SENATOR LEVIN ON FACEBOOK TAX LOOPHOLE

FROM:  U.S. SENATOR CARL LEVIN'S WEBSITE

SPEAKING FROM THE SENATE FLOOR

Thursday, May 17, 2012Mr. President, tomorrow will be a day in tax history – when Facebook goes public, it will get a $16 billion tax deduction, which is the largest tax deduction ever taken by any corporation exploiting the stock option tax loophole.

Facebook's recent filings in anticipation of its upcoming stock offering provide new facts about its plans to use stock option tax deductions, not only to help it avoid future taxes for years and years to come, but to get a refund of taxes it's already paid.

Facebook’s recent registration statement shows that, due to hundreds of millions of stock options handed out to its founders and top executives, it plans to claim stock option tax deductions worth a whopping $16 billion.  That’s more than twice as much as estimates a few months ago, and many, many times larger than the stock option expenses shown on Facebook’s ledgers.
 
Facebook is a booming, successful company.  Its securities filing boasts of double-digit increases in Facebook’s average revenue per user, citing a 32 percent increase in 2010, and another 25 percent increase in 2011, with “growth across all regions.”  Despite trumpeting those revenue increases to investors, Facebook is planning at the same time to tell Uncle Sam it has no taxable income, offsetting its revenues with stock option tax deductions.

Facebook’s $16 billion stock option tax deduction is so huge, it will enable Facebook to claim a $500 million refund of taxes paid over the prior two years and wipe out this year’s tax bill.  The company says it will also use its deduction to create a “net operating loss” that can be used to eliminate its profits and its taxes for up to 20 years into the future.

As with so much of our tax code, it’s not the law-breaking that shocks the conscience, it’s the stuff that’s allowed.  For years, my Permanent Subcommittee on Investigations has identified this stock option tax loophole and tried to explain its cost, its unfairness, and why the loophole should be closed.  Facebook’s $16 billion tax deduction brings the issue into sharp focus.
 
This profitable corporation will stop paying any federal corporate income taxes, simply because it gave hundreds of millions of stock options to its executives.  It will go from a corporate citizen that paid its taxes, to one that not only pays no taxes to Uncle Sam on its profits, but gets a tax refund.

Some Facebook defenders claim the company’s nonpayment of taxes is offset by the taxes paid by its executives.  But first of all, Facebook demands and receives government services that its executives don’t – from patent protection to cybersecurity to trade enforcement.  Second, the fact that executives pay taxes doesn’t mean corporations shouldn’t pay taxes.  Facebook should be paying its fair share, and it’s only through a tax loophole that it won’t be.  Adding insult to injury is that one of its founders recently renounced his U.S. citizenship just to avoid paying his taxes.

Facebook is an American success story.  Its ability to use a stock option loophole to zero out its U.S. tax bill, despite ample profits, makes no sense.  It also isn’t fair to the rest of American taxpayers who will have to pay more because Facebook pays nothing.

In these tough economic times, Congress needs to make choices about where to spend taxpayer dollars.  The stock option tax deduction, as demonstrated by Facebook, fuels excessive executive pay, shifts the tax burden from corporations to other taxpayers, and enables profitable corporations to get out of paying a dime toward the country that helped make their success possible.

What could our nation do with the billions of dollars it will lose when Facebook uses the stock-option loophole?  Well, we could reduce the federal deficit.  Or we could pay for programs to help kids go to college, or programs that protect our seniors and veterans, put cops on the beat, or teachers in classrooms.

The stock-option loophole should have been closed long before Facebook’s stock option bonanza.  But surely the case of Facebook illustrates to the Senate, to the Congress, and to the American people why we should close this loophole.   If Congress were to enact the Levin-Sherrod Brown bill, S. 1375, it would close an unjustified corporate tax loophole that boosts executive pay at the expense of everybody else.  

Mr. President, I thank the Chair and yield the floor.

EX-IM BANK SIGNS AGREEMENT WITH BANCÓLDEX TO INCREASE U.S.-COLOMBIAN TRADE

Photo Credit:  Wikipedia 

FROM:  U.S. EXPORT-IMPORT BANK 

WASHINGTON, D.C.: The Export-Import Bank of the United States (Ex-Im Bank) and Bancóldex have signed a memorandum of understanding (MOU) to work together to facilitate trade between the United States and Colombia.

Ex-Im Bank and Bancóldex have agreed to exchange information on trade and business prospects that may present opportunities for cooperation, including expanding use of Ex-Im Bank financing by Colombian buyers for their purchases of U.S. goods and services.

Bancóldex is Colombia’s government-owned development and foreign trade bank. It functions as a secondary lender and focuses on entrepreneurship and foreign trade.

The MOU is a statement of general intent between Ex-Im Bank and Bancóldex to promote the availability of Ex-Im Bank financing to Colombian companies, particularly small and mid-sized businesses. Ex-Im Bank and Bancóldex will work together to share information and develop export-financing opportunities in key sectors, including infrastructure, environmental projects, medical equipment and transportation.

Ex-Im Bank Chairman and President Fred P. Hochberg and Bancóldex CEO Santiago Rojas signed the agreement today at Ex-Im Bank headquarters in Washington, D.C. Colombia’s deputy chief of mission to the United States, Nicholas Lloreda, attended the signing ceremony. Also attending was Bancóldex Risk Vice President Mauro Sartori.

“Colombia is one of the fastest-growing markets for U.S. goods and services in Ex-Im Bank’s portfolio, and it was our single-largest country market last fiscal year. We join Bancóldex in celebrating the entry into force of the historic U.S.-Colombia free trade agreement on May 15. Ex-Im Bank’s agreement with Bancóldex will further encourage opportunities for both countries. It will also strengthen our ability to reach more Colombian buyers and assist more U.S. exporters in tapping the potential of this emerging market,” said Ex-Im Bank Chairman Fred Hochberg.

Bancóldex CEO Santiago Rojas noted, “The free trade agreement will be an opportunity for both countries to increase their bilateral trade, which will have a positive effect on the competitiveness of each country as well as on the ability to generate employment in some sectors. The cooperation between Ex-Im Bank and Bancóldex will support the opportunities that the free trade agreement could bring to entrepreneurs.”

Colombia’s National Investment Plan for 2011-2014 calls for an investment of over $300 billion in infrastructure projects, a key focus area for Ex-Im Bank financing.

Chairman Hochberg conducted a business-development mission in Bogotá in August 2011, where he met with Colombia’s President Juan Manuel Santos and other government and business leaders. In December 2011, Ex-Im Bank hosted an event in Washington, D.C., “Infrastructure Opportunities in Colombia for U.S. Companies,” which was attended by representatives of more than 100 U.S. companies interested in doing business in Colombia.

Colombia is one of nine key markets (others are Brazil, Mexico, Turkey, South Africa, Nigeria, India, Indonesia and Vietnam) where Ex-Im Bank is focusing its business-development efforts. The Bank authorized more than $3.7 billion in support of U.S. exports to Colombia in FY 2011.

THREE FORMER FINANCIAL SERVICES EXECUTIVES CONVICTED OF BID RIGGING

FROM:  U.S. DEPARTMENT OF JUSTICE
Mon, May 14, 2012 at 10:11 AM
WASHINGTON — A federal jury in New York City today convicted three former financial services executives for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.
Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all former executives of General Electric Co. (GE) affiliates, were found guilty on all remaining counts of a superseding indictment in the U.S. District Court for the Southern District of New York. Carollo was found guilty on two counts of conspiracy to commit wire fraud and defraud the United States, Goldberg was found guilty on four counts of conspiracy to commit wire fraud and defraud the United States and Grimm was found guilty on three counts of conspiracy to commit wire fraud and to defraud the United States.

The trial began on April 16, 2012. Carollo, Goldberg and Grimm were initially indicted on July 27, 2010.
“The defendants corrupted the competitive bidding process and defrauded municipalities across the country for years,” said Deputy Assistant Attorney General Scott D. Hammond of the Antitrust Division. “Through corruption and fraud, they cheated cities and towns out of money for important public works projects. Today’s convictions reflect our determination to preserve fairness and competition in the financial services market. ”

According to evidence presented at trial, while employed at GE affiliates, Carollo, Goldberg and Grimm participated in separate fraud conspiracies with various financial institutions and insurance companies and their representatives at various time periods from as early as 1999 until 2006. These institutions and companies, or “providers,” offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Goldberg also participated in the conspiracies while employed at Financial Security Assurance Capital Management Services LLC (FSA).

According to evidence presented at trial, Carollo, Goldberg and Grimm and their co-conspirators corrupted the bidding process for dozens of investment agreements to increase the number and profitability of investment agreements awarded to the provider companies where they were employed. Carollo, Goldberg and Grimm deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country millions of dollars.

“Fundamentally, this case is about fraud in the investment of public money,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The actions of the defendants denied public entities the benefits of true competitive bidding, and artificially depressed the yield on invested public funds. ”
“Today’s convictions are an important step forward in the coordinated effort by the IRS and the Department of Justice to aggressively rid the municipal bond industry of unfair and corrupt practices,” said Internal Revenue Service (IRS)-Criminal Investigation (IRS-CI) Special Agent in Charge Victor W. Lessoff. “Moreover, the convictions represent an important victory for America’s taxpayers, especially those who live in the municipalities harmed by the actions of the defendants. ”

A total of eighteen individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including today’s convictions, a total of 15 individuals have been convicted and three await trial. Additionally, one company has pleaded guilty.

Each of the fraud conspiracy charges carries a maximum penalty per count of five years in prison and a $250,000 fine. The maximum fines for the fraud conspiracy offense may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The verdict announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York Office, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

CHINA'S MILITARY PROGRESS AND STRATEGIC THINKING

Photo:  Tank, Peoples Republic of China.  Credit:  Wikimedia.

FROM: AMERICAN FORCES PRESS SERVICE

Report Depicts China's Military Progress, Strategic Thinking

By Jim Garamone

WASHINGTON, May 18, 2012 - The Defense Department's 2012 Military and Security Developments Involving the People's Republic of China report details China's growing military capabilities, and points to areas of cooperation between the United States and China, a senior DOD official said here today.

Delivered to Congress today, the annual report discusses China's security and military strategy, developments in China's military doctrine and force structure, the security situation in the Taiwan Strait, U.S.-China military-to-military contacts, and the nature of China's cyber activities directed against the Department of Defense.

Other information in the report includes the People's Liberation Army investments in China's aircraft carrier program, anti-ship ballistic missiles and aircraft development. It also discusses China's pursuit of its "new historic missions."

China is building its military to be able to fight and win "local wars," said David Helvey, the acting assistant secretary of defense for East Asia. Helvey briefed the Pentagon press corps on the report.

The Chinese military is learning from the lessons the U.S. military has compiled since the Persian Gulf War, he said. The Chinese call this strategy "informatization," and Helvey said this is the phrase the Chinese use to encompass the revolution in military affairs. China uses this term to mean the role of information and information systems "not only as an enabler of modern combat, but a fundamental attribute of modern warfare," he said.

The Chinese carefully watched U.S. and coalition military forces, beginning from the first Persian Gulf War in 1991, through today.

"One of the things that the PLA has consistently highlighted is the role of advanced information technology not only for intelligence, surveillance and reconnaissance, but also enabling precision fires," Helvey said. "And when they talk about fighting and winning local wars under conditions of informatization, that's the type of warfighting environment that ... they're talking about.

"

Helvey said Chinese leaders view the first two decades of the 21st century as China's "period of strategic opportunity."

As China's economic power has boomed, its influence has expanded. "As these interests have grown and as China has assumed new roles and responsibilities in the international community, China's military modernization is also, to an increasing extent, focusing on investments that would enable China's armed forces to conduct a wide range of missions, including those that are far from China," Helvey said.

Last year, he said, the People's Liberation Army demonstrated the capability to conduct limited peacetime deployments and military operations at great distance from China, including noncombatant evacuations from Libya, counterpiracy missions in the Gulf of Aden and peacekeeping operations. Still, the focus remains on the Chinese military preparing for contingencies in the Taiwan Strait.

In addition to Taiwan, China places a high priority on its maritime territorial claims, Helvey said. "In recent years China has begun to demonstrate a more routine and capable presence in both the South China Sea and East China Sea," he said.

Helvey stressed the opportunities the situation presents to both the United States and China. Chinese ships and crews could work with international partners to tamp down piracy. Air, naval and ground forces could conduct humanitarian and disaster relief exercises together.

"There's an opportunity for China to partner with us and with other countries to address the types of challenges that we all face in the 21st century," he said.

Helvey said other portions of the report detail continued Chinese investments in nuclear forces, short- and medium-range conventional ballistic missiles, advanced aircraft, and integrated air defenses, cruise missiles, submarines and surface combatants and counter-space and cyberwarfare capabilities. Many of these capabilities "appear designed to enable what we call anti-access and area-denial missions, or what PLA strategists refer to as counterintervention operations," Helvey said.

The January 2011 flight test of China's next-generation fighter aircraft, the J-20, highlighted China's ambition to produce advanced fighter aircraft. The flight, which occurred during then-Defense Secretary Robert M. Gates' visit to China, points to an effective operational capability no sooner than 2018.

Other steps include sea trials of China's first aircraft carrier, which it purchased from Ukraine in 1998. The ship could become available to the PLA Navy by the end of the year, "but we expect it'll take several additional years for an air group to achieve a minimal operational capability aboard the aircraft carrier," Helvey said.

China has also made investments to improve its capacity for operations in cyberspace, he said.

"That is something that we pay very, very careful attention to," Helvey said. "There is the potential for these types of operations to be very disruptive -- disruptive not only in a conflict, [they] could be very disruptive to the United States, but other countries as well.

"That's one of the things about military operations in cyberspace," he added, "that there can be cascading effects that are hard to predict."

The report is DOD's effort to forecast China's intentions, Helvey said. While there have been improvements in transparency within the Chinese military, he added, much still occurs in secret. He pointed to developments in cyber, space and with foreign-bought weapons systems as not being part of China's published national security budget.

That budget grew 11.2 percent from 2011's $91.5 billion to $106 billion -- continuing two decades of hothouse growth.

Helvey said the report is an effort to ensure the United States isn't taken unawares by China's military progress, but he acknowledges there will probably still be some surprises.

"We have seen in the past, instances where China has developed weapons systems and capabilities that appeared either earlier than we expected or that we were surprised when we saw it," he said. "I think that is something that we have to anticipate and expect.

We're paying very careful attention to China's military modernization," he added, "but we've been surprised" in the past, and we may very well be surprised in terms of seeing new weapons and equipment in the future."

NAVY RECRUITS PLAYERS FOR ENERGY CHALLENGED WAR GAMES

Credit:  Wikimedia
FROM:  U.S. NAVY
Navy Recruits Players for Online Wargame to Tackle Energy Challenges
From Chief of Naval Operations Energy and Environmental Readiness Division Public Affairs

WASHINGTON (NNS) -- The Navy's Energy and Environmental Readiness Division (OPNAV N45), together with the Office of Naval Research (ONR), invites civic and military collaboration in energyMMOWGLI (Massive Multiplayer Online Wargame Leveraging the Internet) May 22-24.

The game will build on efforts to improve the U.S. Navy's combat capability and energy security, particularly by promoting energy efficiency and diversifying its energy supply (use of alternative energy), which will ultimately reduce reliance on fossil fuels from overseas.

Scheduled to run for three days, energyMMOWGLI will immerse players in a future energy scenario from the year 2022 (view scenario at http://portal.mmowgli.nps.edu), and will ask them to generate ideas about how to reduce energy consumption, improve energy efficiency, and diversify its energy supply for the sake of future strategic readiness.

The game will be "an examination of what our energy future looks like if we fail to act now," said Cmdr. James Goudreau, director of the Navy Energy Coordination Office. "Every day that petroleum prices increase, it erodes our ability to train for and execute operations that our nation demands of us. Little by little, that results in decreased combat capability, and that is something we simply cannot accept."

Through use of the energyMMOWGLI, Goudreau says, "We hope to increase the awareness of energy security as a national security issue as well as stimulating discussion that will allow the Navy to achieve greater energy resiliency and combat readiness."

Inviting broad-based participation - both civilian and military - is part of the strategy for a more secure energy footing in the context of a more uncertain energy future.

"We're hoping for an extremely diverse set of players including talented thoughtful players from academia, industry, military, government, NGOs, and global citizens," said Goudreau.

The game invites players to bring everything they know about energy from strategies they use at home to their workplace conversations, from their professional knowledge to their wildest imaginings. MMOWGLI is "an online game platform designed to elicit collective intelligence from an engaged pool of world-wide players to solve real problems facing the Navy and Marine Corps," said Dr. Larry Schuette, director of innovation at ONR. The energyMMOWGLI game motto is: Play the game, change the game.

Players can view the future scenario and pre-register now online at http://portal.mmowgli.nps.edu. The Naval Postgraduate School and Palo Alto, Calif.-based Institute for the Future are partnering with N45 and ONR on the energyMMOWGLI project.

PRESIDENT PROCLAIMS MAY 19TH AS ARMED FORCES DAY

Photo Credit:  White House

FROM:  AMERICAN FORCES PRESS SERVICE

President Issues Armed Forces Day Proclamation

WASHINGTON, May 18, 2012 - In a proclamation issued today declaring May 19 as Armed Forces Day, President Barack Obama urged all Americans to recognize and honor U.S. military members for their "unparalleled service" in defense of the nation.

"With every assignment and in every theater, America's men and women in uniform perform their duties with the utmost dignity, honor, and professionalism," Obama said in his proclamation. "Through their dauntless courage and dedication, they live up to our nation's highest ideals in even the most perilous circumstances."

On Armed Forces Day, he continued, Americans "pay tribute to the unparalleled service of our armed forces and recall the extraordinary feats they accomplish in defense of our nation."

America's service members, Obama said, "set extraordinary examples of character for those whose freedom they protect. Together, they comprise the greatest force for freedom and security the world has ever known."

From boot camp to the thick of battle, U.S. service members "look to those with which they stand, shoulder-to-shoulder, knowing they rise and fall as one team. United in their love of country, they teach us the true meaning of words like duty, honor, and strength," The president said in his proclamation.

Besides being leaders and troops, patriots and heroes, U.S. service members "are also parents, spouses, partners, sons, and daughters," Obama said.

"Their families are just as vital to their success as their brothers and sisters in arms, and our debt of gratitude extends to them as well," he added. "As we celebrate the soldiers, sailors, airmen, Marines, and Coast Guardsmen who make our way of life possible, we also pay our deepest respect to their families, our missing, our wounded, and our fallen.

"Inspired by their service and humbled by their sacrifice," Obama said, "let us recommit to providing all those who have served our nation the support they deserve."

NATO GENERAL DISCUSSES ALLIANCE CHANGES

Photo:  Helicopter Over Afghanistan.  Credit:  U.S. Air Force.
FROM:  AMERICAN FORCES PRESS SERVICE
NATO General Outlines Summit Topics, Alliance Changes
By Karen Parrish
WASHINGTON, May 18, 2012 - NATO's plan for military operations in Afghanistan up to and beyond 2014 will be the top agenda item at the organization's May 20-21 summit in Chicago, a senior NATO official said.

Afghan forces are to take the security lead in operations throughout their country by the end of 2014, while International Security Assistance Force troop-contributing nations withdraw combat forces and assign trainers.

The alliance is now reviewing the number of forces Afghanistan will need beyond 2014, and how much other countries will pay to sustain them, Danish Army Gen. Knud Bartels, chairman of the NATO Military Committee, said in Brussels May 11 during a telephone interview with American Forces Press Service.

While the Chicago summit will not be a funding meeting, several coalition nations have announced or are expected to announce their planned post-2014 monetary contributions for Afghan forces, Bartels said.

"There is substantial work ongoing on this issue," he said. "Even though numbers have been circulating in the public and in the media, I think it's too early to define with certainty at which level we will stabilize, in due time, the Afghan national security forces."
Those forces are now surging and will soon reach the agreed-on cap of 352,000, Bartels noted.

"We'll have to look at how we reduce in size, close to 2014," he said, "and this, of course, will have to be correlated with the funding issue."

Bartels said there will likely be "pretty strong indications coming out of Chicago" about NATO views on the question of future Afghan force size.

"What I expect out of Chicago is that the NATO nations and their partners in [the International Security Assistance Force] come to agreement as to how they see the strategy, post-2014, unfolding in relation to Afghanistan," he said.

A number of nations, including France, Italy, Germany and the United States, have already signed bilateral strategic agreements with Afghanistan, Bartels said.

"You could say that the correlation of all those agreements [and] strategies will form the main part of the package ... to support Afghanistan post-2014," he said.

The general said the summit will also highlight NATO's ongoing work to reshape the alliance's military response capability. Much of what is needed to transform the organization has "already been taken care of," he said, or is in progress. Changes include implementing a new command structure, adjusting the organization's defense planning process, and extending the "smart defense" collaborative approach to buying and operating military equipment.

NATO will adopt a new, leaner and more-flexible command structure starting this year, Bartels said.

"We should be able to handle all types of operations," he said. "It will also be smaller, and therefore make it possible for nations to [realize] savings, which can be reinvested in other areas."

The alliance's defense planning process, Bartels said, is designed to ensure that member nations bring the right forces to the group's collective military formations.
"We are further refining that, and we may need to adjust that process," he said.
NATO's smart defense strategy aims to ensure the alliance can buy as much equipment as possible for the best-possible price and ensure interoperability, Bartels said.
"This will, of course, assist us to be able to cooperate on the future battlefield," he said.
NATO forces in Afghanistan are well-trained, well-equipped and well-led for that specific operation, Bartels said.

"What the future will bring us -- well, I don't think any of us really knows," he said. "Therefore we have to be ready to handle a broad spectrum of possible types of operation in the future."

NATO needs to shape its force and equipment buys to support a "strong requirement" for side-by-side operations involving bigger forces, Bartels said. Future NATO military action will be joint and multinational, he noted, and preparing for that means changing mindsets and breaking paradigms to establish a collective approach to defense.
Bartels said he wants summit attendees and NATO leaders to keep in mind that service members are the foundation of the alliance's success.

"We should never forget that the real work is being done by the men and women of the armed forces, deployed in operations," he said. "I would like to ... express my thanks to them for the work they're doing."

SEC SUSPENDS TRADING IN 379 DORMANT COMPANIES

Photo Credit:  Wikipedia
FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., May 14, 2012 — The Securities and Exchange Commission suspended trading in the securities of 379 dormant companies before they could be hijacked by fraudsters and used to harm investors through reverse mergers or pump-and-dump schemes. The trading suspension marks the most companies ever suspended in a single day by the agency as it ramps up its crackdown against fraud involving microcap shell companies that are dormant and delinquent in their public disclosures.

Microcap companies typically have limited assets and low-priced stock that trades in low volumes. An initiative tabbed Operation Shell-Expel by the SEC's Microcap Fraud Working Group utilized various agency resources including the enhanced intelligence technology of the Enforcement Division's Office of Market Intelligence to scrutinize microcap stocks in the markets nationwide and identify clearly dormant shell companies in 32 states and six foreign countries that were ripe for potential fraud.

"Empty shell companies are to stock manipulators and pump-and-dump schemers what guns are to bank robbers — the tools by which they ply their illegal trade," said Robert Khuzami, Director of the SEC's Division of Enforcement. "This massive trading suspension unmasks these empty shell companies and deprives unscrupulous scam artists of the opportunity to profit at the expense of unsuspecting retail investors."

Thomas Sporkin, Director of the SEC's Office of Market Intelligence, added, "It's critical to assess risks to investors in the capital markets and, through strategic planning, develop ways to neutralize them. We were able to conduct a detailed review of the microcap issuers quoted in the over-the-counter market and cull out these high-risk shell companies."

The SEC's previously largest trading suspension was an order in September 2005 that involved 39 companies. The federal securities laws allow the SEC to suspend trading in any stock for up to 10 business days. Subject to certain exceptions and exemptions, once a company is suspended from trading, it cannot be quoted again until it provides updated information including accurate financial statements.

Pump-and-dump schemes are among the most common types of fraud involving microcap companies. Perpetrators will tout a thinly-traded microcap stock through false and misleading statements about the company to the marketplace. After purchasing low and pumping the stock price higher by creating the appearance of market activity, they dump the stock to make huge profits by selling it into the market at the higher price.

The existence of empty shell companies can be a financial boon to stock manipulators who will pay as much as $750,000 to assume control of the company in order to pump and dump the stock for illegal proceeds to the detriment of investors. But with this trading suspension's obligation to provide updated financial information, these shell companies have been rendered essentially worthless and useless to scam artists.

"This mass trading suspension is an effective and novel way for the SEC to neutralize potential threats to investors," said Chris Ehrman, Co-National Coordinator of the SEC's Microcap Fraud Working Group. "With the ability to leverage staff expertise throughout the agency's offices and divisions, the Working Group is uniquely positioned to take on risk-based matters like these and focus resources where they are needed most." This SEC enforcement effort has been led by Mr. Ehrman, Robert Bernstein, Jessica P. Regan, Leigh Barrett, and Megan Alcorn in the Office of Market Intelligence along with Microcap Fraud Working Group staff from each of the SEC's regional offices: Tanya Beard, David Berman, Sharon Binger, Melissa Buckhalter-Honore, Lisa Cuifolo, Tracy Davis, Elisha Frank, Kurt Gottschall, Lucy Graetz, Jennifer Hieb, C.J. Kerstetter, Victoria Levin, Aaron Lipson, Michael Paley, Farolito Parco, Jonathan Scott, and Lauchlan Wash. The SEC appreciates the assistance and cooperation of the Federal Bureau of Investigation's Economic Crimes Unit.

A WARMING CLIMATE AND RAINFALL CHANGES

Photo: South Africa,  Senecio Serpens (Groundcover).   Credit:  Wikimedia.

FROM:  NATIONAL SCIENCE FOUNDATION

Warming climate may mean less rainfall for drought-sensitive regions of the Southern Hemisphere, according to results just published by an international research team.

Geoscientist Curt Stager of Paul Smith's College in Paul Smiths, N.Y., and colleagues found that rainfall in South Africa during the last 1,400 years was affected by temperature--with more rain falling during cool periods and less during warm ones.

The findings, published in the journal Climate of the Past, are supported by the National Science Foundation (NSF).

"The link between climate change and rainfall in certain latitudes can have large effects on ecosystems," said Paul Filmer, program officer in NSF's Directorate for Geosciences. 

"Plants, for example, may be able to grow in a wider area, or conversely, be squeezed up a mountain or onto a peninsula. When the affected ecosystem supports a food crop, that can mean a bonanza--or a famine."

Theoretical climate models have shown that global warming could push storm tracks southward "and away from the mainlands of southern Africa, South America and Australia," said Stager.

"This research supports those predictions of increasing aridity, which could lead to major problems for societies and ecosystems in these already-arid places."

A poleward shift in winds could also affect the flow of marine currents around the tip of Africa, changing air and water temperatures farther afield, including in the Atlantic and Indian Oceans.

Stager, lead author of the paper, collected sediment samples from Lake Verlorenvlei in South Africa. By analyzing the diatoms--tiny, glassy-shelled algae--preserved in sediment cores from the bottom of the lake, he and other researchers were able to reconstruct rainfall patterns dating back to 600 A.D.

Two Paul Smith's College undergraduate students, Christiaan King and Jay White, also participated in the study, along with scientists from the University of Maine and from institutions in South Africa and Europe.

Rainfall at the southernmost tip of Africa is governed by a sinuous belt of eastward winds that migrate like a meandering river, depending on the season.

In summer months, these winds drift closer to Antarctica, carrying rain clouds over the ocean; in winter, the winds move over the African continent.

The shifting winds bring rains that provide much of the annual water supply.

"A poleward retreat of these winds would have serious consequences for cities like Cape Town, for farms and wineries, and for local animal and plant communities," Stager said.

"The same also appears to be true for the semi-arid winter rainfall regions of South America and Australia-New Zealand."

Michael Meadows, a scientist at the University of Cape Town who co-authored the paper, said that hundreds of species of rare flowering plants native to the area's fynbos ecosystem are threatened by the changes.

"These plants are tough, and are already used to dry conditions," Meadows said. "But more aridity could make fires more frequent, which could damage the soils and make it even harder for the plants to survive.

"Unfortunately, this is their only native habitat, so such a change might threaten their existence."

According to Stager, such links to mobile storm tracks make these regions exceptionally vulnerable to the effects of greenhouse gas build-up.

"When it comes to climate change, there's more to consider than warming alone," he said. "In places like these, increasing drought could bring far-reaching challenges."

FDA REVIEWS STUDY OF CLASS OF ANTIBACTERIAL DRUGS FOR POSSIBLE RELATIONSHIP WITH CARDIOVASCULAR DEATHS

FROM:  FDA
Audience: Primary Care, Pharmacy
ISSUE: FDA notified healthcare professionals that it is aware of the study published in the New England Journal of Medicine May 17, 2012 reporting a small increase in cardiovascular deaths, and in the risk of death from any cause, in persons treated with a 5-day course of azithromycin (Zithromax) compared to persons treated with amoxicillin, ciprofloxacin, or no drug. FDA is reviewing the results from this study and will communicate any new information on azithromycin and this study or the potential risk of QT interval prolongation after the agency has completed its review.

BACKGROUND: Azithromycin belongs to a class of antibacterial drugs called macrolides, which have been associated with cardiovascular effects; specifically, prolongation of the QT interval. In 2011, FDA reviewed macrolide drug labeling information related to QT interval prolongation and TdP. The WARNINGS AND PRECAUTIONS section of the Zmax drug label (azithromycin extended release for oral suspension) was revised in March 2012 to include new information regarding risk for QT interval prolongation, which appears to be low. The drug labels for clarithromycin and erythromycin also contain information about QT interval prolongation in the WARNINGS section. FDA is in the process of updating risk information in the drug labels for additional macrolide antibacterial drugs.

RECOMMENDATION: Patients taking azithromycin should not stop taking their medicine without talking to their healthcare professional. Healthcare professionals should be aware of the potential for QT interval prolongation and heart arrhythmias when prescribing or administering macrolides.

Healthcare professionals and patients are encouraged to report adverse events or side effects related to the use of these products to the FDA's MedWatch Safety Information and Adverse Event Reporting Program:
Complete and submit the report Online: www.fda.gov/MedWatch/report.htm
Download form or call 1-800-332-1088 to request a reporting form, then complete and return to the address on the pre-addressed form, or submit by fax to 1-800-FDA-0178

100TH ANNIVERSARY OF MARINE CORP AVIATION

Photo:  U.S. Marine Corps. Corsairs.  Credit:  Wikimedia
FROM:  U.S. DEPARTMENT OF DEFENSE  
100th Anniversary of Marine Corps Aviation As Delivered by Secretary of Defense Leon E. Panetta, U.S. Marine Corps Memorial, Washington D.C., Wednesday, May 16, 2012
Thank you, thank you very much.  General Robling, thank you for that very kind introduction and for your dedicated service to our nation and to the United States Marine Corps.

I'd also like to acknowledge and thank General Amos.  Jim, your leadership as Commandant has been exceptional.  I'm grateful every day for the support I get every day from this man, because he provides support not only to me, but to the entire Department of Defense, and in particular to the nation.  We are all truly fortunate to have such a skilled and visionary aviator in the role of Commandant at a critical time in our nation's history.   "Tamer," thank you for your leadership, thank you for your support, and thank you for your friendship.                       


Distinguished guests, and Marines from generations past and present, it's truly an honor and truly a privilege for me to be here and pay tribute to 100 years of Marine Corps Aviation.

It is also a great privilege to be able to do so at the foot of the Iwo Jima Memorial, where this nation honors the service and sacrifice of more than two centuries of Marines.

Tonight we celebrate a rich legacy, a story that began 100 years ago this month when First Lieutenant Alfred Cunningham, became the first Marine detailed to aviation.

In 1912, Cunningham flew the B-1.  I'm not talking about the bomber, it was the first plane the Navy purchased from the Wright Brothers.

With all due respect to this first Marine plane, it was pretty bad, even by the standards of the time, this machine was a real clunker.  I have a feeling my kids' model planes held together better than this plane.

It repeatedly crashed and had been rebuilt even before Cunningham started flying it.  Parts would vibrate loose.  The propeller shaft did not fit.  The engine never delivered enough power to fly safely in anything but smooth weather.  It eventually became impossible to climb over a few hundred feet with a passenger.  Nevertheless, like a good Marine, Cunningham flew that piece of junk nearly 400 times.

Only a Marine would love to fly that plane.  Actually, Marines were the only ones even willing to leave the ground in it, which says a lot about the Marines.

Hap Arnold, the future Commanding General of U.S. Army Air Forces during World War II, took one look at the plane and bluntly told Cunningham that no Army flier would take off in it.

It turns out that Arnold wasn't the only person to express concern.  In August 1913, Cunningham requested to be detached from flight duty for one simple reason.  As he put it, "My fiancé will not consent to marry me unless I give up flying."

Sure enough, Cunningham detached from flight duty.  But after they were married, his wife relented to his appeals and let him return to flying.  Bless those tolerating spouses.

That story reminds all of us that Marine aviators could not do their job without the love and support of family.  Even with better equipment and more advanced technologies than that clunker I talked about a century ago, our aviators still take incredible risks in order to defend our country.  Let me thank all the family members who are here and who are around the world.  All of them make it possible for Marine Aviation to continue to perform its essential mission for our country.  Your love, your support, your incredible loyalty.  All of that is so critical to our ability to keep America safe.

From the very beginning, the spirit of courage and determination exemplified by Alfred Cunningham has been the legacy of Marine Aviation.  It is a spirit driven by a mission to project power from ship to shore and support Marines on the ground.  It is a spirit that has guided Marine pilots to achieve the unthinkable and dare the impossible with their aircraft.

That has been true from the raids at the end of World War I, to the Marine aces taking out Zeros and conducting strafing runs across the Pacific in World War II, to night defenses in Korea, to enemy assaults and daring rescues in Vietnam, to the present days in Iraq and Afghanistan.  We thank God for the Marine pilots from Camp Leatherneck who support our troops on the ground and deal the enemy a heavy blow.

From one generation to the next, Marine pilots pass down their legendary fighting spirit from one pilot to another, telling them:  "If you are not getting mud on your windshield, you're flying too high!"

Today's pilots not only carry forward that fighting spirit, but also a legacy of innovation to ensure our military can adapt to any situation, anytime, anywhere.

We all know that Marine Air provides an agile and flexible forward presence, but there's nothing like seeing all of that up close.

In the new defense strategy that we established for our Defense Department and our force of the 21st century, that kind of agility is absolutely critical to succeed and to win.  In March, I had the opportunity to visit the historic amphibious ship USS Peleliu and watch operations of the 15th Marine Expeditionary Unit.  Peleliu has deployed time and time again across the globe, supporting Marines ready to engage any adversary.  

During the first insertion of conventional forces into Afghanistan in November 2001, it was Marines from Peleliu launched in Super Cobra and Huey helicopters and conducted one of the longest and most dramatic amphibious landings in the history of the Marine Corps.

During my visit about USS Peleliu, I had the opportunity to personally clear a Harrier for take-off and communicate with the pilots, and nearly get blown off the deck.  That experience reinforced for me the need for this unique vertical take-off and landing capability in the future, because it gives us the ability to take the fight to the enemy on short notice and with overwhelming firepower.

That's the reason the Department is pushing ahead with the development of the world's first supersonic stealth aircraft with short takeoff and vertical landing capabilities.  Earlier this year, I took the STOVL off probation – because the STOVL was meeting its requirements.  The Marines need a 5th generation fighter for the future and they will have it.    

Since becoming Secretary of Defense, I have also had the opportunity to take multiple MV-22 Osprey rides.  In Ospreys, I've landed on the shores of Camp Pendleton in California, near Ground Zero in Manhattan on the 10th anniversary of 9/11, and on the dusty plains of Helmand Province.  That unique aircraft embodies the agility, flexibility, and innovation that are at the heart of Marine Aviation.  And I have to tell you that you haven't lived until you've flown with Marine pilots who tell you not to worry when there are flashing lights appearing on the instrument panel.

     For all of these reasons, Marine Air is what we need for the future.  It is about agility.  It is about moving quickly.  It is about being flexible.  And it is about adapting for the future.

The future – for our military and for Marine Air – depends on innovative leaders.  It depends upon our ability to think creatively and to maintain our decisive technological edge.

Photo:  U.S. Marine Corp. World War I Aviation Insignia.  
Credit:  Wikimedia.
There is simply no force in the world that can match the Marine Corps' ability to conduct agile and flexible expeditionary operations.  There are no pilots anywhere that can match the relentless determination of Marine Aviators to take the fight to the enemy on the ground and in the air.  That has been true for the past 100 years, and it will be true for the next 100 years as well.

In the movie "The Bridges at Toko-Ri," the Admiral watches the pilots taking off for dangerous missions over Korea and asks, "Where do we get such men?"  They come from the heart and soul and guts of America.                           

To the entire Marine Aviation family, my deepest congratulations on a century of unequaled success and sacrifice.  In the last 100 years, we've gone from the B-1 clunker I talked about to Harriers and Ospreys, and Hornets and Snakes and Hueys and 53's and the veritable Battle Frog.  In the next 100 years, I have no idea what kind of planes or rockets or space ships or fighters we'll be flying.  But what I do know is that whatever the hell we're flying in these next 100 years, at the end, there will be one tough son of a bitch of a Marine flying it.

May God bless you, may God bless our Marine Corp Aviation and our Marine Corps aviators on this 100th anniversary.  And may God bless the United States of America.

U.S. BREAKS GROUND ON NEW EMBASSY IN LOAS

Photo:  Loas Countryside.  Credit:  Wikimedia. 
FROM:  U.S. STATE DEPARTMENT
United States Breaks Ground On New Embassy Compound in Laos
Media Note Office of the Spokesperson
Washington, DC May 18, 2012
The U.S. Embassy in Vientiane held a groundbreaking ceremony for the new U.S. Embassy Compound in Laos. Ambassador Karen B. Stewart presided at the occasion, accompanied by Mr. Phomma Khammanichanh, Director General of the Europe-America Department of the Foreign Affairs Ministry, in a confirmation of the strong ties between the two nations. Following local custom, the site of the future U.S. Embassy was blessed by monks from the neighboring Buddhist temple. A Cassia tree was planted to mark the celebration. Local village, district, city and central government officials attended the ceremony along with the U.S. Embassy community.

Situated on a seven-acre site, the multi-building complex will include a chancery, compound access points, and utility buildings. When completed, the new complex will provide embassy employees with a state-of-the-art workspace.

The new facility will incorporate numerous sustainable features, including lights that automatically dim to take advantage of daylight, low consumption water fixtures, rain gardens, and indigenous and adapted plant species for reduced irrigation demand. The facility’s design targets Leadership in Energy and Environmental Design (LEED®) Silver Certification by the Green Building Certification Institute.

The $109 million project will be constructed by B.L. Harbert International of Birmingham, Alabama and Page Southerland Page of Arlington, Virginia is the architect of record. The New Embassy Compound (NEC) is scheduled to be completed in summer 2014.
Since 1999, as part of the Department’s Capital Security Construction Program, the Bureau of Overseas Buildings Operations (OBO) has completed 89 new diplomatic facilities and has moved more than 27,000 people into safe, secure, and functional facilities. OBO has an additional 43 projects in design or construction, including the NEC in Vientiane.

COMBINED FORCES IN AFGHANISTAN SEIZE 200 LBS OF OPIUM

Picture:  The Sea Witch, 19th Century Opium Ship.  Credit:  Wikimedia
FROM:  AMERICAN FORCES PRESS SERVICE
Combined Force Seizes Opium Cache
From an International Security Assistance Force Joint Command News Release
KABUL, Afghanistan , May 18, 2012 - An Afghan and coalition security force discovered a drug cache of opium during a patrol in the Nahr-e Saraj district of Afghanistan's Helmand province yesterday, military officials reported.

The cache contained approximately 200 pounds of opium, officials said. Security forces confiscated the drugs without incident.

In May 15 Afghanistan operations:
-- A combined force discovered a weapons cache containing 30 mortar rounds, 30 mortar fuses, one grenade and several rocket-propelled grenades in the Burkah district of Baghlan province. The confiscated material was destroyed.

-- A combined force discovered a weapons and explosives cache containing two 107 mm rockets, multiple anti-tank mines, an improvised rocket launcher, one machine-gun tripod, one 12.7 mm machine gun, some 82 mm mortar ammunition and 66 gallons of liquid explosives in the Zurmat district of Paktiya province.

G-8 WORKS ON FOOD SECURITY AND NUTRITION

Photo:  Corn Field.  Credit:  Wikimedia
FROM:  U.S. STATE DEPARTMENT
G8 Action on Food Security and Nutrition
Fact Sheet
Bureau of Economic and Business Affairs
May 18, 2012
At the Camp David Summit, G8 and African leaders will commit to the New Alliance for Food Security and Nutrition, the next phase of our shared commitment to achieving global food security. In partnership with Africa’s people and leaders, our goals are to increase responsible domestic and foreign private investments in African agriculture, take innovations that can enhance agricultural productivity to scale, and reduce the risk borne by vulnerable economies and communities. We recognize and will act upon the critical role played by smallholder farmers, especially women, in transforming agriculture and building thriving economies.

The New Alliance for Food Security and Nutrition is a shared commitment to achieve sustained and inclusive agricultural growth and raise 50 million people out of poverty over the next 10 years by aligning the commitments of Africa’s leadership to drive effective country plans and policies for food security; the commitments of private sector partners to increase investments where the conditions are right; and the commitments of the G8 to expand Africa’s potential for rapid and sustainable agricultural growth. We welcome the support of the World Bank and African Development Bank, and of the United Nation’s World Food Program, International Fund for Agricultural Development, and Food and Agriculture Organization for the New Alliance. We also welcome the successful conclusion of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests in the context of National Food Security and support the broad-based consultation process and pilot use of the Principles of Responsible Agricultural Investment.

The New Alliance Will Build on and Help Realize the Promise of L’Aquila
Since the L’Aquila Summit, where we committed to “act with the scale and urgency needed to achieve sustainable global food security,” we have increased our bilateral and multilateral investments in food security and changed the way we do business, consistent with core principles of aid effectiveness. Based on the findings of the 2012 G8 Accountability Report and consistent with the Rome Principles on Sustainable Global Food Security, the G8 will agree to:
Promptly fulfill outstanding L’Aquila financial pledges and seek to maintain strong support to address current and future global food security challenges, including through bilateral and multilateral assistance;
Ensure that our assistance is directly aligned behind country plans;
Strengthen the coordination of G8 strategies, assistance and programs in-country and with partner countries to increase efficiencies, reduce transaction burdens, and eliminate redundancies and gaps.

The New Alliance will be rooted in partnership
To accelerate national progress in African partner countries, the G8 will launch New Alliance Cooperation Frameworks that align with priority activities within each partner’s Comprehensive Africa Agriculture Development Programme (CAADP) national investment plan and include predictable funding commitments, specific policy actions, and statements of intent from the private sector.

The G8 will partner with the African Union, New Partnership for Africa's Development and CAADP to implement the New Alliance, and leverage in particular the Grow Africa Partnership, in order to ensure our efforts build on African ownership, yield significant outcomes, and can be replicated across Africa. The G8 will work together to advance the objectives of the New Alliance and G-8 members will support its individual elements on a complementary basis.

To mobilize private capital for food security, the New Alliance will:
Support the preparation and financing of bankable agricultural infrastructure projects, through multilateral initiatives including the development of a new Fast Track Facility for Agriculture Infrastructure.
Support the Global Agriculture and Food Security Program (GAFSP), with the goal of securing commitments of $1.2 billion over three years from existing and new donors, scaling up and strengthening the operations of its public and private sector windows and support other mechanisms that improve country ownership and align behind CAADP national investment plans.
Report on the progress of G-8 development finance institutions in catalyzing additional private investment in African agriculture and increasing the range of financing options and innovative risk mitigation tools available to smallholder farmers and medium-sized agribusinesses.
Call on the World Bank, in collaboration with other relevant partners, to develop options for generating a Doing Business in Agriculture Index.
Announce the signing of Letters of Intent from over 45 local and multinational companies to invest over $3 billion across the agricultural value chain in Grow Africa countries, and the signing by over 60 companies of the Private Sector Declaration of Support for African Agricultural Development outlining their commitment to support African agriculture and public-private partnerships in a responsible manner.

To take innovation to scale, the New Alliance will:
Determine 10-year targets in partner countries for sustainable agricultural yield improvements, adoption of improved production technologies, including improved seed varieties, as well as post-harvest management practices as part of a value-chain approach, and measures to ensure ecological sustainability and safeguard agro-biodiversity.
Launch a Technology Platform with the Consultative Group on International Agricultural Research, the Forum for Agricultural Research in Africa and other partners in consultation with the Tropical Agriculture Platform and the Coalition for African Rice Development (CARD) initiative that will assess the availability of improved technologies for food commodities critical to achieve sustainable yield, resilience, and nutrition impacts, identify current constraints to adoption, and create a roadmap to accelerate adoption of technologies.
Launch the Scaling Seeds and Other Technologies Partnership, housed at the Alliance for a Green Revolution in Africa to strengthen the seed sector and promote the commercialization, distribution and adoption of key technologies improved seed varieties, and other technologies prioritized by the Technology Platform to meet established goals in partner countries.
Share relevant agricultural data available from G8 countries with African partners and convene an international conference on Open Data for Agriculture, to develop options for the establishment of a global platform to make reliable agricultural and related information available to African farmers, researchers and policymakers, taking into account existing agricultural data systems.
Launch an information and communications technology innovation challenge on extension services at the African Union Summit in July 2012.
Explore opportunities for applying the non-profit model licensing approach that could expand African access to food and nutritional technologies developed by national research institutions.

To reduce and manage risk, the New Alliance will:
Support the Platform for Agricultural Risk Management (PARM) to complete national agricultural risk assessment strategies, to be conducted by the World Bank and other international institutions in close partnership with New Alliance countries, with the mandate of identifying key risks to food and nutrition security and agricultural development and recommending options for managing these risks.
Create a global action network to accelerate the availability and adoption of agricultural index insurance, in order to mitigate risks to farmers, especially smallholder and women farmers, and increase income and nutritional security. This network will pool data and findings; identify constraints; support regional training and capacity-building; and accelerate the development of instruments appropriate for smallholders and pastoralists.
Recognize the need for Africa-based sovereign risk management instruments, recognizing the progress by the African Union and its member governments toward creating the African Risk Capacity, a regional risk-pooling facility for drought management.

To improve nutritional outcomes and reduce child stunting, the G8 will:
Actively support the Scaling Up Nutrition movement and welcome the commitment of African partners to improve the nutritional well-being of their populations, especially during the critical 1,000 days window from pregnancy to a child’s second birthday. We pledge that the G8 members will maintain robust programs to further reduce child stunting.
Commit to improve tracking and disbursements for nutrition across sectors and ensure coordination of nutrition activities across sectors.
Support the accelerated release, adoption and consumption of bio-fortified crop varieties, crop diversification, and related technologies to improve the nutritional quality of food in Africa.
Develop a nutrition policy research agenda and support the efforts of African institutions, civil society and private sector partners to establish regional nutritional learning centers.

To ensure accountability for results, the New Alliance will:
Convene a Leadership Council to drive and track implementation, which will report to the G8 and African Union on progress towards achieving the commitments under the New Alliance, including commitments made by the private sector.
Report to the 2013 G8 Summit on the implementation of the New Alliance, including the actions of the private sector, in collaboration with the African Union.

U.S. AND ISRAEL DISCUSS ISRAEL'S IRON DOME AIR DEFENSE SYSTEM

Photo:  Karmiel Israel.  Credit:  Wikimedia. 
FROM:  AMERICAN FORCES PRESS SERVICE 

Panetta: U.S.-Israel Security Cooperation Never Stronger

By Karen Parrish

WASHINGTON, May 17, 2012 - In talks today at the Pentagon, Defense Secretary Leon E. Panetta and his Israeli counterpart discussed Israel's Iron Dome air defense system.

The level of security cooperation between the United States and Israel has never been stronger, Panetta said in a statement after the meeting. One important example of that cooperation is U.S. support for Israel's Iron Dome, he added.

Iron Dome is a mobile air defense system that Israel began using last year to protect its civilian population against short-range rockets and artillery shells -- those fired from a distance of up to about 40 miles.

Panetta said that in line with President Barack Obama's guidance, he informed Israeli Defense Minister Ehud Barak the United States will provide the $70 million Israel requested for Iron Dome for fiscal 2012.

"This is assistance that, provided Congress concurs, we can [provide] quickly, to ensure [there is] no shortage in this important system," he added.

Panetta said the announcement of U.S. assistance for Iron Dome is "an important step and a reflection of the extraordinarily close defense relationship between our countries."

"My goal is to ensure Israel has the funding it needs each year to produce these batteries that can protect its citizens," the secretary said.

Through 2015, defense officials will request funds for the system based on yearly assessments of Israeli security requirements against an evolving threat, Panetta said. The United States already has provided $205 million in assistance for that system, he noted, and operational batteries have proven effective in defending against rocket attacks on Israel earlier this year.

"Iron Dome has already saved the lives of Israeli citizens, and it can help prevent escalation in the future," the secretary said. Ongoing support for the defense system reflects the United States' "rock-solid commitment to Israel's security," and comes on top of about $3 billion in other annual security assistance for Israel, he said.

Panetta said he and Barak also continued their regular dialogue involving topics of common interest to the two nations and their militaries. "I thank my good friend Minister Barak for his continued friendship and cooperation," the secretary said.

NEW JERSEY MAN CHARGED BY SEC WITH OPERATING A PONZI-LIKE REAL ESTATE SCHEME

Photo:  Wikimedia 

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., May 17, 2012 – The Securities and Exchange Commission today charged a New Jersey man with operating a Ponzi-like scheme involving a series of investment vehicles formed for the purported purpose of purchasing and managing rental apartment buildings in New Jersey and Pennsylvania.

The SEC alleges that David M. Connolly induced investors to buy shares in real estate investment vehicles he created through his firm Connolly Properties Inc. He promised investors monthly dividends based on cash-flow profits from rental income at the apartment buildings as well as the growth of their principal from the appreciation of the property. However, the real estate investments did not produce the projected dividends, and Connolly instead made Ponzi-like dividend payments to earlier investors using money from new investors. Connolly, who lives in Watchung, N.J., also siphoned off at least $2 million in investor funds for his personal use.

“David Connolly presented himself to investors as a successful real estate investment manager with a track record of paying consistent, high returns,” said George S. Canellos, Director of the SEC’s New York Regional Office. “In truth, Connolly’s operation was essentially a shell game intended to raise additional funds from new or existing investors in order to perpetuate his fraudulent scheme.”

The U.S. Attorney’s Office for the District of New Jersey, which conducted a parallel investigation of the matter, today announced that Connolly was indicted on one count of securities fraud among other criminal charges.

According to the SEC’s complaint filed in federal court in New Jersey, none of Connolly’s securities offerings in the investment vehicles were registered with the SEC as required under the federal securities laws. He began offering the investments in 1996 and ultimately raised in excess of $50 million from more than 200 investors in more than 25 investment vehicles. However, beginning in at least 2006, Connolly misrepresented to investors that their funds would be used exclusively for the property related to the particular vehicle in which they invested. Connolly instead commingled the funds in bank accounts that he alone controlled and used for a variety of purposes that weren’t disclosed to investors, including $2 million in payments he made to himself that vastly exceeded any dividends to which he would be entitled through his ownership stake. Between 2007 and 2010, Connolly also wrote checks to “cash” in excess of $2.5 million. Even after Connolly stopped making dividend payments to investors in April 2009, he still continued to pay himself dividends as well as a $250,000 “salary” out of investor funds.

The SEC alleges that Connolly lacked sufficient revenues from rental income at the apartment buildings, so he continued to raise millions of dollars for new investment vehicles. He used the funds to pay purported monthly cash-flow dividends in excess of 10 percent to investors in older investment vehicles. Connolly refinanced properties and improperly used the cash proceeds to continue the scheme, which ultimately collapsed in 2009 when new investor funds dried up and rental income was insufficient to support payments on the mortgages. The properties owned by the investment vehicles were forced into foreclosure, wiping out the equity of the investors.

The SEC’s complaint charges Connolly with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC’s complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The SEC’s investigation was conducted by Justin Smith and William Edwards in the New York Regional Office. Jack Kaufman will lead the litigation.

The SEC thanks the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, 

and the Internal Revenue Service for their assistance in this matter.

U.S. OFFICIAL SAYS DRUG TRAFFICKING THREATENS NATIONAL SECURITY

Photo:  Narcotics Pick-up.  Credit:  U.S. Navy.  
FROM:  AMERICAN FORCES PRESS SERVICE
Drug Trafficking Threatens National Security, Official Says
By Donna Miles
WASHINGTON, May 17, 2012 - Narcotics trafficking, because of its links to other forms of transnational organized crime, has become a major national security challenge that demands continued close collaboration among the Defense Department and its interagency and international partners, a senior defense official told Congress yesterday.

"A network of adversaries requires a network to defeat it," William F. Wechsler, deputy assistant secretary of defense for counternarcotics and global threats, told the Senate Caucus on International Narcotics Control.

Wechsler joined State Department and Drug Enforcement Administration officials at the caucus session to discuss broad federal cooperation under the umbrella of the national drug control strategy and national strategy to combat transnational crime.
The Defense Department supports law enforcement in three major ways, Wechsler explained: detecting and monitoring drug trafficking; sharing information, intelligence and analytic support; and helping countries build their own capacity to confront drug trafficking and related forms of transnational organized crime.

In addition, all six geographic combatant commands incorporate elements of the DOD counternarcotics program into their theater campaign plans, he said.

DOD, working through the combatant commands, military departments and defense agencies, provides "unique military platforms, personnel, systems and capabilities that support federal law enforcement agencies and foreign security forces involved in counternarcotics missions," Wechsler told the panel.

These efforts, in concert with U.S. law enforcement officials, also target terrorist groups worldwide that use narcotics trafficking to support terrorist activities, he said.

Noting the U.S. government's long history of helping to stem the flow of illicit drugs into the United States, Wechsler reported growing recognition that the focus must expand to encompass the broader challenge of transnational organized crime.

That concept is embodied in the national strategy to combat transnational organized crime, released in July. Wechsler called the strategy "a significant step forward" that recognizes transnational crime as a national security threat and seeks to galvanize every available tool to confront it.

"What we now see around the world are loose criminal networks that have diversified their illicit activities and also may have connections with other hostile actors, including terrorist groups, insurgencies and elements of rogue or hostile states," he said in his written testimony. As a result, he said, "these networked adversaries are able to have greater impact on the global security environment than in previous times."
Meanwhile, these networks are expected to evolve to exploit gaps in the global economy and in the defenses against them, he said.

The U.S. government's effectiveness in countering these hostile actors depends largely on its ability to operate as a network, Wechsler said, incorporating all its national security and law enforcement capabilities.

For the Defense Department, that will require continual adaptation to deal with the problem, he told the panel.

"Just as the Department of Defense has long sought to understand how hostile states support the armies that may confront us, we now have to understand how nonstate adversaries use narcotics trafficking and other types of crime to finance their terrorist and insurgent activities," he said.

This understanding, he said, will be needed to support what's expected to be a long-term challenge.

"For the foreseeable future," he said, "drug trafficking will continue to be the world's most lucrative criminal enterprise and therefore, the one with the greatest ability to fund terrorists, insurgents and other threats to our national security."

SHIPS IN FORMATION

FROM:  U.S. NAVY
Ships from Carrier Strike Group 8 are in formation at the end of a composite training unit exercise. U.S. Navy photo by Mass Communication Specialist 2nd Class Julia A. Casper (Released)