Boys" is a nickname used to refer to the CIA and/or the U.S. intelligence community.
The Life and Times of Dillon Read, Robert Sobel, Truman Talley Books/Dutton,
 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%
 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."
 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
"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."
 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.
 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 Group—he 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
 Friends in High
Places: The Bechtel Story—The Most Secret Corporation and How It Engineered
the World by Laton McCartney, Ballentine Books, 1988.
Leveraged Buy-Out in Wikipedia (http://en.wikipedia.org/wiki/Leveraged_buyouts).
 See Mayer Amschel Rothschild family in Wikipedia (http://en.wikipedia.org/wiki/Rothschilds).
 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."
 From Time Magazine, December, 1981—"The
Rothschilds are roving" (http://www.time.com/time/archive/preview/0,10987,925116,00.html;
"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,
"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."
 From Time Magazine, December, 1981—"The
Rothschilds are roving."
European Union vs RJR Nabisco, Inc., et al (Oct 30, 2002), pp 1-2 / pdf
European Union vs RJR Nabisco, Inc., et al (Oct 30, 2002), pp 11-16 / pdf
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:
court told to reconsider EU, RJR cigarette-smuggling cases journalnow.com
(May 3, 2005)
Companies Linked to Criminal Organizations in Cigarette Smuggling The Center
for Public Integrity
Case, CBC News Disclosure (Broadcast April 8, 2003)
launches lawsuit against Philip Morris and R. J. Reynolds (November 6, 2000)
vs RJR Nabisco, Inc, Complaint (August 3, 2001)
Money Laundering Action Against RJ Reynolds Press Release (Scoop: November 26,
Reynolds SEC 10-K Filing, Litigation Section, pages 39-40
Community v. RJR Nabisco, Inc., 150 F.Supp.2d 456, E.D.N.Y. July 16, 2001
Community v. RJR Nabisco, Inc., 355 F.3d 123, 2nd Cir. (N.Y.) Jan 14, 2004
Community v. RJR Nabisco, Inc., 125 S.Ct. 1968, U.S. May 02, 2005
Community v. RJR Nabisco, Inc., 424 F.3d 175, 2nd Cir. (N.Y.) Sep 13, 2005
Community v. RJR Nabisco, Inc., 126 S.Ct. 1045 (Mem), U.S. Jan 09, 2006 (denying
WL 2875039, Petition for a Writ of Certiorari, (U.S., Oct. 28, 2005) European
Community v. RJR Nabisco, Inc.
WL 3322108, Brief in Opposition, (U.S., Dec. 01, 2005) European Community v. RJR
WL 3438567, Reply Brief, (U.S., Dec. 14, 2005) European Community v. RJR Nabisco,
 From Reynolds SEC 10-K Filing, Litigation Section, pages
"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
"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
 See The Life and Times of Dillon Read, Robert Sobel,
Truman Talley Books/Dutton, 1991, page 355. The calculation for First Boston is for
 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 million—twice 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.
 Barry & 'the boys': The CIA, the Mob and Americas
Secret History, Daniel Hopsicker, MadCow Press, 2001, page 459. Useful links on
 See Daniel Hopsickers description of this picture in Was
Bush Spy Pick on Agency Hit Team? — CIA Nominee in Pic of Agencys 60s Assassination
and Barry & 'the boys': The CIA, the Mob and Americas Secret History,
Daniel Hopsicker, page 26.
 Chris Sanders, Sanders Research Associates,
founders note to "The Myth of the Rule of Law," by Catherine Austin Fitts
 Blank Check, by Tim Wiener, Warner Books, 1991 (http://dogbert.abebooks.com/servlet/SearchResults?sts=t&y=0&tn=Blank+Check&x=0).
 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).
 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)
1991 Affidavit by William Duncan (http://prorev.com/wwduncan.htm).
 From Congressional Record (May 7, 1998)
(http://thomas.loc.gov/; enter H2970 in 'Search'
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
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:
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
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,
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
With best regards,
Yours, William J. Casey.
 See The Stanley Sporkin Hotseat (http://whereisthemoney.org/hotseat/stanleysporkin.htm).
 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+
 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.
 See http://en.wikipedia.org/wiki/Federated_Department_Stores
 See The Conspirators, by Ret. Cmdr. Al Martin (http://www.almartinraw.com/book.html).
 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).
 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).
 See links on Mena in endnote above and at the Article Resources—Events
 See The Negative Return on Investment Economy —
A Discourse on Americas Black Budget by Chris Sanders and Catherine Austin Fitts
 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).
 Harvard Design School Case Study (http://www.dunwalke.com/resources/documents/Events/Harvard_Case_Study_940101-014.pdf).
 Executive Officers and Directors of Dillon, Read Holding,
Inc. are listed as:
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.)
- John P. Birkelund, Chairman, Director and Managing Director of Dillon Read &
- 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)
 Executive Officers and Directors listed for Dillon, Read
Inc. were Birkelund, Niemiec, Saint Phalle and Hobbs and representatives of Dillon
investors ING and Barings.
 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
|Sharyar Aziz, Director and Managing
|Tamara A. Bush, Director and Managing
|James H. Brandi, Director and Managing
|William S. Brenizer, Director and
|James C. Brennan, Director and Managing
|John G. Brim, Director and Managing
|Michael A. Cilia, Director and Managing
|Frank V. Colombo, Director and Managing
|Kenneth S. Crews, Director and Managing
(Dallas Office-3950 Trammel Crow Lane, 2001 Ross Avenue, Dallas TX 75201)
|David M. Dickson, Jr. Director and
|Charles P. Durkin, Jr., Director and
|Blair W. Effron, Director and Managing
|Raul P. Esquivel, Director and Managing
|Peter Flannigan, Director
|Thomas J. Hartfield, Director and
|John H. F. Haskell, Jr., Director
and Managing Director
|Anthony B. Helfet, Director and Managing
(San Francisco Office - 555 California Street, Suite 4950, San Francisco, CA 94104)
|William O. Hiltz, Director and Managing
|Robert H. Hotz, Director and Managing
|James W. Hunt, Director and Managing
|Peter H. Imhoff, Director and Managing
|Yerger Johnstone, Director and Managing
(London Office — 60 London Wall, London EC2M 5TQ) (UK Citizen)
|Craig A.T. Jones, Director and Managing
|Kenjiro Kawaguchi, Director and Managing
(Tokyo Office-Imperial Tower, 6th Floor, 1-1-11 Uschisaiwai-cho, Chiyoda-ku, Tokyo,
|Patrick J. Landers, Director and Managing
|Bryan H.Lawrence, Director and Managing
|J. Richard Leaman, III, Director and
|Richard R. Macek, Controller, Director
and Managing Director, 120 Wall Street, New York, NY 10005
|Daniel F. Marciano, Director and Managing
|Cynthia Melcher, Director and Managing
|Richard J. Milligan, Director and
|Richard H. Montague, Director and
|Robert Moulton-Ely, Director and Managing
|John H. Mullin, III, Shade Tree Farmer,
Ridgeway Farm Inc. Route 2, Box 380, Brookneal, VA 24528
|Christian L. Oberbeck, Director and
|Victor A. Pelson, Director
|Robert A. Pilkington, Director and
|Thomas L. Piper, III, Director and
|Jerome H. Powell, Director and Managing
|William P. Powell, Director and Managing
|Eric W. Roberts, Director and Managing
|Kenneth M. Schmidt, Director and Managing
|HC. Bowen Smith, Director and Managing
|Richard R. S. Smith, Director and
|Danforth H. Starr, Director
|Jason D. Sweet, Director and Managing
|F. Davis Terry, Jr., Director and
|Lorenzo D. Weisman, Director and Managing
|Edward B. Whitney, Director and Managing
|George A. Wiegers, Director
|John E. Wilson, Director and Managing
|Robert A. Young, Director and Managing
 For a description of Barings and ING see http://en.wikipedia.org/wiki/Barings.
 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,
|Yoh Kurosaw, The Industrial Bank of
|Heiichi Hamaoka, Nissan Motor Co.
|Gentaro Kawase, Nippon Life Insurance
See Exhibit D of Cornell Corrections' April 4, 1997 SEC 13-D Filing (SEC/09-0000950162-97-000313_4-04-1997_Sched13d.txt.)
 I was an investor in the first Lexington Fund.
 Personal Investments of Dillon Read Officers and Directors
in Cornell Corrections in Dillons April
1997 13-D Filings were:
||Amount of Funds ($)
|John P. Birkelund
|J. Robert Burton, III
|James P. Connelly
|John H. F. Haskell, Jr
|E. Terri Herman (1)
|Franklin W. Hobbs, IV
|Robert H. Hotz
|Peter H. Imhoff
|Craig A. T. Jones
|W. Howard Keenan, Jr.
|Peter A. Leidel (2)
|Richard H. Montague
|David W. Niemiec
|James F. Reilly
|Kenneth M. Schmidt
|H. C. Bowen Smith
|Michael I. Somers
|F. Davis Terry, Jr.
|George H. Weiler, III (3)
|George A. Wiegers
|Richard C. Yancey
(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).
 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.
 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
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).
 See Federal Bureau of Prisons Weekly Report (http://www.bop.gov/news/weekly_report.jsp#bop).
 See Anderson Guilty (http://www.solariactionnetwork.com/phpbb/viewtopic.php?p=9515#9515).
 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).
 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.
 For more on public subsidies for private prisons see Jail
Breaks, Economic Subsidies Given to Private Prisons (http://www.goodjobsfirst.org/pdf/jailbreaks.pdf
/publications/jailbreaks_20011001) and The Real Costs of Prison Project (http://realcostofprisons.org/).
 See Narco Dollars for Beginners by Catherine Austin
and Organized Crime and American Power: a History by Michael Woodiwiss (http://www.powells.com/biblio/62-0802047009-3).
 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).
 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.
 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).
 A Conversation About the Popsicle Index by Catherine
Austin Fitts (http://www.scoop.co.nz/stories/HL0301/S00117.htm).
 See Personal Experience at FHA/HUD (http://www.solari.com/gideon/fhalist.htm).
 For an example of one of the single family design books see
 See How the Money Works: The Hamilton Securities Group
and Its Subsidiaries(http://www.solari.com/gideon/about/How%20The%20Money%20Works.PDF).
 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).
 See The Story of Edgewood Technology Services
 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.
See The Professional Paranoid by H. Michael Sweeney
 See Litigation section at Solari (http://www.solari.com/gideon).
 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).
 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).
 Kemp Tapes—Recollections of Working in Bush I
by Catherine Austin Fitts (http://www.solariactionnetwork.com/phpbb/viewtopic.php?t=269).
 See Boys on the Tracks by Mara Leveritt (http://www.amazon.com/gp/product/0312198418/103-5464626-9431002v=glance&n=283155&v=glance).
 See introduction to The Kemp Tapes recorded by
Catherine Austin Fitts (http://www.solariactionnetwork.com/phpbb/viewtopic.php?t=269).
 See Transcript of the Meeting and links for video excerpts
 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).
 See the list of honors and awards in Jamie Gorelicks resume
at Wilmer Cutler (http://www.wilmerhale.com/jamie_gorelick/).
 See the Stanley Sporkin Hotseat (http://whereisthemoney.org/hotseat/stanleysporkin.htm).
 See Hamilton Litigation section at (http://www.solari.com/gideon/).
 See materials on Jack Quinns role in Marc Richs pardon
 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."
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.
 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).
 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.
 See Pug Winokur Data Dump (http://www.newsmakingnews.com/catharvardpugdd.htm).
 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).
 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
 Harvard Design School Case Study (http://www.dunwalke.com/resources/documents/Events/Harvard_Case_Study_940101-014.pdf).
 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
"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."
 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.
 See Mel Martinez Hotseat, links on Enron (http://www.whereisthemoney.org/hotseat/mel/bush2000.htm#Bush2000).
 See Brown University Steering Committee on Slavery and Justice
 See Solari Analytics at Solari & the Rise of the
Rule of Law (http://www.solari.com/solari).
 See Missing Money—Articles and Documents
 See The Real Deal About Enron (http://www.scoop.co.nz/stories/HL0304/S00031.htm).
 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).
 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).
 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
 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
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
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.
Catherine Austin Fitts