The New Money-Laundering Sting: Come to the U.S. then Get Arrested

The New Money-Laundering Sting:  Come to the U.S. then Get Arrested

by Christie Smythe
September 9, 2015

LawyerPatrick Poulin says he helped clients set up offshore corporations in the Caribbean. And that’s what he was working on when he flew to Miami from the Turks and Caicos last year to meet with two Americans who wanted him to invest $2 million from a real estate deal.

Instead, they arrested him at the airport.

The clients, who went by the names of “Bob” and “Abraham,” according to Poulin, were reallyfederal agents who were targeting him as part of a money laundering sting. Poulin eventually pleaded guilty to conspiracy and spent a year in prison.

“My lawyer told me I should have known,” Poulin, 42, said in a telephone interview from his home in Quebec.

The U.S. has since brought charges against at least four other businessmen working as “incorporators” — people who help clients establish offshore shell companies for tax planning or other reasons. The cases come amid a campaign by U.S. prosecutors to pursue suspect foreign incorporators in countries where corporate secrecy laws and the demands of extradition have stifled investigative efforts. The strategy: Lure the service providers out of their overseas havens to the U.S. with aggressive techniques such as undercover operations, wiretaps and stings, case filings show.

New Front

This new front in the long-running battle against money-laundering is opening as part of a broader U.S. crackdown on tax evasion. Taxpayers who seek amnesty under Internal Revenue Service disclosure programs are snitching on the incorporators, as well as naming Swiss banks and the bankers who aided them.

More than 50,000 U.S. taxpayers have avoided charges since 2009 in the offshore tax evasion crackdown; the program required them to disclose which banks and advisers helped them hide assets, according to the U.S.Internal Revenue Service.

“Leads have been pouring into the government with respect to offshore constructs that are available to help people do money laundering, and securities fraud and tax evasion, and all kinds of misdeeds,” said Miriam Fisher, global chair of Latham & Watkins LLP’s tax controversy practice and a former adviser to the assistant attorney general for the Justice Department’s tax division.

Aggressive Strategies

U.S. prosecutors and the FBI declined to comment on active cases and investigations.

The aggressive strategies are likely meant to send a message to incorporators that they’re being watched, saidJeffrey Neiman, a former federal prosecutor who worked on the groundbreaking 2009 tax evasion case againstUBS Group AG and whose law firm represented an associate of Poulin.

“It plants the seed around the world that just maybe the government is listening to this conversation,” he said.

By luring incorporators to the U.S. to make an arrest, authorities also avoid often-complicated and lengthy extradition battles, and it’s easier to resolve a case, Neiman said.

About 30 Swiss advisers, for example, have been indicted in the U.S. since 2008, part of a broad probe of tax evasion and undeclared offshore accounts. At least 21 are still at large, among them,Josef Beck. The financial adviser was indicted in 2012 for allegedly conspiring with UBS to help Americans evade taxes. Yet he has never come to the U.S. to face the charges.

In July, authorities lured Michael Dodd, a manager for Panamanian corporate services provider High Secured, along with two associates to New York from overseas. They were arrested and accused of agreeing to launder about $2 million in stock fraud proceeds for an undercover investigator posing as a client.

Vuitton Bag

Dodd was taken into custody at Manhattan’s Gramercy Tavern, according to the government, while Kenneth Landgaard, the provider of a private jet equipped with a safe, and James Robert Shipman Jr., an offshore incorporation specialist, were arrested after landing at a Long Island airport.

The men insisted the cash be packed into a Louis Vuitton bag because they thought real cops could never afford such an expensive item, and asked that conversations take place over encrypted software “so that the NSA can’t listen,” the government alleged in papers filed in Brooklyn federal court. A lawyer for Landgaard declined to comment. Lawyers for the other two men didn’t respond to requests for comment, and their clients haven’t yet entered a plea. All three were denied bail. The case is pending.

High Secured says on its website it provides offshore web-hosting and assists in “setting up complete corporate structures and merchant accounts to individuals and businesses to conduct their financial affairs in a private, secure, reliable, and tax-free environment.”

It was not named as a defendant in the criminal case. Representatives did not immediately respond to two calls placed to the company’s Panama City offices or e-mails seeking comment.

Bigger Operations

Prosecutors are moving up the chain and targeting even bigger operations. U.S. officials last year brought charges against Belize-based IPC Corporate Services founderRobert Bandfield, his employee Andrew Godfrey and several associates at brokerages and other firms. Prosecutors accused them of helping clients, including as many as 100 Americans, profit off of illegal stock trades and launder about $500 million.

An undercover investigator, posing as a corrupt stock promoter, paid the incorporator and his associates $9,600 for help setting up a corporate structure designed for illegal trading and money laundering, prosecutors said in court papers in Brooklyn. Bandfield and Godfrey told the investigator they might be able to return laundered funds on prepaid debit cards in $50,000 installments, the government alleged.

“We can make it so it’s not attached to you,” both men told the investigator during a 2013 meeting in Belize, according to prosecutors. Bandfield, 71, was arrested in September 2014 at the Miami airport on his way back to Belize. His lawyer declined to comment on the case. Bandfield has pleaded not guilty to federal charges. His case is pending. Godfrey, IPC and all but two of the associates haven’t appeared in the case and couldn’t be located for comment. One of the associates who answered the charges has denied wrongdoing; the other’s lawyer declined to comment on the charges.

The government’s crackdown comes as offshore tax shells proliferate. PresidentBarack Obama said in a 2009 speech that one Cayman Islands address had as many as 12,000 corporations registered to it. Bloomberg News found the number was closer to19,000.

Seek Confidentiality

Not all offshore incorporation is a smokescreen for illegal activity, of course. Some account holders are wealthy people who seek confidentiality because they could be targets of extortion, Fisher said.

Poulin, who is working on a book about his experiences, said he believed he was providing legitimate services offering clients privacy and help with minimizing taxes. He started out in incorporation work by handling real estate deals for “people coming down on vacation, people wanting to buy a condo,” he said. The discussions became, “let’s do some tax planning while we’re at it,” he said.

For the agents posing as clients, he set up an entity called, “Zero Exposure Inc.,” according to court documents. Following his arrest, Poulin said he was told he faced the possibility of 10 years in prison if convicted at trial for money laundering. With defense fees approaching $100,000, he decided to plead guilty to a lesser charge, he said.

He said he turned away people who were obviously criminals seeking help with funds associated with prostitution, drugs or terrorism.

“The line between unhappy creditor and fraud, it’s not super easy to define,” he said.


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DOJ Vow to Go After Bankers May Prove a Promise Hard to Keep

DOJ Vow to Go After Bankers May Prove a Promise Hard to Keep

The New York Times
September 10, 2015

Banks don’t break the law, bankers do.

That populist lament is now a government directive. The Justice Department this week announced new policies for prosecuting corporate employees, responding to criticism that it has secured huge fines from banks but few indictments of bankers.

The overhaul, Justice Department officials say, may ease some barriers to prosecuting Wall Street cases and pave the way for executive indictments.

But will the changes guarantee a Wall Street “perp walk” — that moment when a top banker is led away in handcuffs? Perhaps not. Recent investigations suggest that the challenges prosecutors face are greater than new rules can solve.

In all likelihood, prosecutors today would still struggle to indict Angelo Mozilo, the founder of Countrywide Financial, who embodied the risk-taking in subprime mortgages before the financial crisis. The same goes for Lehman Brothers executives who, like Mr. Mozilo, never faced criminal charges. Prosecutors did conduct investigations of those executives along the lines of the new guidelines, but they say they struggled to prove wrongdoing.

“Updated guidelines are not a panacea,” said David A. O’Neil, a defense lawyer who until last year was the acting head of the Justice Department’s criminal division in Washington. “White-collar cases are hard to prove, because they’re very complex and if you don’t have direct evidence of fraud, there’s room for argument on both sides.”

And even if the changes ultimately lead to a new round of indictments, those cases won’t necessarily succeed in the courtroom. In several Wall Street cases that involved individual charges — the indictments of two Bear Stearns hedge fund managers, JPMorgan Chase traders and certain hedge fund portfolio managers, for example — juries and judges have spoiled the government’s efforts to secure convictions and prison sentences.

Those outcomes underscore the difficulty of proving criminal wrongdoing, with or without new guidelines, in an increasingly complex and global financial system. Compounding the obstacles, the Federal Bureau of Investigation’s resources these days are dedicated more to fighting terrorism than white-collar crime.

The Justice Department acknowledges the limitations of its new guidelines, but it argues that it is nonetheless necessary to put corporations on notice and set the tone for its white-collar investigations. While the Justice Department cannot control whether some companies continue to obfuscate, officials say, the new policies can at least remove some of the internal barriers to prosecuting culpable individuals.

“I’m not trying to tell you that this means that tomorrow, all of a sudden, corporate heads are going to be rolling,” Sally Q. Yates, the deputy attorney general and author of the new guidelines, said in an interview. “It’s going to take some time for these changes to take effect. And we don’t have any way of knowing what the actual impact will be in terms of cases that are brought.”

In a speech on Thursday at New York University School of Law, Ms. Yates emphasized six “key steps” to such prosecutions, including the refusal to award companies “any” — the word is underlined in a memo that lays out the changes — credit for cooperating without full disclosure of individual wrongdoing.

“It’s all or nothing,” Ms. Yates said in her speech. “No more picking and choosing what gets disclosed.”

The change places added pressure on companies to name names during investigations. A protracted federal inquiry can cost millions of dollars in legal fees and weaken share prices, giving companies a strong incentive to seek cooperation credit from the government. Lacking such credit, companies could pay billions of dollars in extra fines. It can also mean the difference between a company pleading guilty or taking probation.

Another element of Ms. Yates’s memo instructs civil and criminal investigators to give individual employees priority from the onset of an investigation, rather than making them an afterthought. Ms. Yates also instructed civil and criminal prosecutors to better coordinate their investigations, which will probably streamline cases so that actions against companies and individuals are announced in unison.

“The main reason you bring these cases is to send messages to the business community,” Matthew L. Schwartz, a former prosecutor at the United States attorney’s office in Manhattan who is now a partner at Boies, Schiller & Flexner. “The more that you can bring every part of a case together, it paints a more complete picture of who is responsible and what conduct won’t be tolerated.”

Ross H. Garber, a Connecticut lawyer who both conducts internal investigations and represents employees, said the new memo would become required reading inside companies but might also cause them to think twice before settling. “What they’ll do is actually defend themselves,” he said.

Much of Ms. Yates’s memo codifies practices that were already in place in Washington and in United States attorneys’ offices that are accustomed to handling big corporate cases, like those in Manhattan and Brooklyn. The memo mandates that other offices, which increasingly handle white-collar cases, adopt those practices.

“Prosecutors have been acting as if this was the guidance for some time,” said Mr. O’Neil, who was a prosecutor in New York and Washington and is now a partner at the law firm Debevoise & Plimpton.

When working at the Justice Department, Mr. O’Neil helped oversee the case against BNP Paribas, France’s biggest bank, which was blamed for withholding records from prosecutors until after a legal deadline for filing individual charges. The bank paid $8.9 billion and pleaded guilty, but its employees never faced charges.

In other cases, the complexity of evidence and high legal standards stymied prosecutors, who must prove that executives intended to break the law and that their actions “materially” affected the markets or investors. Those standards create a high hurdle to prosecution, given that most executives are insulated from lower-level misconduct.

In the cases of Mr. Mozilo and the Lehman executives, they had no company to protect them. Countrywide was scooped up by Bank of America and Lehman collapsed.

And yet they still avoided charges.

In the Lehman investigation, the prospect of criminal charges seemed remote, since executives never even faced civil charges from the Securities and Exchange Commission, which has a lower burden of proof than the Justice Department. Mr. Mozilo did settle with the S.E.C., but federal prosecutors struggled to even make a civil case against him.

Mr. Mozilo and the Lehman executives have long denied wrongdoing. In a statement last year, a lawyer for Mr. Mozilo remarked that his client “stands virtually alone among banking and mortgage executives to actually have been pursued by this government.”

More broadly, one major obstacle to building white-collar cases is that the F.B.I. has shifted its focus toward investigating terrorism, espionage and computer crimes. Justice Department and F.B.I. officials acknowledge that the shift has come at the expense of white-collar cases. The Justice Department’s inspector general issued a scathing report last year saying that the F.B.I. did not consider investigating mortgage fraud a top priority, despite public statements to the contrary.

In part because of the shift in focus, the Justice Department will face significant challenges in focusing on individuals. Corporate cases are often built from internal investigations conducted by private lawyers hired by the companies themselves.

“We are seldom lucky enough to have a smoking gun that identifies who the bad guy is,” Ms. Yates said in the interview.

Even those cases that make it to court do not necessarily succeed. When federal prosecutors in Brooklyn charged two Bear Stearns hedge fund managers with lying to investors in the time leading up to the crisis, the case seemed to portend a wave of white-collar cases. Instead, a jury acquitted both men in 2009, a setback that loomed over the remaining crisis investigations.

A few years later, prosecutors in Manhattan charged two JPMorgan traders for their role in a $6 billion trading loss at the bank. But the traders, who were based overseas, were never extradited to New York.

Judges present another obstacle to prosecutors. In June, for example, a federal judge tossed out one charge against a former BP employee linked to the 2010 Gulf of Mexico oil spill.

And after federal prosecutors in Manhattan obtained 80 insider trading convictions in recent years, the United States Court of Appeals for the Second Circuit overturned two of the signature convictions in December, imposing new limits on prosecutors and threatening many more of their convictions.

Although a wide-ranging investigation into Wall Street bond trading practices produced criminal charges this week against three former employees of the Japanese financial firm Nomura, the Second Circuit has already signaled that it might toss out a similar case.

“The fact that this policy may lead to more indictments, and I underscore ‘may,’ doesn’t mean it leads to more convictions or jail time,” said Mr. Schwartz, who helped lead the JPMorgan investigation.

In the interview, Ms. Yates said she recognized the remaining challenges and signaled that her memo might lay the groundwork for additional changes.

“I’m not saying our work is done here,” she said. “This is the first step.”

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Justice Department Sets Sights on Wall Street Executives

Justice Department Sets Sights on Wall Street Executives

The New York Times
September 9, 2015

WASHINGTON — Stung by years of criticism that it has coddled Wall Street criminals, the Justice Department issued new policies on Wednesday that prioritize the prosecution of individual employees — not just their companies — and put pressure on corporations to turn over evidence against their executives.

The new rules, issued in a memo to federal prosecutors nationwide, are the first major policy announcement by Attorney General Loretta E. Lynch since she took office in April. The memo is a tacit acknowledgment of criticism that despite securing record fines from major corporations, the Justice Department under President Obama has punished few executives involved in the housing crisis, the financial meltdown and corporate scandals.

“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview on Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.”

Though limited in reach, the memo could erase some barriers to prosecuting corporate employees and inject new life into these high-profile investigations. The Justice Department often targets companies themselves and turns its eyes toward individuals only after negotiating a corporate settlement. In many cases, that means the offending employees go unpunished.

The memo, a copy of which was provided to The New York Times, tells civil and criminal investigators to focus on individual employees from the beginning. In settlement negotiations, companies will not be able to obtain credit for cooperating with the government unless they identify employees and turn over evidence against them, “regardless of their position, status or seniority.” Credit for cooperation can save companies billions of dollars in fines and mean the difference between a civil settlement and a criminal charge.

“We mean it when we say, ‘You have got to cough up the individuals,’ ” Ms. Yates said, a day before she was to address the policy in a speech at New York University School of Law.

But in many ways, the new rules are an exercise in public messaging, substantive in some respects but symbolic in others. Because the memo lays out guidelines, not laws, its effect will be determined largely by how Justice Department officials interpret it. And several of the points in the memo merely codify policy that is already in place.

“It’s a good memo, but it states what should have been the policy for years,” said Brandon L. Garrett, a University of Virginia law professor and the author of the book “Too Big to Jail: How Prosecutors Compromise With Corporations.” “And without more resources, how are prosecutors going to know whether companies are still burying information about their employees?”

It is also unknown whether the rules will encourage companies to turn in their executives, but Ms. Yates said the Justice Department would not allow companies to foist the blame onto low-level officials.

Document:  New Justice Dept. Guidelines

“We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail,” she said.

Under Attorney General Eric H. Holder Jr., the Justice Department faced repeated criticism from Congress and consumer advocates that it treated corporate executives leniently. After the 2008 financial crisis, no top Wall Street executives went to prison, highlighting a disparity in how prosecutors treat corporate leaders and typical criminals. Although prosecutors did collect billions of dollars in fines from big banks like JPMorgan Chase and Citigroup, critics dismissed those cases as hollow victories.

Justice Department officials have defended their record fighting corporate crime, saying that it can be nearly impossible to charge top executives who insulate themselves from direct involvement in wrongdoing. Ms. Yates’s memo acknowledges “substantial challenges unique to pursuing individuals for corporate misdeeds,” but it says that the difficulty in targeting high-level officials is precisely why the Justice Department needs a stronger plan for investigating them.

The new rules take effect immediately, but they are not likely to apply to investigations that are far along, such as one into General Motors over defects. Prosecutors in New York are struggling to charge company employees over problems linked to the deaths of more than 100 people, partly because the laws governing car companies require that prosecutors show that the employees intended to break the law, a higher standard than in other industries like pharmaceuticals and food.

Ms. Yates, a career prosecutor, has established herself in the first months of her tenure as the department’s most vocal advocate for tackling white-collar crime. She foreshadowed plans for the new policy in a February speech to state attorneys general, in which she declared that “even imposing unprecedented financial penalties on the institutions whose conduct led to the financial crisis is not a substitute for holding individuals within those institutions personally accountable.”

A criminal case last year against BNP Paribas, France’s biggest bank, demonstrated the gap between charging a bank and its employees. Even as officials extracted a record $8.9 billion penalty and made the company one of the first giant banks to plead guilty to a crime, no BNP employees faced charges. The Justice Department said the bank insulated its employees by withholding records until after a deadline had passed to file individual charges.

While the idea of white-collar investigations may conjure images of raids of corporate offices by federal agents, the reality is much different. When suspected of wrongdoing, large companies typically hire lawyers to conduct internal investigations and turn their findings over to the Justice Department. Those conclusions form the basis for settlement discussions, and they are likely to take on greater significance now that companies will be expected to name names.

Whatever its practical implications, the memo is likely to resonate on the presidential campaign trail. In a speech this summer, Hillary Rodham Clinton seized on the sentiment that too many executives were escaping accountability, declaring that, if she were elected, her administration would “prosecute individuals as well as firms when they commit fraud.”

For the Justice Department, corporate prosecutions have a long history of political implications and judicial second-guessing. Ms. Yates’s memo is the latest in a series of guidelines drafted and tweaked over the years, often in the period leading to presidential elections. The effort started in 1999 with Mr. Holder, the deputy attorney general at the time.

But two cases that followed chipped away at the guidelines and had a chilling effect on corporate prosecutions: the Supreme Court’s reversal of a conviction against the accounting firm Arthur Andersen in the Enron scandal, and a federal court’s rejection of a case against KPMG employees linked to tax shelters. Prosecutors began to shift from indictments and guilty pleas to deferred-prosecution agreements — essentially a form of corporate probation.

The memo from Ms. Yates, which took shape in recent months through a Justice Department working group that started during Mr. Holder’s tenure, tries to place a new emphasis on individual prosecutions without running afoul of those court rulings.

Still, even if the Justice Department’s effort succeeds, it will not automatically put more executives behind bars. Mr. Garrett, the University of Virginia law professor, analyzed the cases in which corporate employees had been charged.

More than half, he said, were spared jail time.



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New human-like species discovered in South Africa

New human-like species discovered in South Africa

September 10, 2015

Homo naledi has a mixture of primitive and more modern features

Scientists have discovered a new human-like species in a burial chamber deep in a cave system in South Africa.

The discovery of 15 partial skeletons is the largest single discovery of its type in Africa.

The researchers claim that the discovery will change ideas about our human ancestors.

The studies which have been published in the journal Elife also indicate that these individuals were capable of ritual behavior.

Homo naledi may have looked something like this

The species, which has been named naledi, has been classified in the grouping, or genus, Homo, to which modern humans belong.

The researchers who made the find have not been able to find out how long ago these creatures lived – but the scientist who led the team, Prof Lee Berger, told BBC News that he believed they could be among the first of our kind (genus Homo) and could have lived in Africa up to three million years ago.


Like all those working in the field, he is at pains to avoid the term “missing link”. Prof Berger says naledi could be thought of as a “bridge” between more primitive bipedal primates and humans.

“We’d gone in with the idea of recovering one fossil. That turned into multiple fossils. That turned into the discovery of multiple skeletons and multiple individuals.

“And so by the end of that remarkable 21-day experience, we had discovered the largest assemblage of fossil human relatives ever discovered in the history of the continent of Africa. That was an extraordinary experience.”

Prof Chris Stringer of the Natural History Museum said naledi was “a very important discovery”.

“What we are seeing is more and more species of creatures that suggests that nature was experimenting with how to evolve humans, thus giving rise to several different types of human-like creatures originating in parallel in different parts of Africa. Only one line eventually survived to give rise to us,” he told BBC News.

I went to see the bones which are kept in a secure room at Witwatersrand University. The door to the room looks like one that would seal a bank vault. As Prof Berger turned the large lever on the door, he told me that our knowledge of very early humans is based on partial skeletons and the occasional skull.


The haul of 15 partial skeletons includes both males and females of varying ages – from infants to elderly. The discovery is unprecedented in Africa and will shed more light on how the first humans evolved.

“We are going to know everything about this species,” Prof Berger told me as we walked over to the remains of H. naledi.

“We are going to know when its children were weaned, when they were born, how they developed, the speed at which they developed, the difference between males and females at every developmental stage from infancy, to childhood to teens to how they aged and how they died.”

A chronology of human evolution

Ardipithecus ramidus (4.4 million years ago) : Fossils were discovered in Ethiopia in the 1990s. Pelvis shows adaptations to both tree climbing and upright walking.

Australopithecus afarensis (3.9 – 2.9 million years ago) : The famous “Lucy” skeleton belongs to this species of human relative. So far, fossils of this species have only been found in East Africa. Several traits in the skeleton suggest afarensis walked upright, but they may have spent some time in the trees.

Homo habilis (2.8 – 1.5 million years ago) : This human relative had a slightly larger braincase and smaller teeth than the australopithecines or older species, but retains many more primitive features such as long arms.

Homo naledi (Of unknown age, but researchers say it could be as old as three million years) : The new discovery has small, modern-looking teeth, human-like feet but more primitive fingers and a small braincase.

Homo erectus (1.9 million years – unknown) : Homo erectus had a modern body plan that was almost indistinguishable from ours. But it had a smaller brain than a modern person’s combined with a more primitive face.

Homo neanderthalensis (200,000 years – 40,000 years) The Neanderthals were a side-group to modern humans, inhabiting western Eurasia before our species left Africa. They were shorter and more muscular than modern people but had slightly larger brains.

Homo sapiens (200,000 years – present) Modern humans evolved in Africa from a predecessor species known as Homo heidelbergensis. A small group of Homo sapiens left Africa 60,000 years ago and settled the rest of the world, replacing the other human species they encountered (with a small amount of interbreeding).

I was astonished to see how well preserved the bones were. The skull, teeth and feet looked as if they belonged to a human child – even though the skeleton was that of an elderly female.

Its hand looked human-like too, up to its fingers which curl around a bit like those of an ape.

Homo naledi is unlike any primitive human found in Africa. It has a tiny brain – about the size of a gorilla’s and a primitive pelvis and shoulders. But it is put into the same genus as humans because of the more progressive shape of its skull, relatively small teeth, characteristic long legs and modern-looking feet.

“I saw something I thought I would never see in my career,” Prof Berger told me.

“It was a moment that 25 years as a paleoanthropologist had not prepared me for.”

One of the most intriguing questions raised by the find is how the remains got there.


I visited the site of the find, the Rising Star cave, an hour’s drive from the university in an area known as the Cradle of Humankind. The cave leads to a narrow underground tunnel through which some of Prof Berger’s team crawled in an expedition funded by the National Geographic Society.

Small women were chosen because the tunnel was so narrow. They crawled through darkness lit only by their head torches on a precarious 20 minute-long journey to find a chamber containing hundreds of bones.

Among them was Marina Elliott. She showed me the narrow entrance to the cave and then described how she felt when she first saw the chamber.

“The first time I went to the excavation site I likened it to the feeling that Howard Carter must have had when he opened Tutankhamen’s tomb – that you are in a very confined space and then it opens up and all of a sudden all you can see are all these wonderful things – it was incredible,” she said.

Ms Elliott and her colleagues believe that they have found a burial chamber. The Homo naledi people appear to have carried individuals deep into the cave system and deposited them in the chamber – possibly over generations.

If that is correct, it suggests naledi was capable of ritual behaviour and possibly symbolic thought – something that until now had only been associated with much later humans within the last 200,000 years.

Prof Berger said: “We are going to have to contemplate some very deep things about what it is to be human. Have we been wrong all along about this kind of behaviour that we thought was unique to modern humans?

“Did we inherit that behaviour from deep time and is it something that (the earliest humans) have always been able to do?”

Prof Berger believes that the discovery of a creature that has such a mix of modern and primitive features should make scientists rethink the definition of what it is to be human – so much so that he himself is reluctant to describe naledi as human.

Other researchers working in the field, such as Prof Stringer, believe that naledi should be described as a primitive human. But he agrees that current theories need to be re-evaluated and that we have only just scratched the surface of the rich and complex story of human evolution.

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How companies make millions off lead-poisoned, poor blacks

How companies make millions off lead-poisoned, poor blacks

By Terrence McCoy
The Washington Post
August 25, 2015


Rose, who can neither read nor write, was supposed to be set up for life after she won a lead lawsuit against her former landlord and was awarded a large settlement. She’s seen here in Baltimore. (Amanda Voisard/For the Washington Post)


The letter arrived in April, a mishmash of strange numbers and words. This at first did not alarm Rose. Most letters are that way for her — frustrating puzzles she can’t solve. Rose, who can scarcely read or write, calls herself a “lead kid.” Her childhood home, where lead paint chips blanketed her bedsheets like snowflakes, “affected me really bad,” she says. “In everything I do.”

She says she can’t work a professional job. She can’t live alone. And, she says, she surely couldn’t understand this letter.

So on that April day, the 20-year-old says, she asked her mom to give it a look. Her mother glanced at the words, then back at her daughter. “What does this mean all of your payments were sold to a third party?” her mother recalls saying.

The distraught woman said the letter, written by her insurance company, referred to Rose’s lead checks. The family had settled a lead-paint lawsuit against one Baltimore slumlord in 2007, granting Rose a monthly check of nearly $1,000, with yearly increases. Those payments were guaranteed for 35 years.

“It’s been sold?” Rose asked, memories soon flashing.

She remembered a nice, white man. He had called her one day on the telephone months after she’d squeaked through high school with a “one-point something” grade-point average. His name was Brendan, though she said he never mentioned his last name. He told her she could make some fast money. He told her he worked for a local company named Access Funding. He talked to her as a friend.

Rose, who court records say suffers from “irreversible brain damage,” didn’t have a lot of friends. She didn’t trust many people. Growing up off North Avenue in West Baltimore, she said she’s seen people killed.

But Brendan was different. He bought her a fancy meal at Longhorn Steakhouse, she said, and guaranteed a vacation for the family. He seemed like a gentleman, someone she said she could trust.

One day soon after, a notary arrived at her house and slid her a 12-page “purchase” agreement. Rose was alone. But she wasn’t worried. She said she spoke to a lawyer named Charles E. Smith on the phone about the contract. She felt confident in what it stated. She was selling some checks in the distant future for some quick money, right?

The reality, however, was substantially different. Rose sold everything to Access Funding — 420 monthly lead checks between 2017 and 2052. They amounted to a total of nearly $574,000 and had a present value of roughly $338,000.

In return, Access Funding paid her less than $63,000.


‘They fall through a crack’

Rose, who spoke to The Washington Post on the condition that her full name not be used, had just tumbled into the little-noticed, effectively unregulated netherworld of structured settlements.

Traditional settlements are paid in one immediate lump sum. But these structured agreements often deliver monthly payments across decades to protect vulnerable recipients from immediately spending the money. Since 1975, insurance companies have committed an estimated $350 billion to structured settlements. This has given rise to a secondary market in which dozens of firms compete to purchase the rights to those payments for a fraction of their face value.

What happens in these deals is a matter of perspective. To industry advocates, the transactions get money to people who need it now. They keep desperate families off the streets, pay medical bills, put kids through school.

“What we do is provide equity for those people to buy homes,” said Access Funding chief executive Michael Borkowski. He said his organization had no reason to think Rose was cognitively impaired, pointing to her high school degree, driver’s license and written documents in her name. He said Access Funding has no record showing that Brendan, whom he praised for “the highest level of professionalism,” took Rose out to eat, and he disputed that she’d been promised a vacation. “We’re trying to bring better value to people,” Borkowski continued. “. . . We really do try to get people the best deals.”

But to critics, Access Funding is part of an industry that profits off the poor and disabled. And Baltimore has become a prime target. It’s here that one teen — diagnosed with “mild mental retardation,” court records show — sold her payments through 2030 in four deals and is now homeless. It’s here that companies blanket certain neighborhoods in advertisements, searching for a potentially lucrative type of inhabitant, whose stories recall the legacy of Freddie Gray.

Before his April death after being severely injured in police custody, before this hollowed-out city plunged into rioting, the life of Freddie Gray was a case study in the effect of lead paint on poor blacks. The lead poisoning Gray suffered as a child may have contributed to his difficulties with learning, truancy and arrests — all of it culminating in a 2008 lead-paint lawsuit and a windfall of cash locked inside a structured settlement. By late 2013, Gray was striking deals with Access Funding.

People like Gray who have suffered lead poisoning as children are especially vulnerable to predatory transactions. Many are impulsive and mentally disabled, but not so much that the law regards them as incapable of acting on their own behalf, as long as they’re 18 or older.

“A lot of them can barely read,” said Saul E. Kerpelman, who estimates he has defended more than 4,000 victims of lead poisoning, nearly all of them black. “They have limited capacity. But they fall through a crack. If they were severely disabled enough, you could file a court petition to have a trustee manage their property. But they’re not disabled enough.”

Over the past two decades, state legislatures and the U.S. Congress have passed measures to protect vulnerable people selling structured settlements. In 2000, Maryland inked the Structured Settlement Protection Act, which enumerated a series of requirements. First, a seller must seek the counsel of an independent professional adviser. Then the proposed deal must go before a county judge, who decides whether that agreement reflects the seller’s best interests.

But today, critics say, that measure is failing. “There are weaknesses and ways people can circumvent it,” said Eric Vaughn, executive director of the National Structured Settlements Trade Association, which represents companies and lawyers working in the industry. “And these companies are getting around the intents of the law. . . . And when that happens, people get hammered.”

A Washington Post review of thousands of pages of court records and interviews with industry insiders and eight victims of lead poisoning have revealed these loopholes in Baltimore.

Access Funding, located in Chevy Chase, isn’t the biggest player in the industry. But the company’s court documents nonetheless illuminate the mechanics of this trade, as well as how little scrutiny it receives. The firm has filed nearly 200 structured settlement purchases in Maryland since 2013. A review of two-thirds of those cases, which primarily funnel through one judge’s courtroom in Prince George’s County Circuit Court, shows nearly three-fourths involved victims of lead poisoning.

Every case spells out the deal’s worth. It lists the aggregate value of the lead victim’s payments, their present value and the agreed purchase price. A random survey of 52 of those deals shows Access Funding generally offers to pay around 33 cents on the present value of a dollar. Sometimes, it offers more. And sometimes, much less. One 24-year-old lead victim sold nearly $327,000 worth of payments, which had a present value of $179,000, for less than $16,200 — or about 9 cents on the dollar. Another relinquished $256,000 worth of payments, which had a present value of $166,000, for $35,000 — or about 21 cents on the dollar.

Taken together, the sample shows Access Funding petitioned to buy roughly $6.9 million worth of future payments — which had a present value of $5.3 million — for around $1.7 million.

Presented with these findings, Borkowski said Access Funding doesn’t target lead victims and that Baltimore’s glut of lead-paint lawsuits has artificially inflated that aspect of its business. He said interested investors set the purchase prices, which are lower than the payments’ present value because various factors — such as a life-contingency clause that stops payments if the holder dies — diminish their worth.

“When you get all the way until 2052, that’s pretty far out there,” he said, adding that his company, which does 80 percent of its work outside Maryland, survives only by offering better deals than other firms.

Still, Borkowski urged stricter legislation and more oversight. “These questions you raise touch on fundamental things we are going to be doing differently now,” he said. “We want to secure ourselves in the future from any potential questions like this again, so we can say, ‘No, that’s not us.’ ”

‘They sucker you in’

The court proceeding that would alter the futures of Freddie Gray and his siblings took place an hour’s drive south from their home in Baltimore, in the town of Upper Marlboro. At stake were hundreds of thousands of dollars, but none of the Grays attended the hearing.

The issue — and the company — was familiar to the presiding judge, Herman C. Dawson. Access Funding has petitioned his court more than 160 times since 2013 to purchase structured settlement payments. Dawson has approved those requests 90 percent of the time.

Freddie Gray, awarded a structured settlement as a result of his lead-paint lawsuit, now wanted the same. “Being debt free will be a great help,” said an affidavit that Gray signed. “It will take a lot of stress off of me and will help improve my credit rating so that I can make larger purchases in the future.”

Gray had agreed to sell $146,000 worth of his structured settlement, valued at $94,000, to Access Funding for around $18,300. His sisters wanted ­almost the same exact deal, which in all would relinquish $435,000 of the Gray siblings’ settlement — valued at around $280,000 — for about $54,000, or less than 20 cents on the dollar of its present-day value.

A family photo of Freddie Gray, left, and his siblings from a court filing for a lawsuit against a former landlord. (Family Photo)

A family photo of Freddie Gray from a court filing for a lawsuit against a former landlord. (Family Photo)

No one objected to the proposed deals. Dawson adjudicated the petitions, along with two other deals involving victims of lead poisoning, within three minutes, according to a recording of the hearing. “The matter is closed,” Dawson said at the hearing. He declined to comment.

The Gray family, which signed six contracts with Access Funding, now burns with resentment. The kids were in a tough spot financially, stepfather Richard Shipley said. Shipley said he tried to dissuade them from taking the deal but failed. “They sucker you in. . . . They didn’t know they were giving up so much for so little,” he said. Now, he said, the lead checks have stopped, and Access Funding won’t return their calls.

Access Funding, Borkowski said, has a “good” relationship with the Grays. “In fact, we have had dialogue since Freddie’s passing in which we provided our condolences and sent flowers to the family,” Borkowski wrote in an e-mail.

The path that led the Gray siblings into these deals began decades ago, inside a series of poorly maintained, lead-painted tenements in the neighborhood of Sandtown-Winchester, court records show.

“They told us to move out of the house,” Shipley recalled one lead-paint inspector advising the family. But where could they go? Every house they lived in between 1988 and 1996 had lead paint. Each of the siblings’ lead levels soared to at least 36 micrograms of lead per deciliter of blood. This was considered high then, when the city annually produced thousands of lead-poisoned children. It’s considered even higher now. The Centers for Disease Control and Prevention today describes any level above 5 micrograms as ­“elevated,” and on Tuesday, federal authorities pledged $3.7 million to eliminate what remains of Baltimore’s lead-paint problem.


The study of lead’s effects on the body remains an evolving science. Used as an artificial sweetener in ancient Rome, lead later became a cheap manufacturing additive. But lead never lost its sweetness — a poison candy irresistible to children. Scientists once assumed the body could withstand a fair amount of lead, which government authorities banned in residential paint in 1978. But researchers now say any trace of lead, which children absorb by eating paint chips and breathing paint dust, can cripple cognitive development.

The Grays eventually exhibited “neurocognitive deficits,” records say. Psychologists also discovered those same “deficits” in Rose and her siblings. Her blood lead level reached 31 and inflicted “permanent and severe brain damage,” according to court papers, severing her capacity to “enjoy a normal life.”

So the Grays — as Rose did, as thousands of other families did — sued their landlord, settling in 2010. The Grays then decided on a course that six lead-paint lawyers say they often counsel clients to take. The Grays structured their settlements, an arrangement recommended by insurance companies, disability advocates and even Congress.

“I try to convince my clients that taking a structured settlement might be in their best interest,” Kerpelman said. “They have no experience managing money, are brain compromised, and history shows they’ll likely run through a large cash settlement in a short time.”

But poverty is expensive. Disability is expensive. Debt mounts. Forfeiting future payments for immediate cash can seem like a painful necessity.

That’s how 42-year-old Tarsha Simms recently reconciled her decision to sell a portion of her daughter’s settlement to Access Funding. “I do regret it,” Simms said. “But if it wasn’t for this deal, we would be on the street right now.”

To balance clients’ vulnerabilities with purchasing companies’ desire for profit, most state legislatures called upon county judges to decide the cases. But Maryland’s law, according to longtime structured settlement expert Craig Ulman, is “substantially weaker” than in most states. For example, it doesn’t require that settlement recipients appear in court, as Illinois’ law does. It also doesn’t make purchasing companies file their petitions in the seller’s county of residence, as in New York, Oregon and other states.

Critics say such conditions can give rise to something called “forum shopping,” in which purchasing companies seek out less-scrutinous judges. Those firms “find the squeaky wheels, where things aren’t as enforced as much . . . and the judge simply looks at the affidavit,” said John Darer, who operates a blog monitoring the industry.

Petitions involving Maryland’s lead victims cluster in Montgomery, Howard and Prince George’s counties — anywhere but Baltimore City, the jurisdiction where most of those lead victims live. Access Funding says it has overwhelmingly filed in Prince George’s County because that’s where their attorney’s office is located.

Maryland’s court system also makes it easy to find the right clientele. Its case search puts lead-paint lawsuits into their own category, meaning a few keystrokes can call forth thousands of names. This unique confluence of factors constitutes the “perfect storm of bad stuff,” said Earl Nesbitt, executive director of the National Association of Settlement Purchasers.

But it isn’t bad for everyone. For the savvy operative, someone willing to travel deep into Baltimore’s poorest neighborhoods, this can be a lucrative trade.

And for a time, it was for Scott Blumenfeld.

An insider’s view

He likes risks. He’s partial to large, shiny watches. He has played so much poker, peering over cards, shuffling chips, that he’s developed carpal tunnel syndrome in his right arm and now wears a large, black brace. He drives a late-model blue Audi, which he says has made him nervous when driving through certain Baltimore neighborhoods at night to meet a lead-paint victim.

“I never roll up on someone without calling first,” he said.

Blumenfeld, who has worked hundreds of settlement transfer contracts, said he never intended to get into this sort of work. He grew up in Rockville, got his undergraduate degree in Madison, Wis., then enteredthe University of Baltimore School of Law. While there, he says he met other law students who went on to form the legal foundation for some of the area’s biggest structured settlement purchasing firms.

Many settled in one place, he said. “Around Bethesda, there’s a whole concentration of these structured settlement companies, but no [settlement recipients] are in Bethesda. Zero. None. Like, I’ve never heard of one in Bethesda,” Blumenfeld said.“But they’re not doing business with anyone in Bethesda. No one even in Montgomery County. It’s all about Baltimore.”

Attorney Scott Blumenfeld is photographed in Pikesville, Md. (Marvin Joseph/The Washington Post)

The intersection of Stricker Street and Lafayette Avenue in the Sandtown-Winchester neighborhood of Baltimore. (Lance Rosenfield/For The Washington Post)

Blumenfeld’s first role in the industry came in 2005, notarizing contracts for a Bethesda settlement purchasing company. Over the next five years, he rapped on doors in Baltimore’s toughest blocks to secure hundreds of signatures.

In 2010, Blumenfeld became an independent professional adviser and started counseling sellers before their deals went to court. Maryland legislation holds that such a person — who can neither be paid by nor affiliated with a purchasing firm — must “render advice concerning the [deal’s] legal, tax and financial implications.” The sellers are supposed to pay their adviser.

Sounds complicated. It wasn’t, Blumenfeld said. “I was doing most of them on the phone,” he said. He asked whether they understood the “legal, tax and financial implications” of the deal. “It would take less than a minute. I didn’t go over the terms of the contract. That wasn’t my function. I don’t think any of the other lawyers do that, or else they would never get any repeat business.”

Charles E. Smith is another lawyer who does this work. A review of 52 Access Funding deals revealed that Smith worked as the independent adviser on every one. Smith entered the same letter in every case stating that the lead victim understood the deal’s “legal, tax and financial implications” and that he was not “affiliated” with ­Access Funding. Borkowski said his company has no contractual or business relationship with Smith, declining to answer additional questions.

Smith said such transactions “represent an extremely small percentage of my practice. I have no business partnerships with any company in the structured settlement purchasing industry. . . . In all instances, I am directly contacted by the [settlement recipient.] . . . I’m not exactly sure how [they] come to me. . . . My independence is in no way compromised or at risk.”

Critics condemned the practice of an independent adviser working deal after deal for the same company. “It’s a total conflict of interest,” lawyer Kerpelman said. “He’s doing business for them and with them all the time. Imagine if he ever said, ‘No, she can’t read. She can’t understand what she’s signing.’ ” That partnership, he said, would evaporate.

But Blumenfeld said perceived conflicts of interest weren’t the only matters that discomforted him. “A 10-year-old does not have the mental ability to sell these payments, but you see this person is 20, but he has the mental brain capacity of a 10-year-old. . . . So does this annuitant have the ability to sell these payments?”

So Blumenfeld said he adopted a third and final role, this time as something of a broker. He shopped around clients between several purchasing companies, he said, to secure better deals. One client was lead victim Kevin Owens, who wanted to sell hundreds of thousands of dollars’ worth of payments. He committed to ­Access Funding and other firms, but backed out of the Access Funding deal after Blumenfeld spoke with him. In a lawsuit dismissed in March, Access Funding accused Blumenfeld of interference with business practices and unjust enrichment.

Around that same time, the Maryland Attorney Grievance Commission accused Blumenfeld of employing a paralegal with a “substantial criminal history” whom an elderly client gave power of attorney. The board also alleged that Blumenfeld “failed to properly maintain trust account records” and client ledgers. It suspended him in July last year for at least six months for improper supervision and record maintenance.

Those legal issues have stalled Blumenfeld’s work in the structured settlement industry, he said. But even now, he said he still wonders at opportunities missed. One person, especially, still crosses his thoughts. He tried to get in touch with him. He sent him letters.

But Blumenfeld never did connect with Vincent Maurice Jones Jr.

‘They gave me pennies’

Sunlight spilled across the silent street in West Baltimore. But inside one of its few occupied homes, everything was dark. Black curtains hung across the windows. The living room was strewn with pawn slips and a pamphlet advising what to do upon suffering a gunshot wound. And anchoring its mantel was a cookie tin emblazoned with the words “Access Funding.”

Vincent Maurice Jones Jr., who didn’t graduate from high school, was playing video games upstairs in his bedroom. He quickly tired of questions.

What happened with Access Funding? “You feeling me, they got all that money, and I didn’t even get a lot.” How much money was in his settlement? “What settlement?”

Jones, 25, came of age in a house on Mosher Street, which today stands abandoned and boarded up. Lead paint so infested its interior that only a few walls were free of it, according to records filed in a lead-paint lawsuit that Jones settled in 2008. “Just a lead pit,” was what one Baltimore pediatrician called it in a deposition.


When Jones was 2 years old, his blood carried 16 micrograms — triple the level considered elevated — before shooting to 28. Then it dropped to 16 before rising to 22. Even at age 8, lead still coursed at high levels in his bloodstream. Soon, he was repeating grades, failing classes.

One psychologist, court records show, doubted his employability, citing his “severe learning difficulties.” He put his lifetime economic loss at more than $1.5 million. Another medical professional couldn’t determine whether Jones, who repeated several grades, was “severely disabled” or just “generally disabled.”

“His mother essentially handles his medical regimen, takes him to doctors and makes sure he gets his medications,” pediatrician Michael A. Conte said in a deposition. “She, obviously, takes care of all the financial matters. And she transports him, or his girlfriend transports him, when he needs to travel to places that involves more than just walking down the street.”

But an affidavit written by ­Access Funding and signed by Jones in 2013 said Jones wanted to sell $90,000 of his settlement for $26,000 to “purchase a vehicle.” The money, the affidavit said, would also be used to “look for work and also need furniture, clothes, school supplies for my young daughter.”

But Jones has a son, not a daughter. And Jones has never had a driver’s license. Within months of buying a Ford sedan, Jones collected four tickets for operating a vehicle without a license. That car today bakes in the sun, unused.

Months later, Jones struck another deal with Access Funding. This time, he signed two contracts. One relinquished $327,000 worth of future payments, with a present value of $179,000, for $16,000 in return. Another deal, later dismissed, offered $34,000 for a stream of payments that totaled $336,000 and had a present value of $195,000. In all, Jones seemed willingto sell $663,000 of his settlement for $50,000.

The official reason stated in the two spring 2014 affidavits was puzzling. Jones, who had just bought the house he and his mother share using money from a structured-settlement deal, hadn’t needed to pay rent for months. But he signed an affidavit compiled by Access Funding saying he intended “to purchase [a] down payment on a house. Because I am currently unemployed, renting is expensive and detracts from my ability to provide suitable housing for myself and my dependent.” The other affidavit said: “Renting is an expense I no longer wish to incur.”

Burkowski, Access Funding’s chief executive, said he could only speculate as to what happened. “We take what is told to us,” he said. “These are people, respectable people who have honest needs. If they say they need a house, it’s not Access Funding’s position to challenge what that client is representing to us. We’re trying to help these people.”

It’s help that Jones said he could have done without. “The whole thing’s a scam,” said Jones, claiming Access Funding made up why he needed the money. “All that money I got is gone. They gave me pennies.”

So Jones has decided to fight. He’s working with an attorney who’s considering litigation against Access Funding. And he’s not the only one.

Tears, then litigation

“There it is,” Rose said, pointing at a large structure looming just blocks from where the CVS burned during the Freddie Gray protests. This is where her lead-painted, childhood house once stood. “They knocked it down,” Rose said. “It’s gone now.”

It was a Saturday afternoon, and West Baltimore was alive with funeral processions. The city had just undergone its bloodiest month in four decades — 43 shot dead — and Rose pulled out her phone to show a grisly image of a dead black man making the rounds on Facebook. “He got killed over nothing,” she said.

Rose said she hates it here. She doesn’t want to stay long. The funeral processions remind her of everything she was happy to leave behind when her family bought a large home just outside Baltimore with settlement money. The move brought her within a few miles of Heritage High School, where she secured the diploma she now calls her greatest achievement.

That accomplishment, Rose said, now feels far away. One afternoon, she suddenly began to cry. She often tells people she’s “not dumb.” She just needs a little extra time to understand things. But right now, saddled by the weight of decisions made and contracts signed, she felt less sure of that conviction.


Believing she still had money, Rose in March again tried to sell some settlement payments. But the petition, filed in April, was later dismissed when it emerged that all her money was gone. It was around that time that she also stitched together what had happened with Access Funding. In May, she called lawyers to see whether anything could be done.

In early June, Rose sued Smith, the attorney who had worked as Rose’s independent adviser in the Access Funding deal. Smith “has signed at least 40 identical or substantially similar letters under similar circumstances in other petitions where Access Funding was seeking a transfer of a structured settlement,” states the lawsuit, filed in Baltimore City Circuit Court. The lawsuit, filed by attorneys Raymond Marshall and Brian Brown, accuses Smith of legal malpractice and intentional misrepresentation.

It says Smith failed to disclose his ongoing relationship with ­Access Funding to Rose and neither met her in person nor inquired about her intellectual capabilities. “No reasonable attorney acting on behalf of Rose would have recommended the proposed transaction,” it says.

Smith argued in court papers that Rose’s lawsuit is “fundamentally inconsistent” with her earlier position and warrants dismissal. Rose, he said, signed a contract stating her desire to sell the payments. She signed an affidavit saying she’d spoken to an independent adviser. “A party who signs a contract is presumed to have read and understood its terms,” the response stated. “. . . This general rule applies even where the individual signing the document is ‘functionally illiterate.’ ”

Rose now works for a local home care service, providing companionship to an elderly woman, she said. In between shifts and helping her brother with his kids, she said she tries not to think about what has happened to her settlement. Still, she said she feels hunted, “like a target or something.”

Settlement purchasing companies, she said, pester her with phone calls and letters. Just the other day, Rose said she opened the mailbox and there was a letter from Access Funding. It promised her fast money. All Rose had to do was pick up the phone and call.

Terrence McCoy covers poverty, inequality and social justice. He also writes about solutions to social problems.

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Blowback on a NATO beach

Blowback on a NATO beach

By Pepe Escobar
RT – Russia Today
September 4, 2015

A man holds a poster with a drawing depicting drowned Syrian toddlers during a demonstration for refugee rights in Istanbul, Turkey, September 3, 2015. The distraught father of two Syrian toddlers who drowned with their mother and several other migrants as they tried to reach Greece identified their bodies on Thursday and prepared to take them back to their home town of Kobani. Abdullah Kurdi collapsed in tears after emerging from a morgue in the city of Mugla near Bodrum, where the body of his three-year old son Aylan washed up on Wednesday. The image of Aylan, drowned off one of Turkey's most popular holiday resorts, went viral on social media and piled pressure on European leaders. Abdullah's family had been trying to emigrate to Canada after fleeing the war-torn town of Kobani, a revelation which also put Canada's Conservative government under fire from its political opponents. REUTERS/Osman Orsal - RTX1QZ0X

A man holds a poster with a drawing depicting drowned Syrian toddlers during a demonstration for refugee rights in Istanbul, Turkey, September 3, 2015. The distraught father of two Syrian toddlers who drowned with their mother and several other migrants as they tried to reach Greece identified their bodies on Thursday and prepared to take them back to their home town of Kobani. Abdullah Kurdi collapsed in tears after emerging from a morgue in the city of Mugla near Bodrum, where the body of his three-year old son Aylan washed up on Wednesday. The image of Aylan, drowned off one of Turkey’s most popular holiday resorts, went viral on social media and piled pressure on European leaders. Abdullah’s family had been trying to emigrate to Canada after fleeing the war-torn town of Kobani, a revelation which also put Canada’s Conservative government under fire from its political opponents. REUTERS/Osman Orsal

We’ve had it coming. And when it came, virtually the whole planet reacted with stunned silence. Sometimes it takes just a photograph to put a noxiously complex version of hell in perspective.

Little did Nilufer Demir, 29, the female photojournalist of the Turkish Dogan News agency know that the moment she saw little Aylan Kurdi, 3, washed ashore at the Ali Hoca Burnu beach near Bodrum, she would be making history.

Aylan is alone, as if suspended by the immense solitude of death, just as his family’s dream of offering him a new life in a new continent away from death and destruction was about to be fulfilled. It’s as if his lone lifeless body at the shores of a NATO beach was also about to prefigure the death of Europe – or the death of a once pan-European dream of solidarity and compassion.

Hannah Arendt once wrote movingly about the banality of evil, referring to the mechanism of fascism and Nazism. Aylan’s lifeless body now illustrates the banality of an evil he was trying to flee: the “arc of instability”, a Pentagon self-fulfilling prophecy.

So to put hell in perspective we must retrace some steps of the arc.

Back to Shock and Awe

We’ve had it coming when the “we’re the new OPEC” Bush administration invaded, occupied and destroyed Iraq – creating the set-up for the establishment of Al-Qaeda in Iraq.

We’ve had it coming when the Petraeus surge bribed Sunnis to half-heartedly fight Al-Qaeda in Iraq – which then took its time to reorganize in the heart of the desert, change its name to Islamic State and plot a comeback.

We’ve had it coming when NATO, enthusiastically “led” by London and Paris, and allied with hardcore Salafi-jihadis, set out to duly “liberate” Libya into a failed state run by militias.

We’ve had it coming when the Obama administration, allied with the usual Persian Gulf monarchical lackeys, sold an Arab Spring myth to the world by encouraging “moderate” rebels to “liberate” Syria into a wasteland.

We’ve had it coming when US intelligence supported or at best “ignored” the jihadi free flow between Libya and Syria.

We’ve had it coming when the most powerful satellite surveillance system ever simply failed to detect a gleaming white Toyota column of the rebranded ISIS/ISIL/Daesh crossing the Syrian desert into Iraq to take over Mosul.

We’ve had it coming when ISIS/ISIL/Daesh – following a willful decision taken in Washington – was allowed to tear Sykes-Picot to shreds, taking over large swathes of both Syria and Iraq by guile and terror tactics.

We’ve had it coming when ISIS/ISIL/Daesh took Kobani, in Syrian Kurdistan, just to be dislodged essentially by PKK/YPG Kurd militias, not by US bombing raids.

We’ve had it coming when ISIS/ISIL/Daesh gloated over its prowess by profiting not only from oil smuggling and a micromanaged theatre of cruelty – videotaped beheadings, the destruction of archeological pearls – but also wreaking havoc enough to vastly increase the numbers of an uncontainable refugee crisis.

Aylan was a Syrian Kurd fleeing from ISIS/ISIL/Daesh.

Aylan was also one refugee among millions fleeing “liberation” bombing and the convoluted ramifications/unintended consequences of GWOT – the global war on terror – in the “arc of instability”, from Afghanistan and the tribal areas of Pakistan to Yemen, Somalia, Iraq, Syria, Libya, Mali.

These refugees are poor but they are also middle-class, like Aylan’s family. Thousands of them die in the Mediterranean, the Mare Nostrum of Roman times now converted into Cemetery Nostrum; 3,500 dead in 2014, over 2,000 since early 2015.

UNHCR detailed fifteen ongoing wars since 2010; eight in Africa (including Libya, Mali, northern Nigeria and South Sudan); three in the Middle East (Syria, Iraq and Yemen); one in Europe (Ukraine – with refugees absorbed by Russia); and three in Asia (Kyrgyzstan, Myanmar and Pakistan).

The absolute majority of refugees are from Syria. By early 2015, UNHCR was already cataloguing no less than an astounding 11.7 million displaced Syrians – from an initial population of 23 million. The situation that European public opinion now seems to be awakening to is so dramatic that UNHCR automatically recognizes as a “refugee” every single person fleeing Syria.

The “West” also seems to have forgotten, but still 4.1 million refugees are Iraqis; 1.5 million of them are internally displaced.

European solidarity oscillates wildly. France has 46 refugees/asylum seekers for every 100,000 people. Germany has slightly more, 56 for every 100,000. Compare it with Sweden – 233 for every 100,000 – or Norway – 109 for every 100,000.

At least Germany, to its credit, is showing political will; Berlin expects to welcome at least 800,000 refugees by the end of 2015.

Welcome to the Bombing King

Yet across Europe, it’s mostly ugly. Denmark wants to pay Turkey to halt Syrian refugees behind its borders. The Netherlands wants to cut off food and shelter for people who fail to qualify as refugees. Britain opposes the European Commission’s refugee quotas. Hungary is building a barbed wire wall of shame along the border with Serbia.

Already four million Syrian refugees are living in Turkey, Lebanon and Jordan.  Absolutely none of these refugees, especially from Syria, Iraq and Libya is seeking asylum – or is being offered asylum – by the immensely wealthy Persian Gulf petromonarchies, whose ideological matrix is Wahhabism/Salafi-jihadism.

Oh, no. No “swarm” (David Cameron’s expression) of refugees disturbing King Salman, responsible for the illegal bombing – with American weapons and profiting from US satellite intelligence – of Yemen, with accompanying humanitarian crisis, and duly received with pomp and circumstance by US President Barack “Drill, baby, drill” Obama this Friday.

No refugees for Qatar, which would rather sponsor global crowd pleaser Barcelona and buy every building in sight from Madeleine to Opera in Paris while actively involved in the total destruction of Syria.

The Pentagon/NATO “liberation by bombing” campaign all across the “arc of instability” shows no sign of losing steam, helped by wealthy Wahhabis and dodgy players such as the government in Ankara. Still, for millions of people, refuge inside an increasingly fearful, intolerant, xenophobic and austerity-devastated eurozone is still a better option than death and destruction.

We’ve had it coming from the beginning. There will be more blowback. An immensely sad, solitary form of blowback – washing ashore, in silence, on a NATO beach.


Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia. Born in Brazil, he’s been a foreign correspondent since 1985, and has lived in London, Paris, Milan, Los Angeles, Washington, Bangkok and Hong Kong. Even before 9/11 he specialized in covering the arc from the Middle East to Central and East Asia, with an emphasis on Big Power geopolitics and energy wars. He is the author of ‘Globalistan’ (Nimble Books, 2007), ‘Red Zone Blues’ (Nimble Books, 2007), ‘Obama does Globalistan’ (Nimble Books, 2009) and a contributing editor for a number of other books, including the upcoming ‘Crossroads of Leadership: Globalization and the New American Century in the Obama Presidency’ (Routledge). When not on the road, he alternates between Sao Paulo, New York, London, Bangkok and Hong Kong.



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Say hello to China’s new toys

Say hello to China’s new toys

By Pepe Escobar
Asia Times
September 3, 2015

China’s aggression is destabilizing its neighbors in the South China Sea. China never stops cheating on world trade. China’s stock market is a trap for investors. China’s devaluation of the yuan is a dirty trick. China is imploding. President Xi Jinping does not have any credibility left. And China is a major threat because the Pentagon said so.


Cue to clear blue skies over Beijing – engineered with a hefty dose of political will. Lots of glittering toys – aerial and terrestrial. Guests from all over the world (absent the predictable Western suspects). A made-for-TV spectacular dwarfing the Oscars (no teary-eyed acceptance speeches!) What’s not to like?

And then, there it was, strutting its lethal stuff on the Tiananmen catwalk: the Dongfeng-21D. A cracking land-based anti-ship ballistic missile capable of destroying one of those multibillion-dollar US aircraft carriers with a single hit.

No wonder China’s parade celebrating the end of WWII had to be demonized to oblivion.

China’s “say hello to my new toys” show had plenty of co-stars. The DF-5B – an ICBM designed to carry nuclear warheads. The DF-26 intermediate range ballistic missile (IRBM), a.k.a. the Guam Killer, as in capable of wreaking havoc over the notorious U.S. Pacific Ocean base. The HQ-9, China’s third generation surface-to-air missile system. Lots of cool drones. Here’s a (partial) rundown of the greatest hits, and a few misses such as the J-31, China’s fight generation stealth fighter.

The screenplay included priceless dialogue. As in Xi Jinping zooming past the troops, shouting, “Hello comrades! You’ve worked hard!” — to the unison response, “Hello leader! We serve the people!”

No wardrobe fails as Xi’s wife, glamour queen Peng Liyuan, once again ripped, with a tsunami of online shoppers instantly able to snap up her drop-dead red parade outfit on Taobao, China’s answer to eBay.

And then there were those rows and rows of impeccably groomed soldiers saluting Xi with “Follow the Party! Fight to win! Forge exemplary conduct!” What sort of exemplary conduct will apply to 300.000 of their colleagues — soon to be demobilized as Xi revamps the PLA — is open to speculation.

The downsizing of the army to the benefit of allocating equal resources to army, navy and air force is part of Xi’s centralized power manner of governing — as he leads no less than eight extremely high-level policy-making committees, from military reform and cyber-security to short-term financial policy and macro economic planning.

It’s Xi vs. Reuters

China’s V-Day parade specifically celebrated “the 70th anniversary of China’s victory in the War of Resistance Against Japanese Aggression.”

Predictably none of Japan’s TV networks – NHK included – showed the parade live. Japan’s Prime Minister Shinzo Abe, officially invited, snubbed it – in line with the White House and what the State Department ordered the European minions. Here I examined how the juvenihilist Western snubbing poses as “diplomacy.”

The People’s Daily was not off the mark when it stressed the parade, “will give Chinese people the opportunity to reacquaint themselves with the invaluable lessons that history teaches and serve as a tremendous fillip to the confidence of 1.3 billion people in looking at the country’s future.”

That was a quite Chinese way to imply that what happened decades ago, as part of the “century of humiliation,” when China was weak and divided, won’t happen again. And those gleaming toys exist for that purpose.

Even more crucial is what Xi said: “That war inflicted over 100 million military and civilian casualties. China suffered over 35 million casualties and the Soviet Union lost over 27 million lives. War is like a mirror. Looking at it helps us better understand the value of peace.”

Once again, in a very Chinese way, Xi did not have to dwell on the fact that only the Atlanticists are allowed to celebrate the victory over fascism and Nazism. When Russia does it — as in the May 9 parade in Moscow — or China does it this Thursday in Beijing, they are branded as “militaristic,” “nationalistic,” or simply “a threat.”

Xi also said that the world today badly needs a sense of global community, and mutual respect and prosperity. Tell that to the exceptionalists. He emphasized China will remain committed to “peaceful development” – the official motto before Xi’s own “Chinese Dream.” And once again, he made it clear, “China will never seek hegemony or expansion. It will never inflict its past suffering on any other nation.”

Perhaps the leader of the soon-to-be top economy on the planet was … lying? Were these sweet words masking a “threat”? Leave it to Reuters to enlighten the whole planet: “For Xi, the parade is a welcome distraction from the country’s plunging stock markets, slowing economy and recent blasts at a chemical warehouse that killed at least 160 people.”

The dogs of fear/envy/resentment predictably barked as the Chinese victory parade gloriously passed.


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