Dillon Read & Co. Inc. & the Aristocracy of Prison Profits
by Catherine Austin Fitts
Home  |  Table of Contents  |  Author  |  Resources
Nick Brady John Birkelund Al Gore Elaine Kamarck Jack Kemp Mike Eisenson Lauch Faircloth Jamie Gorelick Judge Stanley Sporkin
"Make a law, make a business."  — Old New Jersey street saying

[1] "The Boys" is a nickname used to refer to the CIA and/or the U.S. intelligence community.

[2] The Life and Times of Dillon Read, Robert Sobel, Truman Talley Books/Dutton, 1991 (http://dogbert.abebooks.com/servlet/BookDetailsPL?bi=682230107searchurl=sts%3Dt

[3] See The Negative Return on Investment Economy-A Discourse on America's Black Budget by Chris Sanders and Catherine Austin Fitts (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=3771#3771), World Affairs Journal. See also, Tim Weiner, Blank Check: The Pentagons Black Budget, New York, Warner Books, 1991 (http://dogbert.abebooks.com/servlet/BookDetailsPL?bi=580763578&searchurl=sts%3Dt%26y%3D8%26kn%

[4] Carters Director of CIA, Admiral Stansfield Turner, fired over 800 covert operators. This "piratization" of covert is said to have created a significant infrastructure of private intelligence operatives, including a group called "The Company." In Barry & 'the boys': The CIA, the Mob and Americas Secret History, Mad Cow Press, 2001, pages 234-235 and 404 (http://www.madcowprod.com/Merchant2/merchant.mvc?/Screen=PROD&Store_Code=MP&Product_Code=BAB), Daniel Hopsicker writes:

 "After Carter takes over in 1976 and Admiral Stansfield Turner cleans house at the CIA, finding jobs for long time CIA assets like (Barry) Seal became a priority that was often fulfilled by smuggling under color of narcotics interdiction, " stated Hemming. "All these guys had to be placed somewhere after that choirboy Admiral started getting rid of them. The majority of the operators that were contract employees had to be placed somewhere. There had to be money to take care of these guys. Hemming is referring to what "Deadly Secrets" calls Turners Great Terror when the new CIA Director purged over 800 covert operatives after the Congressional revelations of the CIAs dirty laundry by the Church and Pike Committees investigations. These investigations, which then-CIA Director Bush fought every step of the way, led directly to the election of (Carter). Even General Manuel Noriega was let go in the purge, it was a sign of the desperation of the times. And it prompted droves of angry CIA cowboys to enlist in the George Bush for President Campaign, where their unofficial campaign slogan must have been "Never ever again."


Headquartered outside of St. Louis, "The Company" launched in 1976 and grew into an enterprise with over 350 employees, with separate executives in charge of buying airports, leasing warehouses and even giving polygraph tests to new employees. There was even a $2 million fund for bail. In just two years, The Company had acquired 33 airplanes, 3 airports, warehouses in 7 states and profits of $48 million. 1976 was the year that Barry Seals drug smuggling career began according to his wife.

When the DEA busted them.."they had secret radio frequencies of federal, state and local authorities," a DEA spokesman said. "They had mechanical programmers and night-viewing devices. They had air-to-ground radios so sophisticated we dont even have them on our airplanes."

[5] See various references in Tarpley & Chaitken, The Unauthorized Biography, including a reference to Bradys meeting with Bush, Oliver North and Felix Rodriguez in the White House (http://www.tarpley.net/bush18.htm and http://www.tarpley.net/bushb.htm):

"1986-Vice President Bush and his staff met in the White House with Felix Rodriguez, Oliver North, financier Nicholas Brady, and the new U.S. ambassador to El Salvador, Edwin Corr."

[6] Dillon had helped Donovan found the OSS. Not surprisingly, Dillon Read also had numerous ties, like most Wall Street firms, with the intelligence community. See The Life and Times of Dillon Read, Robert Sobel, Truman Talley/Dutton, 1991.

[7] See the description of Stephen Bechtel, Jr., Chairman of Bechtel and his concern for the outlook for Bechtels business on his way to the Bohemian Grouphe is in the Mandalay Camp-most esteemed of The Groves 127 encampments as reported in Friends in High Places: The Bechtel Story-The Most Secret Corporation and How It Engineered the World, Laton McCartney, Ballentine Books, 1988, pps. 12-16 (http://dogbert.abebooks.com/servlet/BookDetailsPL?bi=686450863&searchurl=sts%3Dt%26y%3D13%26tn%
). Mandalays attendance that year is described as follows:

"Its membership and guest list included Steve, his father, Stephen D. Bechtel, Sr.; Henry Kissinger; former Bechtel Group President and Secretary of State designate George P. Schultz (who this year was bringing West German Chancellor Helmut Schmidt as his personal guest); former IBM chairman and U.S. Ambassador to the Soviet Union Thomas J. Watson; former CIA director John A McCone (former Bechtel partner); Attorney General William French Smith (who had just signed the MOU three months earlier relieving the CIA of the need to report drug dealing by its networks); industrialist Edgar F. Kaiser, Jr.; former Nixon political aide Peter M. Flanigan; Pan American World Airways onetime boss Najeeb Halaby; Wells Fargo Bank Chairman Richard P. Cooley; former General Electric chairman Philip D. Reed; Southern California Edison chairman J.K. "Jack" Horton; Utah International Chairman Edmund W. Littlefield; Dillon Reads former boss Nicholas F. Brady, who was serving as an interim senator from New Jersey and, like Peter Flanigan, was Steve juniors guest; tire and rubber heir Leonard K. Firestone and, not least, Gerald Ford, the former President of the United States. In addition, this years encampment would feature such notables as former Secretary of State Alexander Haig, FBI Director William Webster; computer magnate (and former deputy Defense secretary) David Packard; Chief of Naval Operations Thomas Hayward; Eastern Airlines president Frank Borman; Federal Reserve Bank chairman Paul Volker; World Bank president Alden W. Clausen; Union Oil Chairman Fred L. Hartley; Atlantic Richfield Chairman Robert O. Anderson; publishing czar William Randolph Hearst, Jr.; Southern Pacific Railroad president Alan C. Furth; show business personalities Charlton Heston, Art Linkletter and Dennis Day; and including, among various other pooh-bahs, the Presidents of Dean Witter Reynolds the Bank of America and United Airlines-Page  16 describes problems Bechtel is facing "Confronted with a recession, declining oil prices and stiffer competition abroad" and how George Schultz, former Bechtel President and now Secretary of State will be at the Grove to help."

[8] Friends in High Places: The Bechtel Story—The Most Secret Corporation and How It Engineered the World by Laton McCartney, Ballentine Books, 1988.

[9] See Leveraged Buy-Out in Wikipedia (http://en.wikipedia.org/wiki/Leveraged_buyouts).

[10] See Mayer Amschel Rothschild family in Wikipedia (http://en.wikipedia.org/wiki/Rothschilds).

[11]  Eagle Eye reports Federal Express as the largest recipient of federal government grants in Tennessee. (http://www.eagleeyeinc.com)  A recent announcement by the Frick Museum appointing Birkelund to the board describes his resume as follows:

"John P. Birkelund comes to the Board of the Frick as a dedicated supporter of the arts and the humanities. He is a founding member of the new Frick Collection support group called the "Directors Circle."  He has been a strong supporter of The New York Public Library where he serves as trustee and chairs its finance committee. He has also been engaged for many years as a trustee of Brown University and currently chairs the board of Overseers of its Thomas J. Watson Institute for International Studies. Mr. Birkelund serves as well on the board of The American Academy in Berlin and the Phi Beta Kappa Society. He recently retired as chairman of the National Humanities Center and the International Executive Service Corps and has served as a trustee of the Getty Foundation dedicated to the support of the National Gallery in London. Mr. Birkelund, formerly chairman and chief executive of Dillon Read & Co., is presently engaged as managing director of Saratoga Partners, a private equity investment firm that he co-founded in 1984. Corporate directorships have included the New York Stock Exchange, N.M. Rothschild & Co., and Barings Brothers. He is a member of the Council on Foreign Relations and holds an honorary degree from Brown University. In 1990, Mr. Birkelund was asked by President George H.W. Bush to chair the Polish American Enterprise Fund, a federal aid program designed to stimulate the then newly privatized Polish economic sector. The success of this program led to recognition by the Polish government and the U.S. State Department and the creation of the Polish American Freedom Foundation which he presently chairs."

[12] From Time Magazine, December, 1981"The Rothschilds are roving" (http://www.time.com/time/archive/preview/0,10987,925116,00.html; Subscription Only):

"Its a little bare now," apologizes Baron Guy de Rothschild, 72, waving his hand at the empty black lacquered walls of his office on the 7th floor at 21 Rue Lafitte in Paris...Reason: the Banque Rothschild is being nationalized by the socialist government of French President Francois Mitterrand, along with the countrys other major banks and holding companies. The Rothschilds, who are stepping out of the banks management, have demanded that the government operate the institution without the Rothschild name.

"Nor has their bitterness at being nationalized been quenched by proposed government compensation payments of $100 million, a sum they believe is less than the bank's worth.

"But the members of the French Rothschild clan will not lack for things to do with their money. Unaffected by the nationalization are the non bank personal holdings of Baron Guy and Cousins Baron Alain and Baron Elie, including New Court Securities, a US investment firm based in New York City, which will now receive more of the familys attention and money. And beginning January 1, 1982, New Court will change its name to a more golden sounding sobriquet: Rothschild, Inc.

"Founded with $2 million 1967, New Court today manages a portfolio worth more than $1 billion, including funds from such corporate clients as General Foods, TRW and Hughes Aircraft. New Courts other owners included NM Rothschild & Sons in London, which represents the English branch of the family and is headed by Evelyn de Rothschild, 50, and the Rothschild Zurich bank, of which Swiss Cousin Baron Edmond de Rothschild is part owner.

"New Court is an aggressive venture capital firm that has some $200 million invested in fledgling American companies (Author Note: Federal Express was an important New Court venture investment.) Last year its return on current investment of $17 million was 35%. In July, its American chairman John P. Birkelund, 51, asked the Rothschilds for more control over the firm. Instead, the family sacked Birkelund, named Guy and Evelyn as cochairmen and installed a new manager, Family Confidant Gilbert de Botton, 46.

"The new Rothschild man in New York City had previously directed the familys bank in Zurich, which grew from a paltry $2.5 million in 1968 to its present capitalization of more than $35MM. De Botton is currently investing heavily in sagging stocks of US energy companies, especially those with large domestic reserves of oil and gas. He also plans to strengthen the firms venture capital thrust. Says he: The US is the prime market in the world for startup, small and medium size companies.

"That bullishness on Americas prospects is shared by Co-Chairman Guy, who has been commuting monthly since last June between Paris and New Courts offices in New York Citys Rockefeller Center. Guy will not move permanently to the US and Cousin Ellies son Nathaniel, 34, a graduate of the Harvard Business School, is a prime candidate to direct US operations eventually. Says Guy: My great-grandfather sent one of his sons, my grandfather Alphonse, to America in 1848. After returning to France, Alphonse pleaded with his father that the US was the coming country and that there should be a House of Rothschild there. Its an enormous pity that my grandfathers advice was not heeded. As far as Im concerned we should have had a Rothschild bank in the US since the middle of the 19th century. Our involvement in America now is really 100 years late in arriving."

[13] From Time Magazine, December, 1981"The Rothschilds are roving."

[13a] Complaint, European Union vs RJR Nabisco, Inc., et al (Oct 30, 2002), pp 1-2 / pdf

[13b] Complaint, European Union vs RJR Nabisco, Inc., et al (Oct 30, 2002), pp 11-16 / pdf

[13c] Complaint, European Union vs RJR Nabisco, Inc., et al (Oct 30, 2002), pp 19-20 / pdf

[13d] Articles on the RJR Case and Other Tobacco Company Lawsuits:

[14] From Reynolds SEC 10-K Filing, Litigation Section, pages 39-40: (http://www.reynoldsamerican.com/common/ViewDoc.asp?postID=1050&DocType=PDF):

"On September 18, 2003, RJR, RJR Tobacco, RJR-TI, RJR-PR, and Northern Brands were served with a statement of claim filed by the Attorney General of Canada in the Superior Court of Justice, Ontario, Canada. Also named as defendants are JTI and a number of its affiliates. The statement of claim seeks to recover under various legal theories taxes and duties allegedly not paid as a result of cigarette smuggling and related activities. The Attorney General is seeking to recover $1.5 billion in compensatory damages and $50 million in punitive damages, as well as equitable and other forms of relief. The parties have agreed to a stay of all proceedings until February 2006. The time period for the stay may be lengthened or shortened by the occurrence of certain events or agreement of the parties.

"Over the past few years, several lawsuits have been filed against RJR Tobacco and its affiliates and, in certain cases, against other cigarette manufacturers, including B&W, by the European Community and the following ten member states, Belgium, Finland, France, Greece, Germany, Italy, Luxembourg, the Netherlands, Portugal and Spain, as well as by Ecuador, Belize, Honduras, Canada and various Departments of the Republic of Colombia. These suits contend that RJR Tobacco and other tobacco companies in the United States may be held responsible under the federal RICO statute, the common law and other legal theories for taxes and duties allegedly unpaid as a result of cigarette smuggling. Each of these actions discussed below, seeks compensatory, punitive and treble damages.

"On July 17, 2001, the action brought by the European Community was dismissed by the United States District Court for the Eastern District of New York. However, the European Community and its member states filed a similar complaint in the same jurisdiction on August 6, 2001. On October 25, 2001, the court denied the European Community's request of August 10, 2001, to reinstate its original complaint. On November 9, 2001, the European Community and the ten member states amended their complaint filed on August 6, 2001, to change the name of the defendant Nabisco Group Holdings Corp. to RJR Acquisition Corp. RJR Tobacco and the other defendants filed motions to dismiss that complaint on November 14, 2001, and the court heard oral argument on those motions on January 11, 2002. On February 25, 2002, the court granted the defendants' motion to dismiss the complaint and, on March 25, 2002, the plaintiffs filed a notice of appeal with the United States Court of Appeals for the Second Circuit. The Second Circuit affirmed the dismissal on January 14, 2004. On April 13, 2004, the European Community and its member states petitioned the United States Supreme Court for a writ of certiorari. Briefing is complete. A decision by the Supreme Court is pending.

"On October 30, 2002, the European Community and the following ten member states, Belgium, Finland, France, Greece, Germany, Italy, Luxembourg, the Netherlands, Portugal and Spain, filed a third complaint against RJR, RJR Tobacco and several currently and formerly related companies in the United States District Court for the Eastern District of New York. The complaint, which contains many of the same or similar allegations found in two earlier complaints that were previously dismissed by the same court, alleges that the defendants, together with certain identified and unidentified persons, including organized crime organizations and drug cartels, engaged in money laundering and other conduct for which they should be accountable to the plaintiffs under civil RICO and a variety of common law claims. The complaint also alleges that the defendants manufactured cigarettes, which were eventually sold in Iraq in violation of U.S. sanctions against such sales. The plaintiffs are seeking unspecified actual damages, to be trebled, costs, reasonable attorneys' fees and injunctive relief under their RICO claims, and unspecified compensatory and punitive damages, and injunctive and equitable relief under their common law claims. On April 1, 2004, the plaintiffs fled an amended complaint. The amended complaint does not change the substance of the claims alleged, but primarily makes typographical and grammatical changes to the allegations contained in the original complaint and adds to the description of injuries alleged in the original complaint. This matter remains pending, but all proceedings have been stayed pending a decision by the Supreme Court on the petition for certiorari filed by the plaintiffs in connection with the dismissal of their previous complaint.

"On December 20, 2000, October 15, 2001, and January 9, 2003, applications for annulment were filed in the Court of First Instance in Luxembourg challenging the competency of the European Community to bring each of the foregoing actions and seeking an annulment of the decision to bring each of the actions, respectively. On January 15, 2003, the Court of First Instance entered a judgment denying the admissibility of the first two applications, principally on the grounds that the filing of the first two complaints did not impose binding legal effects on the applicants. On March 21, 2003, RJR and its affiliates appealed that judgment to the Court of Justice of the European Communities. The application for annulment filed in connection with the third action is still pending before the Court of First Instance. On September 18, 2003, however, the Court of First Instance stayed the proceedings in the third action, pending resolution of the appeals from the January 15, 2003 judgment denying the admissibility of the first two applications.

"RJR Tobacco, B&W and the other defendants filed motions to dismiss the actions brought by Ecuador, Belize and Honduras in the United States District Court for the Southern District of Florida. These motions were granted on February 26, 2002, and the plaintiffs filed a notice of appeal with the United States Court of Appeals for the Eleventh Circuit on March 26, 2002. On August 14, 2003, the Eleventh Circuit announced its decision affirming the dismissal of the case. On November 5, 2003, Ecuador, Belize and Honduras filed a petition for a writ of certiorari requesting the United States Supreme Court to review the decision of the Eleventh Circuit. The court denied the petition on January 12, 2004. B&W and the other defendants filed motions to dismiss a similar action brought by Amazonas and other departments of Colombia in the United States District for the Eastern District of New York. These motions were granted on February 19, 2002, and plaintiffs appealed to the United States Court of Appeals for the Second Circuit. The Second Circuit affirmed the dismissal on January 14, 2004. On April 13, 2004, Amazonas and other departments of Colombia petitioned the United States Supreme Court for a writ of certiorari. On June 17, 2004, B&W and the other defendants filed a brief opposing the petition, and the Amazonas and other departments of Colombia filed a reply brief on June 29, 2004. A decision by the Supreme Court is pending.

"RJR Tobacco has been served in two reparations actions brought by descendants of slaves. The plaintiffs in these actions claim that the defendants, including RJR Tobacco, profited from the use of slave labor. These two actions have been transferred to Judge Norgle in the Northern District of Illinois by the Judicial Panel on Multi-District Litigation for coordinated or consolidated pretrial proceedings with other reparation actions. Seven additional cases were originally filed in California, Illinois and New York. RJR Tobacco is a named defendant in only one of these additional cases, but it has not been served. The action in which RJR Tobacco is named, but has not been served, was conditionally transferred to the Northern District of Illinois on January 7, 2003, but the plaintiffs contested that transfer, and the Judicial Panel on Multi-District Litigation has not yet issued a final ruling on the transfer. The plaintiffs filed a consolidated complaint on June 17, 2003.

"On July 18, 2003, the defendants moved to dismiss the plaintiff's complaint. That motion was granted on January 26, 2004, although the court granted the plaintiffs leave within which to file an amended complaint, which they did on April 5, 2004. In addition, several plaintiffs have attempted to appeal the trial court's January 26, 2004 dismissal to the United States Court of Appeals for the Seventh Circuit. Because the dismissal was not a final order, that appeal was dismissed. All the defendants moved to dismiss the amended complaint that had been filed on April 5, 2004. A decision is pending."

[15] See The Life and Times of Dillon Read, Robert Sobel, Truman Talley Books/Dutton, 1991, page 355. The calculation for First Boston is for 1982-1988.

[16] Barry & 'the boys': The CIA, the Mob and Americas Secret History, Dan Hopsicker, MadCow Press, 2001. According to Hopsicker, on the same day, the CIA repossessed Barry Seals Lear Jet. It turns out that it was theirs all along. Seal had signed a series of promissory notes on the Lear Jet in 1982 totaling $1.8 milliontwice what the plane was worth. Hopsicker says "this puzzled us until we learned, from former CIA pilot Morgan Hetrick that this was Standard Operating Procedure, allowing 'the boys' to express their displeasure by taking away your toys at will." Hopsicker describes the attorneys for one of the assassins saying that the assassins alleged that Oliver North arranged the hit to assassinate Seal.

[17] Barry & 'the boys': The CIA, the Mob and Americas Secret History, Daniel Hopsicker, MadCow Press, 2001, page 459. Useful links on Mena include:

[18] See Daniel Hopsickers description of this picture in Was Bush Spy Pick on Agency Hit Team? — CIA Nominee in Pic of Agencys 60s Assassination Squad (http://www.scoop.co.nz/stories/HL0408/S00254.htm) and Barry & 'the boys': The CIA, the Mob and Americas Secret History, Daniel Hopsicker, page 26.

[19] Chris Sanders, Sanders Research Associates, founders note to "The Myth of the Rule of Law," by Catherine Austin Fitts (http://www.solari.com/gideon/q301.pdf).

[20] Blank Check, by Tim Wiener, Warner Books, 1991 (http://dogbert.abebooks.com/servlet/SearchResults?sts=t&y=0&tn=Blank+Check&x=0).

[21] Testimony of William Duncan, Hearing before the Commerce, Consumer, and Monetary Affairs Subcommittee of the Committee on Government Operations, House of Representatives, One Hundred Second Congress, First Session, July 24, 1991. Excerpts from pages 64-73, 85-86 (http://www.whatreallyhappened.com/RANCHO/POLITICS/MENA/testimony_of_william_c._duncan_7-24-91.html).

[22] Misconduct by Senior Managers in the IRS, Twentieth Report by the Committee on Government Operations, House of Representatives, One Hundred First Congress, Second Session, October 4, 1990, excerpts from pp. iii, 117-131 (http://www.whatreallyhappened.com/RANCHO/POLITICS/MENA/duncan.html) and
1991 Affidavit by William Duncan (http://prorev.com/wwduncan.htm).

[23] From Congressional Record (May 7, 1998)

[Page: H2970]
(http://thomas.loc.gov/; enter H2970 in 'Search' box)

Ms. WATERS. Mr. Chairman, this amendment would call for a review of the 1995 memorandum of understanding that currently exists between the Director of Central Intelligence and the intelligence community and the Department of Justice regarding reporting of information concerning Federal crimes.

This amendment is very simple and non-controversial. It calls for a review of the current memorandum of understanding to ensure that drug trafficking and drug law violations by anybody in the intelligence community is reported to the Department of Justice. Specifically, the review would examine any requirements for intelligence employees to report to the Director of Central Intelligence and any requirements for the Director to report this information to agencies.

This information would be reported to the Attorney General. The review would be published publicly. This simple amendment fits well with the recent calls for a reinvigorated war on drugs. The need for this amendment, however, cannot be understated.

One of the most important things that came out of the hearing of the House Permanent Select Committee on Intelligence was an understanding about why we did not know about who was trafficking in drugs as we began to investigate and take a look at the allegations that were being made about the CIA's involvement in drug trafficking in south central Los Angeles and the allegations that profits from that drug trafficking was going to support the Contras.

We discovered that for 13 years the CIA and the Department of Justice followed a memorandum of understanding that explicitly exempted the requirement to report drug law violations by CIA non-employees to the Department of Justice. This allowed some of the biggest drug lords in the world to operate without fear that the CIA would be required to report the activity to the DEA and other law enforcement agencies.

In 1982, the Attorney General and the Director of Central Intelligence entered into an agreement that excluded the reporting of narcotics and drug crimes by the CIA to the Justice Department. Under this agreement, there was no requirement to report information of drug trafficking and drug law violations with respect to CIA agents, assets, non-staff employees and contractors. This remarkable and secret agreement was enforced from February 1982 to August of 1995. This covers nearly the entire period of U.S. involvement in the Contra war in Nicaragua and the deep U.S. involvement in the counterinsurgency activities in El Salvador and Central America.

Senator Kerry and his Senate investigation found drug traffickers had used the Contra war and tie to the Contra leadership to help this deadly trade. Among their devastating findings, the Kerry committee investigators found that major drug lords used the Contra supply networks and the traffickers provided support for Contras in return. The CIA of course, created, trained, supported, and directed the Contras and were involved in every level of their war.

The 1982 memorandum of understanding that exempted the reporting requirement for drug trafficking was no oversight or misstatement. Previously unreleased memos between the Attorney General and Director of Central Intelligence show how conscious and deliberate this exemption was.

On February 11, 1982, Attorney General French Smith wrote to DCI William Casey that, and I quote, this is what he said:

[Page: H2971]

I have been advised that a question arose regarding the need to add narcotics violations to the list of reportable non-employee crimes . . . no formal requirement regarding the reporting of narcotics violations has been included in these procedures.

On March 2, 1982 William Casey responded:

I am pleased these procedures which I believe strike the proper balance between enforcement of the law and protection of intelligence sources and methods will now be forwarded to other agencies covered by them for signing by the heads of those agencies.

My colleagues heard me correctly.

The CHAIRMAN. The time of the gentlewoman from California (Ms. Waters) has expired.

(By unanimous consent, Ms. Waters was allowed to proceed for 3 additional minutes.)

Ms. WATERS. Mr. Chairman, the fact that President Reagan's Attorney General and Director of Central Intelligence thought that drug trafficking by their assets agents and contractors needed to be protected has been long known. These damning memorandums and the resulting memorandum of understanding are further evidence of a shocking official policy that allowed the drug cartels to operate through the CIA-led Contra covert operations in Central America.

This 1982 agreement clearly violated the Central Intelligence Agency Act of 1949. It also raises the possibility that certain individuals who testified in front of congressional investigating committees perjured themselves.

Mr. Chairman, every American should be shocked by these revelations. Given the shameful history of turning a blind eye to CIA involvement with drug traffickers, this amendment seeks to determine whether the current memorandum of understanding closes all of these loopholes to the drug cartels and narcotics trade.

At this time I know that there is a point of order against my amendment. The chairman of the committee is going to oppose this amendment, and so I am going to withdraw the amendment. But I wanted the opportunity to put it before this body so that they could understand that we had an official policy and a memorandum of understanding that people could fall back on and say I did not have to report it. Yes, I knew about it.

We have a subsequent memorandum of understanding of 1995 that is supposed to take care of it. I am not sure that it does.

Mr. Chairman, I submit for the Record the following correspondence between William French Smith and William J. Casey:


Office of the Attorney General, Washington, DC, February 11, 1982.

Hon. William J. Casey, Director, Central Intelligence Agency, Washington, D.C.

Dear Bill: Thank you for your letter regarding the procedures governing the reporting and use of information concerning federal crimes. I have reviewed the draft of the procedures that accompanied your letter and, in particular, the minor changes made in the draft that I had previously sent to you. These proposed changes are acceptable and, therefore, I have signed the procedures.

I have been advised that a question arose regarding the need to add narcotics violations to the list of reportable non-employee crimes (Section IV). 21 U.S.C. 874(h) provides that `[w]hen requested by the Attorney General, it shall be the duty of any agency or instrumentality of the Federal Government to furnish assistance to him for carrying out his functions under [the Controlled Substances Act] . . .' Section 1.8(b) of Executive Order 12333 tasks the Central Intelligence Agency to `collect, produce and disseminate intelligence on foreign aspects of narcotics production and trafficking.' Moreover, authorization for the dissemination of information concerning narcotics violations to law enforcement agencies, including the Department of Justice, is provided by sections 2.3(c) and (i) and 2.6(b) of the Order. In light of these provisions, and in view of the fine cooperation the Drug Enforcement Administration has received from CIA, no formal requirement regarding the reporting of narcotics violations has been included in these procedures. We look forward to the CIA's continuing cooperation with the Department of Justice in this area.

In view of our agreement regarding the procedure, I have instructed my Counsel for Intelligence Policy to circulate a copy which I have executed to each of the other agencies covered by the procedures in order that they may be signed by the head of each such agency.


William French Smith, Attorney General.


THE DIRECTOR OF Central Intelligence, Washington, D.C., March 2, 1982.

Hon. William French Smith, Attorney General, Department of Justice, Washington, D.C.

Dear Bill: Thank you for your letter of 11 February regarding the procedures on reporting of crimes to the Department of Justice, which are being adopted under Section 1-7(a) of Executive Order 12333. I have signed the procedures, and am returning the original to you for retention at the Department.

I am pleased that these procedures, which I believe strike the proper balance between enforcement of the law and protection of intelligence sources and methods, will now be forwarded to other agencies covered by them for signing by the heads of those agencies.

With best regards,

Yours, William J. Casey.


[24] See The Stanley Sporkin Hotseat (http://whereisthemoney.org/hotseat/stanleysporkin.htm).

[25] See Dan Briodys The Iron Triangle: Inside the Secret World of The Carlyle Group (http://dogbert.abebooks.com/servlet/SearchResults?sts=t&y=0&tn=The+Secret+

[26] See http://en.wikipedia.org/wiki/Back-channel—A back channel in the language of diplomacy is an unofficial channel of communication between states or other political entities, used to supplement official channels, often for the purposes of discussing highly sensitive policy issues.

[27] See http://en.wikipedia.org/wiki/Federated_Department_Stores and http://en.wikipedia.org/wiki/Robert_Campeau.

[28] See The Conspirators, by Ret. Cmdr. Al Martin (http://www.almartinraw.com/book.html).

[29] For my documentation as to the HUD systems ability to reject repeated efforts to ensure that its programs were run according to the law, see Personal Experience with FHA-HUD (http://www.dunwalke.com/gideon/fhalist.htm).

[30] For a complete history of my experiences working for Jack Kemp at HUD, see The Kemp Tapes (http://www.solariactionnetwork.com/phpbb/viewtopic.php?t=269).

[31] See links on Mena in endnote above and at the Article Resources—Events page (http://www.dunwalke.com/resources/events.htm).

[32] See The Negative Return on Investment Economy — A Discourse on Americas Black Budget by Chris Sanders and Catherine Austin Fitts (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=3771#3771).

[33] Prior to joining Bechtel, Cornell was President of Tenneco Financial Services from 1981 to 1982. Prior to that time, he served as an Executive Vice President of Philadelphia Life Insurance Co. and President of Philadelphia Life Asset Management Company from 1972-1981 (See Cornell Corrections October 4, 1996 Prospectus, page 43; 01-0000890566-96-001533_10-04-1996_Prospectus.txt).

[34] Harvard Design School Case Study (http://www.dunwalke.com/resources/documents/Events/Harvard_Case_Study_940101-014.pdf).

[35] Executive Officers and Directors of Dillon, Read Holding, Inc. are listed as:

  • John P. Birkelund, Chairman, Director and Managing Director of Dillon Read & Co. Inc.
  • David W. Niemiec, Vice Chairman, Director, Managing Director, Treasurer and Secretary of Dillon Read & Co. Inc.
  • Francois de Saint Phalle, Vice Chairman, Director and Managing Director of Dillon Read & Co. Inc.
  • Franklin W. Hobbs IV, President, Chief Executive Officer, Managing Director of Dillon, Read & Co. Inc.
  • Leendert C. Grijns, Chairman, Internationale Nederlanden Capital Corporation, 135 East 57th St. NY, NY 10022 (Dutch Citizen)
  • Jan Hessel Lindenbergh, Director, ING Bank, The Netherlands (Holland Citizenship)
This and the information in Footnotes 36 and 37 below are detailed in Cornell Corrections' April 4, 1997 SEC 13-D Filing (SEC/09-0000950162-97-000313_4-04-1997_Sched13d.txt.)

[36] Executive Officers and Directors listed for Dillon, Read Inc. were Birkelund, Niemiec, Saint Phalle and Hobbs and representatives of Dillon investors ING and Barings.

[37] Executive Officers and Directors of Dillon, Read & Co. Inc. were Birkelund, Niemiec, Saint Phalle and Hobbs, Simon A. Borrows, Baring Brothers International Limited, 60 London Wall, London, EC2M 5TQ, Director (UK Citizen) Leendert C. Grijins, Chairman, International Nederlanden (U.S.) Capital Corporation, 135 East 57th Street, NY, NY 10022 (Dutch Citizen) James R.C. Lupton, Executive Director, Baring Brothers International Limited, 60 London Wall, London (UK Citizen) Michael D.G. Ross, Managing Director, Baring Brothers International Limited, (UK Citizen)

Also listed were 52 additional Dillon Read Managing Directors as follows:

Barbara Alexander, Director and Managing Director
Sharyar Aziz, Director and Managing Director
Tamara A. Bush, Director and Managing Director
James H. Brandi, Director and Managing Director
William S. Brenizer, Director and Managing Director
James C. Brennan, Director and Managing Director
John G. Brim, Director and Managing Director
Michael A. Cilia, Director and Managing Director
Frank V. Colombo, Director and Managing Director
Kenneth S. Crews, Director and Managing Director
(Dallas Office-3950 Trammel Crow Lane, 2001 Ross Avenue, Dallas TX 75201)
David M. Dickson, Jr. Director and Managing Director
Charles P. Durkin, Jr., Director and Managing Director
Blair W. Effron, Director and Managing Director
Raul P. Esquivel, Director and Managing Director
Peter Flannigan, Director
Thomas J. Hartfield, Director and Managing Director
John H. F. Haskell, Jr., Director and Managing Director
Anthony B. Helfet, Director and Managing Director
(San Francisco Office - 555 California Street, Suite 4950, San Francisco, CA 94104)
William O. Hiltz, Director and Managing Director
Robert H. Hotz, Director and Managing Director
James W. Hunt, Director and Managing Director
(Dallas Office)
Peter H. Imhoff, Director and Managing Director
Yerger Johnstone, Director and Managing Director
(London Office — 60 London Wall, London EC2M 5TQ) (UK Citizen)
Craig A.T. Jones, Director and Managing Director
Kenjiro Kawaguchi, Director and Managing Director
(Tokyo Office-Imperial Tower, 6th Floor, 1-1-11 Uschisaiwai-cho, Chiyoda-ku, Tokyo, Japan)
(Japanese Citizen)
Patrick J. Landers, Director and Managing Director
Bryan H.Lawrence, Director and Managing Director
J. Richard Leaman, III, Director and Managing Director
Richard R. Macek, Controller, Director and Managing Director, 120 Wall Street, New York, NY 10005
Daniel F. Marciano, Director and Managing Director
Cynthia Melcher, Director and Managing Director
Richard J. Milligan, Director and Managing Director
Richard H. Montague, Director and Managing Director
Robert Moulton-Ely, Director and Managing Director
John H. Mullin, III, Shade Tree Farmer,
Ridgeway Farm Inc. Route 2, Box 380, Brookneal, VA 24528
Christian L. Oberbeck, Director and Managing Director
Victor A. Pelson, Director
Robert A. Pilkington, Director and Managing Director
Thomas L. Piper, III, Director and Managing Director
Jerome H. Powell, Director and Managing Director
William P. Powell, Director and Managing Director
Eric W. Roberts, Director and Managing Director
Kenneth M. Schmidt, Director and Managing Director
HC. Bowen Smith, Director and Managing Director
Richard R. S. Smith, Director and Managing Director
Danforth H. Starr, Director
Jason D. Sweet, Director and Managing Director
(Dallas Office)
F. Davis Terry, Jr., Director and Managing Director
Lorenzo D. Weisman, Director and Managing Director
(French Citizen)
Edward B. Whitney, Director and Managing Director
George A. Wiegers, Director
John E. Wilson, Director and Managing Director
Robert A. Young, Director and Managing Director

[38] For a description of Barings and ING see http://en.wikipedia.org/wiki/Barings.

[39] The officers and directors of Concord Japan included:

Kenjiro Kawaguchi, Director and Managing Director Dillon Read & Co., Tokyo
Amerex SA, Coutts & Company (Bahamas) Ltd, West Bay Street, Nassau Bahamas
Takashi Imai, Nippon Steel Corporation, Tokyo
Yoh Kurosaw, The Industrial Bank of Japan, Ltd
Heiichi Hamaoka, Nissan Motor Co. Ltd, Tokyo
Gentaro Kawase, Nippon Life Insurance Company

See Exhibit D of Cornell Corrections' April 4, 1997 SEC 13-D Filing (SEC/09-0000950162-97-000313_4-04-1997_Sched13d.txt.)

[40] I was an investor in the first Lexington Fund.

[41] Personal Investments of Dillon Read Officers and Directors in Cornell Corrections in Dillons April 1997 13-D Filings were:

Name Shares Options Included Amount of Funds ($)
Charles Ballard 5,870 569 5,848.82
John P. Birkelund 39,579 3,736 96,990.16
J. Robert Burton, III 2,387 228 2,448.38
James P. Connelly 697 47 2,576.55
Douglas Darby 5,424 517 13,512.39
Sally Dean 2,379 228 2,425.62
Peter Flanigan 28,178 2,687 48,781.40
Felice Gelman 488 47 2,087.17
Harry Hagerty 684 70 1,498.53
John H. F. Haskell, Jr 36,730 3,505 85,382.75
E. Terri Herman (1) 368 23 1,396.40
Franklin W. Hobbs, IV 30,455 2,803 56,986.04
Robert H. Hotz 1,260 116 5,340.13
Peter H. Imhoff 8,353 853 7,500.00
Craig A. T. Jones 12,671 1,141 18,248.65
W. Howard Keenan, Jr. 5,819 548 9,274.77
Peter A. Leidel (2) 1,839 116 6,972.91
Nathan Leight 1,221 116 5,230.15
Richard H. Montague 1,291 116 5,427.55
Robert Moulton-Ely 1,002 93 4,253.93
John Murabito 367 35 1,570.06
David W. Niemiec 35,018 3,270 76,989.51
James F. Reilly 1,140 116 5,001.73
Bret Russell 5,720 569 5,425.82
Kenneth M. Schmidt 24,778 2,454 35,622.38
H. C. Bowen Smith 22,111 2,105 22,746.92
Michael I. Somers 11,929 1,137 12,223.44
F. Davis Terry, Jr. 2,460 232 10,507.61
Wayne Thornbrough 6,107 582 26,147.30
George H. Weiler, III (3) 1,103 70 4,180.11
George A. Wiegers 28,176 2,571 44,988.85
Richard C. Yancey 9,629 918 21,803.72

(1) (2) (3) Does not include 1,000 shares each purchased in the open market.

[41.5] In the October 1996 Prospectus, Dillon Read and its funds as shareholders are listed as owning 1,359,863 shares. As of the April 1997 filing, Dillon lists shareholdings of 1,191,864. The difference of 168,000 shares is assumed to be distribution of shares to partners by Concord prior to the April 1997 filing. The original cost of these shares has been estimated at $2.75 per share described by valuations in the October 1996 Prospectus (SEC/02-0000890566-97-002232_10-21-1996_Prospectus.txt).

[42] See Harvard Design School Case Study (http://www.dunwalke.com/resources/documents/Events/Harvard_Case_Study_940101-014.pdf).

[42.1] See The Halliburton Agenda: The Politics of Oil and Money, Dan Briody, John Wiley & Sons, 2004, pages 103 and 112 (http://www.powells.com/s?kw=halliburton+agenda&x=0&y=0).

[42.2] See The Life and Times of Dillon Read, Robert Sobel, Penguin Books, 1991, page 234.

[42.3] See The Halliburton Agenda: The Politics of Oil and Money, Dan Briody, John Wiley & Sons, 2004, Chapter 5: Collateral Damage: The Leland Olds Story, pages 93-114.

[42.4] See The Halliburton Agenda: The Politics of Oil and Money, Dan Briody, John Wiley & Sons, 2004, page 150 For description of Suite 8f (Brown’s private hotel suite) and the “Suite 8F Crowd,” see pages 132-141.

[43] See Halliburtons Brown and Root is One of the Major Components of the Bush-Cheney Drug Empire by Michael Ruppert (http://www.fromthewilderness.com/free/ciadrugs/bush-cheney-drugs.html). See also, Opening Remarks of Michael Ruppert for the Senate Select Intelligence Committee (http://www.fromthewilderness.com/ssci.shtml).

See Brown and Root entry from Wikipedia (http://en.wikipedia.org/wiki/Kellogg,_Brown_and_Root).

See Halliburton entry from Wikipedia (http://en.wikipedia.org/wiki/Halliburton).

[44] See Federal Bureau of Prisons Weekly Report (http://www.bop.gov/news/weekly_report.jsp#bop).

[45] See Anderson Guilty (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=9515#9515).

[46] See Charity Lends a Hand to Prisons With Murky Off-the-Books Deals by Joseph T. Hallinan (Wall Street Journal, May 1, 2002) (http://www.prisonsucks.com/scans/prisonaccounting.shtml).

[47] Allegations have been made that the prison system works on a bonding system that bonds each prisoner. The author does not know if such a system exists and, if it does exist, how it works.

[48] For more on public subsidies for private prisons see Jail Breaks, Economic Subsidies Given to Private Prisons (http://www.goodjobsfirst.org/pdf/jailbreaks.pdf or http://www.soros.org/initiatives/justice/articles_publications
) and The Real Costs of Prison Project (http://realcostofprisons.org/).

[49] See Narco Dollars for Beginners by Catherine Austin Fitts (http://www.narconews.com/narcodollars1.html) and Organized Crime and American Power: a History by Michael Woodiwiss (http://www.powells.com/biblio/62-0802047009-3).

[50] See Prison Nation: The Warehousing of Americas Poor, edited by Tara Herivel and Paul Wright, page 72 (http://www.powells.com/s?kw=%22Prison+nation%3A+warehousing%22&x=0&y=0).

[51] After 9-11, when Nick Bradys old friend Governor Tom Kean (Brady lead his transition team when he was elected Governor of New Jersey) chaired the 9-11 Commission, Jamie Gorelick was chosen as a Commissioner. Reports at that time describe her role at DOD and DOJ.

[52] For more about the Popsicle Index and the Solari model, see Solari & the Rise of the Rule of Law (http://www.solari.com/articles/SolariRiseRuleLaw.htm).

[53] A Conversation About the Popsicle Index by Catherine Austin Fitts (http://www.scoop.co.nz/stories/HL0301/S00117.htm).

[54] See Personal Experience at FHA/HUD (http://www.solari.com/gideon/fhalist.htm).

[55] For an example of one of the single family design books see (http://www.solari.com/gideon/legal/background/DesidnBk/Home.htm).

[56] See How the Money Works: The Hamilton Securities Group and Its Subsidiaries(http://www.solari.com/gideon/about/How%20The%20Money%20Works.PDF).

[57] See The Myth of the Rule of Law (http://www.solari.com/gideon/q301.pdf).

See Interview with Greg Palast (http://www.solari.com/gideon/privatization030402.html).

See links for Harvard and Russia at the Harvard Datadump (http://www.newsmakingnews.com; bottom of page).

[58] See The Story of Edgewood Technology Services (http://www.scoop.co.nz/stories/HL0207/S00101.htm).

[59] For details on some of the specifics of modern day "crucifixions" see, Anatomy Of A SWAT From A Lawyers Perspective by Lucille Compton (http://www.scoop.co.nz/stories/HL0504/S00241.htm).

See The Swat List—Audits, Investigations, Inquiries, Leads, Conflicts of Interest, Harassment and Surveillance by The Hamilton Securities Group, Inc. (http://www.solari.com/gideon/legal/audits.html).

See The Professional Paranoid by H. Michael Sweeney (http://www.alibris.com/search/search.cfm).

[60] See Litigation section at Solari (http://www.solari.com/gideon).

[61] For a detailed comparison of DOJs handling of the investigation of Hamilton with the investigation of Enron, see The Real Deal About Enron: An Interview with Catherine Austin Fitts by Daniel Armstrong (http://www.scoop.co.nz/stories/HL0304/S00031.htm).

[62] See Common Denominator stories by John DeVault: Convicted swindler in city housing deals (http://thecommondenominator.com/052101_news1.html); DCHA tenants ask to manage complex (http://www.thecommondenominator.com/070201_news3.html); Metro miscue? (http://thecommondenominator.com/102201_news1.html).

[63] Kemp Tapes—Recollections of Working in Bush I by Catherine Austin Fitts (http://www.solariactionnetwork.com/phpbb/viewtopic.php?t=269).

[64] See Boys on the Tracks by Mara Leveritt (http://www.amazon.com/gp/product/0312198418/103-5464626-9431002v=glance&n=283155&v=glance).

[65] See introduction to The Kemp Tapes recorded by Catherine Austin Fitts (http://www.solariactionnetwork.com/phpbb/viewtopic.php?t=269).

[66] See Transcript of the Meeting and links for video excerpts at (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=9516#9516).

[67] See articles on the CIA Inspector General reports and the House investigation in the CIA & Drugs archives at From the Wilderness (http://www.fromthewilderness.com/free/ciadrugs/index.html).

[68] See the list of honors and awards in Jamie Gorelicks resume at Wilmer Cutler (http://www.wilmerhale.com/jamie_gorelick/).

[69] See the Stanley Sporkin Hotseat (http://whereisthemoney.org/hotseat/stanleysporkin.htm).

[70] See Hamilton Litigation section at (http://www.solari.com/gideon/).

[71] See materials on Jack Quinns role in Marc Richs pardon at (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=9521#9521).

[72] Katharine Graham, owner of the Washington Post published her autobiography, Personal History in June 1997. On page 623 she writes,

"Along with a very able, inspiring, and determined younger partner, Terry Golden, I have helped launch an early-childhood education project in the Anacostia section of Washington, D.C. Though the project has grown larger than I had envisioned, it concentrates on two housing projects, Frederick Douglass Community Homes and Stanton Dwellings, and aims at helping mostly single and unemployed partners be involved in the education of their children. We have raised enough money to help create a community service center for parents, with a small daycare unit for up to fifteen infants, a new school for one hundred Head Start children from the ages of two to four. Our hope is that this is a public/private endeavor that can be replicated in other areas of the district as well as elsewhere."

See (http://dogbert.abebooks.com/servlet/BookDetailsPL?bi=294317372&searchurl=sts%3Dt%26y%3D0

Terry Golden is a Marriot executive who is the head of the Federal City Council and is chair of the board of the Convention Center. The two projects mentioned are managed by Gene Ford who puts Scott Nordheimer in the lead to redevelop them under the Hope VI program. Several years later, Nordheimer reported to Fitts that he has over 70 people working for him on HUD development projects. Among other projects, he is got the services contract on the Washington Convention Center. The Convention Centers remaining neighborhood residence was overcome with an Operation Safe Home raid of the community with over 200 personnel and press that was Washington Times and aol.com front headlines. Graham also mentions how well the Washington Post stock has done. She does not describe where all the money comes from—and does describe Warren Buffets investment.

[73] See HUD Inspector General Semi-Annual Reports to Congress for performance reports and statistics on Operation Safe Home arrests, cash seizures and civil money penalties (http://www.hud.gov/offices/oig/reports/index.cfm).

[74] Growth came from a 516-person expansion at the Big Spring facilities acquired in 1996 as well as several state governments. Between May and September 1997, Cornell acquired Abraxas, a provider of juvenile services, which gave Cornell an additional aggregate capacity of 1,400 children detainees in Pennsylvania, Ohio, Delaware and the District of Columbia.

[75] See Pug Winokur Data Dump (http://www.newsmakingnews.com/catharvardpugdd.htm).

[76] See links for DynCorp Disgrace and other stories by Kelly Patricia OMeara on allegations against DynCorp employees regarding sex slavery and human trafficking, see CSC DynCorp and the Economics of Lawlessness (http://www.scoop.co.nz/stories/HL0304/S00158.htm).

[77] For a complete description of the efforts to discredit Webb, see Alexander Cockburn and Jeffrey St. Clairs, Whiteout: The CIA, Drugs and the Press, Verso, 1999 (http://www.powells.com/s?kw=Whiteout

[78] Harvard Design School Case Study (http://www.dunwalke.com/resources/documents/Events/Harvard_Case_Study_940101-014.pdf).

[79] An article by Jeff Gerth and Stephen Labaton in the New York Times in November 1995, Prisons for Profit: A special report; Jail Business Shows Its Weaknesses describes the problems that Cornell ran into on its Rhode Island facility-one which had been financed with municipal bonds issued by Dillon Read:

"Two years ago, the owners of the red cinder-block prison in this poor mill town threw a lavish party to celebrate the prison's opening and show off its computer monitoring system, its modern cells holding 300 beds and a newly hired cadre of guards.

But one important element was in short supply: Federal prisoners.

It was more than an embarrassing detail. The new prison, the Donald W. Wyatt Detention Facility, is run by a private company and financed by investors. The Federal Government had agreed to pay the prison $83 a day for each prisoner it housed. Without a full complement of inmates, it could not hope to survive.

So the prison's financial backers began a sweeping lobbying effort to divert inmates from other institutions. Rhode Island's political leaders pressed Vice President Al Gore while he was visiting the state as well as top officials at the Justice Department to send more prisoners. Facing angry bondholders and insolvency, the company, Cornell Corrections, also turned to a lawyer who was then brokering prisoners for privately run institutions in search of inmates.

The lawyer, Richard Crane, has done legal work for private corrections companies and Government penal agencies. He put the Wyatt managers in touch with North Carolina officials. Soon afterward, 232 prisoners were moved to Rhode Island from North Carolina, and Mr. Crane was paid an undisclosed sum by Cornell Corrections."

See (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=8203&).

[80] The Virtual Foundation describes Haskell, an Advisory member as follows: After graduating from the U.S. military academy at West Point in 1953, Mr. Haskell served in a number of armor branch units in the U.S., Austria, and Germany. In 1958, he received an MBA from Harvard University's Graduate School of Business Administration and later worked as an Associate at Dillon, Read & Co. from 1958 to 1961. He subsequently went to France, where he reopened and managed the Dillon Read European office from 1961 to 1966. From 1964 to 1975 he served as Vice-President of Dillon Read, and from 1975 to 1999 as its Managing Director. In May of 2000, Dillon Read & Co. changed its name to UBS Warburg LLC. He is presently a Senior Advisor at UBS Warburg in the area of Corporate Finance, and is a member of the Board of Directors of AXA Financial, Inc.; The Equitable Life Insurance Society of the United States, Inc.; Pall Corporation; Belgian-American Educational Foundation; French Institute Alliance Française (President/Board of Trustees); the American Society of the French Legion of Honor; and Security Capital Corporation. He has been decorated with several honors throughout his career, including the Legion d'Honneur and L'Ordre National.

[81] See Mel Martinez Hotseat, links on Enron (http://www.whereisthemoney.org/hotseat/mel/bush2000.htm#Bush2000).

[82] See Brown University Steering Committee on Slavery and Justice (http://www.brown.edu/Research/Slavery_Justice/index.html).

[83] See Solari Analytics at Solari & the Rise of the Rule of Law (http://www.solari.com/solari).

[84] See Missing Money—Articles and Documents (http://www.solari.com/learn/articles_missingmoney.htm).

[85] See The Real Deal About Enron (http://www.scoop.co.nz/stories/HL0304/S00031.htm).

[86] See Legal History(http://www.solari.com/gideon/legal/index.html) and Myth of the Rule of Law by Catherine Austin Fitts (http://www.solari.com/gideon/q301.pdf).

[87] See Dont Blink: All Promises Broken—Volume II Hearings Held Without Notice—Behind Closed Doors by Mike Ruppert (http://www.fromthewilderness.com/free/politics/dontblink.html).

[88] See The Ultimate New Business Cold Call (http://www.fromthewilderness.com/free/economy/nyse_drugs.html).

[88.5] See Meditations at the Crossroads by Catherine Austin Fitts Scoop Media

[89] Catherine's letter to the NY Times about the perverse incentive systems and "tapeworm" economics of prison stocks before she knew that Dillon had banked and cashed out of Cornell:


Letters to the Editor

New York Times


Tim Egan's Article on Prisons, March 7, 1999

Ladies and Gentlemen:

Thank you for Tim Egan’s article on prisons. It was an excellent summary of the growth in the US prison population over the last two decades. A welcome follow up might be an exploration on how the money works on prisons.

The federal government has promoted mandatory sentences and taken other steps that will increase the overall prison population to approximately 3 million Americans as recently legislated policies finish working their way through the sentencing system. This means that approximately 10-15 million Americans will be under the jurisdiction of the criminal justice system from arrest, to indictment, to trial, to prison, to probation and parole.

The enactment of legislation ensuring the growth of prisons and prison populations has been a bipartisan effort. Republicans and Democrats alike appear to have found one area where we can build consensus for substantial growth in government budgets, staffing levels and media attention. Indeed, during this period, the number of federal agencies with police powers has grown to over 50, approximately 10% of the American enforcement bureaucracy. This is further encouraged by federal laws permitting confiscation of assets such as homes, cars, bank accounts, cash, businesses and personal property that can be used to fund federal, state and local enforcement budgets.

One way to look at the financial issues involved is to view them from the vantage point of the portfolio strategists of the large mutual funds. We have approximately 250-280 million people in America. The question from a portfolio strategist standpoint is what productive value will each one be creating in companies and communities and how does that translate into flow of funds that then translate into equity values and bond risk.

The prison companies are marketing one vision of America with their prison and prisoner growth rates, while the consumer companies are marketing another. The two are not compatible. CCA’s assumptions regarding the growth in arrests and incarceration can not be true if Fannie Mae’s, Freddie Mac’s and Sallie Mae’s assumptions about homeownership and college education rates are. We, the people, cannot refinance our mortgages or buy homes or raise our children and send them to college if we are in jail. Meantime, the municipal debt market is also facing conflicting positions. If prison bonds are a good investment, then some general obligation bonds may be in trouble. We, the taxpayers, can not support the debt: we are no longer taxpayers. We have become prisoners. Whatever we are generating in prison labor, it is certainly not enough to pay for the $154,000 per prisoner per year costs indicated for the full system by the General Accounting Office.

It would be very illuminating to get the rating agencies and the ten largest mutual funds together in one room for an investor roundtable to discuss pricing levels on the investment of our savings that is internal to their portfolios and ratings. We would compare equity valuations and growth rates of:

  •  Companies who make money from the American people losing productivity
  •  Companies who make money from helping the American people grow more  knowledgeable and productive.

We are investing in two different visions that can not both come true.

We could then calculate which was going to succeed, and what the integrated pricing level would be. Better yet, what could happen that would make the most money for the investment community. The question is which vision is best for we, the equity investors of America? And why are investors assuming both can or will win as they price their stocks and bonds?

It is critical to look at prison policy from the standpoint of maximizing return on equity investment. It would be a terrible thing, while I can no longer pay taxes or buy a house or send my son to college because I am in prison, if my vested pension benefits were wiped out by the time I re-entered society. It is bad enough that my life savings are being invested in companies that make money from promoting that me and my family should be arrested and incarcerated. It would be worse if I and my family were broke because companies that make money from loss of productivity turned out to also be a bad investment.

Such a roundtable might make for a great New York Times article. If you are willing to take it on, Solari would be happy to assist your staff by contributing background analytics on how the money works in prisons.

Sincerely Yours,
Catherine Austin Fitts




© 2006 Catherine Austin Fitts

Resources Home
- People
- Organizations
- Events
- Campaign Contributions
- Chronology of Events
- Footnotes