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UPDATE: Organized Crime, The CIA and the Savings and Loan Scandal

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And what about the obvious.... (see below)

Scott Munson wrote:
"The distinctions drawn between business, politics, and organized
crime are at best artificial and in reality irrelevant. Rather than
being dysfunctions, corporate crime, white-collar crime, organized
crime, and political corruption are mainstays of American
political-economic life."

Dienstag, 12. Dezember 2006

Organized Crime, The CIA and the Savings and Loan Scandal
Gary W. Potter*

The savings and loan scandal of the 1980s has been depicted in a
myriad of ways. To some, it is "the greatest ... scandal in American
history" (Thomas, 1991: 30). To others it is the single greatest case
of fraud in the history of crime (Seattle Times, June 11, 1991).

Some analysts see it as the natural result of the ethos of greed
promulgated by the Reagan administration (Simon and Eitzen, 1993:
50). And to some it was a premeditated conspiracy to move covert
funds out of the country for use by the U.S. Intelligence Agency
(Bainerman, 1992: 275). All of these depictions of the S & L scandal
contain elements of truth.

And how about this one. An unlearned lesson in the folly of hasty deregulation?

One has to wonder what the real goal is of these alleged "conservative" political stragists. What in fact are we tightening our belts about? What is the purpose of labor at home competing with near-slave labor overseas when the investors have no geographical limitations as to where their money lives.

This is a very very good synopsis! Too much to remember, but the information is exactly right. I want to fill in a couple of blanks though.
The point being, this may not just be the usual heinous, dastardly, slick, rotten, greedy, hypocritical, excessivly "patriotic" yet somehow "renegade" kind of stuff you might expect from a run of the mill "conservative" hero. This might actually be serious stuff.
More comments below. I think you'll agree.

But to a large degree, the savings and loan scandal was simply
business as usual. What was unusual about it was not that it
happened, or who was involved, but that it was so blatant and coarse
a criminal act that exposure became inevitable. But with its
exposure, three basic but usually ignored "truths" about organized
crime were once again demonstrated with startlingly clarity:

-There is precious little difference between those people who society
designates as respectable and law abiding and those people society
castigates as hoodlums and thugs.

-The world of corporate finance and corporate capital is as
criminogenic and probably more criminogenic than any poverty-wracked
slum neighborhood.

-The distinctions drawn between business, politics, and organized
crime are at best artificial and in reality irrelevant. Rather than
being dysfunctions, corporate crime, white-collar crime, organized
crime, and political corruption are mainstays of American
political-economic life.

It is not our intent to discuss the unethical and even illegal
business practices of the failed savings and loans and their
governmental collaborators.

And why not? They were used to launder money for secret wars conducted behind Congress' backs. This might not be an issue to the Swiss but it sure as hell is an issue for Americans. (If you take a look at the website this article came from you'll see articles in both Swiss/German and English languages).

And indeed it was the executive branch, and in particular the CIA, as usual, who were the criminals. Criminals in the sense of "high crimes", not just misdemeanors.

Those secret wars were brutal, basically terrorism. (Casey's affidavit can be found as a photocopy, there was no mistake about it -- brutal.) John Stockwell, a guy who was in the CIA had wondered, what possible reason the CIA would have for "instructing" the freedom fighters on how to blow up a city bus so that the fuel would be blown into the passenger compartment burning all the riders.

He was told that they couldn't tell him but only the NSA knew the reason. Then when he was later promoted to a high position in the NSA, the question was still unanswered.

He resigned. and began talking about what he'd seen, heard and done. The transcript of the lecture he gave at UCSB in Santa Barbara California doesn't appear to be on the net but it was shockingly graphic. Much moreso than the ones you can find still. It was sorse than Oprah's expose, where she showed footage of people doused with gasoline, set on fire and left to die slowly, if anyone happened to catch that one several years ago.

The outlandish salaries paid by S & L
executives to themselves, the subsidies to the thrifts from Congress
which rewarded incompetence and fraud, the land "flips" which
resulted in real estate being sold back and forth in an endless
"kiting" scheme, and the political manipulation designed to delay the
scandal until after the 1988 presidential elections are all immensely
interesting and important.

But they are subjects for others' inquiries.

Those inquiries are well worth the time. The FDIC only guarantees loans up to 100K (or that was the limit at the time, it may be 130K now), and so one wonders how people were paid millions, even billions on their failed accounts?

Our interest is in the
savings and loans as living, breathing organisms that fused criminal
corporations, organized crime, and the CIA into a single entity that
served the interests of the political and economic elite in America.
Let us begin by quickly summarizing the most blatant examples of
collaboration between financial institutions, the mob, and the
intelligence community.

First National Bank of Maryland
For two years, 1983-1985, the First National Bank of Maryland was
used by Associated Traders, a CIA proprietary company, to make
payments for covert operations. Associated traders used its accounts
at First National to supply $23 million in arms for covert operations
in Afghanistan, Angola, Chad, and Nicaragua (Bainerman, 1992;
276-277; Covert Action 35, 1990).

The links between the First National Bank of Maryland and the CIA
were exposed in a lawsuit filed in Federal District Court by Robert
Maxwell, a high-ranking bank officer. Maxwell charged in that suit
that he had been asked to commit crimes on behalf of the CIA.

Specifically, he charged that he was asked to conceal Associated
Traders' business activities, which by law he was required to specify
on all letters of credit. Maxwell alleged that he had been physically
threatened and forced to leave his job after asking that his
superiors supply him with a letter stating that the activities he was
being asked to engage in were legal. In responding to Maxwell's
lawsuit, attorneys for the bank state that "a relationship between
First National and the CIA and Associated Traders was classified
information which could neither be confirmed nor denied (Bainerman,
1992: 276-277; Washington Business Journal, February 5, 1990).

Palmer National Bank
The Washington, D.C.-based Palmer National Bank was founded in 1983
on the basis of a $2.8 million loan from Herman K. Beebe to Harvey D.
McLean, Jr. McLean was a Shreveport Louisiana businessman who owned
Paris (Texas) Savings and Loan. Herman Beebe played a key role in the
savings and loan scandal. Houston Post reporter Pete Brewton linked
Beebe to a dozen failed S & L's, and Stephen Pizzo, Mary Fricker, and
Paul Muolo, in their investigation of the S & L fiasco, called
Beebe's banks "potentially the most powerful and corrupt banking
network ever seen in the U.S." Altogether, Herman Beebe controlled,
directly or indirectly, at least 55 banks and 29 S & L's in eight
states. What is particularly interesting about Beebe's participation
in these banks and savings and loans is his unique background. Herman
Beebe had served nine months in federal prison for bank fraud and had
impeccable credentials as a financier for New Orleans-based organized
crime figures, including Vincent and Carlos Marcello (Bainerman,
1992: 277-278; Brewton, 1993: 170- 179).

Harvey McLean's partner in the Palmer National Bank was Stefan
Halper. Halper had served as George Bush's foreign policy director
during the 1980 presidential primaries. During the general election
campaign, Halper was in charge of a highly secretive operations
center, consisting of Halper and several ex- CIA operatives who kept
close tabs on Jimmy Carter's foreign policy activities, particularly
Carter's attempt to free U.S. hostages in Iran. Halper was later
linked both to the "Debategate" scandal, in which it is alleged that
Carter's briefing papers for his debates with Ronald Reagan were
stolen, and with "The October Surprise," in which it is alleged that
representatives of the Reagan campaign tried to thwart U.S. efforts
to free the Iranian hostages until after the presidential election.
Halper also set up a legal defense fund for Oliver North.

Barbara Hoeneger's book entitled "October Surprise" details that scam right down to the Bush flight to Iran in a (then secret) sr-71 blackbird (a two hour flight) to cut the deal. Khomeini freed the hostages the very hour of Reagan's inauguration -- meaning the deal was NOT under executive (abuse of) authority. It was out and out treason.

Let me run that by you again. Carter was still President when Bush Sr. flew over to Iran and made a deal with a known enemy of the United States, to give them (weapons, including Russian made "Bear Spares") in exchange for the hostages. And they did. Iran's Russian made equipment came from, not Russia. From the US. In addition, Bush made sure they had tank penetrators (I think that was to Iran but it may have been to Iraq), meaning that Iran (or Iraq) also had the depleted uranium weapons needed to take out US made army tanks.

Come to think of it, it may have been Iraq that got the penetrators. Bill Moyers reported that 3/4ths of US tank kills during Bush Sr.'s invasion of Iraq had been "friendly fire". That may have been because it was US-made penetrators rather than us actually shooting our own tanks, though that did happen on occasion as well.

One of Mr. North's Contra Plains, a C-123. Now a Restaurant

During the Iran-Contra Affair, Palmer National was the bank of record
for the National Endowment for the Preservation of Liberty, a front
group run by Oliver North and Carl "Spitz" Channell, which was used
to send money and weapons to the contras.

Indian Springs Bank:
Another bank with clear connections to the CIA was the Indian Springs
Bank of Kansas City, Kansas (Bainerman, 1992: 279-280; Brewton, 1993:
197-200). The fourth largest stockholder in Indian Springs was
Iranian expatriate Farhad Azima, who was also the owner of an air
charter company called Global International Air. The Indian Springs
bank had made several unsecured loans to Global International Air,
totaling $600,000 in violation of the bank's $349,00 borrower limit.
In 1983 Global International filed for bankruptcy, and Indian Springs
followed suit in 1984. The president of Indiana Springs was killed in
1983 in a car fire that started in the vehicle's back seat and was
regarded by law enforcement officials as of suspicious origins.

Global International Air was part of Oliver North's logistical
network which shipped arms for the U.S. government on several
occasions, including a shipment of 23 tons of TOW missiles to Iran by
Race Aviation, another company owned by Azima. Pete Brewton, in his
investigation of the Indian Springs bank collapse was told that FBI
had not followed up on Indian Springs because the CIA informed them
that Azima was "off limits" (Houston Post, February 8, 1990).
Similarly the assistant U.S. Attorney handling the Indian Springs
investigation was told to "back off from a key figure in the collapse
because he had ties to the CIA."

Azima did indeed have ties to the CIA. His relationship with the
agency goes back to the late 1970s when he supplied air and
logistical support to EATSCO (Egyptian American Transport and
Services Corporation), a company owned by former CIA agents Thomas
Clines, Theodore Shackley, and Richard Secord. EATSCO was prominently
involved in the activities of former CIA agent Edwin Wilson, who
shipped arms illegally to Libya. Azima was also closely tied to the
Republican party. He had contributed $81,000 to the Reagan campaign.

YO! Listen up.

And related to this point about CIA agents, Oliver North's asset name was John Cathay. Usama bin Laden's asset name is Tim Osman.

Here's a photo scan (below) of one of the proofs of this CIA/bin Laden connection. See item 1, circled showing bin Laden having been approved to meet with "US government public officials".

The point being, this may not just be the usual heinous, dastardly, slick, rotten, greedy, hypocritical, excessivly "patriotic" yet somehow "renegade" kind of stuff you might expect from a run of the mill "conservative" hero.

This might actually be serious stuff.

We do know that bin Laden was a CIA asset in the 80s. And we do know that just about everyone else in the bin Laden clan is connected in some way to the Bush family (business partners, financiers, and so forth).

What we don't know is if 9/11 was an "intelligence failure" or an "intelligence success".

Keep reading...

Global International also had other unsavory connections. In 1981,
Global International made a payment to organized crime figure Anthony
Russo, a convicted felon with a record that included conspiracy,
bribery, and prostitution charges. Russo was the lawyer of Kansas
City organized crime figures, an employee of Indian Springs, and a
member of the board of Global International. Russo later explained
that the money had been used to escort Liberian dictator Samuel Doe
on a "goodwill trip" to the U.S.

Global International's planes based in Miami were maintained by
Southern Air Transport, another CIA proprietary company. According to
Franck Van Geyso, an employee of Global International, pilots for
Global International ferried arms into South and Central America and
returned to Florida with drugs. Indian Springs also made a loan of
$400,000 to Morris Shenker, owner of the Dunes Hotel in Las Vegas,
former attorney for Jimmy Hoffa, and close associate of Nick Civella
and other Kansas City organized crime figures. At the time the loan
to Shenker was made, he, Civella, and other Kansas City mobsters were
under indictment for skimming $280,000 from Las Vegas' Tropicana

Vision Banc Savings
In March, 1986, Robert L. Corson purchased the Kleberg County Savings
and Loan of Kingsville, Texas, for $6 million, and changed its name
to Vision Banc Savings (Bainerman, 1992: 280-281; Brewton, 1993:
333-351). Harris County, Texas, judge Jon Lindsey vouched for
Corson's character in order to gain permission from state regulators
for the bank purchase. Lindsey was the chairman of the Bush campaign
in 1988 in Harris County and later received a $10,000 campaign
contribution and a free trip to Las Vegas from Corson (Houston Post,
February 11, 1990).

Corson was well-known to federal law enforcement agents as a "known
money launderer" and a "mule for the agency," meaning that he moved
large amounts of cash from country to country. When Corson purchased
Vision Banc, it had assets in excess of $70 million. Within four
months it was bankrupt. Vision Banc engaged in a number of
questionable deals under Corson leadership, but none more so that its
$20 million loan to Miami Lawyer Lawrence Freeman to finance a real
estate deal (Houston Post, February 4, 1990). Freeman was a convicted
money launderer who had cleaned dirty money for Jack Devoe's
Bahamas-to-Florida cocaine smuggling syndicate and for Santo
Trafficante's Florida- based organized crime syndicate. Freeman was a
law partner of CIA-operative and Bay of Pigs paymaster Paul
Helliwell. Corson, in a separate Florida real estate venture costing
$200 million, was indicted on a series of charges.

Hill Financial Savings
Vision Banc was not the only financial institution involved in
Freeman's Florida land deals. Hill Financial Savings of Red Hill,
Pennsylvania, put in an additional $80 million (Brewton, 1993:
346-348) . The Florida land deals were only one of a series of bad
investments by Hill Financial which led to collapse. The failure of
Hill Financial, alone, cost the U.S. treasury $1.9 billion.

Sunshine State Bank
The cast of characters surrounding the Sunshine State Bank of Miami
also included spies, White House operatives, and organized criminals
(Bainermann, 1992: 281; Brewton, 1993: 310- 312, 320-323). The owner
of the Sunshine State Bank, Ray Corona, was convicted in 1987 of
racketeering, conspiracy, and mail fraud. Corona purchased Sunshine
in 1978 with $1.1 million in drug trafficking profits supplied by
Jose Antonio "Tony" Fernandez, who was subsequently indicted on
charges of smuggling 1.5 million pounds of marijuana into the U.S.

Among Corona's customers and business associates were Leonard
Pelullo, Steve Samos, and Guillermo Hernandez-Cartaya. Pelullo was a
well-known associate of organized crime figures in Philadelphia, who
had attempted to use S & L money to broker a major purchase of an
Atlantic City Casino as a mob frontman. Pelullo was charged with
fraud for his activities at American Savings in California. Steve
Samos was a convicted drug trafficker who helped Corona to set up
Sunshine State Bank as a drug money laundry. Samos also helped set up
front companies that funneled money and weapons to the Contras.
Guillermo Hernandez-Cartaya was a veteran CIA operative who had
played a key role in the Bay of Pigs of invasion. He also had a long
career as a money launderer in the Caribbean and in Texas on behalf
of both the CIA and major drug trafficking syndicates.

Mario Renda, Lender to the Mob
Mario Renda was a Long Island money broker who brokered deposits to
various savings and loans in return for their agreement to loan money
to phony companies (Brewton, 1993: 45-47; 188-190; Pizzo et al. 1989:
466-471). Renda and his associates received finders fees of 2 to 6
percent on the loans, most of which went to individuals with strong
organized crime connections who subsequently defaulted on them. Renda
brokered deals to 160 Savings and Loans throughout the country, 104
of which eventually failed. Renda was convicted of $16 million from
an S & L and for tax fraud.

Renda also served CIA and National Security Council interests as a
money broker helping arrange for the laundering of drug money through
various savings and loans on behalf of the CIA. He then obtained
loans from the same S & L's, which were funneled to the Contras. An
organized crime-related stockbroker, a drug pilot, and Renda were all
convicted in the drug money laundering case.

Full-Service Banking: All told at least twenty-two of the failed S &
L's can be tied to joint money laundering ventures by the CIA and
organized crime figures (Glassman, 1990: 16-21; Farnham, 1990:
90-108; Weinberg, 1990: 33; Pizzo, et al., 1989: 466-471). If the
savings and loan scandals of the 1980s reveal anything, they
demonstrate what has often been stated as a maxim in organized crime
research: that corruption linking government, business, and
syndicates is the reality of the day-to-day organization of crime.
Investigations of organized crime in the United States, Europe, and
Asia have all uncovered organized crime networks operating with
virtual immunity from law enforcement and prosecution.

Chambliss' study of organized crime in Seattle exposed a syndicate
that involved participation by a former governor of the state, the
county prosecutor, the police chief, the sheriff, at least 50 law
enforcement officers, leading business people, including contractors,
realtors, banks, and corporation executives, and, of course, a
supporting cast of drug pushers, pimps, gamblers, and racketeers
(Chambliss, 1978). The Chambliss study is not the exception but the
rule. Other sociological inquires in Detroit, Texas, Pennsylvania,
New Jersey, and New York have all revealed similar patterns (Albini,
1971; Block, 1984; Block and Chambliss, 1981; Block and
Scarpitti,1985; Jenkins and Potter, 1989; 1986; Potter and Jenkins,
1985; Potter, 1994). As Chambliss comments:

In the everyday language of the police, the press, and popular
opinion, "organized crime" refers to a tightly knit group of people,
usually alien and often Italian, that run a crime business structured
along the lines of feudal relationships. This conception bears little
relationship to the reality of organized crime today. Nonetheless,
criminologists have discovered the existence of organizations whose
activities focus on the smuggling of illegal commodities into and out
of countries (cocaine out of Colombia and into the United States and
guns and arms out of the United States and into the Middle East, for
example); other organizations, sometimes employing some of the same
people, are organized to provide services such as gambling,
prostitution, illegal dumping of toxic wastes, arson, usury, and
occasionally murder. These organizations typically cut across ethnic
and cultural lines, are run like businesses, and consist of networks
of people including police, politicians, and ordinary citizens
investing in illegal enterprises for a high return on their money.

*Gary W. Potter, Professor in the Department of Police Studies at
Eastern Kentucky University. Potter emphasized criminal justice in
his doctoral work in Community Systems Planning and Development at
the Pennsylvania State University. In addition to writing several
book reviews and many articles in refereed journals on the subjects
of drug law, organized crime and pornography, Potter is the author of
The Porn Merchants and co-author of The City and the Syndicate:
Organizing Crime in Philadelphia. Additionally, Potter is a referee
for the American Journal of Criminal Justice and the American Journal
of Police.

Thank you and a cigar for Swizerland's free media and especially Gary Potter.

Nice reporting.

Rainbow Sally
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