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Posts Tagged ‘crime

“Money laundering is a very sophisticated crime and we must be equally sophisticated”*…

 

money-wash

 

It’s bad form to mention money-laundering. Instead, you talk about asset-management structures and tax beneficial schemes.   — John Sweeney

This is the untold history of how prominent civil servants in the UK tailored US-devised anti-money laundering (AML) policies in ways that suited the needs of Britain’s financial services industry. In the aftermath of these initial compromises in 1987, criminal money managers in both the US and the UK were able to continue to operate in an environment that easily allowed them to hide and use dirty money. The researchers analysed six months of previously unseen personal correspondence and documents exchanged between various actors in the UK Government during 1987. From this they conclude that the core of the current, global AML regime, was not the destruction of drug money laundering and banking secrecy, nor the ending of criminal financial enablers and with it hot money; rather it was the protection and leverage of national trading interests on both sides of the Atlantic. And the drive to protect these interests would see crime control laws made, amended and changed to cater for the interests of the US and UK banking and finance industries. The file had been classified as secret and held by the UK Treasury until it was released to the public in 2017 as an archive document transferred to The National Archives in accordance with The Public Records Act and the Freedom of Information Act…

Mary Alice Young and Michael Woodiwiss tell the extraordinary story of governments effectively competing with criminal gangs at “A world fit for money laundering: the Atlantic alliance’s undermining of organized crime control.”

(Image above: source)

* Attorney General (1993 to 2001) Janet Reno… whose words can be understood, per the article cited above, in more than one way…

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As we follow the money, we might recall that it was on this date in 1957 that George B. Hansburg was issued a patent (#2,793,036) for his invention of “an improved pogo stick”– the modern two-handled pogo stick.

While spring stilts had been invented in 1891, the original pogo stick was created in 1920 by Max Pohlig and Ernst Gottschall– the first two letters of whose surnames gave the device its name.

Pogoanim source

 

Written by LW

May 21, 2020 at 1:01 am

“Results aside, the ability to have complete faith in another human being is one of the finest qualities a person can possess”*…

 

sfburning

Downtown San Francisco ablaze after the 1906 earthquake, from the slope of Nob Hill

 

Amadeo Peter Giannini was born in San Jose, California in 1870. The son of Italian immigrants had an outsized personality and unlimited faith in the American dream.

Giannini began by selling fruits and vegetables from a horse-drawn wagon. But he was made for bigger things. At age 34, he launched a small bank in the Italian neighborhood of North Beach, San Francisco. At the time, big banks lent only to large businesses, handled deposits of the wealthy, and frowned on aggressive advertising.

The novice financier knocked on doors and buttonholed people on the street. He persuaded “unbanked” immigrants that gold and silver coins were safer in vaults than under mattresses. Moreover, the money would earn interest at his “Bank of Italy.”

bankof italy

On the morning of April 18, 1906, a massive earthquake hit San Francisco. The ensuing fires burned down the large banks. Their superheated metal vaults could not be opened for weeks—lest the cash and paper records catch fire when oxygen rushed in.

As flames threatened his one-room bank, Giannini spirited $80,000 in coins out of town. He hid the precious metal under crates of oranges and steered his wagons past gangs of thugs and looters in the streets.

As other banks struggled to recover, Giannini made headlines by setting up a makeshift bank on a North Beach wharf. He extended loans to beleaguered residents “on a handshake” and helped revive the city.

APG

The innovative bank welcomed small borrowers who might otherwise have to use high-cost loan sharks. Most banks at the time regarded people with modest incomes as credit risks not worth the paperwork. But experience had taught Giannini otherwise: that working class people were no less likely to pay their debts than the wealthy.

Seeking more customers, the former produce salesman returned to his old haunts—the fertile valleys of California. He “walked in rows beside farmers engaged in plowing” to explain how bank branches make credit cheaper and more reliable. Town by town, he built the first statewide branching system in the nation.

On November 1, 1930, the Bank of Italy in San Francisco changed its name to Bank of America. The bank today has the same national bank charter number as Giannini’s old bank— #13044.

When A.P. Giannini died in 1949, the former single-teller office in North Beach claimed more than 500 branches and $6 billion in assets. It was then the largest bank in the world…

How a humane response to a community tragedy launched what became the biggest bank in the world: “Bank of America: The Humble Beginnings of a Large Bank.”

* Haruki Murakami, The Wind-Up Bird Chronicle

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As we learn from our elders, we might recall that it was on this date in 2006 that the first news stories based on the Panama Papers were published.  A cache of 11.5 million leaked documents that detailed financial and attorney–client information for more than 214,488 offshore entities, all from Panamanian law firm and corporate service provider Mossack Fonseca, the Panama Papers chronicled tax evasion, money laundering and fraud involving 12 current or former world leaders; 128 other public officials and politicians; and hundreds of celebrities, businessmen, and other wealthy individuals from over 200 countries.

Panama_papers_sz_chat

An online chat between Süddeutsche Zeitung reporter Bastian Obermayer and anonymous source John Doe

source

 

“a crime committed by a person of respectability and high social status in the course of his occupation”*

 

White Collar Crime

 

Over the last two years, nearly every institution of American life has taken on the unmistakable stench of moral rot. Corporate behemoths like Boeing and Wells Fargo have traded blue-chip credibility for white-collar callousness. Elite universities are selling admission spots to the highest Hollywood bidder. Silicon Valley unicorns have revealed themselves as long cons (Theranos), venture-capital cremation devices (Uber, WeWork) or straightforward comic book supervillains (Facebook). Every week unearths a cabinet-level political scandal that would have defined any other presidency. From the blackouts in California to the bloated bonuses on Wall Street to the entire biography of Jeffrey Epstein, it is impossible to look around the country and not get the feeling that elites are slowly looting it.

And why wouldn’t they? The criminal justice system has given up all pretense that the crimes of the wealthy are worth taking seriously. In January 2019, white-collar prosecutions fell to their lowest level since researchers started tracking them in 1998. Even within the dwindling number of prosecutions, most are cases against low-level con artists and small-fry financial schemes. Since 2015, criminal penalties levied by the Justice Department have fallen from $3.6 billion to roughly $110 million. Illicit profits seized by the Securities and Exchange Commission have reportedly dropped by more than half. In 2018, a year when nearly 19,000 people were sentenced in federal court for drug crimes alone, prosecutors convicted just 37 corporate criminals who worked at firms with more than 50 employees.

With few exceptions, the only rich people America prosecutes anymore are those who victimize their fellow elites. Pharma frat boy Martin Shkreli, to pick just one example, wasn’t prosecuted for hiking the price of a drug used to treat HIV from $13.50 to $750 per pill. He went to prison for scamming investors in a hedge fund scheme years before. Meanwhile, in 2016, the CEO whose company experienced the deadliest mining disaster since 1970 served less than one year in prison and paid a fine of 1.4 percent of his salary and stock bonuses the previous year. Why? Because overseeing a company that ignores warnings and causes the deaths of workers, even 29 of them, is a misdemeanor

A bracing look at an alarming phenomenon, and at the forces that drive it: “The Golden Age of White Collar Crime.”

See also this interactive “heat map” of “White Collar Crime Risk Zones,” from @sam_lavigne and his colleagues, and this paper on the cost of white collar crime– more than $300 Billion per year as of 2015; likely more now– and who pays for it (HBS pdf).

rich [Paul Noth in The New Yorker, via Jack Shalom]

* Criminologist Edwin Sutherland’s definition of white collar crime, 1939

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As we equilibrate equity, we might recall that it was on this date in 1933, the day after the German Parliament building (the Reichstag) was damaged by arson, that President Hindenburg issues the Decree for the Protection of People and the Reich…

Though the origins of the fire are still unclear, in a propaganda maneuver, the coalition government (made up of Nazis and the Nationalists) blamed the Communists. They exploited the Reichstag fire to secure President Hindenburg’s approval for an emergency decree, popularly known as the Reichstag Fire Decree, that suspended individual rights and due process of law. The Reichstag Fire Decree permitted the regime to arrest and incarcerate political opponents without specific charge, dissolve political organizations, and to suppress publications. It also gave the central government the authority to overrule state and local laws and overthrow state and local governments. The decree was a key step in the establishment of the Nazi dictatorship. Germany became a police state in which citizens enjoyed no guaranteed basic rights and the SS, the elite guard of the Nazi state, wielded increasing authority through its control over the police.   [source]

 

Reichstag fire source

 

Written by LW

February 28, 2020 at 1:01 am

“I made bongs”*…

 

Alderson prison

Alderson Federal Prison Camp, home to Martha Stewart for five months in 2004-5

 

From Town and Country Magazine, offered here without comment…

So you got caught. That porn star wasn’t about to pay herself to stay mum about her night with your boss, so you stepped up and took one for the team. Or perhaps your daughters were better at Instagram than calculus, so you spent half a million bucks pretending they were the best college athletic prospects since O.J. Simpson. Or maybe the SEC decided you were less of a “cryptoguru” and more of a charlatan.

From Felicity Huffman to Michael Cohen, nearly every day brings a notable figure face to face with a possible jail sentence—which, in turn, has given rise to a cottage industry: the prison consultancy. From companies like California’s White Collar Advice, which boasts a team of professionals with penal experience (as convicts or as employees of the Federal Bureau of Prisons) to individual entrepreneurs like Federal Prison Handbook author Christopher Zoukis, they have made it positively de rigueur for those more accustomed to sleeping between Pratesi than polyester to hire an insider who will lay out what to expect when expecting to be incarcerated…

Counsel for connected cons-to-be– the Emily Post of prison etiquette: “Inside the World of Prison Consultants Who Prepare White Collar Criminals to Do Time.”

* Tommy Chong, of his time at Taft Correctional Institute, where he built a kiln to fire his ceramic creations

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As we ponder privilege, we might recall that it was on this date in 1966 that one of Rolling Stone‘s 500 Greatest Songs of All Time, “96 Tears,” by ? and the Mysterians (AKA Question Mark and the Mysterians), reached #1 on the pop chart.

 

 

“There’s a compounding and unraveling chaos that is perpetually in motion in the Dark Web’s toxic underbelly”*…

 

Dark Web

 

CIRCL, Luxembourg’s computer security incident response team, has published a dataset of 37,500 .onion website screenshots, a subset of which have been categorized by topic (e.g., “drugs-narcotics”, “extremism”, “finance”) and/or purpose (e.g., “forum”, “file-sharing”, “scam”)

Via Jeremy Singer-Vine’s fascinating Data is Plural.

[For more background see “WTF is Dark Web?,” whence the image above]

* James Scott, Senior Fellow, Institute for Critical Infrastructure Technology

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As we grab our flashlights, we might recall that it was on this date in 1979 that CompuServe launched the first consumer-oriented online information service, which they called MicroNET (and marketed via Radio Shack)– the first time a consumer had access to services such as e-mail.

The service was not initially favored internally within the business-oriented CompuServe, but as the service became a hit, they renamed it CompuServe Information Service, or CIS.  By the mid-1980’s CompuServe was the largest consumer information service in the world and half their revenue came from CIS.

In 1989 CompuServe connected its proprietary e-mail system to the Internet e-mail system, making it one of the first commercial Internet services.  But CompuServe did not compete well with America On-Line or independent Internet Service Providers in the 1990’s and rapidly lost its dominant market position.

compuserve-300x205 source

 

Written by LW

September 24, 2019 at 1:01 am

“When I consider Life, ’tis all a cheat”*…

 

ladiesfraud2_web

 

Sarah Howe’s early life is mostly a mystery. There are no surviving photographs or sketches of her, so it’s impossible to know what she looked like. She may, at one point, have been married, but by 1877 she was single and working as a fortune-teller in Boston. It was a time of boom and invention in the United States. The country was rebuilding after the Civil War, industrial development was starting to take off, and immigration and urbanization were both increasing steadily. Money was flowing freely (to white people anyway), and men and women alike were putting that money into the nation’s burgeoning banks. In 1876, Alexander Graham Bell invented the telephone, and in 1879 Thomas Edison created the lightbulb. In between those innovations, Sarah Howe opened the Ladies’ Deposit Company, a bank run by women, for women.

The company’s mission was simple: help white women gain access to the booming world of banking. The bank only accepted deposits from so-called “unprotected females,” women who did not have a husband or guardian handling their money. These women were largely overlooked by banks who saw them — and their smaller pots of money — as a waste of time. In return for their investment, Howe promised incredible results: an 8 percent interest rate…

All told, the Ladies Deposit would gather at least $250,000 from 800 women — although historians think far more women were involved. Some estimate that Howe collected more like $500,000, the equivalent of about $13 million today…

Then, in 1880, it all came crashing down. On September 25, 1880, the Boston Daily Advertiser began a series of stories that exposed Howe’s bank as a fraud. Her 8 percent returns were too good to be true. Howe was operating what we now know as a Ponzi scheme — 40 years before Ponzi would try his hand at it…

Rose Eveleth on the fascinating story of a 19th-century scammer, and what she can teach us about women, lying, and economic boom-and-bust cycles: “The No. 1 Ladies’ Defrauding Agency.”

* John Dryden, Aureng-Zebe

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As we remind ourselves that what’s too good to be true usually isn’t, we might recall that it was on this date in 1946 that FBI agents arrested Chicago gangster George “Bugs” Moran in Kentucky.

During the Prohibition era, Moran was one of the biggest organized crime figures in America, and has been credited with popularizing the drive-by shooting. He was a rival to Al Capone, who gunned down seven members of Moran’s gang in the 1929 Saint Valentine’s Day massacre.

Unlike Capone, Moran wasn’t a clever crime boss. By 1946 he had been reduced to common crimes like bank heists. He was basically penniless. The FBI found him renting an upstairs apartment from a law-abiding couple in Henderson, Ky.  [source]

220px-Bugs_Moran source

 

Written by LW

July 6, 2019 at 1:01 am

“Once, during Prohibition, I was forced to live for days on nothing but food and water”*…

 

prohibtion

 

Americans tend to have a pretty jaundiced view of Prohibition…

… driven by extremists, the country was pushed into an extreme experiment — to ban the sale, production, and transportation of alcohol in the US in 1919 through a constitutional amendment, the 18th. The policy was a political failure, leading to its repeal in 1933 through the 21st Amendment.

There’s also a widespread belief that Prohibition failed at even reducing drinking and led to an increase in violence as criminal groups took advantage of a large black market for booze.

“‘Everyone knows’ that Prohibition failed because Americans did not stop drinking,” historian Jack Blocker wrote in the American Journal of Public Health. He summarized what’s now the conventional wisdom: “Liquor’s illegal status furnished the soil in which organized crime flourished.”

But there’s a lot wrong with these present-day assumptions about Prohibition.

People like [Carry] Nation, as extreme as they were, were driven by real problems caused by excessive drinking, including alcohol-induced domestic violence and crime as well as liver cirrhosis and other health issues. This was perceived as a widespread problem, at least in popular media: George Cruikshank’s 1847 series of drawings, The Bottle, portrayed a father spending all his family’s money drinking and, eventually, killing his wife by attacking her with a bottle. And as historian David Courtwright documented in The Age of Addiction, per capita alcohol consumption increased by nearly a third from 1900 to 1913, largely due to advancements in brewing that helped make beer much cheaper.

Contrary to the conventional wisdom, the evidence also suggests Prohibition really did reduce drinking. Despite all the other problems associated with Prohibition, newer research even indicates banning the sale of alcohol may not have, on balance, led to an increase in violence and crime.

It’s time to reconsider whether America’s “noble experiment” was really such a failure after all…

America’s anti-alcohol experiment cut down on drinking and drinking-related deaths– and it may have reduced crime and violence overall.  Vox takes a sober look at the an episode in American history clouded in received ideas that may not be altogether accurate, making the case that: “Prohibition worked better than you think.”

* W.C. Fields

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As we muse on moderation, we might recall that it was on this date in 1894 (after 30 states had already enshrined the occasion) that Labor Day became a federal holiday in the United States.

labor day

The country’s first Labor Day parade in New York City on Sept. 5, 1882. This sketch appeared in Frank Leslie’s Illustrated Newspaper.

source (and source of more on the history of Labor Day)

 

Written by LW

June 28, 2019 at 1:01 am

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