HAUS EVACUATED BECAUSE OF WALDO CANYON FIRE

FROM:  U.S. AIR FORCE SPACE COMMAND
Default Cutline BUCKLEY AIR FORCE BASE, Colo. -- Haus, a military working dog from the 10th Security Forces Squadron, waits in his kennel June 27, 2012. Haus is one of eight military working dogs recently evacuated from the U.S. Air Force Academy due to the Waldo Canyon Fire. (U.S. Air Force photo by Airman 1st Class Phillip Houk)  

Buckley lodges Air Force Academy military working dogs
by Airman 1st Class Phillip Houk
460th Space Wing Public Affairs
6/27/2012 - BUCKLEY AIR FORCE BASE, Colo.  -- Eight military working dogs and two handlers were given orders to evacuate the Air Force Academy June 26, and were relocated here where their dogs are currently being provided shelter.

Staff Sgt. Timothy Bailey, 10th Security Forces Squadron military working dog trainer, said, "Due to their sensitivity, the primary mission was to get the dogs out due to the smoke and possible fire."

As evacuation plans were being established, Tech. Sgt. Justin Baker, 460th SFS kennel master, reached out and began making arrangements for their fellow dog handlers to come here.

"I started calling the chain of command and got their full support. We were just helping out the Academy," Baker said. "It's what we do."

Evacuation began yesterday afternoon and  progressed without issue. Within two hours of arrival, the dogs were housed and their handlers were placed in the dormitories.

"It all went very smoothly," said Bailey. "We are very thankful that Buckley was able to set us up, because we were not sure what to do next."

In addition to housing military working dogs, Buckley has provided the Air Force Academy a fire truck to assist in structural fires as needed.

ESA Portal - Portugal - Rochas marcianas que chegaram à superfície mostram que houve água debaixo da superfície de Marte

ESA Portal - Portugal - Rochas marcianas que chegaram à superfície mostram que houve água debaixo da superfície de Marte

Supreme Court Upholds Health Care Law

Supreme Court Upholds Health Care Law

2ND GENERATION AEGIS BALLISTIC MISSILE DEFENSE SYSTEM INTERCEPT FLIGHT TEST

FROM:  U.S. NAVY
120627-N-ZZ999-003 PACIFIC OCEAN (June 27, 2012) A Standard Missile-3 (SM-3) Block 1B interceptor is launched from the guided-missile cruiser USS Lake Erie (CG 70) for the second time during a Missile Defense Agency test in the Pacific Ocean. The SM-3 Block 1B successfully intercepted a short-range ballistic missile target that had been launched from the Pacific Missile Range Facility, located on Kauai, Hawaii. (U.S. Navy photo/Released) 

Second-Generation Aegis Ballistic Missile Defense System Completes Second Successful Intercept Flight Test
From Missile Defense Agency Public Affairs
PACIFIC MISSILE RANGE FACILITY, Hawaii (NNS) -- The Missile Defense Agency (MDA) and Sailors of USS Lake Erie (CG 70) successfully conducted a flight test of the Aegis Ballistic Missile Defense (BMD) system June 26.

The test resulted in the intercept of a separating ballistic missile target over the Pacific Ocean by the Navy's newest missile defense interceptor missile, the Standard Missile-3 (SM-3) Block 1B.

At 11:15 pm Hawaii Standard Time (5:15 am EDT June 27), the target missile was launched from the Pacific Missile Range Facility, located on Kauai, Hawaii. The target flew on a northwesterly trajectory towards a broad ocean area of the Pacific Ocean. Following target launch, USS Lake Erie detected and tracked the missile with its onboard AN/SPY-1 radar. The ship, equipped with the second-generation Aegis BMD 4.0.1 weapon system, developed a fire control solution and launched the SM-3 Block IB missile.

Lake Erie continued to track the target and sent trajectory information to the SM-3 Block IB missile in-flight. The SM-3 maneuvered to a point in space, as designated by the fire control solution, and released its kinetic warhead. The kinetic warhead acquired the target, diverted into its path, and, using only the force of a direct impact, engaged and destroyed the threat in a hit-to-kill intercept.

Today's test event was the second consecutive successful intercept test of the SM-3 Block IB missile and the second-generation Aegis BMD 4.0.1 weapon system. The first successful SM-3 Block IB intercept occurred May 9, 2012. Today's intercept is a critical accomplishment for the second phase of the President's European Phased Adaptive Approach consisting of the SM-3 Block 1B interceptor employed in an Aegis Ashore system in Romania in 2015.

Initial indications are that all components performed as designed resulting in a very accurate intercept.

This was the 23rd successful intercept in 28 flight test firings for the Aegis BMD program. Across all Ballistic Missile Defense System programs, it is the 54th successful hit-to-kill intercept in 68 flight tests since 2001.

Aegis BMD is the sea-based midcourse component of the MDA's Ballistic Missile Defense System and is designed to intercept and destroy short to intermediate-range ballistic missile threats. The MDA and the U.S. Navy cooperatively manage the Aegis BMD Program.

SEC ALLEGES MISAPPROPRIATION OF ASSETS AND MARKET MANIPULATION SCHEME

FROM:  SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., June 27, 2012 — The Securities and Exchange Commission today filed fraud charges against New York-based hedge fund adviser Philip A. Falcone and his advisory firm, Harbinger Capital Partners LLC for illicit conduct that included misappropriation of client assets, market manipulation, and betraying clients. The SEC also charged Peter A. Jenson, Harbinger’s former Chief Operating Officer, for aiding and abetting the misappropriation scheme. Additionally, the SEC reached a settlement with Harbinger for unlawful trading.

In a separate, settled action, the SEC charged Harbert Management Corporation, whose affiliates served as the managing members of two Harbinger-related entities, as a controlling person in the market manipulation.

The SEC alleges that Falcone used fund assets to pay his taxes, conducted an illegal “short squeeze” to manipulate bond prices, secretly favored certain customers at the expense of others, and that Harbinger unlawfully bought equity securities in a public offering, after having sold short the same security during a restricted period.

“Today’s charges read like the final exam in a graduate school course in how to operate a hedge fund unlawfully,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.  “Clients and market participants alike were victimized as Falcone unscrupulously used fund assets to pay his personal taxes, manipulated the market for certain bonds, favored some clients at the expense of others, and violated trading rules intended to prohibit manipulative short sales.”

The SEC filed actions in U.S. District Court for the Southern District of New York against Falcone, Jenson, and Harbinger, and, in connection with the illegal trading scheme, separately instituted and settled administrative and cease-and-desist proceedings against Harbinger.

In particular, the SEC alleges that: Falcone fraudulently obtained $113.2 million from a hedge fund that he advised and misappropriated the proceeds to pay his personal taxes;

Falcone and two Harbinger investment managers through which Falcone operated manipulated the price and availability of a series of distressed high-yield bonds by engaging in an illegal “short squeeze;”

Falcone and Harbinger secretly offered and granted favorable redemption and liquidity rights to certain strategically-important investors in exchange for those investors’ consent to restrict redemption rights of other fund investors, and concealed the arrangement from the fund’s directors and investors; and

Harbinger engaged in illegal trades in connection with the purchase of common stock in three public offerings after having sold the same securities short during a restricted period.

“Not only are hedge fund managers expected to be savvy investors, they are supposed to serve the interests of their clients. Here, in addition to raiding a fund for personal benefit and cutting secret deals with favored investors, Falcone then lied to investors about what he had done,” said Bruce Karpati, Chief of the Asset Management Unit in the SEC’s Division of Enforcement.

Describing the illegal short squeeze, Gerald W. Hodgkins, Associate Director of the SEC’s Division of Enforcement said, “After he took control of an entire issue of high-yield bonds, Falcone kept buying with an eye toward rigging the market and punishing short sellers to settle a score. In the process, Falcone hijacked the market for the bonds and illegally manipulated their price and availability. The Division will continue to police the bond market to make sure it operates as an efficient market, free of the corrosive effects of manipulators such as Falcone.”

Misappropriation Scheme
In the misappropriation scheme, the SEC alleges that Falcone unlawfully used fund assets to pay his personal taxes. In 2009 Falcone owed federal and state authorities $113.2 million in taxes. Declining to pursue other financing options, such as pledging his personal assets as collateral for a bank loan, Falcone elected instead to take a $113.2 million loan from the Harbinger Capital Partners Special Situations Fund, L.P. – the same fund from which Harbinger had earlier suspended investors from redeeming.

Falcone authorized the transfer of fund assets to himself in a transaction that Jenson helped structure. Falcone and Harbinger never sought or obtained consent from investors prior to using the fund's assets to benefit Falcone.

As part of the misappropriation scheme, the SEC alleges that Falcone and Harbinger, aided by Jenson, made several material misrepresentations and omissions in seeking legal advice regarding the loan and in subsequent communications with investors, including, among other things:
the financing alternatives available to Falcone; the circumstances that led to Falcone’s need for the loan; the ability of the Special Situations Fund to furnish the loan, without disadvantaging investors;

the terms and conditions of the loan, including the interest rate charged and the amount of collateral posted by Falcone; and the role of Harbinger’s outside legal counsel in vetting the transaction.
The SEC also alleges that Falcone and Harbinger delayed disclosing the loan for approximately five months because of their concern that disclosure of Falcone’s financial condition might have a negative impact on investor withdrawals and on Falcone’s ability to attract more investments for other Harbinger funds. Falcone repaid the loan in 2011, after the Commission commenced its investigation.

Market Manipulation / Illegal Short Squeeze
In a separate civil action, the SEC alleges that from 2006 through early 2008 Falcone and two Harbinger investment management entities manipulated the market in a series of distressed high-yield bonds issued by MAAX Holdings Inc. In this fraudulent scheme, Falcone and the Harbinger entities allegedly orchestrated an illegal “short squeeze” – a market manipulation scheme in which an investor constricts the supply of a security, through large purchases or other means, with the intent of forcing settlement from short sellers at arbitrary and inflated prices.

The SEC’s complaint alleges that at Falcone’s direction, Harbinger purchased a large position in the MAAX bonds during April and June of 2006. After hearing rumors that a Wall Street financial services firm was shorting the MAAX bonds and also encouraging its customers to do the same, Falcone decided to seek revenge. In September 2006, Falcone directed the Harbinger-managed funds to buy every available bond in the market, often purchasing the bonds from short sellers. Ultimately, Falcone raised the funds’ stake to approximately 13 percent more than the available supply of the MAAX bonds.

At one point, Harbinger had purchased 22 million more bonds than MAAX had ever issued. Contemporaneously with these purchases, Falcone locked up the MAAX bonds the Harbinger funds had purchased in a custodial account at a bank in Georgia to prevent his brokers from lending out the bonds to sellers seeking to deliver the bonds to purchasers after short sales.

Having seized control of the supply of the MAAX bonds, Falcone then demanded that the Wall Street firm and its customers settle their outstanding MAAX short sales, not disclosing that it would be virtually impossible to find bonds available for delivery. The Wall Street firm bid daily for the bonds, which quickly doubled in price. Then, Falcone engaged in a series of transactions with certain short sellers at arbitrary, inflated prices, while at the same time valuing the funds’ holdings on his books at a small fraction of the prices he charged the covering short sellers.

Preferential Redemption Scheme
In its action alleging misappropriation, the SEC also alleges that in a further breach of Falcone and Harbinger’s fiduciary duties to their clients, Falcone and Harbinger engaged in unlawful preferential redemptions for the benefit of certain favored investors.

In 2009, while soliciting required investor approval to restrict withdrawals from another Harbinger fund, Falcone and Harbinger secretly exempted certain large investors that Falcone deemed to be strategically important from soon-to-be imposed liquidity restrictions – provided those investors voted to approve restrictions that would temporarily stabilize the decline in Harbinger’s assets under management.

Ultimately, pursuant to these ‘vote buying’ agreements, Falcone and Harbinger allegedly permitted these investors who were connected to certain favored institutional investors to withdraw a total of approximately $169 million. Harbinger concealed these quid pro quo arrangements from the independent directors and from fund investors.

Other Illegal Trading by Harbinger
In a separate administrative and cease-and-desist proceeding, the SEC found that between April and June 2009, Harbinger violated Rule 105 of Regulation M of the Securities Exchange Act of 1934 (Exchange Act). Rule 105 is an anti-manipulation rule that prohibits short selling securities during a restricted period and then purchasing the same securities in a public offering.

The Commission’s Order censures Harbinger and requires the firm to cease and desist from committing or causing any violations of Rule 105 now or in the future. Harbinger will pay disgorgement in the amount of $857,950, prejudgment interest in the amount of $91,838, and a civil monetary penalty in the amount of $428,975. Harbinger consented to the issuance of the Order without admitting or denying any of the Commission’s findings.

Settlement with Harbert Management Company
In a separate complaint also filed in U.S. District Court for the Southern District of New York, the SEC filed a settled civil action against Harbert and two related investment entities – HMC-New York Inc. and HMC Investors, LLC – for their role in the illegal short squeeze described above.

The SEC alleges in its complaint against Harbert that during the entire period of the short squeeze, Defendants Harbert, HMC-NY and HMC Investors, directly or indirectly, possessed the power to control Falcone and the investment managers through which he operated. HMC-NY and HMC Investors, two entities controlled by Harbert, served as the managing members of two limited liability companies that acted as the general partners of the funds advised by Falcone.

Harbert and its affiliates also provided hedge fund administrative, legal, compliance, risk assessment and other services to the funds. In these capacities, Harbert, HMC-NY and HMC Investors knew of Falcone’s trades in the MAAX bonds, but failed to take appropriate steps to address Falcone’s manipulative conduct. The SEC charged the Harbert defendants as controlling persons pursuant to Section 20(a) of the Exchange Act, alleging that they are jointly and severally liable for Falcone’s and the Harbinger investment managers’ violations of the antifraud provisions of the Exchange Act.

Without admitting or denying the allegations of the complaint, Defendants Harbert, HMC-NY and HMC Investors have agreed to pay a civil penalty in the amount of $1 million. The Harbert defendants also have consented to the entry of a judgment enjoining them from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The proposed settlement with Harbert is subject to approval by the court.

In the pending federal court actions concerning the first three fraudulent schemes described above, the Commission seeks a variety of sanctions and relief including injunctions against Falcone and Harbinger from violations of the anti-fraud provisions of the Securities Act of 1933, the Exchange Act, and the Investment Advisers Act of 1940.

In addition, the Commission seeks to enjoin Harbinger and Falcone from controlling any person who violates the anti-fraud provisions of the Exchange Act. As for monetary relief, the Commission seeks disgorgement of ill-gotten gains, prejudgment interest, and civil money penalties from Falcone and Harbinger. The Commission further seeks to prohibit Falcone from serving as an officer and director of any public company. Against Jenson, the Commission seeks to enjoin Jenson from aiding and abetting future violations of the anti-fraud provisions of the Exchange Act and Advisers Act and seeks to obtain monetary penalties.

The SEC’s investigation was a coordinated effort between teams from the SEC’s headquarters and the New York Regional Office, including Conway T. Dodge, Jr., Robert C. Besse, Ken C. Joseph, Mark Salzberg, Brian Fitzpatrick, and David Stoelting. Messrs. Joseph, Salzberg, and Fitzpatrick are members of the Enforcement Division’s Asset Management Unit. Mr. Stoelting and David Gottesman will lead the SEC’s litigation team.

MILITARY FAMILIES OFFERED FREE ANNUAL PASS TO NATIONAL PARKS

FROM:  AMERICAN FORCES PRESS SERVICE
National Park Service Offers Military, Families Free Annual Pass
By Amaani Lyle
WASHINGTON, June 27, 2012 - The National Park Service extends free annual park passes far beyond the droves of Pentagon employees who lined up to take advantage of the offer today.

Through its America the Beautiful series, the National Park Service grants complimentary access to more than 2,000 federal recreation sites, national parks and wildlife refuges to active duty service members and activated Guardsmen and reservists and their families, said Kathy Kupper, National Park Service spokeswoman.

"The park service is just so grateful for the service of the military, so we've been looking for a way to show our gratitude," Kupper said. "It's taken a couple of years to get all the details worked out, but we're honored that we can pay back a little bit."
Service members can get a pass, valued at $80, by showing their military identification card. Family members can obtain their own passes, even if the service member is deployed or if they are traveling separately, Kupper explained.

A pass covers entry and standard amenity fees for a driver and all passengers in a personal vehicle at per-vehicle fee areas, or up to four adults at sites that charge per person. Children age 15 or under are admitted free. Wounded warriors or any American citizen with a disability can get a free lifetime pass to all national parks.

A 25-year National Park Service employee, Kupper recalled the organization's decades-long military ties, specifically to the Army, which oversaw national parks between the 1876 establishment of Yellowstone, the first national park, and the 1916 stand-up of NPS.
"For about 40 years, you had the U.S. Army, particularly the U.S. Cavalry, including Buffalo Soldiers, care for our first national parks," Kupper said. "Yellowstone, Yosemite, Sequoia and Kings Canyon all had roads set up, built, with trails established and wildlife protected ... by the U.S. Army."

Kupper added that even park ranger uniforms are inspired by the cavalry uniform, symbolizing the enduring bond.

"Many national parks were set aside for use strictly by military, whether for rest and relaxation trips ... or for training," the spokeswoman said, adding that through the years, the parks have been home to some of America's most iconic images of freedom.
"Our service members are fighting to protect our freedoms and a lot of them are manifested in these symbols like the Statue of Liberty, the Liberty Bell, Mount Rushmore -- all sites cared for by the Park Service," Kupper said. "These places inspire the military and remind them what they're fighting for so where better for them and their families to visit?"

SEC. OF DEFENSE PANETTA ANNOUNCES $60 MILLION IN GRANTS TO MILITARY SCHOOLS

FROM:  AMERICAN FORCES PRESS SERVICE
Panetta Announces $60M in Grants to Military Schools
By Lisa Daniel
GRAPEVINE, Texas, June 27, 2012 - The Defense Department recently awarded $60 million to three public schools on two military installations, the latest example of its efforts to invest in the education of military children, Defense Secretary Leon E. Panetta said at an education seminar here today.

The grants, to schools serving children at Fort Bliss, Texas, and Joint Base Lewis-McChord, Wash., are the first -- with more to come this summer – of a $500 million congressional appropriation for the department to improve facilities at 161 public schools on military installations, Panetta announced at the Military Child Education Coalition's 14th national seminar.

DOD also has awarded an additional $180 million in grants to more than 900 public schools that support 80 percent of the 1.5 million school-age military children, the secretary said. It has done that while also strengthening and modernizing the Department of Defense Education Activity schools, which serve 86,000 military children, he added.
"Educating military children is not only important to their future – and it is important their future – but it's critically important to the future of our military and our nation," Panetta told seminar participants. The coalition works to improve the education of all school-age military children, whether they are in DOD, public or private schools.

To underscore his point, Panetta noted that he is joined at the two-day seminar in this Dallas suburb by the chairman of the Joint Chiefs of Staff, the chiefs of the Army, Navy and Air Force, and the vice commandant of the Marine Corps.

"That tells you a lot," he told the hundreds of participants. "What you do relates to our ability to carry out the mission of defending the country. We are all here to say 'thank you.'
"In a democracy, we are dependent on good education," he added. "Education is the key to self-governance, the key to opportunity, the key to equality; and education is the key to freedom. It is the key to a better life."

Panetta told of his own parents' immigration thousands of miles from their home in Italy to the United States, where his father's occupation was marked as "peasant" at Ellis Island, N.Y., all so their children could have a better life.

"That's the American dream," he said. "That's what all of us want for our children, and hopefully what they want for their children."

Helping to give future generations a better quality of life goes to the very heart of the military and what everyone at the seminar is doing, Panetta said, and a quality education is essential to a better life.

"I've long believed this country has an obligation to make education a top national priority," the secretary told the audience, adding that he has tried to do that in his four decades in government.

"I would not be here as secretary of defense were it not for the opportunities given to me by education," he said. "Now, as secretary of defense, I'm determined to do everything possible to give our military children the tools they need to succeed in the future."
About 44 percent of service members are parents, and they consistently rate the availability of quality education for their children as a high priority in their career decisions, Panetta said. "The quality of education available to our military children affects our overall readiness, our retention, and it affects the very morale of our force," he added.
"In equipping our military children with the best education, the best knowledge, the best skills they need for the future, the department is investing in its own future," he said. "Many of these young men and women will follow in the tracks of their parents and join the military themselves."

Education also is a national security priority, Panetta said, causing the department to support efforts such as those by the National Math and Science Initiative to build technical proficiency and to emphasize the need for foreign language skills.

"Our military is better able to defend our country when we address the long-term education needs of those who serve and their children," the secretary said.
Military children have many challenges, Panetta noted. More than a million have had a parent deploy to combat since 2001, and many are forever changed by war, he said. Most will move six to nine times before they graduate from high school, and 195,000 of them have special needs, he said.

The department can't meet the education needs of military children without the "active support and cooperation of all the stakeholders" – teachers, parents, community leaders, and state and local governments, the secretary said. Through such partnerships, the department has prompted 43 state governments to pass laws easing the transfer of school credits for military children as they move from state to state and from outside the country, he added.

"I want you to know that the Department of Defense has listened," he said. "It's not always easy to get that big bureaucracy to listen, but we have listened -- to school districts to organizations, to parents -- and we've listened to you. We will continue to fight to give our military children the best in educational opportunities."

DOD AND IMPORTANCE OF PTSD TREATMENT FOR SERVICE MEMBERS

FROM:  AMERICAN FORCES PRESS SERVICE 
Officials Say Progress Must Continue in PTSD Treatment
By Terri Moon Cronk
WASHINGTON, June 27, 2012 - Great strides have been made in treating service members with post-traumatic stress disorder, but progress must continue, military and medical leaders told an audience here today. The military's three surgeons general and the Army's senior sergeant major spoke at an event to mark the third-annual National Post Traumatic Stress Disorder Awareness Day.

Raymond Chandler III, the sergeant major of the army, called himself the poster child of someone with PTSD who is concerned about the stigma associated with seeking treatment, something which he says is an on-going issue for many.

His first brush with a life-threatening event in Iraq became life-altering, he said, adding that it caused him to do things that led to a "downward spiral."  For example, during his post-deployment health risk assessment, he wasn't completely honest about his situation because he was being redeployed.

"I felt that if I said truthfully what happened and what I was feeling, I wouldn't be able to succeed and move on. I've come a long way since 2005," he added, noting that he had turned off a good part of his life -- the emotional, spiritual and physical elements to deal with being the professional soldier.

Chandler finally entered a two-week behavioral health program which he said made a significant difference.

In 2011, when he interviewed with then-Army Chief of Staff Gen. George W. Casey Jr. for the job as Sergeant Major of the Army, he said Casey was glad to have him onboard with his experience in PTSD counseling, because Chandler could speak to the challenges and treatment.

Chandler got the job and went on to tell his story to service members and families.
"I think we've made a difference," Chandler said. "I know in many of our soldiers' lives and the many challenges of the past 10 years, we've made tremendous strides in our behavioral health care access, and our care and quality of care, [but] we still have a long way to go."

"I believe we will work through this and we will be better as a nation," he said.
Army Surgeon General Lt. Gen. Patricia D. Horoho told the audience "As a society in military medicine we must be able to provide care for the invisible wounds of war in the long run. As a nation, it is our opportunity to partner and lead the way in breaking the silence [of the invisible wounds].".

"While it is difficult to ask [for help], it is more difficult, and frankly, tragic to lose a loved one ... to suicide or any high-risk behavior," Horoho said. "Soldiers and families must come to realize that [cases of PTSD] resulting from deployment are curable with the proper care."

The majority of service members with PTSD return to productive and engaging lives, and remain on active duty, she said.

"We will not leave anyone behind," Horoho vowed.

Navy Surgeon General Vice Adm. Matthew Nathan said it "takes a village" to conquer PTSD -- and it begins with awareness across the military, the Department of Veterans Affairs, and the private sector.

Nathan, who also is the chief of the Navy's Bureau of Medicine and Surgery, said he is encouraged by the embedded teams of mental health care providers who treat service members, and that service members know what to look for in their battle buddies for signs of PTSD.

Air Force Surgeon General Lt. Gen. Charles Green noted that the good news is that there is recovery from PTSD, and veterans have access to the very best evidence-based care in both the Defense Department and the Department of Veterans Affairs.

"The hard part is choosing to share your experience, and choosing to recover from something you might not recognize, Green said, noting that more than 75 percent of service members treated for PTSD are returned to active duty.

COMPANY SETTLES CHARGES OF ALLEGED BRIBERY

FROM:  SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., June 27, 2012 –The Securities and Exchange Commission today charged that FalconStor Software, Inc., a Long Island, N.Y., data storage company, misled investors about bribes it paid to obtain business with a subsidiary of J.P. Morgan Chase & Co.

FalconStor admitted to the bribery scheme and agreed to pay a $2.9 million penalty and to institute enhanced compliance measures to settle the SEC’s civil lawsuit, filed in U.S. District Court for the Eastern District of New York. The settlement is subject to court approval. FalconStor will pay an additional $2.9 million as part of a deferred prosecution agreement with the U.S. Attorney’s Office for the EDNY, which filed a related criminal case against the Melville, N.Y., company.

According to the SEC, FalconStor’s now deceased co-founder, chairman, and former chief executive ordered the bribes, which were paid to three executives of the subsidiary, JPMorgan Chase Bank, National Association, and their relatives, starting in October 2007. Lavish entertainment at casinos, and payments in cash, traveler’s checks, gift cards, and grants of FalconStor options and restricted stock, helped FalconStor secure a multi-million dollar contract with the J.P. Morgan Chase subsidiary, the SEC said.

The J.P. Morgan Chase subsidiary became one of FalconStor’s largest customers and FalconStor touted the relationship in earnings calls and releases as proof of the strength of its products and its strides in moving to direct sales rather than relying on third-party distributors. The SEC said FalconStor never told investors about the bribes and inaccurately recorded the payments as “compensation,” “sales promotion,” or “entertainment” expenses.

“FalconStor overstepped the bounds in its pursuit of business. This case shows that when such conduct results in securities law violations, the Commission will not hesitate to hold wrongdoers accountable,” said David Rosenfeld, Associate Director of the SEC’s New York Regional Office, adding, “FalconStor claimed the contract was a vindication of the company’s technology, but neglected to tell investors that the contract derived from the bribes that it paid.”

FalconStor’s CEO resigned in September 2010, after admitting that he had been involved in improper payments to a customer, and FalconStor’s stock fell by more than 22 percent on the news.

According to the SEC’s complaint, FalconStor made materially misleading statements in earnings releases filed with the SEC in April 2008 and February 2009. The SEC said FalconStor also granted restricted stock and options to relatives of two of the JP Morgan Chase executives even though they provided no bona fide services to the company, making the grants ineligible under FalconStor’s incentive stock plan. In addition, the SEC said FalconStor failed to accurately record the expenses associated with the bribes on its books and records, and lacked effective internal controls to detect or prevent bribery, which violated state law and FalconStor’s own policies. The complaint charges FalconStor with violating the books-and-records and internal controls provisions of U.S. securities laws, and violations of the offering registration provisions and certain antifraud provisions.

The SEC thanks the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation for their assistance in this matter, and acknowledges the cooperation of the New York County District Attorney’s Office in the investigation.

Leslie Kazon, Joseph P. Ceglio, Christopher C. Mele, and Preethi Krishnamurthy of the SEC’s New York Regional Office conducted the SEC’s investigation.

THE HORNET IN THE HANGER

An F/A-18C Hornet is in the hangar bay of the aircraft carrier USS Nimitz (CVN 68). Nimitz is underway conducting carrier qualifications in preparation for Rim of the Pacific (RIMPAC) 2012, the world'??s largest international maritime exercise. U.S. Navy photo by Mass Communication Specialist 3rd Class Ian A. Cotter (Released) 120625-N-IR734-00

U.S. EXPORT-IMPORT BANK GRANTS LOAN OF $75.7 MILLION FOR HELICOPTER EXPORT TO BRAZIL

Map Credit:  Wikimedia/CIA
FROM:  U.S. EXPORT-IMPORT BANK
Ex-Im Approves $75.7 Million in Financing for Export of U.S. Helicopters to Brazil
Washington, D.C. – The Export-Import Bank of the United States (Ex-Im Bank) has authorized a $75.7 million loan guarantee for Líder Taxi Aéreo S.A.—Air Brasil that will support the export of three Sikorsky Aircraft Corporation S-92® helicopters to Brazil.

Ex-Im Bank 's support enabled Sikorsky to win the order in competition with government-backed European competitors and will sustain approximately 500 jobs at the company’s facilities in Connecticut and Pennsylvania.

Likewise, the loan guarantee has proved to be an invaluable resource for Líder Taxi, which had insufficient access to financing on acceptable terms to purchase the helicopters.

“The financing support for these helicopters illustrates the unique ability of Ex-Im Bank to provide essential financing to ensure American exporters can compete in the international marketplace,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “Our support leveled the playing field and kept 500 highly-skilled American workers on the job.”

Headquartered in Stratford, Conn., Sikorsky Aircraft Corporation is a manufacturer of commercial and military helicopters. Its S-92 model is a heavy-mission helicopter designed for offshore transport, medical emergencies, and search-and-rescue missions.

“The Export-Import Bank of the U.S. often plays a vital role in the sale of Sikorsky commercial helicopters to the offshore oil and gas industry worldwide,” said Bob Kokorda, Sikorsky vice president for sales and marketing. “These three S-92 helicopters will enable Líder Taxi to fly Brazilian workers to offshore rigs in deeper water farther from shore. And they will help maintain a healthy U.S.-based supply chain for the aircraft while sustaining a highly skilled workforce at our helicopter manufacturing facilities in the United States.”

Líder Taxi, established in 1958 and the largest air taxi company in Brazil, plans to use the helicopters to shuttle personnel and equipment to offshore oil platforms.

The transaction is the sixth Ex-Im Bank has approved since 2004 with the Belo Horizonte-based company.

Brazil is one of Ex-Im Bank’s nine key markets and accounted for $2.7 billion of the Bank’s worldwide credit exposure at the end of FY 2011.

ISAF JOINT COMMAND NEWS RELEASE JUNE 27, 2012

Photo:  Blackhawk Helicopter Flying Over Afghanistan.  Credit:  U.S. Air Force. 

FROM:  AMERICAN FORCES PRESS SERVICE

Combined Force Detains Taliban Weapons Facilitator

Compiled from International Security Assistance Force Joint Command News Releases

WASHINGTON, June 27, 2012 - An Afghan and coalition security force detained a Taliban weapons facilitator in the Zharay district of Kandahar province today, military officials reported.

Officials said the facilitator coordinated the transportation and storage of equipment and supplies used in insurgent attacks across the region.

The security force also detained several suspected insurgents, officials said.

In other Afghanistan operations today:

-- In the Tsamkani district of Paktiya province, a combined force searching for a Haqqani leader called in an airstrike that killed several insurgents. The leader is responsible for coordinating, financing and leading attacks against Afghan and coalition forces. No civilians had been harmed and no property had been damaged.

-- A combined force detained a Haqqani leader and several suspected insurgents in the Sharan district of Paktika province. The detained Haqqani leader was responsible for building improvised explosive devices used throughout the region. He also provided IED instruction to other Haqqani insurgents.

In June 26 operations:

-- A combined force killed multiple insurgents, detained several others and seized a weapons cache containing six rocket-propelled grenades, six IEDs, some homemade explosives, eight AK-47 rifles, one machine gun, three grenades, and communications equipment in the Shahid-e Hasas district of Uruzgan province.

-- A combined force killed one insurgent during a firefight in Ghazni province's Gelan district.

-- Coalition forces killed two insurgents in the Qarah Bagh district of Ghazni province.

-- A combined force detained two insurgents in Khowst province's Sperah district.

-- A combined force discovered a cache containing some RPGs in Khowst province's Nadir Shah Kot district.

-- A combined force killed six insurgents and detained three others in Logar province's Pul-E Alam district.

-- A combined force detained 12 insurgents in Nangarhar province's Khugyani district.

-- Afghan police and coalition forces discovered a cache containing several mortar rounds in the Deh Bala district of Nangarhar province.

-- Afghan police and coalition forces detained three insurgents in Parwan province's Bagram district.

-- Afghan soldiers and coalition forces killed one insurgent in the Siaghird district of Parwan province.

And on June 24, a combined force captured an insurgent leader in the Tarin Kot district of Uruzgan province. The detained insurgent had planned, directed and executed attacks against Afghan and coalition forces.