and the insider
trades of 9-11, but also discloses that a key executive at Deutschebank
– an American – became, just weeks before the attacks, a convicted
felon. His crime: conspiracy to launder drug money to arrange the purchase
of U.S. weapons – in association with two Pakistanis who also attempted
to acquire nuclear bomb components – for use by Islamic fundamentalist
terrorists. – MCR
CIA Does Not Deny Stock
Monitoring Outside U.S.
(Part I in a series)
In a returned phone call
from the Central Intelligence Agency, press spokesman Tom Crispell denied
that the CIA was monitoring "real-time," pre-September 11, stock
option trading activity within United States borders using such software
as the Prosecutor‘s Management Information System (PROMIS).
"That would be illegal.
We only operate outside the United States," the intelligence
official said.
However, when asked whether the
CIA had been using PROMIS beyond American borders to scrutinize world
financial markets for national security purposes, Crispell replied,
"I have no way of knowing what operations are [being affected by our
assets] outside the country."
Extensive media reporting
confirms that investors at Deutschebank-Alex Brown and other global
financial entities may have profited from prior knowledge of the attacks
while purchasing disproportionate pre-attack put option contracts on
targeted U.S. airlines and related insurance or investment firms. All of
these firms suffered serious losses resulting from the September 11th
attacks and their stocks abruptly plummeted.
Confirmation that the CIA or
other U.S. intelligence agencies were monitoring financial markets and had
seen these trades before the attacks would have staggering implications
for thousands of victims’ families.
The CIA official also declined to
comment on the actual capabilities of PROMIS. The highly technical
software has been described as a system that "interfaces with any
database...as police can input an alleged terrorist’s name or credit
card, and the software will provide details of the person’s movements
through purchases...," according to an 11-10-01 Toronto Sun report.
The importance of PROMIS is that
it is not only capable of interfacing with a wide variety of data bases in
different computer languages and then integrating the data, but it has
also been modified for intelligence purposes. It has then been sold
throughout the world by spy agencies through third parties to clients such
as banks and investment houses envious of its unique capabilities. One key
modification by agencies such as the CIA and Mossad – not disclosed to
most users -- is a secret “back door” that permits those with the
right codes to enter databases undetected, retrieve and/or alter
information, and leave without a trace. PROMIS has been extensively
reported as being used throughout the world’s financial markets because
of its versatility in facilitating international transactions.
Further clouding the issue of
pre-attack stock screening by U.S. intelligence, the Canadian daily
revealed that U.S. police said many of the suspected terrorists were
apprehended (and detained) "through use of the state-of-the-art
computer software program PROMIS."
In March 2000, CIA director
George J. Tenet told the Senate that Osama bin Laden’s group (Al Q’aeda)
was "embracing the opportunities offered by recent leaps in
information technology." A FOX News story and stories in FTW
disclosed in November that Osama bin Laden was believed to have the
software.
The issue of CIA monitoring
of stock trades follows on the heels of wide reports indicating that
investigators are carefully probing the insider trading with its resultant
profits, reported to be in the 10’s of millions of dollars -- some of
which a Deutschebank investor has yet to claim.
A promis is a promis
Crispell also declined
comment when asked whether the Treasury Department or FBI had questioned
CIA Executive Director and former Deutschebank-Alex Brown CEO, A.B. "Buzzy"
Krongard, about CIA monitoring of financial markets using PROMIS and his
former position as overseer of Brown’s "private client”
relations. [Note: Krongard stayed with A.B. Brown to head “private
client” operations after it was acquired by Banker’s Trust in 1997. As
Krongard was leaving in 1998 to join the CIA as counselor to Director
George Tenet, Banker’s Trust was acquired by Deutschebank. Banker’s
Trust had been previously criticized by the U.S. Senate and regulators for
money laundering. Krongard was promoted to Executive Director at CIA
in March 2001. - MCR]
Wide reports -- including a
9/28/01 story in the Asian Wall Street Journal and a 10/1/01 story in The
Guardian -- indicate that investigators are checking Deutschebank’s
alleged links to Saudi "private banking," terrorist bank
accounts, and $2.5 million in unclaimed United Airlines (UAL) put options
profits; however, no government acknowledgement had ever been given of CIA’s
alleged use of PROMIS software prior to the attacks.
In a recent phone conversation,
when asked about alleged terrorist ties to Deutschebank and potential
pre-attack CIA trade monitoring via PROMIS, Treasury Department spokesman
Rob Nichols remarked, "This is clearly an interesting line of
questioning regarding conflicts of interest."
However, news searches indicate
that no member of Congress has publicly questioned whether wealthy
terrorist-connected Saudi nationals participated in the private client
operations of Deutschebank-Alex Brown. Osama bin Laden and almost all of
the alleged 9-11 hijackers are of Saudi nationality. Also, no member of
Congress expressed public interest in asking Krongard about whether or not
the CIA affected "real-time" pre-attack trade monitoring using
PROMIS software at any location.
[Note: Under a program known as
Echelon, the governments of the U.S., Britain, Canada, Australia and New
Zealand routinely circumvent prohibitions on domestic electronic spying by
having the agencies of the other governments do it for them. - MCR]
Michael Ruppert, editor and
publisher of From The Wilderness (FTW) newsletter (www.copvcia.com), has been
interviewed by both the House and Senate for his expertise on illegal
covert CIA operations. He said recently that, "It is well documented
that the CIA has long monitored such (suspicious or unusual) trades -- in
real time -- as potential warnings of terrorist attacks and other economic
moves contrary to U.S. interests."
Ruppert was the first to point
out after 9-11 that CIA Executive Director Buzzy Krongard has extensive
past ties to Deutschebank-Alex Brown. Ruppert added, "There is
abundant and clear evidence that a number of transactions in financial
markets indicated specific [criminal] foreknowledge of the September 11
attacks...and the firm which was used to place put options on UAL stock
was, until 1998, managed by the man who is now in the number three
position at the CIA."
Ruppert also confirmed that two
October 17 calls to the FBI resulted in spokespersons declining to give
their names after revealing that "the FBI has discontinued use of the
PROMIS software." Moreover, on October 24, Justice Department
spokesperson Loren Pfeifle declined to answer any questions about where,
when, or how PROMIS had been used and would only say, "I can confirm
that the DOJ has discontinued use of the program." This followed
almost 17 years of denials by the FBI and the Department of Justice -- in
court and under oath -- that they used the software at all in a law
enforcement or intelligence capacity.
Krongard’s current lofty
intelligence community position, combined with his prior leadership of a
financial institution allegedly connected to terrorist hijacker bank
accounts [see Part II], suspicious UAL options contracts, and
"private banking" is so controversial that it has not as yet
sparked any official investigation. That said, the evidence is substantial
enough to potentially expose the prior-knowledge issue -- if Congress
chooses to act.
And while Treasury Department
official Rob Nichols agreed that unresolved conflict of interest questions
remain, the CIA Executive Director is still currently charged with
supervision of the U.S. intelligence investigation of his former firm and
its "private banking" operations.
Reuters has reported that
Krongard "was [also] involved in setting up the CIA experiment into
investing in high-tech companies with the goal of acquiring innovative
technology for its own use."
Commenting on the CIA’s venture
capital firm In-Q-Tel, started in 1999 to encourage development of
private-sector technologies for use in the intelligence world, Krongard
said on August 1, 2001 -- just 5 weeks before the Trade Center attacks --
"I think In-Q-Tel’s a wonderful model...in accessing the
capabilities of the private sector."
On October 16, Fox News reported
that, according to sources, accused Russian spy and FBI agent Robert
Hanssen sold high-tech PROMIS software to Russia, and that Osama bin Laden
allegedly purchased it from Russian organized crime sources.
Fox reported that,
"Government officials suspect bin Laden may have the highly
sophisticated U.S. government software that has been used by several other
governments, including the United States, for classified intelligence and
law enforcement information."
The admission by U.S.
government officials that PROMIS was widely used by a number of
governments further blurs the pre-attack stock monitoring issue since
intelligence officials will likely continue to decline comment, save for
closed-door congressional oversight hearings or challenges by those
victims’ families choosing to bypass settlements adjudicated by the
Attorney General’s office in favor of direct intervention by the courts.
The buck stops where?
Tom Crispell, the CIA
official, was cooperative while attempting to maintain intelligence
confidentiality in the face of what he termed as "ongoing
investigations surrounding the Twin Towers tragedies by the CIA, FBI,
Justice, and Treasury Departments." However, this was in great
contrast to an FBI spokesperson who refused to offer either his first or
last name, while declining comment on any matter related to events of
September 11.
During a series of calls, some
spokespersons quickly attempted to defer and deflect questions to another
government agency, i.e. "We don’t deal with that issue. Call the
other [entity]."
However, many would agree, given
the evidence, that the 9-11 terrorism is closely linked to economic
issues. President Bush has stated that this is “economic warfare.” Yet
few appear to be questioning an apparent paucity of critical information
sharing among key government agencies on the issue.
As U.S. investigators retrace the
financial trails connecting the Twin Towers, terrorist hijackers and their
accomplices, many of whom may still be in the country, evidence is being
turned up by FBI, CIA, Justice, Treasury and NSA that does involve global
banking conglomerate Deutschebank-Alex Brown.
$2.5 million unclaimed UAL
investor profits
For example, according to a
10-19-2001 Wall Street Journal report, an unnamed investor purchased 2,000
United Airlines (UAL) put option contracts through Deutsche Bank-Alex
Brown on September 6 -- betting the stock would shortly plummet. And
USA Today reported that an individual purchased 810 UAL puts on August 6.
A Baron’s source claimed on
10-8-2001 that the pre-attack UAL order placed through Deutsche Bank was
for 2,500 contracts which were "split into 500 chunks each, directing
each order to different U.S. exchanges around the country
simultaneously."
According to San Francisco
Chronicle reporters Christian Berthelsen and Scott Winokur a source
familiar with the UAL trades said investors have yet to claim $2.5 million
in profits on contracts purchased before United airliners crashed into a
New York Trade Tower and a deserted Pennsylvania field on September 11.
The Chronicle source also
identified Deutschebank-Alex Brown as the investment firm used to purchase
some of the UAL options; and Rohini Pragasam, a bank spokeswoman, declined
to comment on the transaction.
The source (who requested
anonymity) said, "Usually, if someone has a windfall like that, you
take the money and run. Whoever did this thought the Exchange [NYSE]
would not be closed for four days. This smells real bad."
The German news weekly Der
Spiegel revealed that Deutschebank also handled accounts worth about $100
million for Osama bin Laden's family. These were part of 10 accounts it
suspected were linked to terrorists or terrorist activities and which it
later handed over to German authorities after the attacks, according to a
report in Britain’s The Guardian. But no further comments have been
forthcoming from the financial giant.
German Central Bank
President Ernst Welteke said a study -- concerning principal hijack
subjects residing in Germany and unusual patterns in short-selling of
insurance, airline and other financial company shares -- pointed to
"terrorism insider trading" in those stocks.
The SEC Is
Investigating
A phone interview with
Securities and Exchange Commission (SEC) press spokesman John Nester, of
the Washington, DC office, revealed that the Commission, “has already
forwarded a general request to Deutschebank-Alex Brown and other
investment firms for unspecified information related to the suspicious put
option contracts placed prior to the attacks on the Trade Towers and the
Pentagon." But the spokesman declined comment regarding the
identities of complying banks or the contents of any information obtained.
Nester augmented his response by
adding that "according to SEC Associate Director of Enforcement Bill
Baker -- who just spoke on a panel outside New York last week -- our SEC
probe is much broader than investigations made by countries in Europe (who
also lost citizens), many of whom have already closed their financial
investigations of investment banks like Deutschebank." No results of
those probes have been made public.
While the SEC media director said
"the investigation is still ongoing with no current
conclusions," Nester (speaking for the SEC), had difficulty
explaining the job description of current New York Stock Exchange (NYSE)
Executive Vice President for Enforcement, David P. Doherty. He would only
say that the NYSE "regulates itself as an SRO or self-regulating
organization...." This vague answer is all the more provocative
because Doherty is a retired General Counsel of the Central Intelligence
Agency.
Nester added, "The SEC has
oversight responsibility regarding the NYSE, and we are also working with
Justice, Treasury, and the FBI, having set up professional point men at
each firm we are looking at -- so we don‘t have to reinvent the wheel
every time we call a company [related to the attacks] to get an answer to
a question."
The "reinvent the
wheel" statement raised an eyebrow regarding the level of corporate
cooperation in the investigation, although Nester declined to add further
comment.
In Spite of CIA Ties
the NYSE Is Little Help
When asked about the status
of the investigation into the disproportionate pre-attack stock option
trades involving United and American Airlines, Merrill Lynch, Marsh and
McLennan Insurance, Morgan Stanley, Citigroup, Bear Stearns, and American
Express, etc. -- all icons of American capitalism -- NYSE Communications
Director Ray Pellecchia said, "We don't even confirm that there is an
ongoing investigation."
"We report to the SEC as a
matter of course," Pellecchia added. But after being referred to as a
"persistent piece of work," this writer asked Pellecchia to
discuss Doherty’s role in the investigations. He said, "We
stand by this statement."
And after pressing for
information about what the NYSE is actually doing to investigate the
suspicious trades on behalf of thousands of victims’ families who may be
concerned about the "prior-knowledge" issue, Pellecchia still
declined to confirm that Doherty's enforcement office had even sent a
report to the SEC.
When asked why so many former key
CIA executives currently hold, or have held in the past, top level
executive management positions connected in some way to the stock market
via either the SEC, NYSE, or other investment banking entities, Pellecchia
replied tersely, "I am quite aware of Mr. Doherty's background and
experience."
Pellecchia also declined to
discuss anything related to current CIA Executive Director A.B. "Buzzy"
Krongard and his past relationship with Alex Brown.
Expecting Miracles?
Questions remain as to who
will ultimately take center stage in investigating conflicts of interest
or the real-time monitoring of world financial markets by U.S.
intelligence entities to protect national security; let alone terrorist
ties to wealthy Saudi private clients at global financial institutions
having direct access (via correspondent banking relationships) to U.S.
banks.
For while thousands of
American families, victimized by terrorism, still remain numb with grief,
information is being advanced daily regarding what could be described by
some as casual, if not negligent, long-term, slipshod governmental
responsiveness to fundamental internal national security and safety
questions -- or worse.
Tom Flocco is a freelance
writer and researcher.
(email: TomFlocco@cs.com)
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