- (FTW) - 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.copvcia.com/
stories/oct_2001/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. TomFlocco@cs.com
|
