19. Government Fraud, Corporate Fraud and More Fraud

Now I'd like to fill in some of the gaps regarding fraud and weapons and narcotics. To present this information, I will draw from summaries of my own files, logs, notes, tape recordings, surveillance photographs, journals, as well as very hard to find court transcripts and other court submissions that have been made in the past in relevant cases I worked on.

      In my fraud files, I have a summary I labeled a "Master Iran-Contra Fraud File," which includes all substantive frauds committed between 1983 and 1991 during the Iran-Contra and the post-Iran-Contra environment.

      In this file, which includes 543 names, I have detailed and broken down the fraud into various categories. These categories include real estate fraud, oil and gas fraud, gold bullion fraud, bank fraud of many different varieties, securities fraud -- all the way down to charitable contribution fraud, brokerage fraud, i.e. aircraft and luxury yacht brokerage fraud and diversion schemes.

      This is all under the Iran-Contra banner.

      Some of the significant names you will find as principals in these frauds include, but not limited to, George Bush, Sr., George Bush, Jr., Jeb Bush, Neil Bush, and George Bush Sr.'s daughter, Dorothy Bush's husband who is Jimmy Le Blonde, Jr. His father is the famous Colonel Jimmy Le Blonde of Air America and Iran-Contra fame.

      By the way, Col. Le Blonde held a congressional record for invoking the phrase, ñI don't recall,Ñ 117 times, when he was asked questions about Southern Air Transport's involvement in Iran-Contra cocaine and weapons trafficking. Anyway, those are some names at the top.

      Other names include former Frank Carlucci, former Assistant Secretary of State, Elliott Abrams, former Assistant Secretary of State, Bernard Aronson, former Under-Secretary of State, Lawrence Eagleburger, and former Assistant Secretary of State, Richard Armitage.

      Involved in fraud on the CIA side of the ledger, the list would include former Deputy Director of Operations, Clair George, Assistant Deputy Directory of Operations, Allan Fiers, a variety of station chiefs there's no sense in going into at this point, and CIA Internal sub-Director, Dewey Clarridge.

      On the military side, I have divided the "scamscateers" into both active and retired.

      The retired group is quite substantial. In the fraud file, there are names like, but not limited to, Maj. Gen. Richard Vernon Secord, Maj. Gen. John K. Singlaub, Brig. General Harry C. Aderholt, Col. Sam Dutton, Col. Richard Gadd, Col. Robert Steele, Lt. Col. Jack Terrell, Lt. Col. Duke Rome, Maj. John N. Piowatty.

      You may remember Piowatty, of course, in his connection with Southern Air Transport in the testimony he was forced to give in the 1990 Hasenfus civil case, and some of the articles that were written about him in the Wall Street Journal.

      The officers I just mentioned were all retired, and of course, are notorious Iran-Contra figures. They often however are just placed into their involvement with Southern Air Transport and its subsidiaries with regards to the trafficking of weapons and cocaine and the liaison facility these men provided between the NSC and the CIA, vis-a-vis the Honduran armed forces, the El Salvadoran Air Force, the Colombian and Venezuelan Air Forces, etc.

      They are seldom looked at in the context of fraud which they were involved in to line their own pockets.

      This was fraud committed under the banner of Iran-Contra and fraud for which they were never prosecuted.

      In these frauds, you'll see very often there are companion links to other corporations controlled by one of the Bushes. That is the common link that runs throughout these frauds. This is particularly true in real estate, oil and gas, banking and securities fraud.

      Some of the more minor frauds that were committed -- the gold bullion and the charitable donations frauds -- those were undertaken directly by Gen. Singlaub, who is quite notorious for those type of frauds.

      In terms of active military officers participating in Iran-Contra fraud, they would also include Lt. Gen. John Gavin and Lt. Gen. Michael Collins.

      Also included in the notable list of retired officers in Iran-Contra fraud are Adm. Elmo Zumwalt and Adm. C. Garrett Henderson, former Deputy Chief of the Office of Naval Intelligence.

      In the real estate fraud, which is the most extensive of the files, segmented into regions, I have also linked all the real estate fraud and cross-referenced it with the banks that were involved, which were of course all Iran-Contra friendly banks.

      Otherwise the fraud would not have worked.

      I have cross-referenced these frauds insofar as eighty percent of them involve so-called busted out HUD property, or so-called busted out bank deals that had been previously been syndicated and broke down for one reason or another.

      That was the most common underlying theme in these real estate frauds.

      My former associate Larry Hamil's recent activity -- his most recent fraud was the $11 million fraud he committed in the State of Florida which also involved busted out HUD properties.

      But the schemes literally continue to this day, although not to the monetary extent they once did.

      The only reason is because there isn't the availability of busted out property deals like there once was.

      And, of course, HUD is under significantly more scrutiny than it ever was before. Or else, if the property was available, these frauds would reach the same magnitude they did in the mid-eighties during the Iran-Contra period.

      There are two real estate frauds I haven't mentioned -- two out of the many in my file of about 137 major frauds.

      You have to understand I didn't make records at the time of every nickel-and-dime $10 and $20 million fraud. It just wasn't possible.

      In my personal logs at the time -- based on my own business affairs and my interaction with others, particularly selling these fraudulent products, I used the cut-off line of $100 million in the real estate fraud category.

      Another larger frauds I think is worth mentioning is the Phoenix Development Fraud, which involved a combination of busted out HUD property and busted out Lincoln Savings and Loan property.

      It got lapped up into a limited partnership and resyndicated by the general partners, including Gen. Secord, Gen. Singlaub, Col. Gadd, Col. Dutton, Jeb Bush, Neil Bush, Walter Bush, the then Vice President's nephew, Prescott Bush, the then Vice President's older brother, and Prescott's son.

      Prescott himself became one of the problems in this fraud later on.

      But it involved busted out HUD property bought surreptitiously through loans at Lincoln Savings and Loan for anywhere between ten and twenty cents on the dollar. These were very expensive residential developments in Phoenix, wherein Lincoln Savings and Loan had a collateral guarantee against the original loans used in the HUD property.

      It also provided bridge financing to build the developments. Lincoln Savings and Loan finally sells out to this partnership at about seventeen cents on the dollar and simply writes the rest off.

      What was not commonly known is that Lincoln Savings and Loan through another loan to Stanford Technologies Overseas, Ltd. actually provided the capital to purchase the property from Lincoln Savings and Loan at an eighty-three cents on the dollar loss. Ultimately, the loan itself by Stanford Technologies, a $17 million bridge loan, was also defaulted on.

      Stanford Technologies' two principals were Oliver North and Richard Secord -- Secord, being the primary principal. Ollie was just a director of Stanford Technologies Overseas, Ltd., but this is one of the few links.

      To link Ollie North into fraud, to get him away from the narcotics and the weapons and to link him into fraud -- the best way is to link him through Stanford Technologies Overseas, Ltd., or Intercontinental Industries, S.A. of San Jose, Costa Rica, in which he was the principal and Richard Secord was the director.

      These two are the most common ones. Lots of times, Intercontinental would front as a money-laundering organization for disguised loans from other Iran-Contra sympathetic banks in the Caribbean.

      A good example of which would include the Banco de Popular, more specifically the Santa Domingo branch.

      But Intercontinental Industries would launder proceeds from what were essentially illicit loans back to Stanford Technologies, who would in turn direct these proceeds by purchasing interest in fraudulent real estate limited partnerships, to wit the Phoenix Group Development.

      Another example would be a large fraud like The Boulder Property, Ltd. series of limited partnerships, in which Neil Bush, Bill Walters and Ken Good were all general partners in the deal.

      The only difference in that deal was that the principal financing came from Silverado.

      The underlying property bought very cheaply had originally been HUD property bought by MDC Holdings Corp. of Denver.

      This gets into the Denver cast of characters -- Phil Winn, Steve Mizel, and Leonard Milman.

      Milman is the principal of MDC Holding Group.

      There is a tremendous interlinkage in this MDC Holding Group fraud through MDC's subsidiary, M&L; Industries, Inc., which in recent years has been indicted several times.

      Its principal, Robert Joseph, is currently in the Colorado State Penitentiary as a matter of fact. He was offered a deal -- if he would admit what Milman, Mizel and Winn's involvement was and how they profited by it. But he refused to talk and received about a seventeen year sentence.

      It's quite humorous, that in the Phoenix Development Fraud, one of the consequences was that Gen. Secord, Gen. Singlaub, and George Bush all wind up owning homes together on the same cul-de-sac in Phoenix near the country club -- for which they paid nothing.

      These homes are appraised between $400,000 and $800,000.

      And it cost them absolutely nothing.

      Further up the street, Col. Jack Terrell has a home and this fraud is really blatant. But people have tried to look at it in the past, and they've been hit with a blizzard of paperwork.

      If you weren't there from the beginning and weren't involved from the beginning as I was, it's tough to connect all the dots because there's so many of them. But George Bush, Sr. would invariably be given a piece of everything, of every fraud that was done, because he was at the very top of the pyramid, and much of this fraud could not have been committed without either his protection or his influence. So he winds up with this house on a certain cul-de-sac in the Riverdale development of this Phoenix project.

      Although naturally it's not held in his own name, it's held by an entity known as PHB Trust, Ltd. The PHB stands for Prescott Herbert Bush, Sr. who is George Bush, Sr.'s father.

      The way these real estate frauds work was all inside a neat circle. For instance, the limited partnerships themselves were marketed by J. Walter Bush Securities in Phoenix, which had a rent-free office in the Lincoln Savings and Loan complex.

      J. Walter Bush is George Bush's nephew.

      In turn, another entity that would raise money for these deals was Prescott Herbert Bush, Jr. Investment Banking Firm of New York.

      The frauds were all kept in a very small circle -- MDC Corporation in Denver, which is a publicly listed company and still trades on the American Stock Exchange. Through their National Brokerage Group subsidiary, they would then raise money for the same deals.

      Then National Brokerage Group winds up buying an interest in another firm (at one time the largest penny stock firm in the United States) Meyer Blinder, which later became Blinder Robinson before it was closed down.

      In turn, MDC owned pieces of penny stock houses throughout Denver -- Balfour McClain, Atlantis Securities, Singer Island Securities. The list goes on and on, and you will see that most of these corporations in turn had offices in Florida, Nevada, and Texas -- states where security regulations were rather lax.

      Also these were states where there was a lot of Iran-Contra control features because you had state governments that were very loyal to George Bush.

      Consequently the ability to control liability within the various state securities or state bank examiner's offices was really remarkable.

      The reason these frauds were able to operate for so long -- in some cases, some are still extant and operating fifteen years later -- and rather discreetly is because no individual investors' money was ever used.

      There wasn't a series of warm bodies that bought one hundred thousand dollars worth of these partnerships that got burnt.

      The people who ultimately got burned were banks and securities firms, and, of course, by extension, the American taxpayer who had to bail them out.

      Another individual who was involved that you don't often connect with Iran-Contra fraud was Malcolm Forbes and his son, Steve Forbes.

      I have extensive information on one of the direct frauds they actually postulated -- the Forbes River Development deal in the Ozarks, financed by Twin Cities Bank of North Little Rock, Arkansas.

      Again, Twin Cities comes to the fore.

      Bridge loans were provided by another renowned Iran-Contra friendly bank, Beach Federal of Kingsville, Texas.

      That was an out and out fraud, and that deal did get busted out. Unfortunately, Forbes had to come up with money out of his own pocket to hush everything up. He wasn't very good at it. He was the only guy I ever knew that went into fraud to make money, and it wound up costing him more money in the end.

      But I have all the original information on that deal. It was very slick and glossy. It was well done, and it would have been a good fraud had Forbes actually known how to turn it into a fraud.

      But that's what you get when you have that idiot, Jonathan Flake, in charge. Flake is the former president of Twin Cities Bank of North Little Rock who was subsequently indicted recently named in civil actions filed against the bank by Congressman Alexander.

      Alexander got whacked out of $3 million from that Boulder Property Limited series of partnerships which Twin Cities Bank of North Little Rock co-syndicated and acted as a sales manager in Arkansas.

      These were the Boulder Property, Ltd. Partnership Series Six and Seven which got used for a very sinister purpose.

      The purpose was to specifically defraud certain targeted individuals. and those individuals were hostile congressional Democrats. This has been mentioned before. They were offered lucrative deals, no cash down, all recourse notes that had tremendous tax leverage and so forth, that these guys literally couldn't resist.

      The people who got hurt in these deals were Steve Solarz of New York, Congressman Dellums of California, Senator Boren of Oklahoma, Congressman Alexander of Arkansas, Congressman Hughes of Ohio -- and on and on and on.

      Look who got hurt. They were all leading congressional Democrats who were banging the drum about Iran-Contra.

      This was a way to control them.

      And, boy, did it ever control them because it bankrupted every one of them. All of these congressmen got suckered in.

      It was the classic bait and switch. They were all offered small investments which they made out of their own pocket -- usually $20,000 to $30,000 in various real estate developments.

      They were bogus pyramid schemes, but designed so that these guys would get their money back and show a huge profit.

      Then they would be very susceptible to signing up into a much more major fraud later on. That's the routine that was used.

      In Alexander's case, he was offered a partnership interest in Marine Research and Development Corporation in Boca Chica, Florida, which was a division of the Boca Chica Development Corporation, Ltd. whose principal was Jeb Bush.

      Another point that can be made through close scrutiny of Iran-Contra fraud is to link seemingly minor players into major players.

      For instance, if you wanted to link George Bush, Sr. directly into Iran-Contra fraud (I mean, his name on a piece of paper), then the corporation at the top you're going to be looking at is, of course, Lone Star Corporation.

      Thatís Lone Star Development, Lone Star Cement, Lone Star Trucking. Itís a publicly listed firm, in which Bush was a substantial shareholder, as well as a director at one time.

      Lone Star has been mentioned many times vis-a-vis Iran-Contra fraud, the transportation of narcotics and weapons, Lone Star Cement's involvement, and other real estate frauds, etc.

      The one deal that links him directly is to start with M&L; Industries in Denver and go through Brodix Manufacturing in Mena, Arkansas.

      You may remember Brodix Manufacturing as one of the deals set up by the infamous Mena player Freddie Lee Hampton and Hubbell's father-in-law, Seth Ward.

      Brodix received letters of credit from Madison Guaranty, which in turn were hypothecated to Lone Star for a bogus real estate development outside Paris, Texas, which in turn is rehypothecated to the Victoria National Bank in Texas and so on. If you put it all in front of you, you can see how George Bush directly profited from this fraud. It gives you tremendous ideas about where to go vis-a-vis George Bush, Sr.'s connection with Lone Star.

      Lone Star is also the starting point to connect George Bush, Sr. into fraudulent transactions with E-Systems Corporation of Dallas, Texas.

      Another fraud (not specifically real estate, although it was partially a real estate fraud) was the medical equipment fraud that links George Bush, Jr. directly into illegal Iran-Contra profiteering -- the International Medical Corporation (IMC) deal in Miami.

      It was the infamous Miguel Recarey who was the head of IMC. Jeb Bush was a director of the corporation and a major investor in it through the $4 million he borrowed -- and later defaulted on -- from Broward Savings and Loan.

      Jeb was pretty crafty though in trying to cover his ass in that fraud by forming that shell corporation in the Bahamas and having Col. Duke Rome and Col. Lanny Thorme head that shell corporation, International Medical Overseas, Ltd. That's how Jeb siphoned money out of IMC and consequently out of Health and Human Services. You see IMC got most of its money from HHC in fraudulent billing through all of its clinics in Little Havana and so on.

      When that deal fell apart, Thorme got nailed, but Thorme would never talk. He was one of those guys who was going to swing in the wind.

      Jeb Bush's two bagmen and gofers, Manny Diaz and Manny Perez, were prepared to talk about the deal and, in fact, they had made arrangements to talk to Jeff Goldstein of the Kerry Commission.

      Unfortunately, Manny Diaz died in an unusual car accident before he could be deposed.

      Perez also unfortunately died in his swimming pool before he could be deposed.

      You may just remember the names Diaz and Perez. Sydney Freedberg did quite a bit on them at the Wall Street Journal.

      They were Jeb's bagmen vis-a-vis Jeb's dealings with Eagle National Bank in Miami.

      People in the media often ask me to give them examples of frauds that began in Iran Contra and continue to this day, albeit under different names.

      It's essentially the same fraud and the same cast of characters.

      The examples I always give (about which I have substantive information, since I was involved in all three of the original frauds and also involved in marketing some of the partnerships for the secondary fraud) are the Ocean Reef Development Group, Ltd., the Omni Development Group, Ltd., and the Tri-Lateral Investment Group, Ltd.

      Who were the common players who are links between all three deals during Iran Contra?

      They are Frank Carlucci and Richard Armitage.

      When Frank Carlucci and Richard Armitage left government service immediately after Iran-Contra (they literally had to leave in order to avoid being subpoenaed as part of the overall coverup), they become principals with Pete Peterson, the infamous Republican player and GOPAC money launderer, in the Blackstone Investment Group, which is a big organization.

      Then they simply continued the same real estate development frauds which were begun under Iran-Contra.

      This time all the original deals went bankrupt. A certain set of banks got burned. The property reverted to them, and then they refinanced the property again through Blackstone.

      Subsequently they entered into an arrangement with another similar sounding company (there's always been some confusion) the Capstone Development Group, which was also a post-Iran-Contra creature.

      They are two separate organizations.

      Some people will try to claim that Capstone was simply a subsidiary of Blackstone. It is not. It is a separate company.

      Look at the directors. They are none other than Larry Eagleburger and Bernie Aronson, former co-workers of Frank Carlucci and Assistant Secretary of State, Richard Armitage.

      However, the real estate frauds continued essentially until the early 1990s. It's interesting to note how former government officials who were in the Reagan-Bush Administration during Iran-Contra profit by subsequent frauds, post-Iran-Contra frauds if you will.

      For instance, in 1994-95, there was the great Mexican Diversion Fraud, when Blackstone immediately opened an office in Mexico City to take advantage of American taxpayers' money being lent to Mexico vis-a-vis the OCED and OPEC and other United States lending and/or guaranteeing agencies.

      The opportunity to commit fraud against the United States Treasury during that Mexican bailout was just like a walk in the park.

      You buy a busted out Mexican company for pennies on the dollar, pump it up, make it look nice, make sure you've got your hands out for a twenty or thirty million dollar loan from somebody else, like the IMF, or a direct United States lending agency, and you would be given Brady Bonds which could then be rehypothecated.

      And it was such a scam.

      Dinerstein alone documented $320 million of fraud committed by former officials of the Reagan-Bush Administration during the "Great Mexican Turkey Shoot" as it became known.

      And then what happened?

      The Russian bailout.

      Blackstone suddenly opens an office in Moscow and promptly proceeds to do the same thing again. This time they were raping and pillaging the American taxpayer with the same corporate schemes to get money out of U.S. agencies and/or collateral guaranty or fidelity instruments that could be rehypothecated.

      Itís exactly the same scheme.

      It was another $38 million of fraud according to our estimates at the time.

      To follow fraud from the Iran-Contra period and to continue to do it to this day -- just look at where the Blackstone Investment Group is opening up offices in the world.

      You can usually tell what's going to be the next place where there's going to be a fraud.

      There's something that I haven't revealed until this time, and that's the fact that I had the opportunity to become involved in a Mexican diversion scheme with some of my former chums and other government hangers-on.

      I probably could have made several hundred thousand dollars or more.

      Unfortunately, the position I was offered was the position of front man -- meaning my name and my signatures would be on everything.

      Of course, people like me learn that being a front man means very simply that you make the least money.

      And you're also the most expendable later on when something goes wrong and everyone else is looking to cover their ass.

      I therefore declined the offer to become involved.