imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
Features
latest news
best of news
syndication
commentary


KILLRADIO

VozMob

ABCF LA

A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List

LAAMN List




IMC Network:

Original Cities

www.indymedia.org africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities

www.indymedia.org africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

How the CIA Steals Money From Taxpayers

by © Michael E. Salla, PhD Wednesday, Apr. 29, 2009 at 12:54 AM

In 1989 Catherine Austin Fitts became Assistant Secretary for Housing in Department of Housing and Urban Development (HUD). She began to notice money was not properly tracked as it moved between different HUD departments and there was a lack of proper accounting mechanisms to deal with discrepancies in revenue indicated fraud at an alarming level. [28] She attempted to put in place some credible financial tracking mechanisms to identify where the money was going and to identify the responsible individuals and HUD departments, but after 18 months on the job she was suddenly fired by the Bush administration. Fitts was told the day after she left that her financial reforms through ‘place-based financial accounting and statements’ would also be terminated.

Fitts subsequently created her own investment company, Hamilton Securities Group that used specially created computer software for tracking financial flows in the mortgage industry. In 1993, Hamilton Securities Group won a contract with HUD to manage its 0 billion portfolio. As a result of its innovative computer tracking of finances called ‘Community Wizard’, Hamilton Securities saved Federal Taxpayers billion and according to Fitts "took the world's breath away." [30] Carolyn Betts, a former Hamilton Securities employee said:

The HUD field office people went absolutely crazy when they saw it. You could go in with a pointer on a map and get to information on expenditures by each HUD program. It was a pretty beautiful program and would have become unbelievably powerful. [31]

Fitts’ innovative program was so successful that it was earning special attention from Congressmen with one chairman of an oversight committee in October 1997 favorably commenting on the "eye-popping" results. [32] Fitts’ program had the potential to revolutionize the way in which large multibillion dollar portfolios were managed. Vice President Al Gore's Reinventing Government Initiative gave her firm the Hammer Award for Excellence in Re-engineering Government. Fitts innovation also came to the attention of powerful individuals who viewed it as a threat to existing way in which finances were tracked in HUD and other federal government agencies that apparently allowed corporations to reap large profits from government inefficiency.

Fitts’ pioneering work came crashing down around her in June, 1996 when a qui tam (whistleblower) suit was brought against her firm by a rival HUD contractor John Ervin who alleged Fitts committed fraud against HUD to the tune of .8 million. According to the Federal False Claims Act, a qui tam suit has 60 days to be investigated before a federal judge has to reach a conclusion on the substance of the suit and unseal the qui tam so that the defendant can respond to the allegations. Instead, the HUD Inspector General together with the federal judge in charge of the case took four years before another judge decided the allegations lacked substance, unsealed the qui tam, and dismissed the suit in July 2000. [33] In the meantime, Fitts’ firm was subjected to 18 audits and investigations, multiple subpoenas for thoupooppooppooppoops of documents, not paid money owed to it by HUD while the ‘investigation’ was underway, subjected to media leaks and a smear campaign that frightened away potential investors, and ultimately raided by Department of Justice agents in 1998. The raid effectively destroyed the Community Wizard program and put an end to Hamilton Securities’ efforts to survive the legal onslaught that involved steep legal costs. At the end, Fitts company went bankrupt, Fitts was emotionally exhausted, but continued to fight for her reputation, repayment from HUD, and exposure of wrong doing by the HUD Inspector General in allowing the qui tam law suit to proceed for four years on a ‘fishing expedition’, while simultaneously leaking false information. [34]

After her experiences in both working with HUD as an employee (1988-1989) and as a contractor (1993-1997) and observing at first hand the chronic state of finances that could not be accounted for under normal accounting rules, Fitts concluded that HUD was being run as a ‘criminal enterprise’:

In the summer of 2000, a member of the staff for the Chairman of the Senate appropriation subcommittee (with jurisdiction over HUD …) confided to me that they believed that HUD was being run as "a criminal enterprise." I responded that I "did not disagree." Reaching that conclusion was a long time coming. It took many years of experience implementing practical and sound reforms to the FHA mortgage system, only to have the system reject any and all efforts to have it become anything other than an integral part of a significant mortgage bubble and a pork and slush fund operation. [35]

The fraudulent movement of finances through HUD were made possible by poor auditing standards that enabled as much as tens of billions of dollars to go annually missing. [36] In a March 2000 report, the HUD Inspector General, Susan Gaffney, reported a high number of ‘adjustments’ that had to be made to account for billion that could not be located in 1999:

At the time we discontinued our audit work, a total of 42 adjustments totaling about .6 billion had been processed in this manner to adjust fiscal year 1998 ending balances. An additional 242 adjustments totaling about .6 billion, were made to adjust fiscal year 1999 activity. [37]

Gaffney argued that the ‘adjustments’ were caused by HUD’s difficulties in reconciling different computer systems. An unnamed official within HUD dismissed the idea of the adjustments being solely problems associated with different computers systems:

Everything that has transpired at HUD is not an accident, and it sure isn't a computer glitch. When you take the different material violations of the most basic financial-management rules and compare them to the time and effort put in to have first-rate systems, it is impossible to explain it as anything other than significant financial fraud. [38]

Such fraud would not have been possible without collusion at the highest level, the Director of HUD, Mario Cuomo. Confirmation that the missing billion for 1999 was known to Cuomo was disclosed by the unnamed source in HUD:

The losses could be far greater than billion, but they don't know for sure because the audit isn't completed. Secretary Cuomo is a very smart control freak, so it's ludicrous to think that he doesn't know what is going on. [39]

Confirmation that losses from HUD were an endemic problem rather than peculiar to 1998 and 1999 comes from the General Accounting Office of Congress that released a report in 2003 stating that in January 2003, “for the 12th year in a row, the HUD OIG [Office of Inspector General] cited the lack of an integrated financial-management system as a material weakness in its audit of the department's financial statements.” [40] In short, billions of dollars were annually missing from HUD and no one knew where the money was going.

Fitts analysis of the fraudulent movement of funds through HUD, her initial firing as an Assistant Secretary, subsequent difficulties her company had with HUD [41] , indicated that she had stumbled on to one of the strategies used by the CIA to generate its secret black budget. Fitts ultimately came to the conclusion that HUD was being run as a money laundering operation to fund black projects. [42] The sums for HUD alone, billion for 1999, were far greater than the official .5 billion annual estimated budget of the CIA that came from DoD appropriations. Missing funds from HUD, the participation of the HUD Director in permitting the funds to go missing, and the difficulties suffered by Fitts, point to the CIA being behind the missing HUD funds. The CIA is the only government agency that has the legal authority to co-opt Federal Agency Directors in permitting billions of dollars to go missing from or laundered through their budgets for transfer into a ‘black budget’. It is worth investigating the destruction of Fitts company, Hamilton Securities Group to identify any CIA fingerprints in covering up the secret transfer of HUD funds into what will be argued to be the CIA’s ‘unofficial’ black budget.

The individual who brought the lawsuit against Fitts, John Ervin, has been described as “notorious for filing nuisance lawsuits and "bid protests’.” [43] His small mortgage investment firm apparently had, according to one inside source, “up to 17 in-house personnel working full time on mountains of paperwork regarding this and other cases.” [44] Ervin may simply have been a small time contractor with a chip on his shoulder from losing the HUD mortgage contract to Fitts’ company. However, the large number of legal cases his firm was involved in suggests he may have been simply a front for more powerful actors threatened by Hamilton’s Securities who wished to cripple it through a damaging court process. More revealing was the behavior of the federal judge in charge of Fitts’ case that eventually presided over the case. According to court transcripts, the initial judge had indicated in 1996 that it would be inappropriate to extend the seal [on the qui tam] without evidence and that unless evidence was produced he would not extend the seal again. The case was then transferred to Judge Stanley Sporkin of the District of Columbia’s District Court. According to Uri Dowbenky, Sporkin “managed to illegally keep a qui tam lawsuit sealed for almost 4 years. That could be a ‘judicial’ record.” [45] Sporkin had given multiple 60-day extensions to further investigate the allegations that he claimed were not limited to the False Claims Act limit of 60 days that applied to Department of Justice investigations, since the HUD Inspector General had independent subpoena power and chose to continue the investigation. [46] Extending the qui tam in this highly dubious manner meant that it was kept sealed thus preventing Hamilton from responding to the allegations, and thus prolonged an elaborate ‘fishing expedition’ that would financially exhaust Hamilton Securities.

A significant background fact about Judge Sporkin was that he was the General Counsel for the CIA (1981-86) before being appointed as a federal judge to the District of Columbia District Court by Ronald Reagan in 1985. [47] Sporkin’s CIA background and the continued extensions of the qui tam case that had questionable legal standing and which was finally unsealed and dropped by a new Federal judge appointed to the case after Sporkin’s retirement in 2000 point to a CIA covert program to destroy Hamilton Securities. One conclusion that emerges is that Fitts company was targeted since it threatened to undermine and even expose the way the CIA secretly extracted congressional appropriations from or laundered funds through HUD and other government agencies. [48] The CIA was using its unique legal status of being able to lawfully transfer Congressional appropriations or ‘laundered money’ through other federal government agencies, to fund projects administered by the intelligence community, and to destroy any individual or company that threatened to reveal such a process.

The wide extent of chronic auditing irregularities for most government agencies suggested that it was not just HUD that was used by the CIA as vehicle for siphoning money into its ‘unofficial’ black budget. A Senate Committee on government reform investigated the auditing practices of federal government agencies in 2001, and the Committee Chairman, Senator Fred Thompson, released a report that found that ineffectual auditing practices were endemic and led to billions of dollars going annually missing from most government agencies. [49] Rather than restricting itself to the appropriations through the DoD (the ‘official’ black budget), something Congress was aware of and tolerated, the accounting irregularities of many government agencies were possible evidence that the CIA was accumulating a sizable portion of the ‘actual’ black budget from other government agencies.

See also: http://www.sourcewatch.org/index.php?title=CIA.

Read Dr. Salla's full article at: http://www.scoop.co.nz/stories/HL0401/S00151.htm

Report this post as:

Local News

GUIDE TO REBEL CITY LOS ANGELES AVAILABLE A12 5:39PM

lausd whistle blower A10 11:58PM

Website Upgrade A10 3:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 1:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 11:58AM

Change Links April 2018 A01 11:27AM

Nuclear Shutdown News March 2018 M31 6:57PM

Join The Protest Rally in Glendale on April 10, 2018! M29 7:00PM

Join The Protest Rally in Glendale on April 10, 2018! M29 6:38PM

Spring 2018 National Immigrant Solidarity Network News Alert! M19 2:02PM

Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A. M16 5:40PM

Steve Mnuchin video at UCLA released M15 12:34AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups M06 12:10PM

After Being Told He's 'Full of Sh*t' at School Event, Mnuchin Demands UCLA Suppress Video M02 11:44AM

Resolution of the Rent Strike in Boyle Heights M01 6:28PM

What Big Brother Knows About You and What You Can Do About It M01 3:30PM

Step Up As LAPD Chief Charlie Beck Steps Down F14 2:44PM

Our House Grief Support Center Hosts 9th Annual Run For Hope, April 29 F13 12:51PM

Don’t let this LA County Probation Department overhaul proposal sit on the shelf F13 11:04AM

Echo Park Residents Sue LA Over Controversial Development F12 8:51AM

Former Signal Hill police officer pleads guilty in road-rage incident in Irvine F09 10:25PM

Calif. Police Accused of 'Collusion' With Neo-Nazis After Release of Court Documents F09 7:14PM

Center for the Study of Political Graphics exhibit on Police Abuse posters F07 9:50AM

City Agrees to Settle Lawsuit Claiming Pasadena Police Officer Had His Sister Falsely Arre F04 3:17PM

Professor's Study Highlights Health Risks of Urban Oil Drilling F04 12:42PM

Claims paid involving Pasadena Police Department 2014 to present F04 10:52AM

Pasadenans - get your license plate reader records from police F03 11:11PM

LA Times Homicide Report F03 1:57PM

More Local News...

Other/Breaking News

Tech workers organize A24 6:24PM

Architect Stephen Francis Jones A24 3:01PM

UN Forum Wrestles with Economic Policies 10 Years After Financial Crisis Islands Call for A24 12:34PM

Xyloglossie attitudinale A23 8:07AM

Shadowgun Legends Hack and Cheats A23 7:24AM

What does the Quran Say About Islamic Dress?? A21 4:15PM

Biodiversité ou la nature privatisée A20 11:22AM

The Market is a Universal Totalitarian Religion A20 7:14AM

Book Available about Hispanics and US Civil War by National Park Service A19 5:52PM

The Shortwave Report 04/20/18 Listen Globally! A19 4:01PM

The Republican 'Prolife' Party Is the Party of War, Execution, and Bear Cub Murder A19 11:48AM

Neurogenèse involutive A18 9:21AM

Paraphysique de la dictature étatique A16 10:13AM

Book Review: "The New Bonapartists" A16 3:45AM

The West Must Take the First Steps to Russia A14 12:25PM

Théorie générale de la révolution ou hommage à feu Mikhaïl Bakounine A14 3:30AM

The Shortwave Report 04/13/18 Listen Globally! A12 3:50PM

“Lost in a Dream” Singing Competition Winner to Be Chosen on April 15 for ,000 Prize! A12 3:48PM

The World Dependent on Central Banks A12 4:43AM

Ohio Governor Race: Dennis Kucinich & Richard Cordray Run Against Mike DeWine A11 9:40PM

March 2018 Honduras Coup Again Update A10 10:52PM

Apologie du zadisme insurrectionnel A10 3:33PM

ICE contract with license plate reader company A10 1:14PM

Palimpseste sisyphéen A09 11:23PM

Black Portraiture(S) IV: The Color of Silence...Cuba No...Cambridge Yes A09 5:32AM

Prohibiting Micro-Second Betting on the Exchanges A09 4:18AM

Prosecutors treat Muslims harsher than non-Muslims for the same crimes A08 10:33PM

Amy Goodman interview on cell phone safety A08 10:29PM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy