Jun 032013
 

The Blaze
Jason Howerton

A high-ranking Mexican drug cartel operative currently in U.S. custody is making startling allegations that the failed federal gun-walking operation known as “Fast and Furious” isn’t what you think it is.

It wasn’t about tracking guns, it was about supplying them — all part of an elaborate agreement between the U.S. government and Mexico’s powerful Sinaloa Cartel to take down rival cartels.

The explosive allegations are being made by Jesus Vicente Zambada-Niebla, known as the Sinaloa Cartel’s “logistics coordinator.” He was extradited to the Chicago last year to face federal drug charges.

Sinaloa Cartel Operative Jesus Vincente Zambada Niebla Makes Explosive Allegation About Operation Fast and Furious

Zambada-Niebla claims that under a “divide and conquer” strategy, the U.S. helped finance and arm the Sinaloa Cartel through Operation Fast and Furious in exchange for information that allowed the DEA, U.S. Immigration and Customs Enforcement (ICE) and other federal agencies to take down rival drug cartels. The Sinaloa Cartel was allegedly permitted to traffic massive amounts of drugs across the U.S. border from 2004 to 2009 — during both Fast and Furious and Bush-era gunrunning operations — as long as the intel kept coming.

This pending court case against Zambada-Niebla is being closely monitored by some members of Congress, who expect potential legal ramifications if any of his claims are substantiated. The trial was delayed but is now scheduled to begin on Oct. 9.

Zambada-Niebla is reportedly a close associate of Sinaloa Cartel kingpin Joaquin “El Chapo” Guzman and the son of Ismael “Mayo” Zambada-Garcia, both of which remain fugitives, likely because of the deal made with the DEA, federal court documents allege.

Based on the alleged agreement  ”the Sinaloa Cartel under the leadership of defendant’s father, Ismael Zambada-Niebla and ‘Chapo’ Guzman, were given carte blanche to continue to smuggle tons of illicit drugs into Chicago and the rest of the United States and were also protected by the United States government from arrest and prosecution in return for providing information against rival cartels which helped Mexican and United States authorities capture or kill thousands of rival cartel members,” states a motion for discovery filed in U.S. District Court by Zambada-Niebla’s attorney in July 2011.

A source in Congress, who spoke to TheBlaze on the condition of anonymity, said that some top congressional investigators have been keeping “one eye on the case.”  Another two members of Congress, both lead Fast and Furious Congressional investigators, told TheBlaze they had never even heard of the case.

One of the Congressmen, who also spoke to TheBlaze on the condition of anonymity because criminal proceedings are still ongoing, called the allegations “disturbing.” He said Congress will likely get involved once Zambada-Niebla’s trial has concluded if any compelling information surfaces.

“Congress won’t get involved in really any criminal case until the trial is over and the smoke has cleared,” he added. “If the allegations prove to hold any truth, there will be some serious legal ramifications.”

Earlier this month, two men in Texas were sentenced to 70 and 80 months in prison after pleading guilty to attempting to export 147 assault rifles and thousands of rounds of ammunition to Mexico’s Los Zetas cartel. Compare that to the roughly 2,000 firearms reportedly “walked” in Fast and Furious, which were used in the murders of hundreds of Mexican citizens and U.S. Border Agent Brian Terry, and some U.S. officials could potentially face jail time if they knowingly armed the Sinaloa Cartel and allowed guns to cross into Mexico.

If proven in court, such an agreement between U.S. law enforcement agencies and a Mexican cartel could potentially mar both the Bush and Obama administrations. The federal government is denying all of Zambada-Niebla’s allegations and contend that no official immunity deal was agreed upon.

To be sure, Zambada-Niebla is a member of one of the most ruthless drug gangs in all of Mexico, so there is a chance that he is saying whatever it takes to reduce his sentence, which will likely be hefty. However, Congress and the media have a duty to prove without a reasonable doubt that there is no truth in his allegations. So far, that has not been achieved.

Zambada-Niebla was reportedly responsible for coordinating all of the Sinaloa Cartel’s multi-ton drug shipments from Central and South American countries, through Mexico, and into the United States. To accomplish this, he used every tool at his disposal: Boeing 747 cargo planes, narco-submarines, container ships, speed boats, fishing vessels, buses, rail cars, tractor trailers and automobiles. But Guzman and Zambada-Niebla’s overwhelming success within the Sinaloa Cartel was largely due to the arrests and dismantling of many of their competitors and their booming businesses in the U.S. from 2004 to 2009 — around the same time ATF’s gun-walking operations were in full swing. Fast and Furious reportedly began in 2009 and continued into early 2011.

According Zambada-Niebla, that was a product of the collusion between the U.S. government and the Sinaloa Cartel.

Sinaloa Cartel Operative Jesus Vincente Zambada Niebla Makes Explosive Allegation About Operation Fast and Furious

The claims seem to fall in line with statements made last month by Guillermo Terrazas Villanueva, a spokesman for the Chihuahua state government in northern Mexico who said U.S. agencies ”don’t fight drug traffickers,” instead “they try to manage the drug trade.”

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Apr 102013
 

Breitbart
Wynton Hall

Those wondering why the Department of Justice has refused to go after Jon Corzine for the vaporization of $1.6 billion in MF Global client funds need look no further than the documents uncovered by the Government Accountability Institute that reveal that the now-defunct MF Global was a client of Attorney General Eric Holder and Assistant Attorney General Lanny Breuer’s former law firm, Covington & Burling.

There’s more.

Records also reveal that MF Global’s trustee for the Chapter 11 bankruptcy retained as its general bankruptcy counsel Morrison & Foerester–the very law firm from which Associate Attorney General Tony West came to DOJ.

And more.

As Government Accountability Institute President Peter Schweizer explains in the Washington Times Thursday, the trustee overseeing MF Global’s bankruptcy is former FBI Director Louis Freeh. At Holder’s Senate confirmation hearing Freeh served as a character witness for Holder and revealed that Holder had previously worked for Freeh. “As general counsel,” Freeh said, “I could have engaged any lawyer in America to represent our bank. I chose Eric.”

Until now, the conventional wisdom for why Holder wouldn’t throw the book at Corzine was that Corzine is an Obama campaign bundler. Indeed, as Breitbart News reported, four of the top officials at the Department of Justice–Eric Holder, Thomas Perrelli, Karol Mason, and Tony West–were also big money bundlers for Obama.

But the newly understood crony connections reveal conflicts of interest that extend well beyond mere political support for a common candidate–they go to a tangle of prior business dealings that further underscore the need for a special prosecutor in the Corzine case.

At least 65 members of Congress have already signed a letter to Attorney General Eric Holder requesting that he appoint a special prosecutor to investigate MF Global’s collapse and the loss of $1.6 billion in customer money. What’s more, even progressives have begun to wonder whether Holder’s Covington & Burling connection explains why the Department of Justice has not charged, prosecuted, or jailed a single Wall Street executive after the biggest financial collapse in American history.

As Richard Eskow of the Huffington Post recently wrote:

More and more Washington insiders are asking a question that was considered off-limits in the nation’s capital just a few months ago: Who, exactly, is Attorney General Eric Holder representing? As scandal after scandal erupts on Wall Street, involving everything from global lending manipulation to cocaine and prostitution, more and more people are worrying about Holder’s seeming inaction — or worse — in the face of mounting evidence.

This isn’t going away.

Both the left and the right are onto Holder’s Wall Street head fake. With the revelation of the new crony connections, the time for Eric Holder to appoint a special prosecutor in the Corzine/MF Global case is now. Continue reading »

Feb 062013
 

Global Research
Barry Grey

bankers

The US Department of Justice on Monday filed a civil suit in Los Angeles charging Standard & Poor’s Ratings Services, the world’s biggest credit rating agency, with defrauding investors and the public by inflating the credit ratings it gave to subprime mortgage-backed securities in the run-up to the 2008 financial crisis.

The suit was announced Tuesday at a Washington press conference presided over by Attorney General Eric Holder. He indicated that the government would seek damages of at least $5 billion from S&P, a subsidiary of McGraw-Hill. Sixteen states and the District of Columbia have joined the federal suit.

Coming nearly four-and-a-half years after the Wall Street crash, the suit is the first federal action against a credit rating firm. S&P and its main competitor, Moody’s Investors Service, played a critical role in the vast edifice of financial speculation and fraud that came crashing down following the bursting of the housing bubble in 2007.

S&P, Moody’s and Fitch Ratings are all private, for-profit companies. As previous US government investigations have documented, S&P and Moody’s made huge profits between 2004 and 2008 by landing contracts from Wall Street banks to rate residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs), which were assembled by the banks from home loans and sold to other financial institutions and investors around the world.

Wall Street drove mortgage lenders to sell high-risk, high-interest subprime home loans to people who could not afford them, bought up the loans from the mortgage companies, bundled them into RMBS and CDOs, and sold off these toxic investments, making massive profits in the process. The entire US and global financial system was infected as a result by what was, in essence, a vast Ponzi scheme.

While US bank regulators looked the other way, the credit rating firms facilitated the fraud by giving triple-A ratings to RMBS and CDOs backed by mortgages they knew were headed for default.

The credit rating firms had a financial interest in inflating the ratings on RMBS and CDOs, since they were paid by the banks whose securities they were rating. Under the inherently corrupt, deregulated system for rating securities—a system that serves the interests, in the first instance, of Wall Street—banks shop around for the credit rating firm most likely to give their products the highest rating. Consequently, the credit rating firms compete for a share in the lucrative financial derivatives market, which includes mortgage-backed securities, by proving to their bank paymasters that they will deliver the top ratings the banks need to maximize their profits.

At the Justice Department press conference, Holder and other officials painted a picture of pervasive and deliberate fraud, costing investors and taxpayers hundreds of billions of dollars. Between 2004 and 2007, Holder said, “S&P executives made false representations to investors and financial institutions, and took other steps to manipulate ratings criteria and credit models to increase revenue and market share.”

“Put simply,” he declared, “this alleged conduct is egregious—and it goes to the very heart of the recent financial crisis.”

Acting Associate Attorney General Tony West described how the major banks, beginning in 2007, worked furiously to package their failing subprime home loans into CDOs and offload the CDOs to investors, in order to get the bad loans off of their books. “And we have evidence,” he said, “that S&P not only knew this is what the banks were doing; S&P helped them to do it.

“As our complaint explains, through the spring and summer of 2007, S&P moved at a record pace, rating hundreds of billions of dollars worth of CDOs packed with subprime mortgage bonds… S&P gave triple-A ratings to nearly all of the CDOs it rated during this time—and they did this despite their own internal reports which showed that the ratings on the mortgage bonds on which the financial quality of these CDOs depended would not hold.”

Despite this narrative of outright criminality, amply documented in the 119-page complaint filed by the Justice Department in US District Court, the government does not name a single individual in its legal brief, nor has it pressed criminal charges. The Obama administration is thus maintaining its record of refusing to criminally prosecute a single leading figure on Wall Street for illegal actions that brought the US and world economy to the brink of collapse and triggered the deepest slump and highest unemployment since the Great Depression.

The government spent four months in talks with S&P in an attempt to reach a settlement and avoid going to court, as it has done in dozens of previous financial fraud cases. Talks reportedly broke down in the last two weeks when S&P rejected any deal requiring it to admit wrongdoing and objected to a cash payment above $100 million.

The Justice Department’s legal complaint cites internal emails, messages and reports demonstrating that the company was well aware it was violating its own standards and giving securities inflated ratings. The legal brief focuses on 40 CDOs S&P rated between March and October of 2007.

The document cites one S&P analyst who wrote in 2006 that the company had loosened its criteria for CDOs to create “a loophole big enough to drive a Mack truck through.” In December of 2006, an S&P employee wrote in an internal email: “Rating agencies continue to create an even bigger monster—the CDO market. Let’s hope we are all wealthy and retired by the time this house of cards falters.”

In April 2007, one S&P analyst told another, “We rate every deal. It could be structured by cows and we would rate it.”

In a July 2007 exchange between an S&P analyst and an investment banking colleague, the banker wrote: “I mean, come on, we pay you to rate our deals, and the better the rating the more money we make?!?! What’s up with that? How are you possibly supposed to be impartial????”

The complicity of the credit rating agencies was previously documented in extensive government reports on the financial crisis. “The Financial Crisis Inquiry Report,” issued in January of 2011 by a commission established by Congress in 2009, wrote: “The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval.”

The Senate Permanent Subcommittee on Investigations devoted 75 pages of its 639-page report on the Wall Street crash, released in April of 2011, to the role of S&P and Moody’s in facilitating the subprime mortgage swindle. It wrote: “It was not in the short-term economic interest of either Moody’s or S&P, however, to provide accurate credit ratings for high-risk RMBS and CDO securities, because doing so would have hurt their own revenues.”

The Senate report found that more than 90 percent of triple-A ratings given to mortgage-backed securities in 2006 and 2007 were eventually downgraded to junk status.

Whatever the outcome of the suit filed on Monday, the Obama administration has systematically worked, and will continue to work, to shield the banks and their accomplices from any accountability for their crimes, and create conditions for Wall Street to make more money than ever.

The same credit rating system—unregulated and dominated by the banks—remains in place today. The same credit rating companies continue to make millions by giving top ratings to high-risk bonds and derivatives and helping conceal violations of securities laws by the banks, creating the conditions for another, even more catastrophic financial crisis.

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Jan 252013
 

Guardian
Glenn Greenwald

A new PBS Frontline report examines a profound failure of justice that should be causing serious social unrest

Eric Holder Breuer

Eric Holder talks to DOJ Criminal Chief Lanny Breuer in 2010.

PBS‘ Frontline program on Tuesday night broadcast a new one-hour report on one of the greatest and most shameful failings of the Obama administration: the lack of even a single arrest or prosecution of any senior Wall Street banker for the systemic fraud that precipitated the 2008 financial crisis: a crisis from which millions of people around the world are still suffering. What this program particularly demonstrated was that the Obama justice department, in particular the Chief of its Criminal Division, Lanny Breuer, never even tried to hold the high-level criminals accountable.

What Obama justice officials did instead is exactly what they did in the face of high-level Bush era crimes of torture and warrantless eavesdropping: namely, acted to protect the most powerful factions in the society in the face of overwhelming evidence of serious criminality. Indeed, financial elites were not only vested with immunity for their fraud, but thrived as a result of it, even as ordinary Americans continue to suffer the effects of that crisis.

Worst of all, Obama justice officials both shielded and feted these Wall Street oligarchs (who, just by the way, overwhelmingly supported Obama’s 2008 presidential campaign) as they simultaneously prosecuted and imprisoned powerless Americans for far more trivial transgressions. As Harvard law professor Larry Lessig put it two weeks ago when expressing anger over the DOJ’s persecution of Aaron Swartz: “we live in a world where the architects of the financial crisis regularly dine at the White House.” (Indeed, as “The Untouchables” put it: while no senior Wall Street executives have been prosecuted, “many small mortgage brokers, loan appraisers and even home buyers” have been).

As I documented at length in my 2011 book on America’s two-tiered justice system, With Liberty and Justice for Some, the evidence that felonies were committed by Wall Street is overwhelming. That evidence directly negates the primary excuse by Breuer (previously offered by Obama himself) that the bad acts of Wall Street were not criminal.

breuer frontline

Numerous documents prove that executives at leading banks, credit agencies, and mortgage brokers were falsely touting assets as sound that knew were junk: the very definition of fraud. As former Wall Street analyst Yves Smith wrote in her book ECONned: “What went on at Lehman and AIG, as well as the chicanery in the CDO [collateralized debt obligation] business, by any sensible standard is criminal.” Even lifelong Wall Street defender Alan Greenspan, the former Federal Reserve Chair, said in Congressional testimony that “a lot of that stuff was just plain fraud.”

A New York Times editorial in August explained that the DOJ’s excuse for failing to prosecute Wall Street executives – that it was too hard to obtain convictions – “has always defied common sense – and all the more so now that a fuller picture is emerging of the range of banks’ reckless and lawless activities, including interest-rate rigging, money laundering, securities fraud and excessive speculation.” The Frontline program interviewed former prosecutors, Senate staffers and regulators who unequivocally said the same: it is inconceivable that the DOJ could not have successfully prosecuted at least some high-level Wall Street executives – had they tried.

What’s most remarkable about all of this is not even Wall Street had the audacity to expect the generosity of largesse they ended up receiving. “The Untouchables” begins by recounting the massive financial devastation the 2008 crisis wrought – “the economy was in ruins and bankers were being blamed” – and recounts:

“In 2009, Wall Street bankers were on the defensive, worried they could be held criminally liable for fraud. With a new administration, bankers and their attorneys expected investigations and at least some prosecutions.”

Indeed, the show recalls that both in Washington and the country generally, “there was broad support for prosecuting Wall Street.” Nonetheless: “four years later, there have been no arrests of any senior Wall Street executives.” Continue reading »