Shell Corporations, Front Businesses, Cut-Outs

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Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Wed Apr 04, 2012 10:22 pm

Via: http://www.economist.com/node/21552196

Shells and shelves
Making money by making companies: another industry that is globalising, consolidating and shifting east

SEARCH online for “company incorporation” and you’ll be spoilt for choice. Hundreds of so-called formation agents ply their trade online, offering to set up companies, trusts and foundations cheaply and discreetly, with minimal fuss (and in some cases minimal documentation) almost anywhere in the world. The customer need only click on the company desired, perhaps adding some optional extras such as a bank account, an offshore credit card, mail-forwarding or letterhead, and then heads to the checkout. Just £349 ($560) buys you a company in the Seychelles, with no local taxation, no public disclosure of directors or shareholders and no requirement to file accounts. Prices rise to £5,000 for more sophisticated corporate structures in places like Switzerland and Luxembourg.

Bad publicity makes many in the industry gun-shy. Almost all the providers are privately held and reluctant to give details of their trade. But interviews with some big ones (mostly on condition of anonymity) paint a picture of an industry buffeted by a regulatory assault but still churning out healthy returns. It is subject to familiar commercial forces, such as globalisation (the rise of the Asian client) and consolidation (arranged in some cases by buccaneering private-equity firms).

Statistics are scanty. Even totting up the overall number of providers is difficult, partly because some do this only as a sideline. No global industry association exists. But a large offshore financial centre will typically have 80-120 corporate smithies, the World Bank reckons. Delaware, America’s market leader, has over 300.

At the top of the market are a dozen or so big operators that pump out tens of thousands of firms a year. Some run call centres with round-the-clock service. Beneath these is a long tail of smaller operators, many of them online, from the legitimate to the thoroughly dodgy.

As in any industry, incorporation includes a mix of wholesalers and retailers. The wholesalers, such as Hong Kong-based Offshore Incorporations Ltd (OIL), sell companies to legal and accounting firms, banks, corporations and also (often in bulk) to web-based resellers. Martin Crawford, the chief executive, says reputation is crucial in this market segment.

The two largest providers offshore may each have 10% of the global market, estimates Jason Sharman, an Australian professor who studies the industry. Onshore markets are more concentrated. Two firms handle two-thirds of all Delaware companies: CT Corporation (part of Wolters Kluwer of the Netherlands) and CSC—though both companies’ websites give little hint of this, focusing on their less controversial compliance services.

Among contenders for the top spot offshore is OIL, which has benefited from an Asian fondness for companies from the British Virgin Islands (on paper the second-largest investor in China in 2010, after Hong Kong). It is said to set up more than 10,000 BVI firms a year for Asian clients. Chinese investors use “BVIs” as a synonym for offshore firms.

Also big is OCRA Worldwide, based on the Isle of Man and chaired by Lord St John of Bletso, a hereditary peer and lawyer. It did not respond to requests for an interview. Its website says its 350 employees sell more than 30,000 companies a year in 20 locations, including Mauritius and the Seychelles. Another Isle of Man outfit, ILS Fiduciaries, was more forthcoming. Its boss and majority shareholder, Chris Eaton, says the firm, which specialises in “tax-efficient structures”, operates somewhere between the industry’s “stack-‘em-high, sell-‘em-cheap commoditisers” and the high-end private-trust companies, which provide more elaborate services to a more select group of clients. Panama has some big providers too, including two law firms, Morgan & Morgan and the tight-lipped Mossack Fonseca (believed to be an industry leader).

Most of the industry’s financial accounts are as impenetrable as the shell companies they peddle, making it “very hard to benchmark performance,” sighs Mr Eaton. He thinks the mass incorporators work on margins of 5-10%, rising to 25-30% for bespoke firms that do advisory work and estate planning.

Returns depend largely on whether the provider offers services beyond straightforward company formation, which tend to boost margins but require more highly skilled staff. Most offer nominee services, meaning their own people will act as directors, legal owners or bank signatories for clients seeking to preserve anonymity. Some also do payroll, invoicing and other “corporate secretarial” services. Pay OCRA an extra $1,300 a year and you can get an e-mail address on an Isle of Man server or call forwarding. Some companies, such as the Netherlands’ Orangefield and Intertrust of Switzerland, focus primarily on the corporate-secretarial market. “We tend the garden” that others have planted, says Joep Bruins, Orangefield’s boss.

The biggest in the business are said to enjoy annual profits of between $20m and $80m. OIL would not confirm a report that it made $25m before tax and other items in 2009. The number of companies it handles has grown every year since it was founded in the mid-1980s, says Mr Crawford.

An attractive feature of the industry’s economics is the annuity-like income generated from renewals. The fee that a client pays upfront covers just the first year. The cost of re-registering the company in each subsequent year is typically 80% of that. Given that the average life of an offshore company is five years, a formation agent taking $500 in year one can expect to receive $1,600 more later (though this must, of course, be shared with the jurisdiction).

This income stream makes the business attractive to private-equity firms, though some remain queasy about investing in a business with a sometimes questionable reputation. Those who have entered the fray say they also like the fact that company formation requires very little capital, allowing juicy returns through leverage.

The American-run Carlyle Group was an early investor, buying OIL in 2004 and selling it on last year to IK Investment Partners, a Scandinavian private-equity firm, for an estimated $250m-300m, making what many believe was a large profit. Waterland, a Dutch private-equity group, bought Intertrust from the Dutch government in 2009 for well below the €350m asking price. The government gained the business when it nationalised its parent, Fortis, but hurried to offload a firm that helps the rich to minimise tax bills.

Mergers backed by private equity could build larger, more efficient groups. The rising cost of legal compliance and document-management technology burden small providers disproportionately. Larger firms can better cope with clients such as the law and accounting firms that demand discounts when they buy shell companies in bundles. Regulators may also broker forced marriages. The BVI’s financial-services commission is said to prefer this to cancelling the licences of errant providers, which could draw unwelcome attention.

Though greater regulatory scrutiny means demand may be sagging in parts of the rich world, the industry reports a booming clientele in Asia, Latin America and the Middle East, wanting (among other things) to reduce tax, shield assets and create legally sound structures for international trading and investment. OIL, being Hong Kong-based, was already well placed to benefit. Others have rushed to expand in Asia. Nine of Mossack’s 44 offices are now in China. Strong demand from the Far East was a big factor in the rebound BVI enjoyed since 2010, says Robert Mathavious, its chief financial regulator. The Cayman Islands is popular with Asian clients too.

But just as the client base is shifting eastward, so is incorporation. A new big trend is the rise of the “midshore” financial centre, which incorporates elements of onshore and offshore. Two big examples are Hong Kong and Singapore. Both have offshore traits (low tax, secrecy) but also have strong legal systems and plenty of double-taxation treaties. This has helped Singapore, in particular, gain business that has fled the Channel Islands and other European jurisdictions.

Other countries wanting to get into the field will find that barriers to entry are low. Company laws are easily replicated, for instance. Envious of the BVI, which gets half of its government revenue from company registration and follow-on services, others copied its legislation almost word for word (in the Bahamas’ case, without even correcting the spelling mistakes).

The industry likes that: the more competitive pressure jurisdictions feel, the lower they will set their fees. The industry is adept at playing small offshore centres off against each other. When the Bahamas raised its fees, for instance, OIL and others persuaded Samoa to rewrite its laws within three weeks to make it easy for Bahamian firms to redomicile there. An executive praises the Samoans as “good listeners”.

Some firms specialise in sponsoring new members of the club. In some cases they even offer to help write the necessary legislation and guarantee to find buyers for the first, say, 1,000 companies. The Seychelles got its start this way, with hand-holding from OCRA. Mossack is said to have supported Anguilla’s efforts to become the next BVI, including changing systems to allow one-day registration and helping it rebrand itself as British Anguilla: laughably, that label is supposed to indicate probity.


Via: http://www.reuters.com/article/2011/06/ ... 0Z20110628

A Little House of Mysteries on the Great Plains

By Kelly Carr and Brian Grow

CHEYENNE/ATLANTA (Reuters) - The secretive business havens of Cyprus and the Cayman Islands face a potent rival: Cheyenne, Wyoming.

At a single address in this sleepy city of 60,000 people, more than 2,000 companies are registered. The building, 2710 Thomes Avenue, isn't a shimmering skyscraper filled with A-list corporations. It's a 1,700-square-foot brick house with a manicured lawn, a few blocks from the State Capitol.

Neighbors say they see little activity there besides regular mail deliveries and a woman who steps outside for smoke breaks. Inside, however, the walls of the main room are covered floor to ceiling with numbered mailboxes labeled as corporate "suites." A bulky copy machine sits in the kitchen. In the living room, a woman in a headset answers calls and sorts bushels of mail.

A Reuters investigation has found the house at 2710 Thomes Avenue serves as a little Cayman Island on the Great Plains. It is the headquarters for Wyoming Corporate Services, a business-incorporation specialist that establishes firms which can be used as "shell" companies, paper entities able to hide assets.

Wyoming Corporate Services will help clients create a company, and more: set up a bank account for it; add a lawyer as a corporate director to invoke attorney-client privilege; even appoint stand-in directors and officers as high as CEO. Among its offerings is a variety of shell known as a "shelf" company, which comes with years of regulatory filings behind it, lending a greater feeling of solidity.

"A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy," the company's website boasts. "A person you control... yet cannot be held accountable for its actions. Imagine the possibilities!"

Among the entities registered at 2710 Thomes, Reuters found, is a shelf company sheltering real-estate assets controlled by a jailed former prime minister of Ukraine, according to allegations made by a political rival in a federal court in California.

The owner of another shelf company at the address was indicted in April for allegedly helping online-poker operators evade a U.S. ban on Internet gambling. The owner of two other firms there was banned from government contracting in January for selling counterfeit truck parts to the Pentagon.

CASTING THE FIRST STONE

All the activity at 2710 Thomes is part of a little-noticed industry in the U.S.: the mass production of paper businesses. Scores of mass incorporators like Wyoming Corporate Services have set up shop. The hotbeds of the industry are three states with a light regulatory touch-Delaware, Wyoming and Nevada.

The pervasiveness of corporate secrecy on America's shores stands in stark contrast to Washington's message to the rest of the world. Since the September 11 attacks in 2001, the U.S. has been calling forcefully for greater transparency in global transactions, to lift the veil on shadowy money flows. During a debate in 2008, presidential candidate Barack Obama singled out Ugland House in the Cayman Islands, reportedly home to some 12,000 offshore corporations, as "either the biggest building or the biggest tax scam on record."

Yet on U.S. soil, similar activity is perfectly legal. The incorporation industry, overseen by officials in the 50 states, has few rules. Convicted felons can operate firms which create companies, and buy them with no background checks.

No states license mass incorporators, and only a few require them to formally register with state authorities. None collect the names and addresses of "beneficial owners," the individuals with a controlling interest in corporations, according to a 2009 report by the National Association of Secretaries of State, a group for state officials overseeing incorporation. Wyoming and Nevada allow the real owners of corporations to hide behind "nominee" officers and directors with no direct role in the business, often executives of the mass incorporator.

"In the U.S., (business incorporation) is completely unregulated," says Jason Sharman, a professor at Griffith University in Nathan, Australia, who is preparing a study for the World Bank on corporate formation worldwide. "Somalia has slightly higher standards than Wyoming and Nevada."

An estimated 2 million corporations and limited liability companies are created each year in the U.S., according to Senate investigators. The Treasury Department has singled out LLCs as particularly vulnerable to being used as shell companies, as they can be owned by anyone and managed anonymously. Delaware, Nevada and Wyoming had 688,000 LLCs on file in 2009, up from 624,000 in 2007.

Treasury and state banking regulators say banks have flagged billions of dollars in suspicious transactions involving U.S. shell companies in recent years. On June 10, a federal judge in Oregon ordered a company registered there to pay $60 million for defrauding a Ukrainian government agency through sham transactions involving shell companies. The civil lawsuit described a network of U.S.-registered shells connected to fraud in Eastern Europe and Afghanistan.

A growing niche in the shell business is shelf corporations. Like paper-only shells, which enable the secrecy-minded to hide real ownership of assets, shelf companies are set up by firms like Wyoming Corporate Services, then left "on the shelf" to season for years. They're then sold later to owners looking for a quick way to secure bank loans, bid on contracts, and project financial stability. To speed up business activity, shelf corporations can often be purchased with established bank accounts, credit histories and tax returns filed with the Internal Revenue Service.

"They just slot in your names, and you walk away with the company. Presto!" says Daniel E. Karson, executive managing director at investigative firm Kroll Inc. "The purpose is to conceal ownership."


On its website, Wyoming Corporate Services currently lists more than 700 shelf companies for sale in 37 states. The older they are, the more expensive, like Scotch whisky. Brookside Management Inc., formed in December 2004, sells for $5,995, while Knotty Management LLC, formed in May, costs just $645. In Delaware, incorporator Harvard Business Services markets First Family LLC, created in May 1997, for $10,000.

"If they're signing a large contract, they may not want it to look like they've just formed a company," said Brett Melson, director of U.S. sales at Harvard Business Services. But he added: "Unsavory characters can do a lot of bad things with the companies."

Shell and shelf companies do serve legitimate purposes. They provide a quick and cheap way for entrepreneurs to jump into business and create jobs. Businesses can use them to protect trade secrets. Politicians or other public figures may use a shell company to hold their home so that people with ill intent have a harder time locating them.

The state of Wyoming says it cracked down on incorporation services in 2009 after discovering that nearly 5,700 companies were registered to post-office boxes. New laws require companies to have a physical presence in the state through an owner or a registered agent, and make it a felony to submit false filings.

"What we want to have is good, quality legitimate businesses," said Patricia O'Brien, Wyoming's Deputy Secretary of State. "We don't regulate what the business itself does, but we are not recruiting businesses here that are questionable or illegal."

Wyoming Corporate Services is run by Gerald Pitts, its 54-year-old founder and president. On paper, he is a prolific businessman. Incorporation data provided by Westlaw, a unit of Thomson Reuters, show that Pitts is listed as a director, president or principal for at least 41 companies registered at 2710 Thomes Avenue.

Another 248 firms name Edge Financial Inc., another incorporation service, as their "manager." Gerald Pitts is the president of Edge Financial, according to records on file with the Wyoming secretary of state's office.

Companies registered at 2710 Thomes Avenue have been named in a dozen civil lawsuits alleging unpaid taxes, securities fraud and trademark infringement since 2007, a review of Westlaw data shows. State and federal tax authorities have filed liens against companies registered at the address seeking to collect more than $300,000 in unpaid taxes, according to Westlaw.

Pitts says Wyoming Corporate Services fully complies with the law and doesn't have any knowledge of how clients use the companies he registers. "However, we recognize that business entities (whether aged, shell or traditional) may be used for both good and ill," Pitts wrote in an email to Reuters. "WCS will always cooperate with law enforcement agencies who request information or assistance. WCS does not provide any product or service with the intent that it be used to violate the law."

THE UKRAINE CONNECTION

Gerald Pitts and his own incorporation firms have never been sued or sanctioned, according to federal and state court records. Wyoming officials said Wyoming Corporate Services operates legally. "If they do it by cubby holes and they are really representing each person, they meet the law," said O'Brien, the deputy secretary of state.

But clients of his have run into trouble.

Among those registered at the little house in Cheyenne are two small companies formed through Wyoming Corporate Services that sold knock-off truck parts to the U.S. Department of Defense, according to a Reuters review of two federal contracting databases and findings from an investigation by the Pentagon's Defense Logistics Agency. The owner of those firms, Atilla Kan, awaits sentencing on a 2007 conviction for wire fraud in a related matter.

Also linked to 2710 Thomes is former Ukrainian Prime Minister Pavlo Lazarenko, who was once ranked the eighth-most corrupt official in the world by watchdog group Transparency International. He is now serving an eight-year jail term in California for a 2004 conviction on money-laundering and extortion charges. According to court records, that scheme used shell companies and offshore bank accounts to hide stolen Ukrainian government funds.

Court records submitted in Lazarenko's criminal case and documents from a separate civil lawsuit, as well as interviews with lawyers familiar with the matter, indicate Lazarenko controls a shelf company incorporated in Cheyenne that owns an estimated $72 million in real estate in Ukraine through other companies.


The U.S. government continues to seek more than $250 million from bank accounts in Antigua, Barbuda, Guernsey and other countries that it says were controlled by Lazarenko and his associates, according to a forfeiture action filed by the Department of Justice.

The paper trail linking Lazarenko to the real estate in Ukraine is labyrinthine. At the heart of it is a shelf company called Capital Investments Group, registered at 2710 Thomes Avenue.

U.S. lawyers for a Ukrainian businessman named Gennady Korban submitted documents claiming that Lazarenko is the true owner of Capital Investments Group and other U.S. companies.

Lazarenko and Korban are rivals in Ukraine, and for years have traded allegations of corruption and assassination. An organization chart accompanying Korban's submission alleges Capital Investments Group owns 99.99 percent of a Ukrainian firm called OOO Capital Investments Group. That company, the chart claims, is the owner of another company, OOO Ukrainsky Tyutyun, where Pavlo Lazarenko is a director. Each of the firms and several others are used as corporate fronts to control properties in Dnepropetrovsk, Ukraine, the filing alleges.

Seven properties are named in the 2009 filing by Korban, including 55 Pushkin Street and 58 Komsomolskaya Street. The dossier on Capital Investments Group claims that other directors of the alleged front companies include Lazarenko's wife, son and mother-in-law.

Federal prosecutors successfully urged the court in late 2009 to disregard Korban's submissions, arguing that it would take too much time to vet his account and thus delay his resentencing after a lengthy appeal.

A few months later, in February 2010, Capital Investments Group sued Korban and others in federal court in Delaware. That lawsuit claims two properties in the Ukraine controlled by Capital Investments Group - 55 Pushkin Street and 58 Komsomolskaya Street - were stolen from it using forged documents.

The lawsuit says Capital Investments was formed in September 2005. It is registered at 2710 Thomes Avenue, and Gerald Pitts, the court documents say, is "President, Secretary, Chairman and director."

But Capital Investments Group doesn't disclose the name of its owners. Daniel Horowitz and Martin Garbus, attorneys for the company, have represented Pavlo Lazarenko in other U.S. and Ukrainian litigation. They declined to provide the owners' names, citing client confidentiality, and wouldn't comment on Lazarenko's links to CIG.

The U.S. Attorney's office in San Francisco declined to comment. Asked about his association with Lazarenko and Capital Investments Group, Gerald Pitts declined to provide information on specific clients. Pitts said he is aware of the Delaware lawsuit and "is cooperating fully with authorities in the matter."

POKER EMPIRE

Another man linked to 2710 Thomes is Ira N. Rubin. Prosecutors allege he created a Rube Goldberg-style network of shell and shelf corporations to further his scams.

In December 2006, the Federal Trade Commission sued Rubin for fraud in federal court in Tampa. Documents in the civil lawsuit allege Rubin used at least 18 different front companies to obscure his role as a credit-card processor for telemarketing scams.

These operations, the FTC alleged, offered subprime credit cards that charged an upfront fee debited from customers' bank accounts, but the cards were never delivered. The complaint also alleged Rubin processed payments for online gambling rings and pharmacy websites selling controlled substances.

One company in that network was Elite Funding Group Inc. It was registered at 2710 Thomes Avenue in August 2004 and offered for sale by Wyoming Corporate Services for $1,095. Gerald Pitts was listed in public documents as the original director, wrote an investigator hired by the FTC in a January 2007 report filed in federal court in Tampa. Pitts had resigned six months earlier as director and was replaced by Rubin, according to court records.

Rubin's maze-like network served as the back office for alleged consumer scams operating from Canada, the Philippines, Cyprus and the U.S., with names like Freedom Pharmacy and Fun Time Bingo. His companies took consumer bank account information obtained by the clients, charged the accounts via an electronic transactions network that enables direct debits, kept a portion of the proceeds, and forwarded the rest to the alleged fraudsters, according to documents in the FTC's civil lawsuit.

To minimize scrutiny, Rubin used at least 18 different firms to handle his operations. A firm called Global Marketing Group processed payments for telemarketers offering bogus credit cards, the FTC alleged. Elite Funding, the Wyoming shelf corporation, was a subsidiary of Global Marketing. Rubin used Elite to open bank accounts with Wells Fargo Bank which held more than $300,000 in proceeds from the payment processing, according to court records.

Just hours after Rubin was visited by a court-appointed receiver in the case in December 2006, $249,000 vanished from the Wells Fargo account. Rubin refused to say if he transferred the money, citing his 5th Amendment right against self-incrimination. At least $125,000 then made its way to a bank account in Chennai, India, and has never been recovered, according to documents in the civil lawsuit.

Why use a shelf company? "To hide who they are and what they are doing. In the case of Ira Rubin, he had a payment processing empire that worked on behalf of many different industries, all of which were engaged in illegal conduct," said James Davis, an attorney with the Federal Trade Commission. "It was to his benefit to make it as difficult as possible for law enforcement to connect these companies back to him."

In 2008, Rubin fled to Costa Rica to avoid arrest for contempt in the civil case. Authorities allege he went on to run another payment-processing operation from abroad: This March 10, he and 10 others were indicted in New York for allegedly running a massive scheme to hide payments made by U.S. customers to the three largest online-poker websites, in violation of a ban passed by Congress in 2006. He was extradited from Guatemala the same month. On June 8, a New York judge denied bail for Rubin. (link.reuters.com/jud42s)

Stuart Meissner, an attorney for Rubin, said his client was not available for comment. Pitts declined to comment.

AMERICAN LOOPHOLES

The loopholes in U.S. disclosure of bank-account and shell-company ownership have drawn fire.

The U.S. was declared "non-compliant" in four out of 40 categories monitored by the Financial Action Task Force, an international group fighting money laundering and terrorism finance, in a 2006 evaluation report, its most recent. Two of those ratings relate to scant information collected on the owners of corporations. The task force named Wyoming, Nevada and Delaware as secrecy havens. Only three states - Alaska, Arizona and Montana - require regular disclosure of corporate shareholders in some form, according to the 2009 report by the National Association of Secretaries of State.

Some lawmakers want tighter rules. Senator Carl Levin (D-Mich.), chairman of the Senate Homeland Security Committee's Permanent Subcommittee for Investigations, has introduced the Incorporation Transparency and Law Enforcement Assistance Act each year since 2008. The bill would require states to obtain and update information about the real owners of companies, and impose civil and criminal sanctions for filing false information.

"Criminals use U.S. shell companies to commit financial fraud, drug trafficking, even terrorist financing, in part because our states don't require anyone to name the owners of the companies they form," Levin said in an email to Reuters.

The bill has been beaten back by a coalition of state officials and business groups, citing concerns about the cost of implementing the new law and federal government infringement on state incorporation rights.

A leading opponent is the National Association of Secretaries of State. Kay Stimson, a spokeswoman, said in an email that the Levin bill "would have placed new burdens upon states and legitimate, law-abiding businesses-many of which are struggling to stay afloat during these difficult financial times-while continuing to provide lawbreakers with the means to evade the law."

An aide for Levin said the bill is expected to be re-introduced soon. The new bill will add provisions requiring incorporation agents who sell shelf companies to provide beneficial owner data, said a Senate aide familiar with it.

CAT AND MOUSE

Shell companies remain a headache for law-enforcement authorities. Officials say court-ordered subpoenas served on incorporators of shell and shelf corporations generally do deliver the names of the real owners hiding behind nominees. But if the owners are not U.S. citizens or companies, the investigation often hits a dead-end, they say.

There are additional hurdles. Wyoming Corporate Services charges $2,500 per year to supply an attorney who can provide an extra shield. Cheyenne attorney Graham Norris Jr. tells prospective clients sent to him by WCS that he will create a company on their behalf. That way, he says, he can invoke attorney-client privilege-adding a layer of privacy anytime there is an inquiry about their identities.

"When you do need to contact Wyoming Corporate Services, you may do so through me," advises a June 13 "Dear Client" letter supplied by Norris to Reuters. "If you contact them directly, there is a greater risk they may disclose that information in response to a subpoena; remember there is no privilege with Wyoming Corporate Services, only with your attorney."

For a fee, clients can request that Norris file a motion to quash any subpoena, the letter says. It warns that in cases where fraud or criminal conduct is alleged, a court might order Norris to name the owners. Still, after any inquiry about identity, the letter says, Norris must inform the client-and "I must also decline to answer the inquiry."

Investigators say they are sometimes loath to use subpoenas for the very reason highlighted in Norris' letter-fear of tipping off targets. "In the initial stages of investigation, when we encounter a domestic shell corporation, we know we can't subpoena the company that sold the corporation to the end users, because we don't want the target to find out they are being investigated," says FTC attorney James Davis.

Other U.S. agencies raise similar complaints about shells. The 2006 U.S. Money Laundering Threat Assessment, prepared by 16 federal agencies, devotes a chapter to the ways U.S. shell companies can be attractive vehicles to hide ill-gotten funds. It includes a chart to show why money launderers might like to create shells in Wyoming, Nevada or Delaware, which offer the highest levels of corporate anonymity.

The information in the chart is credited to the Web site of a firm called Corporations Today-an incorporation service run by Gerald Pitts in Cheyenne, Wyoming.
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Wed Apr 04, 2012 11:32 pm



In espionage parlance, a cutout is a mutually trusted intermediary, method or channel of communication, facilitating the exchange of information between agents. Cutouts usually only know the source and destination of the information to be transmitted, but are unaware of the identities of any other persons involved in the espionage process. Thus, a captured cutout cannot be used to identify members of an espionage cell.

Espionage or spying involves an individual obtaining information that is considered secret or confidential without the permission of the holder of the information. Espionage is inherently clandestine, lest the legitimate holder of the information change plans or take other countermeasures once it is known that the information is in unauthorized hands.

Espionage is usually part of an institutional effort by a government or corporation, and the term is most readily associated with state spying on potential or actual enemies primarily for military purposes. Spying involving corporations is known as industrial espionage.

One of the most effective ways to gather data and information about an enemy (or potential enemy) is by infiltrating the enemy's ranks. This is the job of the spy. Spies can bring back all sorts of information concerning the size and strength of an enemy army. They can also find dissidents within the enemy's forces and influence them to defect. In times of crisis, spies can also be used to steal technology and to sabotage the enemy in various ways. Counterintelligence operatives can feed false information to enemy spies, protecting important domestic secrets and preventing attempts at subversion. Nearly every society has very strict laws concerning espionage, and the penalty for being caught is often severe. However, the benefits that can be gained through espionage are generally felt to outweigh the risks.

Further information on clandestine HUMINT (human intelligence) information collection techniques is available, including discussions of operational techniques, asset recruiting and the tradecraft used to collect this information.

In the United States, there are several federal agencies that form the United States Intelligence Community. The Central Intelligence Agency operates a Clandestine Service (NCS) to collect human intelligence and perform Covert operations. The National Security Agency collects Signals Intelligence. Other agencies do similar work. The CIA used to head the IC but after the September 11 attacks a new agency was formed, the Director of National Intelligence, to lead the group.

An early example of espionage literature is Kim by the English novelist Rudyard Kipling, with a description of the training of an intelligence agent in the Great Game between the UK and Russia in 19th century Central Asia. An even earlier work was James Fenimore Cooper's classic novel, The Spy, written in 1821, about an American spy in New York during the Revolutionary War.

During the many 20th century spy scandals, much information became publicly known about national spy agencies and dozens of real-life secret agents. These sensational stories piqued public interest in a profession largely off-limits to human interest news reporting, a natural consequence of the secrecy inherent to their work. To fill in the blanks, the popular conception of the secret agent has been formed largely by 20th and 21st century literature and cinema. Attractive and sociable real-life agents such as Valerie Plame find little employment in serious fiction, however. The fictional secret agent is more often a loner, sometimes amoral—an existential hero operating outside the everyday constraints of society. Loner spy personalities may have been a stereotype of convenience for authors who already knew how to write loner private investigator characters that sold well from the 1920s to the present.



The parallel universe
By Douglas Valentine

As a result of Dana Priest’s three-part article, Top-Secret America, published in the Washington Post, pundits have been falling all over themselves in their rush to describe the size and implications of the elephant in the living room. Forget that none of these pundits has seen fit to write about the elephant before. More important is the fact that the elephant has dimensions Dana Priest never even touched upon.

Let me tell you a story.

In 1985, I was contacted by Larry, a CIA officer who had had a breakdown and wanted to talk to me. He had served as a deep cover agent overseas for over 15 years at that point. He had been recruited from the Marines in Vietnam, and given a fake life in which his father had been an Australian soldier in World War II, and his mother a Filipino who died in childbirth. The Australian soldier had abandoned the mother before she gave birth. The father had later died in World War II, and Larry, having been brought up in an orphanage, was adopted as an infant by a couple in the United States.

In the legend created by the CIA, Larry’s foster parents told him about his real parents while he was a Marine in Vietnam. Larry took advantage of his proximity to the Philippines to travel there and claim his right to Filipino citizenship. In this way the CIA established an agent in the Philippines, with impeccable credentials. Larry eventually was even elected to public office.

To make a long story short, after Larry’s breakdown, the CIA got him a job as a manager of a Playboy club in Detroit. Later they transferred him to Washington, DC, as manager of the Four Ways restaurant. When I met him there, his Filipino wife and entourage were staffing the facility, along with his CIA hand-holder, who handled finances.

This was the fanciest place I had never been in my life. It was a place where State Department officials, foreign dignitaries and business tycoons enjoyed the finest wines and the most haute cuisine. Each lavishly appointed room had its own dining table and waiter. As I sat in a leather booth in the wood-paneled basement bar with Larry, he explained that each room was bugged by the CIA.

As we were talking, a group of well-dressed younger people in the company of one older man took occupied the booth next to us. The rest of the basement bar was empty. They ordered drinks, but remained silent and alert as Larry explained the ins and outs of his CIA experience to me. At one point, he nodded to the older man at the other table; then he informed me that the young people were junior officer trainees from Langley, who were also listening to his lecture.

Again, to make a very long story short, Larry explained that the CIA manages a parallel society to American society, where deep cover agents like him, as well as retired CIA officers and their agents, are provided with comfortable employment in their retirement years, or when they otherwise need recompense for their service. Many of these agents have no resume that is suitable in the modern professional world. So there is this parallel universe that they are folded into, as managers of the local Ford dealership, or Chinese restaurant, or hotel, or in hundreds and thousands of other jobs.

Think of it as a sort a witness protection program. Since 1985 it has grown substantially. It is, of course, another facet of Top-Secret America, but the ex-spooks in this dimension are not your average every day wingnut ideologue informant or strong-arm man. They know how to burn down buildings, which is what the CIA does.

As John Lennon said, “Imagine.”


Doug Valentine is the author of “The Phoenix Program” and his latest book is “The Strength of the Pack: The Personalities, Politics and Espionage Intrigues That Shaped The DEA.” Please visit his website at http://www.members.authorsguild.net/valentine/bio.htm.
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Wed Apr 04, 2012 11:46 pm

CIA moonlights in corporate world
By: Eamon Javers
February 1, 2010 12:57 AM EDT

In the midst of two wars and the fight against Al Qaeda, the CIA is offering operatives a chance to peddle their expertise to private companies on the side — a policy that gives financial firms and hedge funds access to the nation’s top-level intelligence talent, POLITICO has learned.

In one case, these active-duty officers moonlighted at a hedge-fund consulting firm that wanted to tap their expertise in “deception detection,” the highly specialized art of telling when executives may be lying based on clues in a conversation.

The never-before-revealed policy comes to light as the CIA and other intelligence agencies are once again under fire for failing to “connect the dots,” this time in the Christmas Day bombing plot on Northwest Flight 253.
This article is adapted from the author's forthcoming book, 'Broker, Trader, Lawyer, Spy: The Secret World of Corporate Espionage.'

But sources familiar with the CIA’s moonlighting policy defend it as a vital tool to prevent brain-drain at Langley, which has seen an exodus of highly trained, badly needed intelligence officers to the private sector, where they can easily double or even triple their government salaries. The policy gives agents a chance to earn more while still staying on the government payroll.

A government official familiar with the policy insists it doesn’t impede the CIA’s work on critical national security investigations. This official said CIA officers who want to participate in it must first submit a detailed explanation of the type of work involved and get permission from higher-ups within the agency.

“If any officer requests permission for outside employment, those requests are reviewed not just for legality, but for propriety,” CIA spokesman George Little told POLITICO.

There is much about the policy that is unclear, including how many officers have availed themselves of it, how long it has been in place and what types of outside employment have been allowed. The CIA declined to provide additional details.

Generally, federal employees across the vast government work force are allowed to moonlight in the private sector, but under tight guidelines, that can vary from agency to agency, according to the federal Office of Government Ethics.

“In general, for most nonpolitical employees, they may engage in outside employment, but there are some restrictions,” said Elaine Newton, an attorney at the Office of Government Ethics. She explained that agencies throughout the federal government set their own policies on outside employment, and that they all typically require that the employment not represent a conflict of interest with the employee’s federal job and that the employee have written approval before taking on the work.

But the close ties between active-duty and retired CIA officers at one consulting company show the degree to which CIA-style intelligence gathering techniques have been employed by hedge funds and financial institutions in the global economy.

The firm is called Business Intelligence Advisors, and it is based in Boston. BIA was founded and is staffed by a number of retired CIA officers, and it specializes in the arcane field of “deception detection.” BIA’s clients have included Goldman Sachs and the enormous hedge fund SAC Capital Advisors, according to spokesmen for both firms.

BIA has employed active-duty CIA officers in the past, although BIA president Cheryl Cook said that has “not been the case with BIA for some time.”

But the ties between BIA and the intelligence world run deep. The name itself was chosen as a play off CIA. And the presence of so many former CIA personnel on the payroll at BIA causes confusion as to whether the intelligence firm is actually an extension of the agency itself. As a result, BIA places a disclaimer in some of its corporate materials to clarify that it is not, in fact, controlled by Langley.

BIA’s clients can put the company on a retainer for as much as $400,000 to $800,000 a year. And in return, they receive access to a variety of services, from deception detection to other programs that feature the CIA intelligence techniques.


In one presentation in 2006, BIA personnel promised to teach managers at a leading hedge fund some of the CIA’s own foolproof techniques.

The presenters that day at SAC Capital Advisors in Stamford, Conn., included two women with backgrounds in intelligence. One spent 20 years with the CIA, specializing in polygraph, interviewing, and deception detection. The other had more than 25 years of interrogation experience.

In their intensity, they reminded one person in the room of Clarice Starling, the no-nonsense FBI agent played by Jodie Foster in the movie “The Silence of the Lambs”: “You could tell they knew exactly what they were doing.”

The tactics that BIA officials such as these teach hedge fund clients are based in a program it calls “Tactical Behavior Assessment.”.

Unlike polygraph machines, the TBA technique allows examiners to work without hooking up their subject to a series of wires. The subject never knows he’s being scrutinized.

Polygraph machines work by measuring a person’s physical responses, such as heart rate, that indicate stress. Analysts using the machine need to sit with their subject for a long time. They have to establish a person’s physiological baseline, so they begin with a “control” conversation about neutral topics, before they can begin grilling the subject. Conducting an interview and doing a thorough analysis of polygraph results can take hours.

TBA focuses on the verbal and nonverbal cues that people convey when they aren’t telling the truth. Psychologists familiar with the method say it works because human beings just aren’t hard-wired to lie well. Holding two opposing ideas in your brain at the same time — as you have to do in order to tell a lie — causes a phenomenon they term “cognitive dissonance,” which creates actual physical discomfort. And when people are uncomfortable, they squirm. They fidget ever so slightly, they pick lint off their clothes, they shift their bodily positions.

Agents look for the physical indicators of lying. They watch for a person shifting anchor points. If the person is leaning forward on one elbow, does he switch to the other one? Interrogators watch for grooming gestures such as adjusting clothes, hair or eyeglasses. They look to see if the person picks at his fingernails or scratches himself. They watch for the person to clean his surroundings — does he straighten the paper clips on the table or line up the pens? If he does, he could be lying.

To obtain verbal clues, agents listen for several kinds of statements. They’ll listen for qualifying answers, phrases that begin with words like “honestly,” “frankly” or “basically.” The agents will be listening for detour phrases like “as I said before ...” They’ll want to hear if the person invokes religion — “I swear to God” — or attacks the questioner: “How dare you ask me something like that?”

Other red flags: Complaints —“How long is this going to take?” Selective memory —“To the best of my knowledge.” Overly courteous responses —“Yes, sir.”

BIA doesn’t just offer training, though. For a fee, its officers do the analysis themselves.

Often, BIA deploys its CIA-trained operatives to analyze quarterly corporate-earnings calls. Those conference calls are an important Wall Street ritual that serves as a direct line from the corporate boardroom to the trading floor.

Companies use the calls to put the best spin on the events of the quarter and give investors a sense of the way ahead. Analysts for top-of-the-line investment houses use them to ask probing questions of senior management.

And BIA uses them to figure out if the company may not be disclosing the truth — all with the help of the CIA-trained analysts.

In one particular instance in August 2005, Hong Liang Lu, the chairman and CEO of a company called UTStarcom, walked through the numbers with a telephone audience of Wall Street investment bankers. With his slicked-back hair, rimless glasses and wide smile, Lu projected an image of intelligence and competence.

And as he began the call, Lu couldn’t know that it also was being patched into a room thousands of miles away where interrogators trained in CIA-style techniques would analyze each inflection in Lu’s voice. The analysts were human lie detectors, working for BIA. They were trying to find out whether Lu was telling the whole truth about UTStarcom’s financial health.

When they came to their conclusion, they’d report it to BIA’s client, an enormous hedge fund. The secret intelligence they produced would help the hedge fund decide whether to buy or sell UTStarcom stock. If the intelligence analysts did their jobs, the hedge fund would be far ahead of the rest of the market.

The information they gleaned from this phone call could be worth millions of dollars.

The company Hong Liang Lu ran sells broadband, wireless and hand-held Internet equipment and technology around the world. It had generated more than $700 million in revenue that quarter, and although it was still losing money, that performance was good enough to bring it close to profitability. The company thought the results were positive, and the CEO seemed optimistic.

Investment analysts from Bank of America, Smith Barney, Deutsche Bank and other Wall Street powerhouses were the official participants in UTStarcom’s call. The analysts prepared their best questions to help them figure out the answer to one big question: Would UTStarcom emerge as a hot stock in the third quarter?

After some opening remarks, Lu threw open the session to questions from the Wall Streeters. One of them, Mike Ounjian, a keen-eyed analyst with Credit Suisse First Boston, asked about potential problems he’d spotted with how the company’s income was being counted in the books, a process known as revenue recognition.

There seemed to be a backlog in the recording, and Ounjian wanted to know why. If the problems were serious, they could affect the company’s financial results in the next quarter and might cause the stock price to dip.

“Are there any issues related to recognizing revenues on these?” Ounjian asked.

The voice of Michael Sophie, then the company’s interim chief financial officer, came over the phone line: “Yes, with the backlog, the vast majority of the wireless backlog is clearly PAS [an acronym for one of the company’s products, Personal Access System]. I think you saw the announcement at the end of June where we announced on the PAS infrastructure orders in China. And again, it’s just the timing of deployment and achieving final acceptance, we’ve also got some CDMA [an acronym for a type of mobile phone standard] to a lesser extent in the backlog. ... But Q3 is clearly a little more handset-oriented than we would typically run.”

After analyzing the call, BIA’s employees supplied a 27-page confidential report to their client, and they singled out Sophie’s response to the question about revenue recognition for particular attention. They noted that Sophie qualified his response and referred back to another announcement from the end of June.

BIA called that kind of conversational reference a “detour statement,” and its analysts were convinced that Sophie was trying to minimize the delays. “Mr. Sophie avoids commenting on any issues related to revenue recognition, and his overall behavior indicates that revenue recognition problems cannot be ruled out.”


Overall, BIA’s team rated the second-quarter conference call as a “medium high level of concern”— the same rating they’d given UTStarcom’s call the quarter before. This time, though, the BIA team found more problems, which they listed in a box on the first page of their report: “Lacks Confidence,” “Underlying Concern,” “Avoids Providing Information.”

In their conclusion, the BIA team said they’d found that the executives were worried about the timing of the company’s profitability date and the issue of revenue recognition. The report says: “Management’s behavior indicates that they will post poor third-quarter results, and it is also highly unlikely they will achieve profitability in the fourth quarter.”

It might not seem like much, one take on whether the company will do well in the next six months. But to hedge-fund investors — who are looking for ways to make money off of falling stocks by selling short — that is valuable information indeed.

BIA’s client had no way of telling whether the deception analysis report was accurate or not. It was the client’s job to take the report, combine it with other information known about UTStarcom and make a bet for or against the company. And there’s no evidence that UTStarcom officials weren’t being truthful during the call.

With the benefit of hindsight, though, it’s possible to go back and check the record to find out what did happen to UTStarcom stock in the weeks after the call.

It turns out that any investor who shorted UTStarcom at the time BIA submitted its report would have been in a position to reap substantial gains.

Over the next month or so after the call of Aug. 2, UTStarcom’s stock price lost about $1 per share, a nice win for any short seller. But on Oct. 6, 2005, the company released its third-quarter results, shocking Nasdaq traders with numbers that were below the guidance executives had offered during the conference call. In October, UTStarcom said it expected total revenues of between $620 million and $640 million, compared with its previous target of $660 million to $680 million. The next morning, investors frantically sold their shares: more than 23 million transactions took place on Oct. 7, 2005.

A day after the third-quarter results were released, the stock was down roughly an additional $2, closing at $5.64. It had been at $8.54 when the BIA team listened in on the conference call in August and flagged the potential problems with revenue recognition.

And what reason did UTStarcom give for its poor third-quarter performance? It disclosed difficulties with revenue recognition.

© 2011 POLITICO LLC


http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=rss_daily
MAY 23, 2006

NEWS
By Dawn Kopecki
Intelligence Czar Can Waive SEC Rules
Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.

Unbeknownst to almost all of Washington and the financial world, Bush and every other President since Jimmy Carter have had the authority to exempt companies working on certain top-secret defense projects from portions of the 1934 Securities Exchange Act. Administration officials told BusinessWeek that they believe this is the first time a President has ever delegated the authority to someone outside the Oval Office. It couldn't be immediately determined whether any company has received a waiver under this provision.

The timing of Bush's move is intriguing. On the same day the President signed the memo, Porter Goss resigned as director of the Central Intelligence Agency amid criticism of ineffectiveness and poor morale at the agency. Only six days later, on May 11, USA Today reported that the National Security Agency had obtained millions of calling records of ordinary citizens provided by three major U.S. phone companies. Negroponte oversees both the CIA and NSA in his role as the administration's top intelligence official.

FEW ANSWERS. White House spokeswoman Dana M. Perino said the timing of the May 5 Presidential memo had no significance. "There was nothing specific that prompted this memo," Perino said.

In addition to refusing to explain why Bush decided to delegate this authority to Negroponte, the White House declined to say whether Bush or any other President has ever exercised the authority and allowed a company to avoid standard securities disclosure and accounting requirements. The White House wouldn't comment on whether Negroponte has granted such a waiver, and BusinessWeek so far hasn't identified any companies affected by the provision. Negroponte's office did not respond to requests for comment.

Securities-law experts said they were unfamiliar with the May 5 memo and the underlying Presidential authority at issue. John C. Coffee, a securities-law professor at Columbia University, speculated that defense contractors might want to use such an exemption to mask secret assignments for the Pentagon or CIA. "What you might hide is investments: You've spent umpteen million dollars that comes out of your working capital to build a plant in Iraq," which the government wants to keep secret. "That's the kind of scenario that would be plausible," Coffee said.

AUTHORITY GRANTED. William McLucas, the Securities & Exchange Commission's former enforcement chief, suggested that the ability to conceal financial information in the name of national security could lead some companies "to play fast and loose with their numbers." McLucas, a partner at the law firm Wilmer Cutler Pickering Hale & Dorr in Washington, added: "It could be that you have a bunch of books and records out there that no one knows about."

The memo Bush signed on May 5, which was published seven days later in the Federal Register, had the unrevealing title "Assignment of Function Relating to Granting of Authority for Issuance of Certain Directives: Memorandum for the Director of National Intelligence." In the document, Bush addressed Negroponte, saying: "I hereby assign to you the function of the President under section 13(b)(3)(A) of the Securities Exchange Act of 1934, as amended."

A trip to the statute books showed that the amended version of the 1934 act states that "with respect to matters concerning the national security of the United States," the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate "books, records, and accounts" and maintaining "a system of internal accounting controls sufficient" to ensure the propriety of financial transactions and the preparation of financial statements in compliance with "generally accepted accounting principles."


Kopecki is a correspondent in BusinessWeek's Washington bureau


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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Thu Apr 05, 2012 12:44 am

SourceWatch has a landing page on exactly this: http://www.sourcewatch.org/index.php?title=Front_groups

A front group typically has some (but not necessarily all) of the following characteristics:

* Avoids mentioning its main sources of funding. Note that this does not necessarily mean absolute concealment of sponsorship. Some front groups do indeed go to great lengths to conceal their origins, funders and personnel links to sponsors. However, the likelihood that these will be exposed anyway, with embarrassing consequences for a group's credibility, has led many companies and their sponsored organizations to opt for a strategy of selective disclosure, in which funders are mentioned in an annual report or other obscure publication, but are not mentioned in the organization's most common communications that reach the largest audience.
* Is set up by and/or operated by another organization, (particularly a public relations, grassroots campaigning, polling or surveying firm or consultancy)
* Engages in actions that consistently and conspicuously benefit a third party, such as a company, industry or political candidate;
* Effectively shields a third party from liability/responsibility/culpability
* Re-focuses debate about an issue onto a new or suspiciously unrelated topic, (e.g., secondhand smoke as a property rights issue)
* Has a misleading name that disguises its real agenda, such as the National Wetlands Coalition, which opposed policies to protect U.S. wetlands, or Citizens for a Free Kuwait, which purported to represent U.S. citizens but was actually funded almost entirely by the royal family of Kuwait. Sometimes a front group's name might seem to suggest academic or political neutrality ("Consumers' Research," "American Policy Center"), while in fact it consistently turns out opinions, research, surveys, reports, polls and other declarations that benefit the interests of a company, industry or political candidate.
* Has the same address or phone number as a sponsoring corporation, or a similar group that has since disbanded, or been forced out of business by exposure, lawsuits, etc.
* Consists of a group of vocal, "esteemed" academic "experts" who go on national tours, put on media events, give press conferences, seminars, workshops, and give editorial board meetings around the country, etc., who ordinarily would not seem to have the budget or financial means to carry out such events
* Touts repeatedly in communications that it is "independent," "esteemed," "credible" etc.
* Has a custom-painted, luxury bus that goes on highly-publicized, national tours
* Has remarkably low, if any, individual membership fees. (Front groups are typically in need of individual members to bolster their claims of being a "grassroots" organization. They need these individuals' representation more than their money -- since they are already well-funded by corporations -- so individual dues will typically be very low, perhaps $5 or $10, while group or corporate dues are much higher.)

An organization that only has a few of these characteristics may not be a true front group. For example, the tobacco industry has given funding to youth organizations such as the Jaycees and w:4-H clubs, which serves a public relations goal by helping the industry cultivate an image of corporate responsibility. This PR tactic is an example of the third party technique, and organizations that trade their reputations for corporate funding may be naive, gullible or opportunistic, but this in itself would not make them a front group.
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Thu Apr 05, 2012 12:47 am

Very interested in finding a copy of this Amenesty International report because all indexed URLs are dead and I can't find any mention of it on their site.

Front companies used in secret flights to torture and "disappearance"

Amnesty International today released a new report which exposes a covert operation whereby people have been arrested or abducted, transferred and held in secret or handed over to countries where they have faced torture and other ill-treatment. The report describes how the CIA has used private aircraft operators and front companies to preserve the secrecy of "rendition" flights.

Below the radar: Secret flights to torture and 'disappearance', shows that the CIA has exploited aviation practices that would otherwise require their flights to be declared to aviation authorities. The report lists dozens of destinations around the world where planes associated with "rendition" flights have landed and taken off - and lists private airlines with permission to land at US military bases worldwide.

Amnesty International has records of nearly 1,000 flights directly linked to the CIA, most of which have used European airspace; these are flights by planes that appear to have been permanently operated by the CIA through front companies. In a second category, there are records of some 600 other flights made by planes confirmed as having been used at least temporarily by the CIA.

The report details the destinations and ownership of specific aircraft linked to people interviewed by Amnesty International who have been transferred illegally. For example one particular aircraft is known to have made over 100 stops in Guantanamo Bay. Another took Abu Omar to Egypt from Germany after he was kidnapped in Italy. Its owners have admitted leasing the plane to the CIA, but have said it is not used exclusively by the agency. There are 488 relevant recorded landings or take-offs between February 2001 and July 2005.

"The US Administration has tried to circumvent the ban on torture and other ill-treatment in many ways. The latest evidence shows how the Administration is manipulating commercial arrangements in order to be able to transfer people in violation of international law. It demonstrates the length to which the US government will go to conceal these abductions," said Amnesty International Secretary General, Irene Khan.

The report uncovers part of the mystery surrounding the practice of renditions. Secrecy surrounding rendition operations means it is impossible to know how many people have been arrested or abducted, transferred across borders, held in secret detention or tortured in the 'war on terror'. Information from governments themselves indicates that numbers are likely to be in the hundreds.

The report analyses new information about "black site" detention provided to Amnesty International by three Yemeni men recently released after a two-year rendition ordeal, which raises the possibility that they were held somewhere in eastern Europe or Central Asia.

Muhammad Al-Assad, Muhammad Bashmilah and Salah 'Ali Qaru spent 13 months in one secret facility before being flown to Yemen in May 2005 and eventually released last month.

"Their captors went to great lengths to conceal their location to the men, but circumstantial evidence such as climate, prayer schedules and flight times to and from the site suggest that they may have been held in eastern Europe or Central Asia," said senior advisor Anne FitzGerald. "But without further information from the US government and European authorities, it is impossible to verify exactly where."

Rendition is the illegal transfer of people from one country to another in ways that bypass all judicial and administrative oversight. The aim of rendition in the "war on terror" is usually to facilitate interrogation of suspects outside the reach of the law.

"Renditions are not just about transporting terror suspects from one place to another without red tape. The term sanitises the multiple layers of human rights violations involved," said Ms Khan.

"Most victims of rendition were arrested and detained illegally in the first place. Many were abducted, denied access to any legal process and have subsequently "disappeared". All of those interviewed by Amnesty International described being tortured or otherwise ill-treated."

"The callous and calculated multiplicity of abuses is shocking. People captured have been subjected to a range of abuses of human rights by a number of governments acting in collusion, and all of this has been shrouded by secrecy and deceit," said Ms Khan.

"The report shows not just how arrest and extradition procedures have been ignored, the ban on torture and other ill-treatment has been disregarded, but also how aviation practices have been undermined: in essence the rule of law has been put aside."

Amnesty International cautioned that states that tolerate these flights landing on their territory and companies that carry them out, may find themselves complicit in serious human rights abuses.

The organization called for the transfer of any detainee to other countries to take place with proper safeguards, including judicial oversight, and the use of official aircraft.

"All governments must prevent, investigate and prosecute those responsible for secret detention and rendition," declared Ms Khan.

Amnesty International called on the aviation sector to take specific and immediate action to ensure that aviation companies do not lease their aircraft in circumstances in which they may be used in renditions. The onus is on companies to ensure that they are aware of the end use of any aircraft they lease or operate and that they do not facilitate human rights violations.

Amnesty International called on governments to:
Insist that any plane or helicopter used to carry out the missions of the intelligence services be declared a 'state' flight, regardless of whether they are carried out using civilian aircraft.
Prohibit the use of airspace and airports for renditions and actively investigate suspected rendition cases.
Disclose the full extent of these practices and the fate of those whose whereabouts are still unknown.


Another disappeared gem: this AP report has since been considerably abbreviated to read "The article requested is no longer available", which doesn't quite convey the impact of the original, reproduced here:


US senator calls for hearings on plane registry

NEW YORK (AP) — The chairman of the Senate subcommittee overseeing aviation said Friday he would recommend holding congressional hearings on aircraft registration after The Associated Press reported the Federal Aviation Administration was missing data on one-third of U.S. planes.

"We need to find out why, and how it can be brought back to have a registry that has credibility," said North Dakota Sen. Byron Dorgan, a Democrat.

The FAA says as many as 119,000 of the 357,000 U.S.-registered aircraft have "questionable registration" due to missing paperwork, invalid addresses and other paperwork problems.

In reports in 2007 and 2008, the agency warned that the gaps were causing loopholes that terrorists, drug traffickers and other criminals might exploit. Law enforcement agencies were increasingly turning to the FAA for information, and the registry needed more accuracy as the government launched new computer systems to track suspicious flights, it said.


On Friday the FAA said it was taking "proactive steps" to clean up the database by requiring all aircraft owners to re-register their planes over the next three years.

"The agency is moving to a mandatory re-registration system like the ones most states use to register automobiles, so we have more current and complete registration information in our database," the agency said.

Dorgan's counterpart in the House of Representatives, Rep. Jerry Costello, D-Ill., said Friday the FAA needs to improve its recordkeeping but stopped short of calling for hearings.

"Given the security issues at stake, revising and modernizing the registration process is necessary," Costello said in a written statement. "The FAA needs to ensure the re-registration process runs as smoothly as possible and that the maintenance of records is improved, and I believe the FAA is proceeding accordingly."

Both congressmen will soon be stepping down from their leadership roles in the aviation committees. Dorgan is retiring in January, and Senate leaders have not yet chosen a new committee chair.

Costello, a Democrat, will lose the post when Republicans take control of the House in January. His likely replacement, Rep. Tom Petri, R-Wis., was unavailable for comment on Friday, a spokeswoman said.

Until now, aircraft owners were only required to register once, when they purchased an aircraft. Errors accumulated over decades as new purchasers forgot to register, owners died, invalid addresses went uncorrected and junked aircraft went unreported, the FAA says.

In addition to law enforcement purposes, the FAA said it uses the database to contact owners about safety problems and locate planes that go missing.

Pilot groups said the outdated registry was not a security risk, noting the United States has other safeguards against terrorism.

The Transportation Security Administration does background checks on student pilots from other countries, air traffic controllers watch for suspicious flights, and the Department of Homeland Security has launched new computer systems to screen aircraft arriving from other countries.
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Fri Apr 06, 2012 10:48 pm

May 31, 2005
C.I.A. Expanding Terror Battle Under Guise of Charter Flights
By SCOTT SHANE, STEPHEN GREY and MARGOT WILLIAMS


SMITHFIELD, N.C. - The airplanes of Aero Contractors Ltd. take off from Johnston County Airport here, then disappear over the scrub pines and fields of tobacco and sweet potatoes. Nothing about the sleepy Southern setting hints of foreign intrigue. Nothing gives away the fact that Aero's pilots are the discreet bus drivers of the battle against terrorism, routinely sent on secret missions to Baghdad, Cairo, Tashkent and Kabul.

When the Central Intelligence Agency wants to grab a suspected member of Al Qaeda overseas and deliver him to interrogators in another country, an Aero Contractors plane often does the job. If agency experts need to fly overseas in a hurry after the capture of a prized prisoner, a plane will depart Johnston County and stop at Dulles Airport outside Washington to pick up the C.I.A. team on the way.

Aero Contractors' planes dropped C.I.A. paramilitary officers into Afghanistan in 2001; carried an American team to Karachi, Pakistan, right after the United States Consulate there was bombed in 2002; and flew from Libya to Guantánamo Bay, Cuba, the day before an American-held prisoner said he was questioned by Libyan intelligence agents last year, according to flight data and other records.

While posing as a private charter outfit - "aircraft rental with pilot" is the listing in Dun and Bradstreet - Aero Contractors is in fact a major domestic hub of the Central Intelligence Agency's secret air service. The company was founded in 1979 by a legendary C.I.A. officer and chief pilot for Air America, the agency's Vietnam-era air company, and it appears to be controlled by the agency, according to former employees.

Behind a surprisingly thin cover of rural hideaways, front companies and shell corporations that share officers who appear to exist only on paper, the C.I.A. has rapidly expanded its air operations since 2001 as it has pursued and questioned terrorism suspects around the world.

An analysis of thousands of flight records, aircraft registrations and corporate documents, as well as interviews with former C.I.A. officers and pilots, show that the agency owns at least 26 planes, 10 of them purchased since 2001. The agency has concealed its ownership behind a web of seven shell corporations that appear to have no employees and no function apart from owning the aircraft.

The planes, regularly supplemented by private charters, are operated by real companies controlled by or tied to the agency, including Aero Contractors and two Florida companies, Pegasus Technologies and Tepper Aviation.


The civilian planes can go places American military craft would not be welcome. They sometimes allow the agency to circumvent reporting requirements most countries impose on flights operated by other governments. But the cover can fail, as when two Austrian fighter jets were scrambled on Jan. 21, 2003, to intercept a C.I.A. Hercules transport plane, equipped with military communications, on its way from Germany to Azerbaijan.

"When the C.I.A. is given a task, it's usually because national policy makers don't want 'U.S. government' written all over it," said Jim Glerum, a retired C.I.A. officer who spent 18 years with the agency's Air America but says he has no knowledge of current operations. "If you're flying an executive jet into somewhere where there are plenty of executive jets, you can look like any other company."

Some of the C.I.A. planes have been used for carrying out renditions, the legal term for the agency's practice of seizing terrorism suspects in one foreign country and delivering them to be detained in another, including countries that routinely engage in torture. The resulting controversy has breached the secrecy of the agency's flights in the last two years, as plane-spotting hobbyists, activists and journalists in a dozen countries have tracked the mysterious planes' movements.

Inquiries From Abroad

The authorities in Italy and Sweden have opened investigations into the C.I.A.'s alleged role in the seizure of suspects in those countries who were then flown to Egypt for interrogation. According to Dr. Georg Nolte, a law professor at the University of Munich, under international law, nations are obligated to investigate any substantiated human rights violations committed on their territory or using their airspace.

Dr. Nolte examined the case of Khaled el-Masri, a German citizen who American officials have confirmed was pulled from a bus on the Serbia-Macedonia border on Dec. 31, 2003, and held for three weeks. Then he was drugged and beaten, by his account, before being flown to Afghanistan.

The episode illustrates the circumstantial nature of the evidence on C.I.A. flights, which often coincide with the arrest and transporting of Al Qaeda suspects. No public record states how Mr. Masri was taken to Afghanistan. But flight data shows a Boeing Business Jet operated by Aero Contractors and owned by Premier Executive Transport Services, one of the C.I.A.-linked shell companies, flew from Skopje, Macedonia, to Baghdad and on to Kabul on Jan. 24, 2004, the day after Mr. Masri's passport was marked with a Macedonian exit stamp.

Mr. Masri was later released by order of Condoleezza Rice, the national security adviser at the time, after his arrest was shown to be a case of mistaken identity.

A C.I.A. spokeswoman declined to comment for this article. Representatives of Aero Contractors, Tepper Aviation and Pegasus Technologies, which operate the agency planes, said they could not discuss their clients' identities. "We've been doing business with the government for a long time, and one of the reasons is, we don't talk about it," said Robert W. Blowers, Aero's assistant manager.

A Varied Fleet

But records filed with the Federal Aviation Administration provide a detailed, if incomplete, portrait of the agency's aviation wing.

The fleet includes a World War II-era DC-3 and a sleek Gulfstream V executive jet, as well as workhorse Hercules transport planes and Spanish-built aircraft that can drop into tight airstrips. The flagship is the Boeing Business Jet, based on the 737 model, which Aero flies from Kinston, N.C., because the runway at Johnston County is too short for it.

Most of the shell companies that are the planes' nominal owners hold permits to land at American military bases worldwide, a clue to their global mission. Flight records show that at least 11 of the aircraft have landed at Camp Peary, the Virginia base where the C.I.A. operates its training facility, known as "the Farm." Several planes have also made regular trips to Guantánamo.

But the facility that turns up most often in records of the 26 planes is little Johnston County Airport, which mainly serves private pilots and a few local corporations. At one end of the 5,500-foot runway are the modest airport offices, a flight school and fuel tanks. At the other end are the hangars and offices of Aero Contractors, down a tree-lined driveway named for Charlie Day, an airplane mechanic who earned a reputation as an engine magician working on secret operations in Laos during the Vietnam War.

"To tell you the truth, I don't know what they do," said Ray Blackmon, the airport manager, noting that Aero has its own mechanics and fuel tanks, keeping nosey outsiders away. But he called the Aero workers "good neighbors," always ready to lend a tool.

Son of Air America

Aero appears to be the direct descendant of Air America, a C.I.A.-operated air "proprietary," as agency-controlled companies are called.

Just three years after the big Asian air company was closed in 1976, one of its chief pilots, Jim Rhyne, was asked to open a new air company, according to a former Aero Contractors employee whose account is supported by corporate records.

"Jim is one of the great untold stories of heroic work for the U.S. government," said Bill Leary, a professor emeritus of history at the University of Georgia who has written about the C.I.A.'s air operations. Mr. Rhyne had a prosthetic leg - he had lost one leg to enemy antiaircraft fire in Laos - that was blamed for his death in a 2001 crash while testing a friend's new plane at Johnston County Airport.

Mr. Rhyne had chosen the rural airfield in part because it was handy to Fort Bragg and many Special Forces veterans, and in part because it had no tower from which Aero's operations could be spied on, a former pilot said.

"Sometimes a plane would go in the hangar with one tail number and come out in the middle of the night with another," said the former pilot. He asked not to be identified because when he was hired, after responding to a newspaper advertisement seeking pilots for the C.I.A., he signed a secrecy agreement.

While flying for Aero in the 1980's and 1990's, the pilot said, he ferried King Hussein, Jordan's late ruler, around the United States; kept American-backed rebels like Jonas Savimbi of Angola supplied with guns and food; hopped across the jungles of Colombia to fight the drug trade; and retrieved shoulder-fired Stinger missiles and other weapons from former Soviet republics in Central Asia.

Ferrying Terrorism Suspects

Aero's planes were sent to Fort Bragg to pick up Special Forces operatives for practice runs in the Uwharrie National Forest in North Carolina, dropping supplies or attempting emergency "exfiltrations" of agents, often at night, the former pilot said. He described flying with $50,000 in cash strapped to his legs to buy fuel and working under pseudonyms that changed from job to job.

He does not recall anyone using the word "rendition." "We used to call them 'snatches,' " he said, recalling half a dozen cases. Sometimes the goal was to take a suspect from one country to another. At other times, the C.I.A. team rescued allies, including five men believed to have been marked by Muammar el-Qaddafi, the Libyan leader, for assassination.

Since 2001, the battle against terrorism has refocused and expanded the C.I.A.'s air operations. Aero's staff grew to 79 from 48 from 2001 to 2004, according to Dun and Bradstreet.

Despite the difficulty of determining the purpose of any single flight or who was aboard, the pattern of flights that coincide with known events is striking.

When Saddam Hussein was captured in Iraq the evening of Dec. 13, 2003, a Gulfstream V executive jet was already en route from Dulles Airport in Washington. It was joined in Baghdad the next day by the Boeing Business Jet, also flying from Washington.

Flights on this route were highly unusual, aviation records show. These were the first C.I.A. planes to file flight plans from Washington to Baghdad since the beginning of the war.

Flight logs show a C.I.A. plane left Dulles within 48 hours of the capture of several Al Qaeda leaders, flying to airports near the place of arrest. They included Abu Zubaida, a close aide to Osama bin Laden, captured on March 28, 2002; Ramzi bin al-Shibh, who helped plan 9/11 from Hamburg, Germany, on Sept. 10, 2002; Abd al-Rahim al-Nashri, the Qaeda operational chief in the Persian Gulf region, on Nov. 8, 2002; and Khalid Shaikh Mohammed, the architect of 9/11, on March 1, 2003.

A jet also arrived in Riyadh, Saudi Arabia, from Dulles on May 31, 2003, after the killing in Saudi Arabia of Yusuf Bin-Salih al-Ayiri, a propagandist and former close associate of Mr. bin Laden, and the capture of Mr. Ayiri's deputy, Abdullah al-Shabrani.

Flight records sometimes lend support to otherwise unsubstantiated reports. Omar Deghayes, a Libyan-born prisoner in the American detention center at Guantánamo Bay, Cuba, has said through his lawyer that four Libyan intelligence service officers appeared in September in an interrogation cell.

Aviation records cannot corroborate his claim that the men questioned him and threatened his life. But they do show that a Gulfstream V registered to one of the C.I.A. shell companies flew from Tripoli, Libya, to Guantánamo on Sept. 8, the day before Mr. Deghayes reported first meeting the Libyan agents. The plane stopped in Jamaica and at Dulles before returning to the Johnston County Airport, flight records show.

The same Gulfstream has been linked - through witness accounts, government inquiries and news reports - to prisoner renditions from Sweden, Pakistan, Indonesia and Gambia.

Most recently, flight records show the Boeing Business Jet traveling from Sudan to Baltimore-Washington International Airport on April 17, and returning to Sudan on April 22. The trip coincides with a visit of the Sudanese intelligence chief to Washington that was reported April 30 by The Los Angeles Times.

Mysterious Companies

As the C.I.A. tries to veil such air operations, aviation regulations pose a major obstacle. Planes must have visible tail numbers, and their ownership can be easily checked by entering the number into the Federal Aviation Administration's online registry.

So, rather than purchase aircraft outright, the C.I.A. uses shell companies whose names appear unremarkable in casual checks of F.A.A. registrations.

On closer examination, however, it becomes clear that those companies appear to have no premises, only post office boxes or addresses in care of lawyers' offices. Their officers and directors, listed in state corporate databases, seem to have been invented. A search of public records for ordinary identifying information about the officers - addresses, phone numbers, house purchases, and so on - comes up with only post office boxes in Virginia, Maryland and Washington, D.C.

But whoever created the companies used some of the same post office box addresses and the same apparently fictitious officers for two or more of the companies. One of those seeming ghost executives, Philip P. Quincannon, for instance, is listed as an officer of Premier Executive Transport Services and Crowell Aviation Technologies, both listed to the same Massachusetts address, as well as Stevens Express Leasing in Tennessee.

No one by that name can be found in any public record other than post office boxes in Washington and Dunn Loring, Va. Those listings for Mr. Quincannon, in commercial databases, include an anomaly: His Social Security number was issued in Washington between 1993 and 1995, but his birth year is listed as 1949.

Mr. Glerum, the C.I.A. and Air America veteran, said the use of one such name on more than one company was "bad tradecraft: you shouldn't allow an element of one entity to lead to others."

He said one method used in setting up past C.I.A. proprietaries was to ask real people to volunteer to serve as officers or directors. "It was very, very easy to find patriotic Americans who were willing to help," he said.

Such an approach may have been used with Aero Contractors. William J. Rogers, 84, of Maine, said he was asked to serve on the Aero board in the 1980's because he was a former Navy pilot and past national commander of the American Legion. He knew the company did government work, but not much more, he said. "We used to meet once or twice a year," he said.

Aero's president, according to corporate records, is Norman Richardson, a North Carolina businessman who once ran a truck stop restaurant called Stormin' Norman's. Asked about his role with Aero, Mr. Richardson said only: "Most of the work we do is for the government. It's on the basis that we can't say anything about it."

Secrecy Is Difficult

Aero's much-larger ancestor, Air America, was closed down in 1976 just as the United States Senate's Church Committee issued a mixed report on the value of the C.I.A.'s use of proprietary companies. The committee questioned whether the nation would ever again be involved in covert wars. One comment appears prescient.

When one C.I.A. official told the committee that a new air proprietary should be created only if "we have a chance at keeping it secret that it is C.I.A.," Lawrence R. Houston, then agency's general counsel, objected.

In the aviation industry, said Mr. Houston, who died in 1995, "everybody knows what everybody is doing, and something new coming along is immediately the focus of a thousand eyes and prying questions."

He concluded: "I don't think you can do a real cover operation."
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby Wombaticus Rex » Mon Apr 23, 2012 10:53 pm

Via: http://www.reuters.com/article/2011/12/ ... PY20111221

Special Report: Phantom firms bleed millions from Medicare

By Brian Grow and Matthew Bigg

MIAMI/ATLANTA (Reuters) - By the time authorities busted a fake AIDS clinic in Miami, it had bilked Medicare of more than $4.5 million. Still, the man behind the scheme remained far ahead of the agents pursuing him.

Michel De Jesus Huarte, a 40-year-old Cuban-American, hadn't simply avoided arrest. He had hatched a plan to steal millions more from Medicare by forming at least 29 other shell companies - paper-only firms with no real operations. Each time, he would keep his name out of any corporate records. Other people - some paid by Huarte, some whose identities had been stolen - would be listed in incorporation papers.

The shells functioned as a vital tool to hide the Medicare deceit - and not only for Huarte. Hundreds of others have used the veil of corporate secrecy to help steal hundreds of millions of dollars from one of the nation's largest social service programs, a Reuters investigation has found.

Huarte is now behind bars and did not respond to requests for comment. But basic checks by Reuters of Medicare providers in one city - Miami - suggest shell companies remain prime tools in perpetrating fraud. Simply by reviewing the incorporation records of Medicare providers in two buildings there, reporters uncovered information that one government official said could prompt "a serious criminal investigation" of some of the companies.

The fraud rings merge stolen doctor and patient data under the auspices of a shell company and then bill Medicare as rapidly as possible. Other shell companies are often layered on top to camouflage the fraud, law enforcement officials say.

Some of the shells purport to be billing companies; they form a buffer between the sham clinics and Medicare. Others pay kickbacks to doctors and patients who sign off on bogus medical claims or sell their Medicare ID numbers to enable the shell company to bill the government. Still other shells act as fronts to launder the profits.

The key to this kind of fraud, known as a "bust-out" scheme, is for each of the fake companies to bill as much as possible before authorities catch on. Shell companies become a tool that helps keep the crooks ahead of the cops.

"This is a 'Catch Me If You Can' environment," says Ryan K. Stumphauzer, a former assistant U.S. attorney with the Department of Justice in Miami who prosecuted the Huarte case and scores of other Medicare frauds involving shell companies. "We had no clue who Huarte was. We had no idea there was some mastermind out there."

Last year, "improper payments" resulted in $48 billion in losses to the Medicare program, nearly 10 percent of the $526 billion in payments the program made, according to a Government Accountability Office report last March. Exactly how much of those payments moved through shell companies remains unclear. That's because neither Medicare nor law enforcement agencies systematically track how often such companies are used in the frauds. And not until 2007 did the federal government form task forces to exclusively target Medicare fraud rings.

But recent indictments issued by those task forces indicate that shell-perpetrated fraud is pervasive. Reuters examined indictments issued since 2007 in the eight states that have Medicare fraud task forces in place. The examination found that shell companies were involved in more than a third of the fraudulent Medicare claims identified by the task forces - $1 billion of the $2.9 billion uncovered.

The indictments and other cases indicate that at least 300 shell companies posed as legitimate Medicare providers and billing firms, or laundered payments from Medicare. Court records show shells have purported to provide services ranging from treating varicose veins to supplying prosthetic limbs.

"These companies are nameless, faceless entities collecting billions in secret," says Patrick Burns, director of communications for the advocacy group Taxpayers Against Fraud in Washington, D.C. Medicare is "chasing it," he says. "But they're not getting any closer."

TOOLS OF DECEPTION

The shell companies bedeviling Medicare exemplify a national problem that Reuters documented in a series of stories this year. During the last decade, Washington has called on the rest of the world to clean up shady financial flows and improve corporate transparency to combat terrorism and tax evasion.

Even so, U.S.-based shell companies remain a significant tool of deception - in this case, to swindle hundreds of millions of dollars from taxpayer-supported Medicare.

In one of the largest cases of Medicare fraud ever charged, the operation was enabled by shell companies. In October 2010, federal prosecutors indicted 44 members of an Armenian organized crime ring. Their network, which stretched from Los Angeles to Savannah, Ga., used 118 shell companies in 25 states to pose as Medicare providers, billing more than $100 million, according to federal indictments in three states.

The difficulty of spotting - and stopping - shell-perpetrated Medicare fraud is compounded by incorporation laws that vary from state to state and make forming fake businesses easy.

Intentionally submitting false corporate information constitutes fraud in every state. But none check the validity of corporate records when a company incorporates or collect information on the "beneficial owners" - those with a controlling interest in the corporations.

Because Huarte's shell companies, like others, were incorporated with various state governments, the corporate documentation gave the fake clinics a veneer of legitimacy. And because Huarte was seldom listed in the incorporation papers, connecting him to the cons became more complicated.

The strategy enabled the scheme to go largely undetected by authorities for years, even though most of the operations had mailing addresses that betrayed their fiction. More than a dozen corresponded to UPS stores, Reuters found. Others tracked back to shabby apartments.

For example, a purported cancer clinic called Bellemeade Oncology Care lists its address in Georgia state records as 1500 Bellemeade Dr., #4D, Marietta, Ga. But a visit to the address reveals it isn't a clinic at all. Rather, it's an apartment with a broken washing machine on the front stoop and a pick-up truck parked in the grass outside the complex on Atlanta's north side.

In Florida, FBI agents say almost every Medicare fraud scheme involves shell companies. There, Reuters scrutinized incorporation documents for firms located in two buildings near the Miami International Airport. In a building with dimly lit corridors, a rickety elevator and almost no one in sight, a host of companies purport to provide services to Medicare recipients. But telltale signs of fraud abound.

Many of the 26 companies in the buildings had replaced corporate officers at least once in the last four years. Some had changed ownership, or their corporate executives represented more than one medical-related company. Law enforcement officials consider such activities to be red flags for fraud.

Reuters subsequently asked analysts from the Recovery Accountability and Transparency Board to use its software programs to examine the companies. The board monitors $787 billion in stimulus funds for fraudulent activity using sophisticated computer systems; last year, it had worked with Medicare officials to look for patterns of fraud.

Earlier this month, board head Earl E. Devaney said the companies Reuters identified represent "a pretty big case."

Devaney, who is also the inspector general for the Department of the Interior, says the board's analysis of the 26 Medicare providers led investigators to another 15 Medicare entities associated with those providers. He believes the findings could prompt a "serious criminal investigation."

The Miami Medicare providers, he said, "have the distinct look of the kinds of scams we've seen before." The results of the board's analysis were sent to the inspector general of the Department of Health and Human Services for further investigation, Devaney said.

'WHACK-A-MOLE'

Federal prosecutors struggled for years to spot, let alone stop, Huarte's shell game. They describe his operation as "remarkable for its geographic breadth, organization, sophistication, and size." From 2005 until early 2009, Huarte and at least seven co-conspirators operated at least 35 fake Medicare clinics in Florida, Georgia, Louisiana, North Carolina and South Carolina, court records show.

During that time, his scams operated "virtually uninterrupted," according to a September 2009 superseding indictment and other court records filed in U.S. District Court in Florida.

They billed Medicare for more than $100 million and received at least $34 million in payments for non-existent HIV and AIDS treatments and varicose vein care and pain management therapy that never occurred.

The key: Huarte stayed steps ahead of authorities by setting up new companies before the government could sniff out the fraud from his old ones, court records show.

"It was like whack-a-mole for a time," says Alanna Lavelle, a director of investigations for Medicare contractor WellPoint Inc., who chased the case against Huarte for more than a year. "It became frustrating."

It began like this: In 2005, Huarte and his co-conspirators formed or acquired control of six medical clinics in Florida, each with its own office. Patients were then recruited and paid kickbacks to periodically appear at the clinics or allow use of their Medicare numbers, according to a plea agreement signed by Huarte in October 2009. The clinics were shams - patients weren't receiving legitimate treatment there. Later, when authorities caught on, Huarte created shell companies consisting of entirely fictional clinics -- those that corresponded with mailbox stores, for instance.

Most of the clinics purported to treat HIV and AIDS patients. Bills submitted for expensive injections of drugs such as Infliximab and Rituxan, which fight immune system deficiencies, cost Medicare as much as $7,800 per dose, according to the indictment.

To disguise Huarte's role, "straw owners" were paid as much as $200,000 to put their names on Florida incorporation records and bank accounts. In return, some straw owners agreed to "flee to Cuba to avoid law enforcement detection or capture," according to the indictment.

For instance, Madelin Machado is listed as president of Zigma Medical Care, the fake Miami clinic that collected $4.5 million from Medicare. In January 2008, after authorities figured out the scam, Machado was indicted for healthcare fraud in Florida. She subsequently disappeared, although she's still listed as Zigma's president in state records.

Huarte's cover-ups proved successful for years, even as he secretly directed his fake companies, authorities say. He later replaced Zigma and the other Florida clinics with shell clinics in Atlanta such as New Age Family Institute and Elusive Quality, according to federal court records. Although each was registered in state incorporation records, neither the Centers for Medicare and Medicaid (CMS) nor state officials checked the validity of the corporate documents, a review that may have uncovered the fraud.

CMS, which runs Medicare, says it doesn't have the resources to analyze incorporation records for each of its 1.5 million providers and suppliers. Those records are separately maintained by each state.

Almost all of Huarte's corporate data proved a lie. The purported representative of New Age Family Institute was a deaf retiree whose identity had been stolen, an FBI affidavit said.

Medicare claims filed by each of the fake clinics were accompanied by all the right doctor, patient and treatment codes, say law enforcement officials and fraud investigators.

But New Age Family Institute was purportedly located in Atlanta at 205 South 49th St., according to state incorporation records. A Google Maps search shows that address doesn't exist. Elusive Quality's address - 925B Peachtree Street N.E., Suite 131 - was actually a UPS store in Atlanta's Midtown district.

Some of the people listed as officers in incorporation papers say they didn't know their names had been used until contacted for this article.

One, Jimmie Dominic Dancer, is an instructor at the Emory University School of Medicine in Atlanta. State incorporation records name him as the chief executive and chief financial officer of S.T.R. of Georgia, a purported HIV and AIDS clinic in Atlanta that was part of the Huarte fraud network.

Dancer says he was surprised to learn that his name was listed in state records. A specialist in internal medicine, he says he has not practiced medicine since 2002. "I've never been a CEO or CFO," he said. "I've never heard of S.T.R. of Georgia."

THE BIG CON

For much of 2008, Huarte continued his use of shell companies outside of Florida. From February to December 2008, he and co-conspirators formed at least 29 new sham Medicare clinics in Georgia, North Carolina, South Carolina and Louisiana, according to state incorporation records.

Authorities say Huarte bought lists of real Medicare beneficiaries from a Medicare contractor and from employees of a company that administered benefits. Then he submitted claims in the beneficiaries' names.

But instead of billing Medicare directly as he had done initially, Huarte changed his approach, court records show. He began charging Medicare Advantage Plans, a program administered by private health insurers such as WellPoint and UnitedHealthcare Group, according to the indictment and a July 2009 motion to revoke bond.

A break came in early 2008, when a Medicare beneficiary complained to WellPoint that his Medicare benefits statement was wrong. It listed him as having received HIV treatments from a Huarte sham clinic called BIBB Group Services - but he didn't have HIV and he'd never received any such care.

WellPoint fraud investigator Lavelle says her team began to review the claims and the incorporation records for other clinics in Georgia.

Reuters also reviewed records and found that BIBB Group's purported home in the central Georgia town of Warner Robins -- 1000 Martha Street, Suite F -- is an abandoned building behind a $59-a-night motel.

Despite efforts to stop him, Huarte and his cohorts adapted.

Using stolen patient information, they called WellPoint's customer service line. They pretended to be the patients, Lavelle says, and asked to change the patients' billing addresses to post office boxes. That way, the patients themselves wouldn't receive benefits letters and the fraud might remain undetected, she says.

For the next 15 months, WellPoint denied claims and stopped payment on checks worth $34 million that were sent to Huarte clinics.

After BIBB Group claims were blocked, new ones flowed in from new shell clinics. They first came from First Choice Group Services, Lavelle says. When those were stopped, new bills for HIV and AIDS treatments came from Strong Hope Co., In Excess LLC and More Than Ready Co. LLC. Each of those firms was formed in August 2008, according to Georgia state records.

"We saw more unusually named clinics pop up," Lavelle says. "We actually thought they were playing with us."

The addresses for Strong Hope, In Excess, More Than Ready and four other shell clinics also tracked to UPS stores. They billed Medicare for $15.1 million in false medical services and received $4.2 million in payments, according to court records.

Huarte's four-year Medicare fraud spree was finally ended in 2009. That's when federal investigators in Florida identified co-conspirators who ran Miami check-cashing businesses that turned the Medicare checks into cash. Early that year, the check-cashers agreed to secretly wear recording devices that caught Huarte and others talking about the scam.

In October 2009, Huarte, the master of the Medicare shell game, pleaded guilty to healthcare and mail fraud. He was sentenced to 22 years in a federal prison in Pennsylvania and ordered to repay $18.3 million.

Although WellPoint had blocked millions in payments, Huarte's fake clinics outside Florida had still received more than $12 million from almost a dozen private insurers, according to Huarte's plea agreement. In total, his fraud garnered at least $34 million from Medicare.

At a sentencing hearing in January 2010, former prosecutor Stumphauzer told the judge why he felt Huarte deserved a lengthy prison term for his shell-driven scam.

"I think what really troubles me most is their innovation," he said, according to a court transcript.

"Every time Medicare gets close, every time Medicare clamps off one path, it never occurs to them to stop stealing. They just evolve the scheme and steal some more."

FUNDING THE FRAUD FIGHT

CMS says it has been handcuffed in combating shell companies that posed as legitimate providers because it lacked the resources to extensively review the backgrounds and addresses of providers. Less than 5 percent of all payments were subjected to audits.

That led to a system in which Medicare cut checks and asked questions later. Analysts and law enforcement officials call it "pay and chase."

Until recently, Congress offered little funding to help Medicare prevent abuses. But the healthcare reform law passed in March 2010 allocates $350 million over the next 10 years to fight fraud in Medicare and Medicaid, its sister program for the poor. The law also imposes stiffer sentences for the scam artists.

CMS is installing new fraud-fighting computer analytics to check the backgrounds of doctors and providers to ensure, for example, that Medicare ID numbers aren't being stolen. The programs may help connect the people to the corporations they're running about 75 percent of the time, says Peter Budetti, deputy administrator and director of program integrity at CMS.

Beginning in January, the locations of providers also will be checked by "geo-spatial mapping," Budetti says.

In the aftermath of the Huarte case, CMS and private contractors launched a comparison of UPS store addresses and Medicare provider locations. Investigators visited 823 locations and found that 185 providers - 22 percent - listed a UPS store as the practice location on their Medicare enrolment application. CMS says 134 providers have had their license revoked or deactivated.

New providers also will be subject to automated enrolment screening. Their names will be checked against databases that include the federal government's banned contractor lists, state and federal criminal dockets, and state licensing records.

But how much shell-perpetrated fraud these steps will eliminate remains unclear. The dragnet, for instance, might prompt criminals to simply create new shell companies - entities with no prior histories that wouldn't register on any government watch list.

Nor do the steps address the fundamental loophole. Although the new screening system will have access to state incorporation records, CMS acknowledges it will still struggle to pierce the shell-company veil because states don't collect information on the real owners when corporations are formed or sold.

"We want to catch this stuff when it's at the $30,000 level instead of the $10 million level before anyone notices," Budetti says.

"With the shell companies, these people just keep trying over and over again."

(Additional reporting by Kelly Carr; editing by Blake Morrison and Michael Williams)

METHODOLOGY

To examine how often shell companies were used in Medicare fraud schemes, Reuters obtained a list of some 300 closed criminal cases brought by federal Medicare fraud task forces in eight states since March 2007. Reuters then scrutinized federal court records using Pacer, a publicly available court docket system. Open case files for fraud rings indicted by the task forces also were examined.

The federal indictments rarely make specific reference to shell companies. So Reuters looked for descriptions of false corporate entities that posed as legitimate Medicare providers or for sham companies pretending to be billing firms. Reuters also looked for firms that paid kickbacks to doctors and patients, or that laundered stolen Medicare funds.
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby MinM » Fri Jan 15, 2016 9:48 am

ImageMotherboard ‏@motherboard: 'Call of Duty' publisher is being sued for depicting a historical figure (Jonas Savimbi)—again http://bit.ly/1Om7Ht9
Image

seemslikeadream » Mon Jun 20, 2005 8:55 pm wrote:Abramoff, a former Hollywood movie producer, helped the IFF to produce the movie "Red Scorpion," a film about an anti-Communist African guerrilla leader battling Marxist forces with the assistance of South African military advisers. Of course, the film was a propaganda piece aimed at extolling Angolan anti-Communist UNITA leader Jonas Savimbi, who was fighting Angola's Marxist government with the overt assistance of South Africa and the covert (and illegal) assistance of the Reagan-Bush administration. As late as 1990 and after Mandela's release from prison, the IFF was running anti-ANC and Mandela ads in American newspapers...

Wombaticus Rex » Fri Apr 06, 2012 9:48 pm wrote:
May 31, 2005
C.I.A. Expanding Terror Battle Under Guise of Charter Flights
By SCOTT SHANE, STEPHEN GREY and MARGOT WILLIAMS


SMITHFIELD, N.C. - The airplanes of Aero Contractors Ltd. take off from Johnston County Airport here, then disappear over the scrub pines and fields of tobacco and sweet potatoes. Nothing about the sleepy Southern setting hints of foreign intrigue. Nothing gives away the fact that Aero's pilots are the discreet bus drivers of the battle against terrorism, routinely sent on secret missions to Baghdad, Cairo, Tashkent and Kabul.

When the Central Intelligence Agency wants to grab a suspected member of Al Qaeda overseas and deliver him to interrogators in another country, an Aero Contractors plane often does the job. If agency experts need to fly overseas in a hurry after the capture of a prized prisoner, a plane will depart Johnston County and stop at Dulles Airport outside Washington to pick up the C.I.A. team on the way.

Aero Contractors' planes dropped C.I.A. paramilitary officers into Afghanistan in 2001; carried an American team to Karachi, Pakistan, right after the United States Consulate there was bombed in 2002; and flew from Libya to Guantánamo Bay, Cuba, the day before an American-held prisoner said he was questioned by Libyan intelligence agents last year, according to flight data and other records.

While posing as a private charter outfit - "aircraft rental with pilot" is the listing in Dun and Bradstreet - Aero Contractors is in fact a major domestic hub of the Central Intelligence Agency's secret air service. The company was founded in 1979 by a legendary C.I.A. officer and chief pilot for Air America, the agency's Vietnam-era air company, and it appears to be controlled by the agency, according to former employees.

Behind a surprisingly thin cover of rural hideaways, front companies and shell corporations that share officers who appear to exist only on paper, the C.I.A. has rapidly expanded its air operations since 2001 as it has pursued and questioned terrorism suspects around the world.

An analysis of thousands of flight records, aircraft registrations and corporate documents, as well as interviews with former C.I.A. officers and pilots, show that the agency owns at least 26 planes, 10 of them purchased since 2001. The agency has concealed its ownership behind a web of seven shell corporations that appear to have no employees and no function apart from owning the aircraft.

The planes, regularly supplemented by private charters, are operated by real companies controlled by or tied to the agency, including Aero Contractors and two Florida companies, Pegasus Technologies and Tepper Aviation.


The civilian planes can go places American military craft would not be welcome. They sometimes allow the agency to circumvent reporting requirements most countries impose on flights operated by other governments. But the cover can fail, as when two Austrian fighter jets were scrambled on Jan. 21, 2003, to intercept a C.I.A. Hercules transport plane, equipped with military communications, on its way from Germany to Azerbaijan.

"When the C.I.A. is given a task, it's usually because national policy makers don't want 'U.S. government' written all over it," said Jim Glerum, a retired C.I.A. officer who spent 18 years with the agency's Air America but says he has no knowledge of current operations. "If you're flying an executive jet into somewhere where there are plenty of executive jets, you can look like any other company."

Some of the C.I.A. planes have been used for carrying out renditions, the legal term for the agency's practice of seizing terrorism suspects in one foreign country and delivering them to be detained in another, including countries that routinely engage in torture. The resulting controversy has breached the secrecy of the agency's flights in the last two years, as plane-spotting hobbyists, activists and journalists in a dozen countries have tracked the mysterious planes' movements.

Inquiries From Abroad

The authorities in Italy and Sweden have opened investigations into the C.I.A.'s alleged role in the seizure of suspects in those countries who were then flown to Egypt for interrogation. According to Dr. Georg Nolte, a law professor at the University of Munich, under international law, nations are obligated to investigate any substantiated human rights violations committed on their territory or using their airspace.

Dr. Nolte examined the case of Khaled el-Masri, a German citizen who American officials have confirmed was pulled from a bus on the Serbia-Macedonia border on Dec. 31, 2003, and held for three weeks. Then he was drugged and beaten, by his account, before being flown to Afghanistan.

The episode illustrates the circumstantial nature of the evidence on C.I.A. flights, which often coincide with the arrest and transporting of Al Qaeda suspects. No public record states how Mr. Masri was taken to Afghanistan. But flight data shows a Boeing Business Jet operated by Aero Contractors and owned by Premier Executive Transport Services, one of the C.I.A.-linked shell companies, flew from Skopje, Macedonia, to Baghdad and on to Kabul on Jan. 24, 2004, the day after Mr. Masri's passport was marked with a Macedonian exit stamp.

Mr. Masri was later released by order of Condoleezza Rice, the national security adviser at the time, after his arrest was shown to be a case of mistaken identity.

A C.I.A. spokeswoman declined to comment for this article. Representatives of Aero Contractors, Tepper Aviation and Pegasus Technologies, which operate the agency planes, said they could not discuss their clients' identities. "We've been doing business with the government for a long time, and one of the reasons is, we don't talk about it," said Robert W. Blowers, Aero's assistant manager.

A Varied Fleet

But records filed with the Federal Aviation Administration provide a detailed, if incomplete, portrait of the agency's aviation wing.

The fleet includes a World War II-era DC-3 and a sleek Gulfstream V executive jet, as well as workhorse Hercules transport planes and Spanish-built aircraft that can drop into tight airstrips. The flagship is the Boeing Business Jet, based on the 737 model, which Aero flies from Kinston, N.C., because the runway at Johnston County is too short for it.

Most of the shell companies that are the planes' nominal owners hold permits to land at American military bases worldwide, a clue to their global mission. Flight records show that at least 11 of the aircraft have landed at Camp Peary, the Virginia base where the C.I.A. operates its training facility, known as "the Farm." Several planes have also made regular trips to Guantánamo.

But the facility that turns up most often in records of the 26 planes is little Johnston County Airport, which mainly serves private pilots and a few local corporations. At one end of the 5,500-foot runway are the modest airport offices, a flight school and fuel tanks. At the other end are the hangars and offices of Aero Contractors, down a tree-lined driveway named for Charlie Day, an airplane mechanic who earned a reputation as an engine magician working on secret operations in Laos during the Vietnam War.

"To tell you the truth, I don't know what they do," said Ray Blackmon, the airport manager, noting that Aero has its own mechanics and fuel tanks, keeping nosey outsiders away. But he called the Aero workers "good neighbors," always ready to lend a tool.

Son of Air America

Aero appears to be the direct descendant of Air America, a C.I.A.-operated air "proprietary," as agency-controlled companies are called.

Just three years after the big Asian air company was closed in 1976, one of its chief pilots, Jim Rhyne, was asked to open a new air company, according to a former Aero Contractors employee whose account is supported by corporate records.

"Jim is one of the great untold stories of heroic work for the U.S. government," said Bill Leary, a professor emeritus of history at the University of Georgia who has written about the C.I.A.'s air operations. Mr. Rhyne had a prosthetic leg - he had lost one leg to enemy antiaircraft fire in Laos - that was blamed for his death in a 2001 crash while testing a friend's new plane at Johnston County Airport.

Mr. Rhyne had chosen the rural airfield in part because it was handy to Fort Bragg and many Special Forces veterans, and in part because it had no tower from which Aero's operations could be spied on, a former pilot said.

"Sometimes a plane would go in the hangar with one tail number and come out in the middle of the night with another," said the former pilot. He asked not to be identified because when he was hired, after responding to a newspaper advertisement seeking pilots for the C.I.A., he signed a secrecy agreement.

While flying for Aero in the 1980's and 1990's, the pilot said, he ferried King Hussein, Jordan's late ruler, around the United States; kept American-backed rebels like Jonas Savimbi of Angola supplied with guns and food; hopped across the jungles of Colombia to fight the drug trade; and retrieved shoulder-fired Stinger missiles and other weapons from former Soviet republics in Central Asia.

Mysterious Companies

As the C.I.A. tries to veil such air operations, aviation regulations pose a major obstacle. Planes must have visible tail numbers, and their ownership can be easily checked by entering the number into the Federal Aviation Administration's online registry.

So, rather than purchase aircraft outright, the C.I.A. uses shell companies whose names appear unremarkable in casual checks of F.A.A. registrations.

On closer examination, however, it becomes clear that those companies appear to have no premises, only post office boxes or addresses in care of lawyers' offices. Their officers and directors, listed in state corporate databases, seem to have been invented. A search of public records for ordinary identifying information about the officers - addresses, phone numbers, house purchases, and so on - comes up with only post office boxes in Virginia, Maryland and Washington, D.C.

But whoever created the companies used some of the same post office box addresses and the same apparently fictitious officers for two or more of the companies. One of those seeming ghost executives, Philip P. Quincannon, for instance, is listed as an officer of Premier Executive Transport Services and Crowell Aviation Technologies, both listed to the same Massachusetts address, as well as Stevens Express Leasing in Tennessee.

No one by that name can be found in any public record other than post office boxes in Washington and Dunn Loring, Va. Those listings for Mr. Quincannon, in commercial databases, include an anomaly: His Social Security number was issued in Washington between 1993 and 1995, but his birth year is listed as 1949.

Mr. Glerum, the C.I.A. and Air America veteran, said the use of one such name on more than one company was "bad tradecraft: you shouldn't allow an element of one entity to lead to others."

He said one method used in setting up past C.I.A. proprietaries was to ask real people to volunteer to serve as officers or directors. "It was very, very easy to find patriotic Americans who were willing to help," he said.

Such an approach may have been used with Aero Contractors. William J. Rogers, 84, of Maine, said he was asked to serve on the Aero board in the 1980's because he was a former Navy pilot and past national commander of the American Legion. He knew the company did government work, but not much more, he said. "We used to meet once or twice a year," he said.

Aero's president, according to corporate records, is Norman Richardson, a North Carolina businessman who once ran a truck stop restaurant called Stormin' Norman's. Asked about his role with Aero, Mr. Richardson said only: "Most of the work we do is for the government. It's on the basis that we can't say anything about it."

Secrecy Is Difficult

Aero's much-larger ancestor, Air America, was closed down in 1976 just as the United States Senate's Church Committee issued a mixed report on the value of the C.I.A.'s use of proprietary companies. The committee questioned whether the nation would ever again be involved in covert wars. One comment appears prescient.

When one C.I.A. official told the committee that a new air proprietary should be created only if "we have a chance at keeping it secret that it is C.I.A.," Lawrence R. Houston, then agency's general counsel, objected.

In the aviation industry, said Mr. Houston, who died in 1995, "everybody knows what everybody is doing, and something new coming along is immediately the focus of a thousand eyes and prying questions."

He concluded: "I don't think you can do a real cover operation."

elfismiles » Mon Oct 06, 2014 11:18 am wrote:... AND ... a Peter Dale Scott article ta boot! Intro art reminds me of Jeff's collages! :yay

Permit me at this moment an instructive digression. It is by now well established that Kennedy in 1963 was concerned enough by “the threat of far-right treason” that he urgently persuaded Hollywood director John Frankenheimer “to turn [the novel] Seven Days in May into a movie.” In this book, to quote Wikipedia, a

charismatic superior officer, Air Force General James Mattoon Scott, intend[s] to stage a coup d’état …. According to the plan, an undisclosed Army combat unit known as ECOMCON (Emergency COMmunications CONtrol) will seize control of the country’s telephone, radio, and television networks, while the conspiracy directs the military and its allies in Congress and the media from “Mount Thunder” (a continuity of government base based on Mount Weather).

It is no secret also that in 1963 Kennedy had aroused major right-wing dissatisfaction, largely because of signs of his increasing rapprochement with the Soviet Union. The plot of the book and movie reflects the concern of liberals at the time about generals like General Edwin Walker, who had resigned in 1961 after Kennedy criticized his political activities in the Army. (Walker had given his troops John Birch Society literature, along with the names of right-wing candidates to vote for.) We can assume however that Kennedy had no firm evidence of a Mount Weather conspiracy: if he had, it is unlikely his response would have just been to sponsor a fictionalized movie.

It is important at this stage to point out that, although COG elements like Mount Weather were considered part of the Pentagon, the COG “government in waiting” was at no time under military control. On the contrary, President Eisenhower had ensured that it was broadly based at the top, so its planners included some of the nation’s top corporate leaders, like Frank Stanton of CBS. By all accounts of COG leadership in the decades after Reagan took office in 1981, this so-called “shadow government” still included CEOs of private corporations, like Donald Rumsfeld and Dick Cheney, as well as three former CIA directors: Richard Helms, James Schlesinger, and George Bush.

Alfonso Chardy wrote in 1987 that the “virtual parallel government” empowering North to run Iran-Contra had also developed “a secret contingency plan that called for suspension of the Constitution, turning control of the United States over to FEMA.” Subsequently North was questioned in the Iran-Contra Hearings about this charge, but was prevented by the Committee Chairman, Democratic Senator Inouye, from answering in a public session.

Later, investigating the powerful COG planning group, CNN called it “a hidden government [in the USA] about which you know nothing.” James Mann emphasized its hawkish continuity, unaffected by changes of presidency in the White House:

Cheney and Rumsfeld were, in a sense, a part of the permanent, though hidden, national security apparatus of the United States, inhabitants of a world in which Presidents come and go, but America always keeps on fighting.”

Cheney and Rumsfeld in 1974

Going one step further, Andrew Cockburn quoted a Pentagon source to support a claim that a COG planning group under Clinton was now for the first time staffed “almost exclusively with Republican hawks.” In the words of his source, “You could say this was a secret government-in-waiting. The Clinton administration was extraordinarily inattentive, [they had] no idea what was going on.”

The Pentagon official’s description of COG planners as a “secret government-in-waiting” under Clinton (which still included both Cheney and Rumsfeld) is very close to the standard definition of a cabal, as a group of persons secretly united to bring about a change or overthrow of government. A very similar situation existed under Jimmy Carter, when some of those who would later figure in Iran-Contra (notably George H.W. Bush and Theodore Shackley) worked with chiefs of foreign intelligence services (the so-called Safari Club) “to start working with [former DCI Richard] Helms [then U.S. Ambassador to Iran] and his most trusted operatives outside of Congressional and even Agency purview.” This group began by backing guerrilla forces in Africa (notably UNITA of Jonas Savimbi in Angola), which they knew would not be backed by the CIA under William Colby or Stansfield Turner.

But some of these figures, notably Alexandre de Marenches of the French spy agency SDECE, became involved with Casey, Bush, Shackley, and others in a 1980 plot – the so-called Republican “October Surprise” – to prevent the reelection of Jimmy Carter. The essence of this plot was to frustrate Carter’s efforts to repatriate the hostages seized in the U.S. Tehran Embassy, by negotiating a Republican deal with the Iranians that would be more to their liking. (The hostages in fact were returned hours after Reagan took office in 1981.)

This Republican hostage plot in 1980 deserves to be counted as a fifth structural deep event in recent US history. Unquestionably the illicit contacts with Iran established by the October Surprise Group in 1980 became, as Alfonso Chardy wrote, the “genesis” of the Iran-Contra arms deals overseen by the COG/ Mount Weather planners in 1984-86.

In an important interview with journalist Robert Parry, the veteran CIA officer Miles Copeland claimed that a “CIA within the CIA” inspired the 1980 plot, having concluded by 1980 that Jimmy Carter (in Copeland’s words) “had to be removed from the presidency for the good of the country.” Copeland made it clear to Parry that he shared this view that Carter “represented a grave threat to the nation,” and former Mossad agent Ari Ben-Menashe told Parry that Copeland himself was in fact “the conceptual father” of the 1980 arms-for-hostages deal, and had “brokered [the] Republican cooperation with Israel.” And Copeland, together with his client Adnan Khashoggi whom he advised, went on with Shackley to help launch the 1984-85 Iranian arms deals as well.

However, just as Knebel in Seven Days may have overestimated the military component in the COG Mount Weather...

JackRiddler » Mon May 12, 2014 2:24 pm wrote:
OTI in Angola

After the military defeat of the South African army at Cuito Cuanavale in 1988 the USAID intensified its support for Jonas Savimbi of UNITA via the Office of U.S. Foreign Disaster Assistance (OFDA). The principal subcontractors for the USAID funding were reliable and trusted cold war ‘humanitarian’ agencies such as the International Rescue Committee. [xxvi] I remember travelling to Northern Angola in 1996 when the NGO workers of the International Rescue Committee were working closely with UNITA at a moment when UNITA had carried out massive atrocities. USAID funded projects in Angola provided crucial links between the Pentagon and UNITA at a time when the Clinton Administration for the first time recognized the government of the MPLA. It was then not by accident that when in 1994 the USAID created the Office for Transition Initiatives, Angola was one of the first places that it worked to intensify its work in support of Jonas Savimbi and UNITA.

In the Congressional Report on the start of OFI in Angola and Haiti in 1994 there is no mention of the linkages between the Pentagon and Jonas Savimbi. Instead the report stated,

“Angola, the first country where OTI operated, was selected in 1994 for several reasons: its oil and other natural resources represented a security and commercial interest to the United States; a peace process was underway; and there was evidence that significant gains could be made through targeted programs related to land mine awareness, demining, and reintegration of ex-combatants.”[xxvii]

The role of the OTI then was to subvert the government of Angola just as how today we have learnt that one of the contractors for OTI was working to subvert the government of Cuba. The exposure of Creative Associates will give new assignments for those who want to fully understand when the OTI calls itself the Bureau for Democracy, Conflict, and Humanitarian Assistance. In their official statements, the USAID states that The Office of Transitions Initiatives (OTI) was created in 1994 to “provide short-term assistance in post-conflict situations or crises in order to support peaceful and democratic transitions. By promoting reconciliation, jumpstarting economies and helping democracy take hold, the intent is to lay the foundations for long term successful development.”

Integrating international non-governmental organizations as Force Multipliers for the USA

During the nineties military Journals such as Parameters honed the discussion of the planning for the increased engagement of international NGO’s and by the end of the 20th century the big international NGO’s Care, Catholic Relief Services , Save The Children, World Vision, and Medicins Sans Frontieres (MSF ) were acting like major international corporations doing subcontracting work for the US military. At the time when the book The Road to Hell: the Ravaging Effects of Foreign Aid and International Charity was written by Michael Maren to expose the role of humanitarian agencies in Somalia, there was already enough information to expose the militarization of humanitarian work. [xxviii] This kind of Humanitarian intervention as a front for military operations is not new. It has been the standard fare in Africa since King Leopold II of Belgium and the partitioning of Africa. At all moments of external military interventions, the imperial occupation of Africa was spurred by noble motives such as ‘feeding’ starving children. USAID perfectly represented the continuity of the militarization of humanitarian work...

justdrew » Tue Nov 01, 2011 3:37 pm wrote:for reference...

In addition to this community largesse, Cownie is a major Republican donor with ties to the Midwest’s Heritage Groups, founded by the ultraconservative Adolph Coors with money from his brainchild The Heritage Foundation. Throughout the late 1980s and early 1990s, the Heritage Foundation’s support for the Nicaraguan contras and Angola’s Savimbi proved extremely influential with the United States government, including the Central Intelligence Agency, the Defense Intelligence Agency, the National Security Council and other governmental agencies. The Heritage Foundation presented its case for armed support for these movements, and United States support soon followed.

According to this website at media transparency.org, “among other Heritage efforts have been the publications Beware of the Union Label, The Case for Plant Closures, Upsetting the Balance of U.S. Labor Law: The Striker Replacement Bill and In Praise of Corporate Radiers: Junking Three Fallacies About Hostile Takeovers.

The site further reports: “The U.S. labor movement is a particular target for Heritage. Ronald Reagan’s first appointment to the National Labor Relations Board (NLRB) was Robert Hunter, a conservative activist who wrote the chapter on the Labor Department for the foundation’s ‘Mandate for Leadership.’ In that paper, Hunter called for increasing the use of NLRB injunctions against unions, gutting the Occupational Safety and Health Administration (OSHA) and drastically cutting the Bureau of Labor Statistics.”

Mr. Cownie is such an admirer of the Heritage Foundation’s political program that he apparently went so far as to name the company from which his mysterious fortune emanates “Heritage Communications.” Despite Mr. Cownie’s funding of Anna Gaskell’s Des Moines Museum vanity project and his keen interest in Mr. Wit’s Winchester Series, he and now most of the younger male members of his family are professionally devoted to using Homeland Security pork to overturn decades of social progress and subverting values that the art coummunity struggles to represent and uphold. For example, author Russ Bellant states in his book The Coors Connection that The Heritage Groups “will continue to be a key element in the phalanx of rightist groups with an agenda of austerity for the poor, hostility to minorities and women, upward distribution of wealth for the rich, economic domination of the Third World, with repression and bloodletting for those who rebel.”...
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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby MinM » Sun Apr 03, 2016 9:07 pm

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Re: Shell Corporations, Front Businesses, Cut-Outs

Postby MinM » Mon Apr 04, 2016 11:52 pm

Image@BlacklistedNews 13 minutes ago

Let's not forget the CIA's Panama shell companies setup for drug-money laundering http://dlvr.it/Kz6Szt


https://alethonews.wordpress.com/2016/0 ... ma-papers/
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