FROM: U.S. JUSTICE DEPARTMENT
Wednesday, August 7, 2013
Former Sevierville, Tenn. Resident Convicted of Tax Evasion
The Justice Department and the Internal Revenue Service (IRS) announced today that Jimmie Duane Ross of Lehi, Utah, and formerly of Sevierville, Tenn., was convicted today of five counts of tax evasion following a jury trial in the U.S. District Court for the Eastern District of Tennessee.
According to the indictment and evidence produced at trial, Ross won a monetary award of approximately $840,000 in 1999 after arbitration of an employment dispute with a former employer. Ross thereafter failed to pay the full amount of his income tax due and owing for 1999 and evaded the tax by filing a false mortgage on his residence, filing a false lien on his vehicle, dealing extensively in cash and directing funds to an offshore account. In addition, from 2004 through 2007, Ross earned commission income for referring clients to a purported Nevis-based investment company and evaded his taxes by using nominees and other means.
Following the jury verdict, U.S. District Judge R. Leon Jordan ordered that Ross be detained and scheduled the sentencing for Jan. 14, 2014. On each of the five counts of conviction, Ross faces a maximum sentence of five years in prison and a maximum fine of $250,000.
The case was investigated by Special Agents of IRS – Criminal Investigation. Trial Attorneys Kevin Lombardi and Kimberly Shartar of the Justice Department’s Tax Division prosecuted the case.
Sunday, August 11, 2013
BUSINESSMAN SETTLES FALSE CLAIM ALLEGATIONS OF FRAUD INVOLVING THE E-RATE PROGRAM
FROM: U.S. DEPARTMENT OF JUSTICE
Tuesday, August 6, 2013
Texas Businessman Agrees to Settle False Claims Allegations Involving the E-Rate Program
Larry Lehmann of Giddings, Texas has agreed to pay $400,000 to settle allegations that he violated the False Claims Act in connection with the Federal Communications Commission’s E-rate Program, the Department of Justice announced today. The E-rate Program, created by Congress in the Telecommunications Act of 1996, subsidizes eligible equipment and services to make Internet access and internal networking more affordable for public schools and libraries. The Houston Independent School District (HISD) was one of the applicants that successfully sought and received E-rate subsidies from 2004 through 2006.
“The E-rate Program provides vital support for our nation’s students and schools,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice. “We are committed to protecting the integrity of this important program, which helps our children connect to the digital world.”
“Our office is committed to protecting the integrity of government initiatives,” said U.S. Attorney Kenneth Magidson. “We will continue to work closely with the Department in cases such as this one to ensure the E-rate and other federal programs are free from fraudulent and deceitful claims.”
Lehmann functioned as the CEO and managing partner of Acclaim Professional Services (Acclaim), which partnered with other companies to provide E-rate funded equipment and services to HISD during this period. The United States contended that, in violation of E-rate competitive bidding requirements and HISD procurement rules, Lehmann provided gifts and loans to HISD employees, including tickets to sporting events and two loans totaling $66,750 to an HISD employee who was involved in the procurement and administration of HISD’s E-rate projects.
The United States also alleged that Lehmann helped devise a scheme in which HISD outsourced some of its employees to Acclaim, which allowed them to continue to work for HISD while passing the cost on to the E-rate Program. The United States further alleged that, with Lehmann’s approval, Acclaim hid the cost of these employees in its E-rate Program invoices by rolling them into the cost of eligible goods and services.
The settlement with Lehmann is part of a broader investigation by the United States of E-rate funding requests submitted by HISD and the Dallas Independent School District (DISD). The government previously recovered $16.25 million from Hewlett-Packard, $850,000 from HISD, and $750,000 from DISD. The government’s investigation was initiated, in part, by a qui tam or whistleblower lawsuit filed under the False Claims Act by Dave Richardson and Dave Gillis, who investigated allegations of improprieties based on Richardson’s experience bidding for contracts at HISD and DISD. The False Claims Act authorizes private parties to file suit for false claims on behalf of the United States and share in the government’s recovery. The United States intervened in Richardson and Gillis’ lawsuit, and added Lehmann as a defendant.
“E-rate is one of the FCC’s biggest success stories, helping connect nearly every U.S. library and school to the Internet,” said Julie Veach, Chief of the FCC Wireline Competition Bureau. “We take any abuse of our rules seriously and thank the Department of Justice for their assistance in protecting the integrity of the E-rate Program for students, teachers, and libraries across the country. Today’s action is a signal to those interested in profiting at the expense of our nation’s schools and libraries: fraud doesn’t pay.”
This case was handled by the U.S. Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas, and the FCC’s Office of the Inspector General and Office of the General Counsel.
Tuesday, August 6, 2013
Texas Businessman Agrees to Settle False Claims Allegations Involving the E-Rate Program
Larry Lehmann of Giddings, Texas has agreed to pay $400,000 to settle allegations that he violated the False Claims Act in connection with the Federal Communications Commission’s E-rate Program, the Department of Justice announced today. The E-rate Program, created by Congress in the Telecommunications Act of 1996, subsidizes eligible equipment and services to make Internet access and internal networking more affordable for public schools and libraries. The Houston Independent School District (HISD) was one of the applicants that successfully sought and received E-rate subsidies from 2004 through 2006.
“The E-rate Program provides vital support for our nation’s students and schools,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice. “We are committed to protecting the integrity of this important program, which helps our children connect to the digital world.”
“Our office is committed to protecting the integrity of government initiatives,” said U.S. Attorney Kenneth Magidson. “We will continue to work closely with the Department in cases such as this one to ensure the E-rate and other federal programs are free from fraudulent and deceitful claims.”
Lehmann functioned as the CEO and managing partner of Acclaim Professional Services (Acclaim), which partnered with other companies to provide E-rate funded equipment and services to HISD during this period. The United States contended that, in violation of E-rate competitive bidding requirements and HISD procurement rules, Lehmann provided gifts and loans to HISD employees, including tickets to sporting events and two loans totaling $66,750 to an HISD employee who was involved in the procurement and administration of HISD’s E-rate projects.
The United States also alleged that Lehmann helped devise a scheme in which HISD outsourced some of its employees to Acclaim, which allowed them to continue to work for HISD while passing the cost on to the E-rate Program. The United States further alleged that, with Lehmann’s approval, Acclaim hid the cost of these employees in its E-rate Program invoices by rolling them into the cost of eligible goods and services.
The settlement with Lehmann is part of a broader investigation by the United States of E-rate funding requests submitted by HISD and the Dallas Independent School District (DISD). The government previously recovered $16.25 million from Hewlett-Packard, $850,000 from HISD, and $750,000 from DISD. The government’s investigation was initiated, in part, by a qui tam or whistleblower lawsuit filed under the False Claims Act by Dave Richardson and Dave Gillis, who investigated allegations of improprieties based on Richardson’s experience bidding for contracts at HISD and DISD. The False Claims Act authorizes private parties to file suit for false claims on behalf of the United States and share in the government’s recovery. The United States intervened in Richardson and Gillis’ lawsuit, and added Lehmann as a defendant.
“E-rate is one of the FCC’s biggest success stories, helping connect nearly every U.S. library and school to the Internet,” said Julie Veach, Chief of the FCC Wireline Competition Bureau. “We take any abuse of our rules seriously and thank the Department of Justice for their assistance in protecting the integrity of the E-rate Program for students, teachers, and libraries across the country. Today’s action is a signal to those interested in profiting at the expense of our nation’s schools and libraries: fraud doesn’t pay.”
This case was handled by the U.S. Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas, and the FCC’s Office of the Inspector General and Office of the General Counsel.
GENES BY THE NUMBERS
u.s.+national+institutes+of+health-wikimedia,+pd..jpg) |
| Photo: DNA. Credit: NIH/Wikimedia. |
Genomic and computational tools provide window to distant past
Out of the estimated 23,000 or more genes in the human genome, about 100 of them will differ--they will be present or not--between any two individuals. Genes lost or gained over time result from evolution and adaptation, as species respond through the years to their environment and other influences.
The availability of genomic sequences now allows scientists to study the presence or absence of whole genes among individuals and between species, and the impact of such changes for evolution.
Some individuals, for example, have a sharper sense of smell than others because they have more copies of olfactory receptor genes, which allow them to detect a wider range of odors. Others, especially those who live in societies with starchy diets, have more copies of the gene responsible for producing amylase, an enzyme in saliva that breaks down starch.
"There have been lots of changes, and we want to know which ones might have been involved in human adaptation," says Matthew Hahn, an associate professor of biology and informatics at Indiana University at Bloomington. "The comparison of whole genomes has revealed large and frequent changes in the size of gene families. Comparative genomic analyses allow us to identify large-scale patterns of change in gene families, and to make inferences regarding the role of natural selection in gene gain and loss."
Using computer models and available genomic data, Hahn studies the differences in genes among humans and other species, and compares them, in order to better understand the timeline of genetic changes and adaptation throughout our history. By developing computational and statistical tools to analyze whole genomes, Hahn and his team are learning new things about the evolution of gene regulation and gene families, human genomic history, and the evolution of phenotypically important genes.
"We can't go back in time, but we can use current species to get a pretty good estimate of what the ancestors looked like, and to get some ideas of what changes occurred and the order of these changes," he says.
The scientists are examining all the genes in the genome, and focusing on differences among species, such as chimpanzees and other primates compared to humans. "There's a 6 percent difference between humans and chimps in the genes they have," he says. "In the end, after 6 million years of being separate, we don't have exactly the same set of genes as chimps. How and when did those differences occur?"
Hahn is conducting his research under a National Science Foundation (NSF) Faculty Early Career Development (CAREER) award, which he received in 2009 as part of NSF's American Recovery and Reinvestment Act funding. The award supports junior faculty who exemplify the role of teacher-scholars through outstanding research, excellent education and the integration of education, and research within the context of the mission of their organization. He is receiving about $1 million over five years.
The work could have wide-ranging applications in diagnosing and treating diseases, since many illnesses and conditions arise from genetic mutations, including the duplication or loss of important genes.
"There is a lot of interest in trying to associate these changes to human diseases," Hahn says. "There are diseases that are caused when you lose or even gain a gene, not just affecting smell or the ability to digest starch. A lot of the genes that differ in copy number are genes involved in our immune response, and these are obvious candidates for the genetic changes underlying differences in disease susceptibility among individuals. By understanding normal variation in gene copy-number, we hope to be able to better recognize changes that may be detrimental to human health."
The researchers often start by examining the differences in the number of copies of different genes among individual humans.
"The 1,000 Genomes Project (an international research effort, launched in 2008, to establish the most detailed catalogue of human genetic variation) has allowed us to study the full genetic complement of genes in a wide variety of human populations, from all of the inhabited continents," he says. "We find differences between individuals within populations and among populations, largely recapitulating the known relationships among humans.
"But we also find population-specific changes in genes that have allowed us to adapt to our surroundings," he adds. "These changes have involved both the adaptive gain and adaptive loss of genes, and are associated with important phenotypic differences among individuals."
To understand the differences shared among all humans, and that distinguish us from our ancestors, the researchers then compare the full complement of genes to those of other primates, including chimpanzees, orangutans, macaques and marmosets.
"These comparisons, and similar ones to other new genomes that are being sequenced all the time, allow us to make strong inferences about what our common ancestral genome looked like, and, therefore, the changes that have occurred along the human lineage," he says.
Such genetic changes are highly likely to have been involved in human-specific adaptations, for example, humans' increased cranium size, according to Hahn.
"Having these genomic and computational tools gives us a window into the distant past that we otherwise would not have had," he says.
-- Marlene Cimons, National Science Foundation
Investigators
Saturday, August 10, 2013
CDC REPORTS OBESITY DECLINES AMONG LOW-INCOME PRESCHOOLERS IN SEVERAL STATES
FROM: CENTERS FOR DISEASE CONTROL AND PREVENTION
Obesity among low-income preschoolers declines in many states
Nineteen states and territories report decreases in obesity among this group
After decades of rising rates, obesity among low-income preschoolers declined slightly in 19 states and U.S. territories from 2008 through 2011, according to the latest Vital Signs report from the Centers for Disease Control and Prevention.
The report found that Florida, Georgia, Missouri, New Jersey, South Dakota, and the U.S. Virgin Islands saw at least a one percentage point decrease in their rate of obesity. Twenty states and Puerto Rico held steady at their current rate. Obesity rates increased slightly in three states.
Previous research shows that about one in eight preschoolers is obese in the United States. Children are five times more likely to be overweight or obese as an adult if they are overweight or obese between the ages of three and five years.
“Although obesity remains epidemic, the tide has begun to turn for some kids in some states,” said CDC Director, Tom Frieden, M.D., M.P.H. “While the changes are small, for the first time in a generation they are going in the right direction. Obesity in early childhood increases the risk of serious health problems for life.”
“Today’s announcement reaffirms my belief that together, we are making a real difference in helping kids across the country get a healthier start to life,” said First Lady Michelle Obama. “We know how essential it is to set our youngest children on a path towards a lifetime of healthy eating and physical activity, and more than 10,000 childcare programs participating in the Let’s Move! Child Care initiative are doing vitally important work on this front. Yet, while this announcement reflects important progress, we also know that there is tremendous work still to be done to support healthy futures for all our children.”
Obesity among low-income preschoolers declines in many states
Nineteen states and territories report decreases in obesity among this group
After decades of rising rates, obesity among low-income preschoolers declined slightly in 19 states and U.S. territories from 2008 through 2011, according to the latest Vital Signs report from the Centers for Disease Control and Prevention.
The report found that Florida, Georgia, Missouri, New Jersey, South Dakota, and the U.S. Virgin Islands saw at least a one percentage point decrease in their rate of obesity. Twenty states and Puerto Rico held steady at their current rate. Obesity rates increased slightly in three states.
Previous research shows that about one in eight preschoolers is obese in the United States. Children are five times more likely to be overweight or obese as an adult if they are overweight or obese between the ages of three and five years.
“Although obesity remains epidemic, the tide has begun to turn for some kids in some states,” said CDC Director, Tom Frieden, M.D., M.P.H. “While the changes are small, for the first time in a generation they are going in the right direction. Obesity in early childhood increases the risk of serious health problems for life.”
“Today’s announcement reaffirms my belief that together, we are making a real difference in helping kids across the country get a healthier start to life,” said First Lady Michelle Obama. “We know how essential it is to set our youngest children on a path towards a lifetime of healthy eating and physical activity, and more than 10,000 childcare programs participating in the Let’s Move! Child Care initiative are doing vitally important work on this front. Yet, while this announcement reflects important progress, we also know that there is tremendous work still to be done to support healthy futures for all our children.”
DOJ FILES LAWSUIT AGAINST BUS COMPANY FOR ALLEGED DISCRIMINATION AGAINST U.S. CITIZENS
FROM: U.S. DEPARTMENT OF JUSTICE
Monday, August 5, 2013
Justice Department Files Lawsuit Against Texas Bus Company Alleging Employment Discrimination Against U.S. Citizens and Other Individuals
The Justice Department announced today the filing of a lawsuit with the Executive Office of Immigration Review’s Office of the Chief Administrative Hearing Officer (OCAHO), against Autobuses Ejecutivos LLC, d/b/a Omnibus Express, a bus company based in Houston.
The complaint alleges Omnibus Express violated the Immigration and Nationality Act’s (INA) anti-discrimination provision by preferring to hire temporary nonimmigrant visa holders over U.S. citizens, certain lawful permanent residents and other protected individuals for bus driver positions. Specifically, the complaint states that from at least September 2012 to February 2013, Omnibus Express failed to consider the applications of many qualified U.S. citizens and other protected individuals, or actively discouraged them from pursuing their applications, while at the same time petitioning the U.S. Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS) for permission to hire up to 50 foreign workers on H-2B visas. The H-2B program allows U.S. employers to bring foreign nationals to the United States to fill temporary nonagricultural jobs when there are not enough U.S. workers who are able, willing or qualified to do the temporary work. The complaint further alleges that Omnibus Express hired 42 H-2B workers during this period, and in doing so, represented to the DOL and USCIS that there were not enough qualified workers in the United States to fill the 50 bus driver positions. The complaint seeks an order prohibiting future discrimination by Omnibus Express, civil penalties, back pay for injured parties and injunctive relief. The INA’s anti-discrimination provision prohibits employers from discriminating in hiring against certain workers based on their citizenship status.
“The nation’s current immigration law protects individuals in the United States, such as U.S. citizens, certain lawful permanent residents, refugees and asylees, from unlawful discrimination in hiring based on their citizenship status,” said Jocelyn Samuels, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “We are committed to enforcing the INA so that work-authorized individuals have equal access to employment in the United States.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which prohibits employers from discriminating against work-authorized individuals on the basis of citizenship status or national origin in hiring, firing, recruitment or referral for a fee.
Monday, August 5, 2013
Justice Department Files Lawsuit Against Texas Bus Company Alleging Employment Discrimination Against U.S. Citizens and Other Individuals
The Justice Department announced today the filing of a lawsuit with the Executive Office of Immigration Review’s Office of the Chief Administrative Hearing Officer (OCAHO), against Autobuses Ejecutivos LLC, d/b/a Omnibus Express, a bus company based in Houston.
The complaint alleges Omnibus Express violated the Immigration and Nationality Act’s (INA) anti-discrimination provision by preferring to hire temporary nonimmigrant visa holders over U.S. citizens, certain lawful permanent residents and other protected individuals for bus driver positions. Specifically, the complaint states that from at least September 2012 to February 2013, Omnibus Express failed to consider the applications of many qualified U.S. citizens and other protected individuals, or actively discouraged them from pursuing their applications, while at the same time petitioning the U.S. Department of Labor (DOL) and U.S. Citizenship and Immigration Services (USCIS) for permission to hire up to 50 foreign workers on H-2B visas. The H-2B program allows U.S. employers to bring foreign nationals to the United States to fill temporary nonagricultural jobs when there are not enough U.S. workers who are able, willing or qualified to do the temporary work. The complaint further alleges that Omnibus Express hired 42 H-2B workers during this period, and in doing so, represented to the DOL and USCIS that there were not enough qualified workers in the United States to fill the 50 bus driver positions. The complaint seeks an order prohibiting future discrimination by Omnibus Express, civil penalties, back pay for injured parties and injunctive relief. The INA’s anti-discrimination provision prohibits employers from discriminating in hiring against certain workers based on their citizenship status.
“The nation’s current immigration law protects individuals in the United States, such as U.S. citizens, certain lawful permanent residents, refugees and asylees, from unlawful discrimination in hiring based on their citizenship status,” said Jocelyn Samuels, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “We are committed to enforcing the INA so that work-authorized individuals have equal access to employment in the United States.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA, which prohibits employers from discriminating against work-authorized individuals on the basis of citizenship status or national origin in hiring, firing, recruitment or referral for a fee.
REMARKS BEFORE THE RUSSIA 2+2 MEETING
FROM: U.S. STATE DEPARTMENT
Remarks Before the Russia 2+2 Meeting
Remarks
John Kerry
Secretary of State
U.S. Secretary of Defense Chuck Hagel, Russian Foreign Minister Sergey Lavrov, and Defense Minister Sergey Shoygu
Benjamin Franklin Room
Washington, DC
August 9, 2013
SECRETARY KERRY: Well, good morning, everybody, and welcome. We are delighted to welcome Ministers Lavrov and Shoygu, two Sergeys. We’re happy to have them here today, and I particularly want to welcome my old friend Chuck Hagel from the Defense Department.
The relationship between the United States and Russia is, needless to say, a very important relationship, and it is marked by both shared interests and at times colliding and conflicting interests. Now, I think we’re all very clear-eyed about that. Sergey Lavrov and I are old hockey players and we both know that diplomacy, like hockey, can sometimes result in the occasional collision. So we’re candid, very candid, about the areas in which we agree, but also the areas in which we disagree.
It’s no secret that we have experienced some challenging moments, and obviously not just over the Snowden case. We will discuss these differences today for certain. But this meeting remains important above and beyond the collisions and the moments of disagreement. It is important for us to find ways to make progress on missile defense, on other strategic issues, including Afghanistan, Iran, on North Korea, and Syria. And one thing I would emphasize is that on Syria, while Sergey and I do not always agree completely on responsibility for the bloodshed or on some of the ways forward, both of us and our countries agree that to avoid institutional collapse and descent into chaos, the ultimate answer is a negotiated political solution. And Geneva 2 conference is a step toward that solution. And I look forward to a very honest and robust discussion on all of these issues.
So we welcome the delegation from Russia here today, and we look forward to a very productive, hopefully, and full conversation.
Sergey.
FOREIGN MINISTER LAVROV: (Via interpreter) Your Excellencies, ladies and gentlemen, dear colleagues, thank you for the warm hospitality extended to myself and Sergey Shoygu, Minister of Defense of the Russian Federation. We attach great importance to cooperation in this format, +2. We haven’t met in a while and it was the right idea of the two presidents, Obama and Putin, when they met June 17th on the sidelines of the G-8 summit in Lough Erne when they decided to resume the format. And thus we meet here today in Washington.
We were preparing a number of documents, a package of documents for approval at the meeting between the two presidents. I am referring to the statement on the comprehensive development of our cooperation in the context of the 80th anniversary of resumption of diplomatic relationship between our two countries we are celebrating this year. I’m also referring to the statement aimed at giving momentum to the development of trade and economic cooperation between our two countries. By design, presidents were supposed to adopt the statement in the presence of captains of business of the two countries, because we want economy to be way more dominant in our relations.
We also prepared number of statements on enhancing cooperation in combating drug threat, cooperation on – further cooperation – agreement on further cooperation of nuclear threat reduction centers, cooperation agreement on research and nuclear sector. So I want to highlight that we have laid very solid foundation for our future work, and once we start building on the foundation, once these – the instruments are approved, we will be able to enhance cooperation in different sectors, and significantly.
Today, naturally, we will discuss international issues, global security. In particular, John mentioned missile defense. We have been discussing this issue for a long time. First, we start – since we started discussions of the New START Treaty, we always spoke about missile defense, and we note with satisfaction that in his April letter to President Putin, President Obama recognized the need to take into account all factors that impact strategic stability when talking about reductions. In Lough Erne, our two presidents discussed steps that were proposed by our U.S. partners to increase transparency in the sector. Ministers of Defense of the two countries were given instructions in that respect, and at least we in Russia were prepared to table our proposals to the two presidents, and we will do so once their summit meeting takes place.
As regards crisis settlement, Syria indeed is on top of our agenda. Our goal is the same. We need to start political process. We need to stage Geneva 2 conference. And in my view, the most important task for the Geneva 2 would be honor the commitment of all G-8 leaders made in Lough Erne when they called upon both government and opposition to join efforts to fight terrorists and force them away from Syria. And I’m convinced that in the current day reality, especially in light of the fact and assessments we’ve been hearing lately, this is indeed our top priority.
Of course, Afghanistan is also important, Iranian nuclear program is, Korean peninsula nuclear issue, and many other topics will be discussed today. We are united by shared responsibility. We must prevent destabilization of the global situation. We must prevent proliferation of weapons of mass destruction. We need to ensure peaceful settlements of all crises by global community and avoid attempts to impose forced solutions irrespective of the situation. We’ve seen examples in the past, and we’ve seen that they are not working. Just like U.S., we want to see the situation get back to normal.
In Egypt, we want to see the national reconciliation process begin. We appreciate greatly efforts made by our U.S. colleagues and John Kerry personally. Especially, I’m referring to his efforts aimed at resumption of Israeli-Palestinian dialogue.
So the agenda is very intense. Of course, we have disagreements. We’ll continue discussing matters on which we disagree calmly and candidly. I recall when I first met John in his capacity, his present-day capacity, and we were having this initial conversation, if I may put it that way, he told me that our countries have special responsibility, so we need to work as grown-ups. And this is what we do. And we hope that this will be reciprocal. Thank you.
SECRETARY KERRY: Sergey, thank you very much. Appreciate that. And Secretary Hagel.
SECRETARY HAGEL: Secretary Kerry, thank you. And you and your colleagues here at the State Department, thank you for hosting today’s meeting. To our guests from the Russian Federation, welcome. We are very grateful for this opportunity to spend some time with Minister Lavrov and Minister Shoygu and your colleagues who have accompanied you to address some of the most pressing and important issues facing our countries, facing the world. Our interests, almost in every case noted, and more, are mutual interests. The world is complicated; it is combustible. To find solutions at a critical time in the world are not easy. But just as Minister Lavrov and Secretary Kerry have noted, to address these clearly, directly with each other, honestly, and to find the common denominators where we can build high ground to move forward to help resolve these great issues of our time.
We live in a very defining time in the world, and just as Minister Lavrov noted in his first conversation with Secretary Kerry, our countries have some responsibility to each other, obviously, but to the world in many respects. We are leading nations, and we must work with alliances and others as to how we find these solutions to these great challenges.
Some of the issues that we will deal with today have been noted; there are others. I particularly appreciated the opportunity to spend an hour with Minister Shoygu this morning and his colleagues as we addressed some of the more specific issues related to our defense ministries and our military-to-military cooperation. That meeting was a very positive meeting, which set the standard, I hope, for our meeting today.
I very much look forward to this meeting, and again thank Ministers Lavrov and Shoygu and their delegation for being here, and to you, Secretary Kerry, for hosting us.
SECRETARY KERRY: Thank you very much, Secretary Hagel.
Mr. Minister Shoygu.
DEFENSE MINISTER SHOYGU: (Via interpreter) Thank you, Your Excellency. Secretaries, indeed, today I had an hour-long meeting with my colleague, Secretary Hagel. We spoke about military-to-military cooperation. We spoke about military-political and military-technical cooperation as well.
I would like to thank colleagues for the wonderful arrangement of the meeting here in Washington and once again highlight that the 2+2 format is, in our view, very efficient and important.
Naturally, we couldn’t but discuss issues that are of concern to our Washington colleagues today and to us – Afghanistan, in the first place, and the forthcoming 2014 events. Of course, we spoke about Syria. We also discussed bilateral cooperation, ways to intensify our contacts. We agreed to step up cooperation between deputy ministers of the two countries. And what is no less important, we spoke about how we could give incentive to practical cooperation, such as exercise, military exercise, both naval or special forces exercise.
We also spoke about the need for more transparency. I would like to make sure that major events, such as exercise and others hosted by the Ministry of Defense in the Russian Federation, would like to invite U.S. colleagues and will do that timely. And of course we would like to invite not just military attaches, but also delegations from the U.S. capital, from Washington, to attend major events.
We started talking about missile defense, but missile defense should probably be discussed in this expanded format, the way we have gathered today. And I would like to again thank U.S. colleagues for organizing the meeting, and I hope it’s going to be as constructive as my meeting with Secretary Hagel was. Thank you.
SECRETARY KERRY: Thank you very much, Mr. Minister. Again, we emphasize the importance of this conversation and in order to do it properly, we regrettably need to ask our friends in the press if they would now leave us so that we can have an opportunity to talk. Thank you very, very much. Appreciate it.
Remarks Before the Russia 2+2 Meeting
Remarks
John Kerry
Secretary of State
U.S. Secretary of Defense Chuck Hagel, Russian Foreign Minister Sergey Lavrov, and Defense Minister Sergey Shoygu
Benjamin Franklin Room
Washington, DC
August 9, 2013
SECRETARY KERRY: Well, good morning, everybody, and welcome. We are delighted to welcome Ministers Lavrov and Shoygu, two Sergeys. We’re happy to have them here today, and I particularly want to welcome my old friend Chuck Hagel from the Defense Department.
The relationship between the United States and Russia is, needless to say, a very important relationship, and it is marked by both shared interests and at times colliding and conflicting interests. Now, I think we’re all very clear-eyed about that. Sergey Lavrov and I are old hockey players and we both know that diplomacy, like hockey, can sometimes result in the occasional collision. So we’re candid, very candid, about the areas in which we agree, but also the areas in which we disagree.
It’s no secret that we have experienced some challenging moments, and obviously not just over the Snowden case. We will discuss these differences today for certain. But this meeting remains important above and beyond the collisions and the moments of disagreement. It is important for us to find ways to make progress on missile defense, on other strategic issues, including Afghanistan, Iran, on North Korea, and Syria. And one thing I would emphasize is that on Syria, while Sergey and I do not always agree completely on responsibility for the bloodshed or on some of the ways forward, both of us and our countries agree that to avoid institutional collapse and descent into chaos, the ultimate answer is a negotiated political solution. And Geneva 2 conference is a step toward that solution. And I look forward to a very honest and robust discussion on all of these issues.
So we welcome the delegation from Russia here today, and we look forward to a very productive, hopefully, and full conversation.
Sergey.
FOREIGN MINISTER LAVROV: (Via interpreter) Your Excellencies, ladies and gentlemen, dear colleagues, thank you for the warm hospitality extended to myself and Sergey Shoygu, Minister of Defense of the Russian Federation. We attach great importance to cooperation in this format, +2. We haven’t met in a while and it was the right idea of the two presidents, Obama and Putin, when they met June 17th on the sidelines of the G-8 summit in Lough Erne when they decided to resume the format. And thus we meet here today in Washington.
We were preparing a number of documents, a package of documents for approval at the meeting between the two presidents. I am referring to the statement on the comprehensive development of our cooperation in the context of the 80th anniversary of resumption of diplomatic relationship between our two countries we are celebrating this year. I’m also referring to the statement aimed at giving momentum to the development of trade and economic cooperation between our two countries. By design, presidents were supposed to adopt the statement in the presence of captains of business of the two countries, because we want economy to be way more dominant in our relations.
We also prepared number of statements on enhancing cooperation in combating drug threat, cooperation on – further cooperation – agreement on further cooperation of nuclear threat reduction centers, cooperation agreement on research and nuclear sector. So I want to highlight that we have laid very solid foundation for our future work, and once we start building on the foundation, once these – the instruments are approved, we will be able to enhance cooperation in different sectors, and significantly.
Today, naturally, we will discuss international issues, global security. In particular, John mentioned missile defense. We have been discussing this issue for a long time. First, we start – since we started discussions of the New START Treaty, we always spoke about missile defense, and we note with satisfaction that in his April letter to President Putin, President Obama recognized the need to take into account all factors that impact strategic stability when talking about reductions. In Lough Erne, our two presidents discussed steps that were proposed by our U.S. partners to increase transparency in the sector. Ministers of Defense of the two countries were given instructions in that respect, and at least we in Russia were prepared to table our proposals to the two presidents, and we will do so once their summit meeting takes place.
As regards crisis settlement, Syria indeed is on top of our agenda. Our goal is the same. We need to start political process. We need to stage Geneva 2 conference. And in my view, the most important task for the Geneva 2 would be honor the commitment of all G-8 leaders made in Lough Erne when they called upon both government and opposition to join efforts to fight terrorists and force them away from Syria. And I’m convinced that in the current day reality, especially in light of the fact and assessments we’ve been hearing lately, this is indeed our top priority.
Of course, Afghanistan is also important, Iranian nuclear program is, Korean peninsula nuclear issue, and many other topics will be discussed today. We are united by shared responsibility. We must prevent destabilization of the global situation. We must prevent proliferation of weapons of mass destruction. We need to ensure peaceful settlements of all crises by global community and avoid attempts to impose forced solutions irrespective of the situation. We’ve seen examples in the past, and we’ve seen that they are not working. Just like U.S., we want to see the situation get back to normal.
In Egypt, we want to see the national reconciliation process begin. We appreciate greatly efforts made by our U.S. colleagues and John Kerry personally. Especially, I’m referring to his efforts aimed at resumption of Israeli-Palestinian dialogue.
So the agenda is very intense. Of course, we have disagreements. We’ll continue discussing matters on which we disagree calmly and candidly. I recall when I first met John in his capacity, his present-day capacity, and we were having this initial conversation, if I may put it that way, he told me that our countries have special responsibility, so we need to work as grown-ups. And this is what we do. And we hope that this will be reciprocal. Thank you.
SECRETARY KERRY: Sergey, thank you very much. Appreciate that. And Secretary Hagel.
SECRETARY HAGEL: Secretary Kerry, thank you. And you and your colleagues here at the State Department, thank you for hosting today’s meeting. To our guests from the Russian Federation, welcome. We are very grateful for this opportunity to spend some time with Minister Lavrov and Minister Shoygu and your colleagues who have accompanied you to address some of the most pressing and important issues facing our countries, facing the world. Our interests, almost in every case noted, and more, are mutual interests. The world is complicated; it is combustible. To find solutions at a critical time in the world are not easy. But just as Minister Lavrov and Secretary Kerry have noted, to address these clearly, directly with each other, honestly, and to find the common denominators where we can build high ground to move forward to help resolve these great issues of our time.
We live in a very defining time in the world, and just as Minister Lavrov noted in his first conversation with Secretary Kerry, our countries have some responsibility to each other, obviously, but to the world in many respects. We are leading nations, and we must work with alliances and others as to how we find these solutions to these great challenges.
Some of the issues that we will deal with today have been noted; there are others. I particularly appreciated the opportunity to spend an hour with Minister Shoygu this morning and his colleagues as we addressed some of the more specific issues related to our defense ministries and our military-to-military cooperation. That meeting was a very positive meeting, which set the standard, I hope, for our meeting today.
I very much look forward to this meeting, and again thank Ministers Lavrov and Shoygu and their delegation for being here, and to you, Secretary Kerry, for hosting us.
SECRETARY KERRY: Thank you very much, Secretary Hagel.
Mr. Minister Shoygu.
DEFENSE MINISTER SHOYGU: (Via interpreter) Thank you, Your Excellency. Secretaries, indeed, today I had an hour-long meeting with my colleague, Secretary Hagel. We spoke about military-to-military cooperation. We spoke about military-political and military-technical cooperation as well.
I would like to thank colleagues for the wonderful arrangement of the meeting here in Washington and once again highlight that the 2+2 format is, in our view, very efficient and important.
Naturally, we couldn’t but discuss issues that are of concern to our Washington colleagues today and to us – Afghanistan, in the first place, and the forthcoming 2014 events. Of course, we spoke about Syria. We also discussed bilateral cooperation, ways to intensify our contacts. We agreed to step up cooperation between deputy ministers of the two countries. And what is no less important, we spoke about how we could give incentive to practical cooperation, such as exercise, military exercise, both naval or special forces exercise.
We also spoke about the need for more transparency. I would like to make sure that major events, such as exercise and others hosted by the Ministry of Defense in the Russian Federation, would like to invite U.S. colleagues and will do that timely. And of course we would like to invite not just military attaches, but also delegations from the U.S. capital, from Washington, to attend major events.
We started talking about missile defense, but missile defense should probably be discussed in this expanded format, the way we have gathered today. And I would like to again thank U.S. colleagues for organizing the meeting, and I hope it’s going to be as constructive as my meeting with Secretary Hagel was. Thank you.
SECRETARY KERRY: Thank you very much, Mr. Minister. Again, we emphasize the importance of this conversation and in order to do it properly, we regrettably need to ask our friends in the press if they would now leave us so that we can have an opportunity to talk. Thank you very, very much. Appreciate it.
U.S. REOPENING 18 OF 19 RECENTLY CLOSED FACILITIES BECAUSE OF TERRORIST CONCERNS
FROM: U.S. STATE DEPARTMENT
Update on Status of Embassies and Consulates
Press Statement
Jen Psaki
Spokesperson, Office of the Spokesperson
Washington, DC
August 9, 2013
On Sunday, August 11, the Department of State will re-open 18 of the 19 embassies and consulates that were closed recently. Our embassy in Sanaa, Yemen will remain closed because of ongoing concerns about a threat stream indicating the potential for terrorist attacks emanating from Al Qaeda in the Arabian Peninsula. Our consulate in Lahore, Pakistan, which closed yesterday due to a separate credible threat to that facility, will also remain closed.
We will continue to evaluate the threats to Sanaa and Lahore and make subsequent decisions about the re-opening of those facilities based on that information. We will also continue to evaluate information about these and all of our posts and to take appropriate steps to best protect the safety of our personnel, American citizens traveling overseas, and visitors to our facilities.
Update on Status of Embassies and Consulates
Press Statement
Jen Psaki
Spokesperson, Office of the Spokesperson
Washington, DC
August 9, 2013
On Sunday, August 11, the Department of State will re-open 18 of the 19 embassies and consulates that were closed recently. Our embassy in Sanaa, Yemen will remain closed because of ongoing concerns about a threat stream indicating the potential for terrorist attacks emanating from Al Qaeda in the Arabian Peninsula. Our consulate in Lahore, Pakistan, which closed yesterday due to a separate credible threat to that facility, will also remain closed.
We will continue to evaluate the threats to Sanaa and Lahore and make subsequent decisions about the re-opening of those facilities based on that information. We will also continue to evaluate information about these and all of our posts and to take appropriate steps to best protect the safety of our personnel, American citizens traveling overseas, and visitors to our facilities.
OVER $5 MILLION AWARDED IN JOB TRAINING GRANTS TO HOMELESS WOMEN VETS, VETS WITH CHILDREN
FROM: U.S. DEPARTMENT OF LABOR
Department of Labor awards more than $5 million in job training grants to help 1,900 homeless women veterans, veterans with families
WASHINGTON —The Department of Labor’s Veterans’ Employment and Training Service today announced the award of 22 grants, totaling more than $5 million, to provide about 1,900 homeless female veterans and veterans with families with job training to help them succeed in civilian careers. The grants are being awarded under the department’s Homeless Female Veterans and Veterans with Families Program.
"These grants will offer the opportunity for a better life, providing the training and skills needed to find a job and housing,” said Secretary of Labor Tom Perez. “Our veterans have sacrificed for our nation, and job training programs offer them a path to participation in society and success in the workplace.”
The services provided by grantees will include job placement, on-the-job and classroom training, career counseling, life skills and money management mentoring, as well as help in finding housing. VETS estimates that these funds will help approximately 1,900 veterans.
Funds are being awarded on a competitive basis to state and local workforce investment boards, local public agencies and nonprofit organizations, including faith-based and community organizations. These grantees are familiar with the areas and populations to be served and have demonstrated that they can administer effective programs to help homeless veterans.
Department of Labor awards more than $5 million in job training grants to help 1,900 homeless women veterans, veterans with families
WASHINGTON —The Department of Labor’s Veterans’ Employment and Training Service today announced the award of 22 grants, totaling more than $5 million, to provide about 1,900 homeless female veterans and veterans with families with job training to help them succeed in civilian careers. The grants are being awarded under the department’s Homeless Female Veterans and Veterans with Families Program.
"These grants will offer the opportunity for a better life, providing the training and skills needed to find a job and housing,” said Secretary of Labor Tom Perez. “Our veterans have sacrificed for our nation, and job training programs offer them a path to participation in society and success in the workplace.”
The services provided by grantees will include job placement, on-the-job and classroom training, career counseling, life skills and money management mentoring, as well as help in finding housing. VETS estimates that these funds will help approximately 1,900 veterans.
Funds are being awarded on a competitive basis to state and local workforce investment boards, local public agencies and nonprofit organizations, including faith-based and community organizations. These grantees are familiar with the areas and populations to be served and have demonstrated that they can administer effective programs to help homeless veterans.
CFTC COMMISSIONER CHILTON'S SPEECH TO THE AMCOT 2013 BUSINESS CONFERENCE
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
“Cowboy Company”
Speech of Commissioner Bart Chilton to the Amcot 2013 Business Conference, Lake Tahoe, California
August 5, 2013
Hey Yeah, Hold Your Horses!
Hey yeah! Much obliged for the introduction. It sure is a fine thing to spend a spell with all you good folks in this pretty part of the American West. I always get a little “giddy-up” when dealing with cooperatives, so it’s a great treat to be with each of you.
When people think of Tahoe, they may ponder “Tahoe, oh—skiing, the Lake, maybe golf or gambling. Heck, let’s go.” But today, well, let’s switch it up and talk about the Old West and Tahoe aglow, back in the day. This is a fitting place to do just that. The Ponderosa Ranch, from Bonanza, was just over yonder, on the Nevada side of the Lake. Remember the Cartwright’s? There was Ben who survived three wives, but begets a son from each one: Adam, Hoss, and Little Joe. And just a few miles from here, they hold the Genoa Cowboy Festival at the site of the first ranch in Nevada. (Not the Mustang Ranch—that’s 15 minutes east of Reno. Hey, you at the door, where ya going?) The first ranch in Nevada was Trimmer Ranch No. 1. Let’s assume there were others. The oldest saloon in Nevada is also in Genoa. A portion of the original bar from the 1800’s is still in use. And, the local phone book lists at least 25 places to “get your boots on” and get a pair.
Right about now, some of you might be thinking, “Whoa, hold your horses there, long hair.” Isn’t this supposed to be about financial regulation or commodity markets or something?” Yeah, Sundance, it is. We’re just going to kick up the dust a bit as we “tumble along with the tumbling tumbleweeds” and have our cordial conversationalizing. After all, like George Strait sings, “I ain’t here for a long time. I’m here for a good time.” So, let’s get to it and talk some about the Old West and our financial markets today.
Has anybody seen the new Lone Ranger movie? Ooh, not too many, eh? It received some rough reviews, although I found a few good ones. It tanked on opening weekend. As of a few days ago, the film had made $85 million in the U.S., and $164 million worldwide. The production budget was $215 million. So, not good, Kemosabe. The whole thing has the good folks at Disney cogitating some on that one. But, I’ll come clean: I’m partial to it. In fact, I really liked it! Yessiree, Bob. (Jarral asked me to refer to Bob Norris as “sir.” Yessiree, Bob. Was that okay, Jarral?) In fact my wife and I saw The Lone Ranger twice. Heck, he’s an American legend. Plus, I’m a patsy for Westerns and the William Tell Overture. Can’tcha just hear that tune? Hi-Yo Silver, away! It really gets you going. You can envision Silver rearing up then taking off like wildfire and galloping along. Lots and lots of action—ooh, ooh yeah!
Well, there’s a lot of action in financial markets too. How smooth was that? But it’s true. The William Tell Overture might as well be the theme music for our work, sun-up to sun-down these days.
Blue Jean Baby & Prospectors
So, let’s travel back those golden days of yesteryear, to the mid-1800’s. The Gold Rush was going strong here in California. Prospectors came to make their fortunes. Some did. Some didn’t. In addition to those gold prospectors, some folks that assisted them also found their fortunes. Think Levi Strauss, who switched very early on from canvas to twilled cotton cloth to make his now-famous pants. He later co-patented, with a Reno tailor, the pants with rivets to make them stronger. It was the birth of blue jeans. “Blue jean baby . . . L.A. lady, seamstress for the band” (sorry). But, it was the birth of blue jeans, if you will. There was also Henry Wells and William Fargo of stagecoach and now banking renown. One of the prospectors, Charles Bowles, had a side job. He robbed Wells Fargo stagecoaches of their strongboxes ‘round these parts. He committed 28 such robberies in Northern California in eight years and became better known as Black Bart. Gotta love the name.
At the same time, a group of market prospectors in Chicago started what would become the Chicago Board of Trade. Commodity prices were in disarray with extreme volatility that didn’t do anyone any good. These market prospectors sought to fix that. Cotton wasn’t one of the original products traded, but soon, it would be.
Here we are, all these years later, and like the Western gold prospectors who changed the way they looked for gold over the years, the market prospectors—in particular the speculators—have also changed, or morphed. The question I ask as a regulator, and I know some of you ask as well, is this: Are markets still performing the purposes envisioned by those folks back in the day? There are a couple of areas, actually some new types of traders and activities, which make me wha wha wha wonder.
The Massive Passive Gang
First, we have seen a “financialization” of commodity markets by a band of traders called Massive Passives—the Massive Passive Gang (they are a “gang” for today). Investors looking to diversify their present-day strongbox portfolios sought out the derivatives world and dumped roughly $200 billion into U.S. regulated futures markets as they were “coming round the mountain” between 2005 and 2008.
Say a pension fund wanted to diversify into commodities—there’s nothing wrong with that from my perspective. They aren’t Desperados. Nevertheless, the type of trading activity they undertake is different from what speculators have typically done. Instead of getting in and out of markets, maybe based upon a drought or other natural disaster, this gang of very large funds, pension funds, some hedge funds, exchange traded funds (ETFs), and the like buy and hold their market positions. They bury them, only to come back a few years later. They are both massive in size, and fairly passive in their trading strategy—the Massive Passive Gang.
Here’s the worrisome part, pardners: too much concentration in markets by too many of the Massive Passive Gang can influence and contribute to price abnormalities. Heck, just one large massive passive can impact price if they are large enough.
Take 2008, when crude went from right around $99 at the beginning of the year to more than $145 in July, then all the way back to $31 in December. All of that took place without much change in supply or demand. Convince me the Massive Passive Gang had no role in that market distortion and I’ll wear chaps and a fringe coat to your next meeting.
On cotton futures markets, absent a few exceptions (uh hum, 2008, pardon me…frog in my throat) since their inception more than 120 years ago, things have been comparatively stable. There are lots of commercial traders, like many of you and other end-user-related traders. Of course, we still have the market speculators. We need the speculators, want ‘em, gotta have ‘em, or we have no markets.
One thing that has changed is the length of the trading day. The markets run nearly 24-7-365. That’s actually caused some problems in cotton, by the way. Also back in 2008, we saw 14 days in about a six week period where markets went lock-limit, 11 of which were before sun-up in New York—ya know, back in the Old States. There was sparse liquidity, and traders in China in the markets, and what would normally not be huge trades pushed prices to the limits. Heck, the markets were locked before folks here had their eggs and bacon.
In response to what was going on in 2008 with the Massive Passive Gang, Congress and President Obama instructed us (as part of the Dodd-Frank financial reform law in 2010) to put in place speculative position limits. Those limits would ensure that regulators have the firepower to run excessive speculation outta these markets. To date, the limits aren’t in place. There’s fierce opposition out there, but we’re fix’n to pony up and fix that soon. In September I expect we’ll get back in the saddle again and put out a proposal on position limits. And, I believe the final limits rule will be in place come January of 2014. This rule, I assure you, won’t be able to be shot down (in a blaze of glory or otherwise).
So, that’s the Massive Passive Gang. Let’s go, daylights burning and we’ve got ground to cover.
The Fastest Gunslingers
There is a lot of debate about who actually was the fastest gun in the West. Some say Doc Holliday or Johnny Ringo deserve the designation. Others suggest Bat Masterson (born Bartholomew, by the way—what’s it about those dandy Western names?). How about Billy the Kid? The Kid thought he was the one, “I’m Billy the Kid,” he said, “…the fastest draw. It’s not arrogance. It’s the truth.” Maybe Wyatt Earp? Nah, he held that, “Fast is fine, but accuracy is everything.” Annie Oakley and Calamity Jane, the renowned sharpshooters, would agree with Sherriff Earp. Some suggest the fastest gun was John Wesley Hardin, also known as “Little Arkansaw.” He claimed to have killed 42 men.
Let’s talk about some other fast guns—market gunslingers. They’re a rough bunch of young guns, and a Wild West breed all their own. Not a horse, like the Lone Ranger’s “Silver,” or a cow, coyote or rattlesnake, but a cheetah. That’s right, a cheetah. Not a card cheater who sits in the gunfighter’s chair in the corner saloon, but a cheetah as in the fastest land animal. Those cats are the fastest trading guns. Sometimes you just gotta mix it up.
Now, I’m asking you to envision a cheetah with a hat (let’s say a ten-gallon hat, just for the hell of it), tooled boots with silver spurs, and a low-slung gun belt on those slim cheetah hips. That cheetah gunslinger is eyeballing us from 40 paces. Will we be fast enough to take him? In truth, nah, probably not. They usually win, those cheetahs, with their fancy spurs. Who do they think they are?
The thing is, those cheetahs gunslingers are always so hell-bent for leather when they trade that they are impacting the ability of you guys, and other end-users, to do what you need to do, to hedge. I mean, pardon you guys to pieces for simply trying to hedge your legitimate business risks. For crying out loud, you aren’t looking for a gunfight. You just wanna do what those original prospectors set in motion all those years ago. Yet, here you are, staring down the barrel of a gun. And . . . that gun is held by a damn cat, with a hat . . . at that!
How Fast is Fast?
How fast are these cheetah gunslingers? Well, it’s about a thousand miles from New York to Chicago. A recent article in the Financial Times pointed out that communications cables laid between the two cities meant that a message could be delivered in 14.5 milliseconds—70 round trips per second. Now that’s fast—cheetah gunslinger fast. But not fast enough for some who use those cables to trade commodities. It’s been reported that at least one company has cut that time down to 13.1 milliseconds and that microwave capability could get it under 10 milliseconds. Holy smokes!
Let me give you some of our own data: over the last year, we analyzed 20 million trading seconds. Of those 20 million, we pinpointed 189,000 seconds, primarily around the open and close of markets. In those 189,000 seconds we found something astounding: cheetahs traded at rates of 100-500 trades per second in a major commodity market! Trading 100 to 500 times per second, as a gang, in one commodity contract? That’s pretty hard to wrap your head around. Heck, it’s easier to imagine our cheetah friends in their gunfighter get-up.
Why this need for speed? It’s not the need to stay alive like an Old West gunfighter, of course not. It’s about the dinero, the loot. A study late last year, which was conducted in conjunction with the CFTC, said in essence that cheetah trading imposes quantifiable costs. Aggressive cheetahs make a lot of money, and they make their biggest paydays when they trade with small, traditional traders. A cheetah trading with a fundamental trader—like a lot of you—makes $1.92 on a $50,000 trade, but if that same trade is made with a small trader, the number goes up to $3.49. This could end up pushing smaller, slow-shooters out of markets and it doesn’t help the fundamental traders either.
But that’s not the only issue with the cheetahs, no sirree.
Ghost Town Liquidity
The name “Tahoe” actually came from the name “Washoe,” which is the name of the Native Americas that inhabited this area for something like 6,000 years. In fact, Washoe City is located just south of Reno. In the 1860’s it was booming with a sawmill for lumber used in Virginia City (ya know, where the Cartwright clan went when they went to town—da ta da da da, da da da, ta da da, da da da daa). Washoe City was even the county seat of Washoe County (it’s now Reno). But today, you can’t even visit Washoe City. It’s all fenced off. Washoe City is an Old West ghost town.
That brings us to another problem area with the cheetah gang. I told you it was like the William Tell Overture—lots going on. In fact, this ghost town thing is sort of a dirty little secret. It involves “wash” trading, where cheetahs (and sometimes others) trade with themselves. They make a bid or offer and they hit it themselves. Putting a price out and hitting it yourself, you take no risk, yet create the impression that a legitimate trade has occurred. That entices others—easy prey—to get into markets. But the liquidity isn’t real. It’s ghost town liquidity. If this was only for a few trades, it wouldn’t make much difference. However, there is a lot of ghost town liquidity. I mean a whole lot. “Voluminous” is the word I’ve used. And if this ghost town trading amounts to wash trading, it’s not only wrong, but based upon the facts and circumstances, it is illegal. That’s because wash trading is clearly unfair to other traders, and it can impact price discovery which is unfair to consumers.
Wash Blockers—20-Mule Team Borax!
One might think the exchanges would put in place what are called “wash blockers.” That sounds like a commercial: “Wash blockers—for cleaner markets!” Remember Death Valley Days? “Brought to you by 20-Mule Team Borax.” The show was Ronald Reagan’s last acting gig before he went into politics.
Wash blocker technology is available and exchanges are starting to put more of an emphasis on it. In my view, traders shouldn’t be able to just opt-in to the technology requirements if they want to. It needs to be mandatory that they utilize wash blocker technology. Otherwise, we’ll still have ghost town liquidity and markets that aren’t necessarily fair and effective.
So, that’s the cheetah gang and we did the Massive Passive Gang. Let’s head down the trail to our last topics.
Bank Ownership
When we think about how the West was won, it had a lot to do with the railroads. As the Iron Horses moved from east to west, towns along the line grew. But towns could never ever have amounted to much without banks. The banks helped build the towns. They made loans to individuals and businesses. They helped fuel economic development. They built communities. Some refer to the Winchester rifle as “The gun that won the West.” But I’ll tell ya, a good case could be made that banks won the West.
However, just like markets have morphed with the Massive Passive Gang, with non-stop trading, with our cheetah gunslingers and their “gee whiz” technology, so too have the banks changed. And it seems some have lost sight of those noble endeavors for which they are known as the country moved west.
A decade ago, in the shifting climate to allow banks more freedom, several policy changes took place. One such change was approved by the Federal Reserve. It allowed the ownership of totally unrelated businesses. The idea was that it was a good thing for the banks to be diversified. It was okay to get away from their sweet spot—ya know . . . banking. Like folks do when they see an opening, the banks got into all sorts of other businesses—businesses which include physical commodities like agriculture, energy or metals. It also includes owing the storage or warehousing facilities of commodities, and/or the delivery mechanisms of commodities—like pipelines, shipping, rail or other transportation interests.
Bank Ownership: The Data
You might wonder, “What it is they actually do own?” Well, let me tell you a story. A couple of weeks ago we rounded up a posse to look and see what actually is owned by the banks. I’m a financial regulator; you’d think it would be a piece of pie to find a list of what they own, right? I mean, it would be understandable if there were certain business reasons why a few particulars of the ownership information might not be available to the public. Nevertheless, you’d think I could get it. After all, banks own commercial interests that can impact prices, and at the same time their trading desks are all over the very same markets. There are obvious conflicts of interest. I’m not saying there have been any violations of the law, but how would we even know?
Our little posse did find that Morgan Stanley has ownership stakes in oil tankers and a fuel distributor. And, of course, they also trade crude oil and other energy contracts. Parts of Citigroup, Goldman Sachs and Bank of America own or have owned power plants. They also trade energy contracts. And, everybody’s been talking about Goldman Sachs holding onto aluminum at warehouses they own. Some say that’s consequently driving the up the price of beer and soda, while the bank collects storage fees. And, they trade aluminum. JP Morgan also owns similar warehouses, although they said last week they may get out of commodities. We’ll see. Oh, and by the way, Barclays and JP Morgan are putting out hundreds of millions of dollars in restitution for getting caught rigging electricity prices. There is that.
But, getting other information on ownership of the banks has been super difficult, at best. Maybe we need a “WANTED” poster:
W A N T E D
Information leading to the apprehension of ownership data related to large investment banks, including but not limited to businesses related to commodities, the storage and warehousing of commodities, and/or the delivery mechanisms of commodities.
This might be a little amusing if it weren’t such a serious thing that the information isn’t readily available. In fact, its sorta deja-oohish in that it’s reminiscent of that period of time, just before the financial crisis, when folks were asking questions about the valuation of credit default swaps (CDSs). Nobody could turn up much of anything. We all know how that troubled tale of tragedy ended . . . in tragedy and economic catastrophe. So, this is a big deal.
Tracking down this information should be an immediate responsibility of regulators. It’s gonna require more bodies and more horses, and maybe that “WANTED” poster, but we need to find out specifically—and comprehensively—what banks own relating to physical commodities. Furthermore, the basic ownership information should be transparent, certainly to regulators. And public information should be easily accessible on the Federal Reserve’s website or someplace where people can view it without needing a bloodhound to track it down.
Bank Ownership: The Work-Around (Volcker & Limits)
There is also a related issue with ownership of commodities by banks. If the banks own the physical commodities, warehousing or delivery mechanisms, they may then contend that their “legitimate business interests” should allow them to hedge those risks, in addition to hedging their financial proprietary risks.
This approach could amount to yet another work-around the Volcker Rule. Recall the Volcker Rule? It’s a provision of Dodd –Frank that requires that banks no longer be able to conduct speculative trading. They may only hedge their legitimate business risk. But, if they own the physical, then it muddies up what is their business risk.
I’ve written to Chairman Bernanke about this issue (and am discussing it for the first time today). In the letter, I urge that the final Volcker Rule be written in a precise and surefooted fashion that allows only for appropriate hedging of banks proprietary risks, but firmly prohibits speculation. I even provided rule text language for his consideration. I won’t vote for a final Volcker Rule unless this language, or something substantially similar, is included in the final text.
Incidentally, owning the physical could also be used as a way around speculative position limits. (I’m working on that one.) We’d be fools to think the bank lawyers aren’t thinking about these work-around end runs.
Bank Ownership: Reverse the Policy!
One easy way to stop the work-around is to simply have the Federal Reserve’s ownership policy reversed. Why can’t the banks, just can’t get back to banking? That’s my preferred policy. I don’t want a bank owning an electric service, or cotton, corn or feedlots. I don’t want banks owning warehouses, whether they have aluminum, gold, silver, or anything else in them. Get back (Jo Jo) to making loans to individuals and businesses to help get our economy on track. We don’t want Cowboy Companies out there. We don’t want a Wild West anymore when it comes to our economy. Do what you did when the West was won, when you helped to build the frontier. That is such an honorable, worthy, noble and essential endeavor. Plus, you were so very good at accomplishing so much!
I hope the Federal Reserve, which announced last week that the policy was being reviewed, actually reverses it. They can and should reverse it. Sure, if they have to grandfather some of the bank ownership in for a time-certain, I get that. The banks shouldn’t be required to take a loss due to the policy change. But the policy should, in fact, change, and soon. And, if the Fed doesn’t do so, I expect there will be efforts in Congress, and I hope there are, to prohibit such ownership by changing the law.
Cowboy Ethics
Our trail has come to an end. However, I’d like to leave you with this: there’s a book out by a gentleman named James P. Owen who’s a cowboy and western lover and who also happens to be a 40-year veteran of Wall Street. The book’s called Cowboy Ethics. It is sort of a coffee table book with a message—great photography, too. Owen opines that businesses today, especially the behemoth banks on Wall Street, need to live less by the “greed is good” mantra and more like the Code of the West. “When you make a promise, keep it.” “Remember that some things aren’t for sale.” “Know where to draw the line.” Do those sound like mantras for Wall Street? Unfortunately—not so much. You folks can recall the horrific headlines of malfeasance as well as anyone. A recent study queried 250 financial service industry insiders and 23 percent said they had “observed or had firsthand knowledge of wrongdoing in the workplace.”
For a while now, I’ve been saying that there needs to be a culture shift in the financial sector. How about the responsibility to customers, to society and the economy? Maybe the Code of the West is just the thing.
Conclusion—Shut Up
There’s a scene near the end of The Lone Ranger where, as the sun is setting, the masked man rears up on Silver, and says the famous “Hi-Yo Silver, away!”—only time in the movie he actually says it. And Johnny Depp, as Tonto, says, “Don’t ever do that again.” Well, I’m not going to stop working on these issues. I’m going to remember the Old West and how and why these markets began. I’m going to talk about them and work on them again and again. Even if the William Tell Overture remains our theme song.
However, there’s another old cowboy adage, “Never miss a good chance to shut up.” So, for now I’ll just say . . . thanks, Kemosabes.
“Cowboy Company”
Speech of Commissioner Bart Chilton to the Amcot 2013 Business Conference, Lake Tahoe, California
August 5, 2013
Hey Yeah, Hold Your Horses!
Hey yeah! Much obliged for the introduction. It sure is a fine thing to spend a spell with all you good folks in this pretty part of the American West. I always get a little “giddy-up” when dealing with cooperatives, so it’s a great treat to be with each of you.
When people think of Tahoe, they may ponder “Tahoe, oh—skiing, the Lake, maybe golf or gambling. Heck, let’s go.” But today, well, let’s switch it up and talk about the Old West and Tahoe aglow, back in the day. This is a fitting place to do just that. The Ponderosa Ranch, from Bonanza, was just over yonder, on the Nevada side of the Lake. Remember the Cartwright’s? There was Ben who survived three wives, but begets a son from each one: Adam, Hoss, and Little Joe. And just a few miles from here, they hold the Genoa Cowboy Festival at the site of the first ranch in Nevada. (Not the Mustang Ranch—that’s 15 minutes east of Reno. Hey, you at the door, where ya going?) The first ranch in Nevada was Trimmer Ranch No. 1. Let’s assume there were others. The oldest saloon in Nevada is also in Genoa. A portion of the original bar from the 1800’s is still in use. And, the local phone book lists at least 25 places to “get your boots on” and get a pair.
Right about now, some of you might be thinking, “Whoa, hold your horses there, long hair.” Isn’t this supposed to be about financial regulation or commodity markets or something?” Yeah, Sundance, it is. We’re just going to kick up the dust a bit as we “tumble along with the tumbling tumbleweeds” and have our cordial conversationalizing. After all, like George Strait sings, “I ain’t here for a long time. I’m here for a good time.” So, let’s get to it and talk some about the Old West and our financial markets today.
Has anybody seen the new Lone Ranger movie? Ooh, not too many, eh? It received some rough reviews, although I found a few good ones. It tanked on opening weekend. As of a few days ago, the film had made $85 million in the U.S., and $164 million worldwide. The production budget was $215 million. So, not good, Kemosabe. The whole thing has the good folks at Disney cogitating some on that one. But, I’ll come clean: I’m partial to it. In fact, I really liked it! Yessiree, Bob. (Jarral asked me to refer to Bob Norris as “sir.” Yessiree, Bob. Was that okay, Jarral?) In fact my wife and I saw The Lone Ranger twice. Heck, he’s an American legend. Plus, I’m a patsy for Westerns and the William Tell Overture. Can’tcha just hear that tune? Hi-Yo Silver, away! It really gets you going. You can envision Silver rearing up then taking off like wildfire and galloping along. Lots and lots of action—ooh, ooh yeah!
Well, there’s a lot of action in financial markets too. How smooth was that? But it’s true. The William Tell Overture might as well be the theme music for our work, sun-up to sun-down these days.
Blue Jean Baby & Prospectors
So, let’s travel back those golden days of yesteryear, to the mid-1800’s. The Gold Rush was going strong here in California. Prospectors came to make their fortunes. Some did. Some didn’t. In addition to those gold prospectors, some folks that assisted them also found their fortunes. Think Levi Strauss, who switched very early on from canvas to twilled cotton cloth to make his now-famous pants. He later co-patented, with a Reno tailor, the pants with rivets to make them stronger. It was the birth of blue jeans. “Blue jean baby . . . L.A. lady, seamstress for the band” (sorry). But, it was the birth of blue jeans, if you will. There was also Henry Wells and William Fargo of stagecoach and now banking renown. One of the prospectors, Charles Bowles, had a side job. He robbed Wells Fargo stagecoaches of their strongboxes ‘round these parts. He committed 28 such robberies in Northern California in eight years and became better known as Black Bart. Gotta love the name.
At the same time, a group of market prospectors in Chicago started what would become the Chicago Board of Trade. Commodity prices were in disarray with extreme volatility that didn’t do anyone any good. These market prospectors sought to fix that. Cotton wasn’t one of the original products traded, but soon, it would be.
Here we are, all these years later, and like the Western gold prospectors who changed the way they looked for gold over the years, the market prospectors—in particular the speculators—have also changed, or morphed. The question I ask as a regulator, and I know some of you ask as well, is this: Are markets still performing the purposes envisioned by those folks back in the day? There are a couple of areas, actually some new types of traders and activities, which make me wha wha wha wonder.
The Massive Passive Gang
First, we have seen a “financialization” of commodity markets by a band of traders called Massive Passives—the Massive Passive Gang (they are a “gang” for today). Investors looking to diversify their present-day strongbox portfolios sought out the derivatives world and dumped roughly $200 billion into U.S. regulated futures markets as they were “coming round the mountain” between 2005 and 2008.
Say a pension fund wanted to diversify into commodities—there’s nothing wrong with that from my perspective. They aren’t Desperados. Nevertheless, the type of trading activity they undertake is different from what speculators have typically done. Instead of getting in and out of markets, maybe based upon a drought or other natural disaster, this gang of very large funds, pension funds, some hedge funds, exchange traded funds (ETFs), and the like buy and hold their market positions. They bury them, only to come back a few years later. They are both massive in size, and fairly passive in their trading strategy—the Massive Passive Gang.
Here’s the worrisome part, pardners: too much concentration in markets by too many of the Massive Passive Gang can influence and contribute to price abnormalities. Heck, just one large massive passive can impact price if they are large enough.
Take 2008, when crude went from right around $99 at the beginning of the year to more than $145 in July, then all the way back to $31 in December. All of that took place without much change in supply or demand. Convince me the Massive Passive Gang had no role in that market distortion and I’ll wear chaps and a fringe coat to your next meeting.
On cotton futures markets, absent a few exceptions (uh hum, 2008, pardon me…frog in my throat) since their inception more than 120 years ago, things have been comparatively stable. There are lots of commercial traders, like many of you and other end-user-related traders. Of course, we still have the market speculators. We need the speculators, want ‘em, gotta have ‘em, or we have no markets.
One thing that has changed is the length of the trading day. The markets run nearly 24-7-365. That’s actually caused some problems in cotton, by the way. Also back in 2008, we saw 14 days in about a six week period where markets went lock-limit, 11 of which were before sun-up in New York—ya know, back in the Old States. There was sparse liquidity, and traders in China in the markets, and what would normally not be huge trades pushed prices to the limits. Heck, the markets were locked before folks here had their eggs and bacon.
In response to what was going on in 2008 with the Massive Passive Gang, Congress and President Obama instructed us (as part of the Dodd-Frank financial reform law in 2010) to put in place speculative position limits. Those limits would ensure that regulators have the firepower to run excessive speculation outta these markets. To date, the limits aren’t in place. There’s fierce opposition out there, but we’re fix’n to pony up and fix that soon. In September I expect we’ll get back in the saddle again and put out a proposal on position limits. And, I believe the final limits rule will be in place come January of 2014. This rule, I assure you, won’t be able to be shot down (in a blaze of glory or otherwise).
So, that’s the Massive Passive Gang. Let’s go, daylights burning and we’ve got ground to cover.
The Fastest Gunslingers
There is a lot of debate about who actually was the fastest gun in the West. Some say Doc Holliday or Johnny Ringo deserve the designation. Others suggest Bat Masterson (born Bartholomew, by the way—what’s it about those dandy Western names?). How about Billy the Kid? The Kid thought he was the one, “I’m Billy the Kid,” he said, “…the fastest draw. It’s not arrogance. It’s the truth.” Maybe Wyatt Earp? Nah, he held that, “Fast is fine, but accuracy is everything.” Annie Oakley and Calamity Jane, the renowned sharpshooters, would agree with Sherriff Earp. Some suggest the fastest gun was John Wesley Hardin, also known as “Little Arkansaw.” He claimed to have killed 42 men.
Let’s talk about some other fast guns—market gunslingers. They’re a rough bunch of young guns, and a Wild West breed all their own. Not a horse, like the Lone Ranger’s “Silver,” or a cow, coyote or rattlesnake, but a cheetah. That’s right, a cheetah. Not a card cheater who sits in the gunfighter’s chair in the corner saloon, but a cheetah as in the fastest land animal. Those cats are the fastest trading guns. Sometimes you just gotta mix it up.
Now, I’m asking you to envision a cheetah with a hat (let’s say a ten-gallon hat, just for the hell of it), tooled boots with silver spurs, and a low-slung gun belt on those slim cheetah hips. That cheetah gunslinger is eyeballing us from 40 paces. Will we be fast enough to take him? In truth, nah, probably not. They usually win, those cheetahs, with their fancy spurs. Who do they think they are?
The thing is, those cheetahs gunslingers are always so hell-bent for leather when they trade that they are impacting the ability of you guys, and other end-users, to do what you need to do, to hedge. I mean, pardon you guys to pieces for simply trying to hedge your legitimate business risks. For crying out loud, you aren’t looking for a gunfight. You just wanna do what those original prospectors set in motion all those years ago. Yet, here you are, staring down the barrel of a gun. And . . . that gun is held by a damn cat, with a hat . . . at that!
How Fast is Fast?
How fast are these cheetah gunslingers? Well, it’s about a thousand miles from New York to Chicago. A recent article in the Financial Times pointed out that communications cables laid between the two cities meant that a message could be delivered in 14.5 milliseconds—70 round trips per second. Now that’s fast—cheetah gunslinger fast. But not fast enough for some who use those cables to trade commodities. It’s been reported that at least one company has cut that time down to 13.1 milliseconds and that microwave capability could get it under 10 milliseconds. Holy smokes!
Let me give you some of our own data: over the last year, we analyzed 20 million trading seconds. Of those 20 million, we pinpointed 189,000 seconds, primarily around the open and close of markets. In those 189,000 seconds we found something astounding: cheetahs traded at rates of 100-500 trades per second in a major commodity market! Trading 100 to 500 times per second, as a gang, in one commodity contract? That’s pretty hard to wrap your head around. Heck, it’s easier to imagine our cheetah friends in their gunfighter get-up.
Why this need for speed? It’s not the need to stay alive like an Old West gunfighter, of course not. It’s about the dinero, the loot. A study late last year, which was conducted in conjunction with the CFTC, said in essence that cheetah trading imposes quantifiable costs. Aggressive cheetahs make a lot of money, and they make their biggest paydays when they trade with small, traditional traders. A cheetah trading with a fundamental trader—like a lot of you—makes $1.92 on a $50,000 trade, but if that same trade is made with a small trader, the number goes up to $3.49. This could end up pushing smaller, slow-shooters out of markets and it doesn’t help the fundamental traders either.
But that’s not the only issue with the cheetahs, no sirree.
Ghost Town Liquidity
The name “Tahoe” actually came from the name “Washoe,” which is the name of the Native Americas that inhabited this area for something like 6,000 years. In fact, Washoe City is located just south of Reno. In the 1860’s it was booming with a sawmill for lumber used in Virginia City (ya know, where the Cartwright clan went when they went to town—da ta da da da, da da da, ta da da, da da da daa). Washoe City was even the county seat of Washoe County (it’s now Reno). But today, you can’t even visit Washoe City. It’s all fenced off. Washoe City is an Old West ghost town.
That brings us to another problem area with the cheetah gang. I told you it was like the William Tell Overture—lots going on. In fact, this ghost town thing is sort of a dirty little secret. It involves “wash” trading, where cheetahs (and sometimes others) trade with themselves. They make a bid or offer and they hit it themselves. Putting a price out and hitting it yourself, you take no risk, yet create the impression that a legitimate trade has occurred. That entices others—easy prey—to get into markets. But the liquidity isn’t real. It’s ghost town liquidity. If this was only for a few trades, it wouldn’t make much difference. However, there is a lot of ghost town liquidity. I mean a whole lot. “Voluminous” is the word I’ve used. And if this ghost town trading amounts to wash trading, it’s not only wrong, but based upon the facts and circumstances, it is illegal. That’s because wash trading is clearly unfair to other traders, and it can impact price discovery which is unfair to consumers.
Wash Blockers—20-Mule Team Borax!
One might think the exchanges would put in place what are called “wash blockers.” That sounds like a commercial: “Wash blockers—for cleaner markets!” Remember Death Valley Days? “Brought to you by 20-Mule Team Borax.” The show was Ronald Reagan’s last acting gig before he went into politics.
Wash blocker technology is available and exchanges are starting to put more of an emphasis on it. In my view, traders shouldn’t be able to just opt-in to the technology requirements if they want to. It needs to be mandatory that they utilize wash blocker technology. Otherwise, we’ll still have ghost town liquidity and markets that aren’t necessarily fair and effective.
So, that’s the cheetah gang and we did the Massive Passive Gang. Let’s head down the trail to our last topics.
Bank Ownership
When we think about how the West was won, it had a lot to do with the railroads. As the Iron Horses moved from east to west, towns along the line grew. But towns could never ever have amounted to much without banks. The banks helped build the towns. They made loans to individuals and businesses. They helped fuel economic development. They built communities. Some refer to the Winchester rifle as “The gun that won the West.” But I’ll tell ya, a good case could be made that banks won the West.
However, just like markets have morphed with the Massive Passive Gang, with non-stop trading, with our cheetah gunslingers and their “gee whiz” technology, so too have the banks changed. And it seems some have lost sight of those noble endeavors for which they are known as the country moved west.
A decade ago, in the shifting climate to allow banks more freedom, several policy changes took place. One such change was approved by the Federal Reserve. It allowed the ownership of totally unrelated businesses. The idea was that it was a good thing for the banks to be diversified. It was okay to get away from their sweet spot—ya know . . . banking. Like folks do when they see an opening, the banks got into all sorts of other businesses—businesses which include physical commodities like agriculture, energy or metals. It also includes owing the storage or warehousing facilities of commodities, and/or the delivery mechanisms of commodities—like pipelines, shipping, rail or other transportation interests.
Bank Ownership: The Data
You might wonder, “What it is they actually do own?” Well, let me tell you a story. A couple of weeks ago we rounded up a posse to look and see what actually is owned by the banks. I’m a financial regulator; you’d think it would be a piece of pie to find a list of what they own, right? I mean, it would be understandable if there were certain business reasons why a few particulars of the ownership information might not be available to the public. Nevertheless, you’d think I could get it. After all, banks own commercial interests that can impact prices, and at the same time their trading desks are all over the very same markets. There are obvious conflicts of interest. I’m not saying there have been any violations of the law, but how would we even know?
Our little posse did find that Morgan Stanley has ownership stakes in oil tankers and a fuel distributor. And, of course, they also trade crude oil and other energy contracts. Parts of Citigroup, Goldman Sachs and Bank of America own or have owned power plants. They also trade energy contracts. And, everybody’s been talking about Goldman Sachs holding onto aluminum at warehouses they own. Some say that’s consequently driving the up the price of beer and soda, while the bank collects storage fees. And, they trade aluminum. JP Morgan also owns similar warehouses, although they said last week they may get out of commodities. We’ll see. Oh, and by the way, Barclays and JP Morgan are putting out hundreds of millions of dollars in restitution for getting caught rigging electricity prices. There is that.
But, getting other information on ownership of the banks has been super difficult, at best. Maybe we need a “WANTED” poster:
W A N T E D
Information leading to the apprehension of ownership data related to large investment banks, including but not limited to businesses related to commodities, the storage and warehousing of commodities, and/or the delivery mechanisms of commodities.
This might be a little amusing if it weren’t such a serious thing that the information isn’t readily available. In fact, its sorta deja-oohish in that it’s reminiscent of that period of time, just before the financial crisis, when folks were asking questions about the valuation of credit default swaps (CDSs). Nobody could turn up much of anything. We all know how that troubled tale of tragedy ended . . . in tragedy and economic catastrophe. So, this is a big deal.
Tracking down this information should be an immediate responsibility of regulators. It’s gonna require more bodies and more horses, and maybe that “WANTED” poster, but we need to find out specifically—and comprehensively—what banks own relating to physical commodities. Furthermore, the basic ownership information should be transparent, certainly to regulators. And public information should be easily accessible on the Federal Reserve’s website or someplace where people can view it without needing a bloodhound to track it down.
Bank Ownership: The Work-Around (Volcker & Limits)
There is also a related issue with ownership of commodities by banks. If the banks own the physical commodities, warehousing or delivery mechanisms, they may then contend that their “legitimate business interests” should allow them to hedge those risks, in addition to hedging their financial proprietary risks.
This approach could amount to yet another work-around the Volcker Rule. Recall the Volcker Rule? It’s a provision of Dodd –Frank that requires that banks no longer be able to conduct speculative trading. They may only hedge their legitimate business risk. But, if they own the physical, then it muddies up what is their business risk.
I’ve written to Chairman Bernanke about this issue (and am discussing it for the first time today). In the letter, I urge that the final Volcker Rule be written in a precise and surefooted fashion that allows only for appropriate hedging of banks proprietary risks, but firmly prohibits speculation. I even provided rule text language for his consideration. I won’t vote for a final Volcker Rule unless this language, or something substantially similar, is included in the final text.
Incidentally, owning the physical could also be used as a way around speculative position limits. (I’m working on that one.) We’d be fools to think the bank lawyers aren’t thinking about these work-around end runs.
Bank Ownership: Reverse the Policy!
One easy way to stop the work-around is to simply have the Federal Reserve’s ownership policy reversed. Why can’t the banks, just can’t get back to banking? That’s my preferred policy. I don’t want a bank owning an electric service, or cotton, corn or feedlots. I don’t want banks owning warehouses, whether they have aluminum, gold, silver, or anything else in them. Get back (Jo Jo) to making loans to individuals and businesses to help get our economy on track. We don’t want Cowboy Companies out there. We don’t want a Wild West anymore when it comes to our economy. Do what you did when the West was won, when you helped to build the frontier. That is such an honorable, worthy, noble and essential endeavor. Plus, you were so very good at accomplishing so much!
I hope the Federal Reserve, which announced last week that the policy was being reviewed, actually reverses it. They can and should reverse it. Sure, if they have to grandfather some of the bank ownership in for a time-certain, I get that. The banks shouldn’t be required to take a loss due to the policy change. But the policy should, in fact, change, and soon. And, if the Fed doesn’t do so, I expect there will be efforts in Congress, and I hope there are, to prohibit such ownership by changing the law.
Cowboy Ethics
Our trail has come to an end. However, I’d like to leave you with this: there’s a book out by a gentleman named James P. Owen who’s a cowboy and western lover and who also happens to be a 40-year veteran of Wall Street. The book’s called Cowboy Ethics. It is sort of a coffee table book with a message—great photography, too. Owen opines that businesses today, especially the behemoth banks on Wall Street, need to live less by the “greed is good” mantra and more like the Code of the West. “When you make a promise, keep it.” “Remember that some things aren’t for sale.” “Know where to draw the line.” Do those sound like mantras for Wall Street? Unfortunately—not so much. You folks can recall the horrific headlines of malfeasance as well as anyone. A recent study queried 250 financial service industry insiders and 23 percent said they had “observed or had firsthand knowledge of wrongdoing in the workplace.”
For a while now, I’ve been saying that there needs to be a culture shift in the financial sector. How about the responsibility to customers, to society and the economy? Maybe the Code of the West is just the thing.
Conclusion—Shut Up
There’s a scene near the end of The Lone Ranger where, as the sun is setting, the masked man rears up on Silver, and says the famous “Hi-Yo Silver, away!”—only time in the movie he actually says it. And Johnny Depp, as Tonto, says, “Don’t ever do that again.” Well, I’m not going to stop working on these issues. I’m going to remember the Old West and how and why these markets began. I’m going to talk about them and work on them again and again. Even if the William Tell Overture remains our theme song.
However, there’s another old cowboy adage, “Never miss a good chance to shut up.” So, for now I’ll just say . . . thanks, Kemosabes.
LOS ALAMOS SCIENTIST TO DISCUSS IF BEHAVIOR IS PRODUCT OF DNA OR ENVIRONMENT
 |
| Photo Caption: Cells in the human body contains strands of DNA nearly 10 feet long that look like this and are packed into cellular sacks less than a millionth of an inch in diameter. Credit: LANL |
Lab’s Frontiers in Science lectures focus on epigenetics
Is behavior hardwired by DNA or a product of environment?
LOS ALAMOS, N.M., August 7, 2013—Los Alamos National Laboratory scientist Karissa Sanbonmatsu, will discuss epigenetics in a series of Frontiers in Science lectures beginning Tuesday, Aug. 13, at the New Mexico Museum of Natural History and Science in Albuquerque.
The 7 p.m. talk, titled “Nature, Nurture or Neither: The New Science of Epigenetics,” focuses on the age-old question of “nature versus nurture,” and also looks at how social interactions and environmental factors play a role in programming your DNA.
“Over the past decade, epigenetics research has and continues to unveil a whole new kind of biological circuitry,” Sanbonmatsu said. “The act of a mother nurturing or not nurturing her baby programs DNA; so literally, nurture directly affects nature in a way that nature and nurture are fused together.”
The new science of epigenetics studies how DNA is reprogrammed at the molecular level. DNA is often considered the blueprint of life, however, environmental factors and social interactions during formative years can affect genes for more than three generations. This heritable switching is called “epigenetics” and has been associated with diet, exercise, mate preference, depression, autism, eating disorders and response to abuse.
Sanbonmatsu, of Los Alamos’ Theoretical Biology and Biophysics Group, will discuss the new science of epigenetics and how it is related to a wide range of biological phenomena. Her research involves how DNA can be reprogrammed throughout life and how the missing link could be RNA molecules.
“We have been lucky enough to land on the cutting edge of this field, in the area of long non-coding RNAs, which has absolutely exploded in the last three years,” Sanbonmatsu said. “With many suggesting that the number of long non-coding RNAs may rival the number of proteins, the landscape of molecular biology may look entirely different ten years from now."
These Frontiers in Science lectures all begin at 7 p.m., at the following locations:
Tuesday, Aug. 13, New Mexico Museum of Natural History and Science, 1801 Mountain Road NW, Albuquerque
Thursday, Aug. 15, Nick L. Salazar Center for the Arts, Northern New Mexico College, 921 Paseo de Oñate, Española
Tuesday, Aug. 20, Duane W. Smith Auditorium, Los Alamos High School, Los Alamos
Thursday, Aug. 22, James A. Little Theater, New Mexico School for the Deaf, 1060 Cerrillos Road, Santa Fe.
Sponsored by the Fellows of Los Alamos National Laboratory, the Frontiers in Science lecture series is intended to increase local public awareness of the diversity of science and engineering research at the Laboratory.
"DEEP TIME" FUTURE PREDICTIONS
 |
| Time spiral: looking back through time to understand future climate change. Credit: NASA |
Back to the future: Scientists look into Earth's "Deep Time" to predict future effects of climate change
Climate change alters the way in which species interact with one another--a reality that applies not just to today or to the future, but also to the past, according to a paper published by a team of researchers in this week's issue of the journal Science.
"We found that, at all time scales, climate change can alter biotic interactions in very complex ways," said paleoecologist Jessica Blois of the University of California, Merced, the paper's lead author.
"If we don't incorporate this information when we're anticipating future changes, we're missing a big piece of the puzzle."
Blois asked for input from researchers who study "deep time," or the very distant past, as well as those who study the present, to help make predictions about what the future holds for life on Earth as climate shifts.
Co-authors of the paper are Phoebe Zarnetske of Yale University, Matthew Fitzpatrick of the University of Maryland, and Seth Finnegan of the University of California, Berkeley.
"Climate change and other human influences are altering Earth's living systems in big ways, such as changes in growing seasons and the spread of invasive species," said Alan Tessier, program director in the National Science Foundation's (NSF) Division of Environmental Biology, which co-funded the research with NSF's Division of Earth Sciences.
"This paper highlights the value of using information about past episodes of rapid change from Earth's history to help predict future changes to our planet's ecosystems."
Scientists are seeing responses in many species, Blois said, including plants that have never been found in certain climates--such as palms in Sweden--and animals like pikas moving to higher elevations as their habitats grow too warm.
"The worry is that the rate of current and future climate change is more than species can handle," Blois said.
The researchers are studying how species interactions may change between predators and prey, and between plants and pollinators, and how to translate data from the past and present into future models.
"One of the most compelling current questions science can ask is how ecosystems will respond to climate change," said Lisa Boush, program director in NSF's Division of Earth Sciences.
"These researchers address this using the fossil record and its rich history," said Boush. "They show that climate change has altered biological interactions in the past, driving extinction, evolution and the distribution of species.
"Their study allows us to better understand how modern-day climate change might influence the future of biological systems and the rate at which that change will occur."
While more research is needed, Blois said, changes can be observed today as well as in the past, although it's harder to gather information from incomplete fossil records.
Looking back, there were big changes at the end of major climate change periods, such as the end of the last Ice Age when large herbivores went extinct.
Without those mega-eaters to keep certain plants at bay, new communities of flora developed, most of which in turn are now gone.
"People used to think climate was the major driver of all these changes," Blois said, "but it's not just climate. It's also extinction of the megafauna, changes in the frequency of natural fires, and expansion of human populations. They're all linked."
People are comfortable with the way things have been, said Blois. "We've known where to plant crops, for example, and where to find water."
Now we need to know how to respond, she said, to changes that are already happening--and to those coming in the near future.
-NSF-
Friday, August 9, 2013
UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT FOR WEEKENDING JULY 27, 2013
FROM: U.S. DEPARTMENT OF LABOR
SEASONALLY ADJUSTED DATA
In the week ending August 3, the advance figure for seasonally adjusted initial claims was 333,000, an increase of 5,000 from the previous week's revised figure of 328,000. The 4-week moving average was 335,500, a decrease of 6,250 from the previous week's revised average of 341,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending July 27, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 27 was 3,018,000, an increase of 67,000 from the preceding week's unrevised level of 2,951,000. The 4-week moving average was 3,023,750, a decrease of 2,250 from the preceding week's unrevised average of 3,026,000.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 286,738 in the week ending August 3, an increase of 5,285 from the previous week. There were 320,219 initial claims in the comparable week in 2012.
The advance unadjusted insured unemployment rate was 2.3 percent during the week ending July 27, unchanged from the prior week's unrevised rate. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,954,988, an increase of 27,804 from the preceding week's revised level of 2,927,184. A year earlier, the rate was 2.5 percent and the volume was 3,242,883.
The total number of people claiming benefits in all programs for the week ending July 20 was 4,520,948, a decrease of 174,418 from the previous week. There were 5,750,327 persons claiming benefits in all programs in the comparable week in 2012.
No state was triggered "on" the Extended Benefits program the week ending July 20.
Initial claims for UI benefits filed by former Federal civilian employees totaled 2,149 in the week ending July 27, a decrease of 130 from the prior week. There were 2,205 initial claims filed by newly discharged veterans, a decrease of 17 from the preceding week.
There were 20,596 former Federal civilian employees claiming UI benefits for the week ending July 20, an increase of 588 from the previous week. Newly discharged veterans claiming benefits totaled 34,312, a decrease of 698 from the prior week.
States reported 1,516,275 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending July 20, a decrease of 48,242 from the prior week. There were 2,412,938 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending July 20 were in Puerto Rico (4.9), New Jersey (3.7), Alaska (3.5), Connecticut (3.4), Pennsylvania (3.3), New Mexico (3.1), California (3.0), Nevada (2.9), Illinois (2.8), New York (2.8), Rhode Island (2.8), and Virgin Islands (2.8).
The largest increases in initial claims for the week ending July 27 were in Idaho (+264), Wisconsin (+179), South Dakota (+115), Arkansas (+90), and Hawaii (+61), while the largest decreases were in California (-21,479), Michigan (-8,647), Missouri (-3,208), Georgia (-2,951), and Texas (-2,782).
SEASONALLY ADJUSTED DATA
In the week ending August 3, the advance figure for seasonally adjusted initial claims was 333,000, an increase of 5,000 from the previous week's revised figure of 328,000. The 4-week moving average was 335,500, a decrease of 6,250 from the previous week's revised average of 341,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending July 27, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending July 27 was 3,018,000, an increase of 67,000 from the preceding week's unrevised level of 2,951,000. The 4-week moving average was 3,023,750, a decrease of 2,250 from the preceding week's unrevised average of 3,026,000.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 286,738 in the week ending August 3, an increase of 5,285 from the previous week. There were 320,219 initial claims in the comparable week in 2012.
The advance unadjusted insured unemployment rate was 2.3 percent during the week ending July 27, unchanged from the prior week's unrevised rate. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,954,988, an increase of 27,804 from the preceding week's revised level of 2,927,184. A year earlier, the rate was 2.5 percent and the volume was 3,242,883.
The total number of people claiming benefits in all programs for the week ending July 20 was 4,520,948, a decrease of 174,418 from the previous week. There were 5,750,327 persons claiming benefits in all programs in the comparable week in 2012.
No state was triggered "on" the Extended Benefits program the week ending July 20.
Initial claims for UI benefits filed by former Federal civilian employees totaled 2,149 in the week ending July 27, a decrease of 130 from the prior week. There were 2,205 initial claims filed by newly discharged veterans, a decrease of 17 from the preceding week.
There were 20,596 former Federal civilian employees claiming UI benefits for the week ending July 20, an increase of 588 from the previous week. Newly discharged veterans claiming benefits totaled 34,312, a decrease of 698 from the prior week.
States reported 1,516,275 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending July 20, a decrease of 48,242 from the prior week. There were 2,412,938 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity.
The highest insured unemployment rates in the week ending July 20 were in Puerto Rico (4.9), New Jersey (3.7), Alaska (3.5), Connecticut (3.4), Pennsylvania (3.3), New Mexico (3.1), California (3.0), Nevada (2.9), Illinois (2.8), New York (2.8), Rhode Island (2.8), and Virgin Islands (2.8).
The largest increases in initial claims for the week ending July 27 were in Idaho (+264), Wisconsin (+179), South Dakota (+115), Arkansas (+90), and Hawaii (+61), while the largest decreases were in California (-21,479), Michigan (-8,647), Missouri (-3,208), Georgia (-2,951), and Texas (-2,782).
SECRETARY OF STATE KERRY'S REMARKS ON ANNIVERSARY OF THE EAST AFRICA EMBASSY BOMBINGS
FROM: U.S. STATE DEPARTMENT
Fifteenth Anniversary of East Africa Embassy Bombings
Press Statement
John Kerry
Secretary of State
Washington, DC
August 7, 2013
On the fifteenth anniversary of the U.S. Embassy bombings in Kenya and Tanzania, our thoughts and prayers are with the survivors and innocent victims of these cowardly attacks.
We honor the memory of the over 200 people who lost their lives, and we remember the nearly 5,000 who were injured.
The victims included American, Kenyan, and Tanzanian employees of our embassies.
Our continued presence in the region and our enduring friendship with the people of Kenya and Tanzania remind us that, despite the devastation and loss of life, the terrorists failed.
We are committed to bringing them all to justice.
Tragedies like these also remind us why embassy security and the safety of our personnel and visitors remain a priority for the U.S. Department of State.
Working closely with our African partners, we will continue to combat terrorism while we keep our doors open to all those of good will.
Fifteenth Anniversary of East Africa Embassy Bombings
Press Statement
John Kerry
Secretary of State
Washington, DC
August 7, 2013
On the fifteenth anniversary of the U.S. Embassy bombings in Kenya and Tanzania, our thoughts and prayers are with the survivors and innocent victims of these cowardly attacks.
We honor the memory of the over 200 people who lost their lives, and we remember the nearly 5,000 who were injured.
The victims included American, Kenyan, and Tanzanian employees of our embassies.
Our continued presence in the region and our enduring friendship with the people of Kenya and Tanzania remind us that, despite the devastation and loss of life, the terrorists failed.
We are committed to bringing them all to justice.
Tragedies like these also remind us why embassy security and the safety of our personnel and visitors remain a priority for the U.S. Department of State.
Working closely with our African partners, we will continue to combat terrorism while we keep our doors open to all those of good will.
3 MS-13 LEADERS FOUND GUILTY OF RACKETEERING AND MORE CHARGES RELATED TO MULTIPLE MURDERS
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, August 6, 2013
Three MS-13 Leaders Found Guilty of Racketeering and Additional Charges for Multiple Murders and Attacks
Twelve Others Have Pleaded Guilty in the Case
Three leaders of MS-13 in Washington, D.C., were found guilty by a federal jury today of conspiring to participate in racketeering activity and other charges stemming from their roles in murders, extortion and other violent crimes in the Washington area.
The verdicts, which followed a month-long trial, were announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Ronald C. Machen Jr. of the District of Columbia; Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI) in Washington; and Cathy L. Lanier, Chief of the Washington, D.C., Metropolitan Police Department (MPD).
“Today, a jury has found three defendants guilty of committing heinous crimes as part of their membership in a brutal international criminal organization that has terrorized communities throughout the United States and Central America,” said Acting Assistant Attorney General Raman. “As a result of this successful investigation and prosecution, these violent gang members now face substantial prison sentences.”
“After a month-long trial, this jury delivered the message that MS-13 and its brutal brand of violence will not be tolerated in the District of Columbia,” said U.S. Attorney Machen. “These three killers now face life in prison for their outrageous crimes, including the stabbing death of a 14-year-old boy in Columbia Heights. I want to thank the prosecutors and our law enforcement partners who have dedicated years to investigating and prosecuting this transnational gang. The District is safer with these murderers behind bars.”
“This verdict represents the consequences for the decisions made and the lifestyle choices of the three convicted gang members,” said Special Agent in Charge Torres. “Investigating violent crimes committed by trans-national gang members is a priority for HSI.”
“The convictions of these three violent gang leaders should send a clear message to the members of this ruthless, international criminal organization that gang activity will not be tolerated in our communities,” said Police Chief Lanier. “I applaud the hard work and dedication by the members of the Metropolitan Police Department and our law enforcement partners who helped make today’s convictions possible. Our communities will be safer as a result.”
Yester Ayala, 22, aka “Freeway” and “Daddy Yankee,” of Washington; Noe Machado-Erazo, aka “Gallo,” 30, of Wheaton, Md.; and Jose Martinez-Amaya, 26, aka “Crimen,” of Brentwood, Md., were each found guilty in U.S. District Court in the District of Columbia. At sentencing, scheduled for Nov. 4, 2013, each of the defendants faces a maximum sentence of life in prison.
Ayala was found guilty of one count of conspiracy to participate in racketeering activity, two counts of murder in aid of racketeering, one count of first-degree premeditated murder and one count of second-degree murder. Machado-Erazo was found guilty of conspiracy to participate in racketeering activity, murder in aid of racketeering and possession of a firearm during a crime of violence. Martinez-Amaya was found guilty of conspiracy to participate in racketeering activity, murder in aid of racketeering and possession of a firearm during a crime of violence.
The government’s evidence showed that MS-13, a large gang that operates in the United States and Central America, engages in racketeering activity including murder, narcotics distribution, extortion, robberies, obstruction of justice and other crimes. The gang has numerous rules, such as enduring a beating of 13 seconds before becoming a member; killing rival gang members; and staying unfailingly loyal.
According to the government’s evidence, Machado-Erazo was a member and Martinez-Amaya was a leader of the Normandie clique, one of a number of smaller MS-13 groups operating in the Washington area. Ayala was a leader of the Sailors, another clique. The local cliques often act together, and evidence showed that Machado-Erazo was the leader of a program of cliques that worked together. According to evidence presented in court, the local MS-13 cliques act in accordance with the international MS-13’s strictures and have frequent contact with MS-13 leadership in El Salvador. The evidence showed that two of the murders were committed on orders from MS-13 leadership in El Salvador.
The three defendants are among numerous people indicted by a grand jury in 2010 following a federal investigation. Twelve others have pleaded guilty to charges in the case.
The range of criminal activity alleged in the indictment includes acts committed from 2008 through 2010 in the District of Columbia, Maryland, Virginia and other states.
Ayala was convicted of taking part in two murders in 2008, and Machado-Erazo and Martinez-Amaya were convicted of taking part in the murder of another victim.
The government presented evidence that Ayala helped carry out orders to murder Louis Alberto Membreno-Zelaya, a fellow MS-13 member who had removed his gang tattoos. Membreno-Zelaya, 27, was stabbed at least 20 times, according to evidence presented in court. His body was found on Nov. 6, 2008, in Northwest Washington.
The second murder, according to evidence presented in court, took place in the late afternoon of Dec. 12, 2008. Ayala joined in on an attack against Giovanni Sanchez, 14, near the Columbia Heights Metro station in Washington. Giovanni had 11 stab wounds, and witnesses identified Ayala as one of the assailants.
According to evidence presented at trial, Machado-Erazo and Martinez-Amaya took part in the killing of Felipe Enriquez, 25, whose body was found on March 31, 2010, in Montgomery County, Md. Enriquez, another fellow MS-13 member, was fatally shot. Evidence presented during trial showed that Machado-Erazao provided the gun and Martinez-Amaya committed the shooting.
This case was prosecuted by Assistant U.S. Attorney Nihar Mohanty of the District of Columbia and Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section.
The case was investigated by ICE-HSI and the MPD. Assistance was provided by the Montgomery County and the Prince George’s County, Md. Police Departments, the State’s Attorney’s Office for Montgomery County, the U.S. Attorney’s Office for the District of Maryland and the U.S. Attorney’s Office for the Eastern District of Virginia. Assistance was provided by the Organized Crime Drug Enforcement Task Force (OCDETF).
Tuesday, August 6, 2013
Three MS-13 Leaders Found Guilty of Racketeering and Additional Charges for Multiple Murders and Attacks
Twelve Others Have Pleaded Guilty in the Case
Three leaders of MS-13 in Washington, D.C., were found guilty by a federal jury today of conspiring to participate in racketeering activity and other charges stemming from their roles in murders, extortion and other violent crimes in the Washington area.
The verdicts, which followed a month-long trial, were announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Ronald C. Machen Jr. of the District of Columbia; Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI) in Washington; and Cathy L. Lanier, Chief of the Washington, D.C., Metropolitan Police Department (MPD).
“Today, a jury has found three defendants guilty of committing heinous crimes as part of their membership in a brutal international criminal organization that has terrorized communities throughout the United States and Central America,” said Acting Assistant Attorney General Raman. “As a result of this successful investigation and prosecution, these violent gang members now face substantial prison sentences.”
“After a month-long trial, this jury delivered the message that MS-13 and its brutal brand of violence will not be tolerated in the District of Columbia,” said U.S. Attorney Machen. “These three killers now face life in prison for their outrageous crimes, including the stabbing death of a 14-year-old boy in Columbia Heights. I want to thank the prosecutors and our law enforcement partners who have dedicated years to investigating and prosecuting this transnational gang. The District is safer with these murderers behind bars.”
“This verdict represents the consequences for the decisions made and the lifestyle choices of the three convicted gang members,” said Special Agent in Charge Torres. “Investigating violent crimes committed by trans-national gang members is a priority for HSI.”
“The convictions of these three violent gang leaders should send a clear message to the members of this ruthless, international criminal organization that gang activity will not be tolerated in our communities,” said Police Chief Lanier. “I applaud the hard work and dedication by the members of the Metropolitan Police Department and our law enforcement partners who helped make today’s convictions possible. Our communities will be safer as a result.”
Yester Ayala, 22, aka “Freeway” and “Daddy Yankee,” of Washington; Noe Machado-Erazo, aka “Gallo,” 30, of Wheaton, Md.; and Jose Martinez-Amaya, 26, aka “Crimen,” of Brentwood, Md., were each found guilty in U.S. District Court in the District of Columbia. At sentencing, scheduled for Nov. 4, 2013, each of the defendants faces a maximum sentence of life in prison.
Ayala was found guilty of one count of conspiracy to participate in racketeering activity, two counts of murder in aid of racketeering, one count of first-degree premeditated murder and one count of second-degree murder. Machado-Erazo was found guilty of conspiracy to participate in racketeering activity, murder in aid of racketeering and possession of a firearm during a crime of violence. Martinez-Amaya was found guilty of conspiracy to participate in racketeering activity, murder in aid of racketeering and possession of a firearm during a crime of violence.
The government’s evidence showed that MS-13, a large gang that operates in the United States and Central America, engages in racketeering activity including murder, narcotics distribution, extortion, robberies, obstruction of justice and other crimes. The gang has numerous rules, such as enduring a beating of 13 seconds before becoming a member; killing rival gang members; and staying unfailingly loyal.
According to the government’s evidence, Machado-Erazo was a member and Martinez-Amaya was a leader of the Normandie clique, one of a number of smaller MS-13 groups operating in the Washington area. Ayala was a leader of the Sailors, another clique. The local cliques often act together, and evidence showed that Machado-Erazo was the leader of a program of cliques that worked together. According to evidence presented in court, the local MS-13 cliques act in accordance with the international MS-13’s strictures and have frequent contact with MS-13 leadership in El Salvador. The evidence showed that two of the murders were committed on orders from MS-13 leadership in El Salvador.
The three defendants are among numerous people indicted by a grand jury in 2010 following a federal investigation. Twelve others have pleaded guilty to charges in the case.
The range of criminal activity alleged in the indictment includes acts committed from 2008 through 2010 in the District of Columbia, Maryland, Virginia and other states.
Ayala was convicted of taking part in two murders in 2008, and Machado-Erazo and Martinez-Amaya were convicted of taking part in the murder of another victim.
The government presented evidence that Ayala helped carry out orders to murder Louis Alberto Membreno-Zelaya, a fellow MS-13 member who had removed his gang tattoos. Membreno-Zelaya, 27, was stabbed at least 20 times, according to evidence presented in court. His body was found on Nov. 6, 2008, in Northwest Washington.
The second murder, according to evidence presented in court, took place in the late afternoon of Dec. 12, 2008. Ayala joined in on an attack against Giovanni Sanchez, 14, near the Columbia Heights Metro station in Washington. Giovanni had 11 stab wounds, and witnesses identified Ayala as one of the assailants.
According to evidence presented at trial, Machado-Erazo and Martinez-Amaya took part in the killing of Felipe Enriquez, 25, whose body was found on March 31, 2010, in Montgomery County, Md. Enriquez, another fellow MS-13 member, was fatally shot. Evidence presented during trial showed that Machado-Erazao provided the gun and Martinez-Amaya committed the shooting.
This case was prosecuted by Assistant U.S. Attorney Nihar Mohanty of the District of Columbia and Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section.
The case was investigated by ICE-HSI and the MPD. Assistance was provided by the Montgomery County and the Prince George’s County, Md. Police Departments, the State’s Attorney’s Office for Montgomery County, the U.S. Attorney’s Office for the District of Maryland and the U.S. Attorney’s Office for the Eastern District of Virginia. Assistance was provided by the Organized Crime Drug Enforcement Task Force (OCDETF).
COURT ORDERS TRADER TO PAY OVER $7.5 MILLION FOR ROLE IN COMMODITY FUTURES FRAUD
FROM: COMMODITY FUTURES TRADING COMMISSION
Federal Court in Illinois Orders Chicago-Based Trader Bradley Scott Schiller to Pay more than $7.5 Million in Restitution and a Civil Monetary Penalty for a Multi-Million Dollar Commodity Futures Fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Thomas M. Durkin of the U.S. District Court for the Northern District of Illinois entered a Consent Order for Permanent Injunction (Order) requiring defendant Bradley Scott Schiller, of Chicago, Illinois, to pay restitution of approximately $4.565 million and a civil monetary penalty of $3 million for commodity futures fraud. The Order also imposes permanent trading and registration bans, among other sanctions.
The Order stems from a CFTC Enforcement complaint filed on May 24, 2012 (see CFTC Press Release 6262-12). The Order finds that from at least January 2008 through approximately May 2012, Schiller fraudulently solicited approximately $7.8 million from at least six investors for trading futures, and that Schiller misappropriated investors’ funds and issued false account statements to customers in order to perpetuate his fraud. According to the Order, Schiller, a former floor broker, told prospective investors that he was a successful trader and showed prospective investors altered account statements to bolster his claims when he was soliciting funds. However, according to the Order, Schiller opened no accounts in the name of his investors, misappropriated approximately $3 million to pay for personal expenses and to re-pay earlier investors and lost approximately $1.6 million in trading in an account in his own name.
The CFTC appreciates the assistance of the U.S. Attorney’s Office, Northern District of Illinois, and the Federal Bureau of Investigation, Chicago Division.
The CFTC Division of Enforcement staff members responsible for this case are Jennifer Diamond, Judith McCorkle, Joseph Konizeski, Scott Williamson, Rosemary Hollinger and Richard B. Wagner.
Last Updated: August 6, 2013
Federal Court in Illinois Orders Chicago-Based Trader Bradley Scott Schiller to Pay more than $7.5 Million in Restitution and a Civil Monetary Penalty for a Multi-Million Dollar Commodity Futures Fraud
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Thomas M. Durkin of the U.S. District Court for the Northern District of Illinois entered a Consent Order for Permanent Injunction (Order) requiring defendant Bradley Scott Schiller, of Chicago, Illinois, to pay restitution of approximately $4.565 million and a civil monetary penalty of $3 million for commodity futures fraud. The Order also imposes permanent trading and registration bans, among other sanctions.
The Order stems from a CFTC Enforcement complaint filed on May 24, 2012 (see CFTC Press Release 6262-12). The Order finds that from at least January 2008 through approximately May 2012, Schiller fraudulently solicited approximately $7.8 million from at least six investors for trading futures, and that Schiller misappropriated investors’ funds and issued false account statements to customers in order to perpetuate his fraud. According to the Order, Schiller, a former floor broker, told prospective investors that he was a successful trader and showed prospective investors altered account statements to bolster his claims when he was soliciting funds. However, according to the Order, Schiller opened no accounts in the name of his investors, misappropriated approximately $3 million to pay for personal expenses and to re-pay earlier investors and lost approximately $1.6 million in trading in an account in his own name.
The CFTC appreciates the assistance of the U.S. Attorney’s Office, Northern District of Illinois, and the Federal Bureau of Investigation, Chicago Division.
The CFTC Division of Enforcement staff members responsible for this case are Jennifer Diamond, Judith McCorkle, Joseph Konizeski, Scott Williamson, Rosemary Hollinger and Richard B. Wagner.
Last Updated: August 6, 2013
Subscribe to:
Posts (Atom)