This is Chapter Four of a multi-chapter story…
Chapter 1 - Was The United States Attacked By Financial Terrorists?
Chapter 2 - The Money Weapon And A Jihad Bigger Than Bin Laden
Chapter 3 - Michael Milken And The BCCI Criminal Enterprise
Chapter 4 - Michael Milken, The Mafia, & Some Powerful Hedge Funds
Chapter 5 - The Russians, Their Friends, & Bernie Madoff's Bear Market
Chapter 6 - Man Financial And Al-Qaeda's Wash Trades
Chapter 7 - The Bernie Madoff Cover-Up, The Blind-Sheikh, & The RLevi2 Algo Market Manipulation Machine
Chapter 8 - Al-Qaeda, Iran, And Some Mafia Tied Agents of Economic Sabotage
Chapter 9 - The Collapse Of MJK Clearing, A Few Loose Nukes, & A Lot Of Self-Destruct CDOs
Again we remind you, there is a lot of information and we would highly advise you fact check anything you question.
Chapter Four:
When Michael Milken and his famous co-conspirator, Ivan Boesky, were convicted on multiple counts of stock manipulation and insider trading, the media reported that Boesky not only cooperated with prosecutors, but delivered the key evidence that resulted in Milken receiving a prison sentence of ten years, three of which he served.These reports were false. As was first noted by Pulitzer Prize winning author James Stewart in “Den of Thieves” (the seminal work on the government’s prosecution of Milken), a careful reading of Milken’s 99-count indictment makes clear that Boesky provided little information to the government. To the contrary, he explained that he could not testify against Milken because he was afraid of what might happen to him. As Boesky put it, Milken had “friends in Vegas” – an apparent reference to the Mafia.Soon after Boesky expressed his fears, one of Milken’s closest associates, John Mulheren, got into his car and headed towards Boesky’s house. Police officers had been watching Mulheren, and knew that he had in his car a gym bag loaded with two handguns, a 12-guage shotgun, and a .233 caliber Galil assault rifle.Suspecting that Mulheren planned to murder Boesky, the cops arrested Mulheren and put him in jail, where, according to James Stewart, he spent most of his time conversing with Anthony “Fat Tony” Salerno, who had been the top boss of the Genovese Mafia family until he was jailed on charges of manslaughter.Nobody has produced evidence that Milken had anything to do with Mulheren’s attempted assassination of Boesky. In fact, it seems unlikely that Milken would kill his old friend Boesky. As we will see, the two men remain on close terms today.Milken also remained close with Mulheren until Mulheren’s death of a heart attack in 2003. To this day, Millennium Management, a major hedge fund founded by Mulheren and now run by Izzy Englander, remains a key component of the Milken network.Perhaps Mulheren (whom the government was investigating for his role in the nationwide stock manipulation network that Milken operated in the 1980s) only meant to threaten Boesky. Or perhaps, as some have said, Mulheren was taking the wrong psychiatric medications. Whatever the case, there is no question that Boesky was right when he said that Milken had “friends in Vegas.”Milken’s best friend in the world, according to Milken, is Steve Wynn, the Las Vegas casino mogul. Meanwhile, Wynn’s best friends in the world, according to Scotland Yard, are Michael Milken and the dons of the Genovese Mafia family.Indeed, according to a declassified report written in the late 1980s by Scotland Yard investigators, Wynn had “been operating under the aegis of the Genovese Mafia since he first went to Las Vegas in the 1960s.” Scotland Yard noted that both Wynn and his father had a long standing relationship with the above-mentioned Anthony “Fat Tony” Salerno.Another of Milken’s closest associates was Fred Carr, who was one of the select friends who helped perpetrate Milken’s junk bond merry-go-round scam. Carr used Milken’s junk bond finance to seize control of Executive Life, a massive insurance and S&L conglomerate that was looted and later demolished (that is, “busted-out”). Prior to taking control of Executive Life, Carr had been a principal with Investors Overseas Service, which was, at the time, the biggest Ponzi scheme in history.One of Investors Overseas’ key feeders (that is, the person who fed the Ponzi much of its money, which he had raised from unwitting investors) was John Pullman, whom the U.S. government had named as a close associate of that same Genovese Mafia boss – Anthony “Fat Tony” Salerno. Meanwhile, Sylvian Ferdman, a Genovese Mafia courier, was routing money into the Investor’s Overseas racket from clients in South America.Another key component of Milken’s junk bond merry-go-round in the 1980s was MDC Global, an insurance and investment company that controlled a brokerage called Blinder, Robinson. The eponymous head of Blinder, Robinson was Milken crony Meyer Blinder, whose diamond-encrusted pinky ring and thick, gold chains marked him as one among the new breed of financial operators who had descended upon Wall Street.Blinder, Robinson was first indicted in 1989. Afterward, it came to be known as “Blind’em and Rob’em” because it was not only a key player in Milken’s nationwide stock manipulation network, but also among the most crooked Mafia brokerages in America.Among the miscreants who manipulated stocks in league with Blinder, Robinson was Thomas Quinn, a capo in the Genovese Mafia family. Another Milken network man who manipulated stocks with Blinder, Robinson was Arnold Kimmes, also known as Charlie Kimmes. Since Kimmes had been named in a widely disseminated 1978 New York crime task force report as a “major organized crime figure”, Milken likely knew whom he was dealing with.Quinn spent part of the year manipulating stocks in New York, and part of the year in Cannes, where he had a pink villa overlooking the Mediterranean – a pink villa that he had named Le Mas des Roses, or Farmhouse of the Roses, suggesting that some ruthless Mafia figures appreciate things that are cute and pretty. In 1989, as authorities in the U.S. were closing in on Milken, French police stormed Le Mas des Roses, kicking down doors, shouting, ransacking the place, hauling away evidence, and arresting Quinn, who ended up in prison.Kimmes was arrested soon after. He escaped prison by ratting on Meyer Blinder, who did not escape prison. In 2000, Richard Walker, then the SEC’s director of enforcement, gave testimony to Congress in which he described Blinder, Robinson as being part of a network of brokerages — including D.H. Blair, Rooney Pace, FN Wolf, A.R. Baron, and many others – that were tied to organized crime. Most of these brokerages had been financed by Michael Milken or his closest associates.The proprietor of Rooney, Pace, which was financed directly by Milken, was Randolph Pace, who was later indicted for running a $200 million stock manipulation scheme with another Milken crony, Judah Wernick. Both Pace and Wernick were also tied to a massive scandal that saw Russian Mafia figures, including Semion Mogilevich — described by British authorities as the “most dangerous mobster in the world” — launder upwards of $7 billion through the Bank of New York in the late 1990s.Many of the other brokerages mentioned in the SEC’s Congressional testimony – including D.H. Blair, A.R. Baron, and FN Wolf — were financed by Zev Wolfson, a Milken crony who also financed Millennium, the hedge fund founded by Boesky’s prospective assassin John Mulheren.D.H. Blair was particularly close to Milken. It was founded by Morty Davis, and run with help from Davis’s son-in-law, Lindsay Rosenwald, who served as vice chairman. After Milken went to prison in 1991, one of Milken’s top Drexel, Burnham employees, Richard Maio, became president of D.H. Blair.In 2000, D.H. Blair was charged on multiple counts of stock manipulation and forced to shut its doors. To describe the full extent of D.H. Blair’s relations with La Cosa Nostra and the Russian Mafia, I would have to bore you with a list of names so long that this story would begin to read like a telephone directory.But to give you just a small sampling, I will mention that the people indicted in just one of the hundreds of stock manipulation schemes perpetrated by D.H. Blair included: Frank Coppa, a capo in the Bonanno Mafia family; Edward Garafola, a soldier in the Gambino Mafia family; Daniel Persico, a capo in Colombo Mafia family; and Ernest Montevecchi, a soldier in the Genovese Mafia family.After Milken got out of prison, he hooked up again with D.H. Blair’s former vice chairman, Lindsay Rosenwald, who is now one of the most powerful hedge fund managers in America, and perhaps the single biggest player in the world of biotech stocks.I have written a book-length Deep Capture article (“The Story of Dendreon”) describing how Milken and Rosenwald, in cahoots with other Mafia-tied miscreants and hedge funds, including Millennium, have sought to destroy biotech companies that are developing promising medicines while promoting Rosenwald companies whose medicines are killing people. That story is a good introduction to the Milken network, but it doesn’t begin to describe the destruction this network has wrought.Many other powerful hedge fund managers operating today got their start in the 1980s working for Milken-financed Mafia brokerages. And these hedge fund managers are among Milken’s closest associates. Again, when I refer to “closest associates,” I mean no more than a few dozen people who are intimately tied together.SEC filings and other evidence compiled by Deep Capture show with perfect clarity that all of the hedge fund managers in this network regularly trade in unison, investing in (or, more often, attacking) the same companies. Press reports suggest that the biggest players in this network are, in fact, currently the targets of the largest FBI insider trading investigation in history.One of the principal hedge fund managers in this network is Steve Cohen, who has been described by BusinessWeek magazine as “The Most Powerful Trader on the Street.” Cohen, who now runs the giant hedge fund SAC Capital, previously was among the select traders who effectively ran Gruntal Securities, a Mafia brokerage that received much of its finance from Michael Milken. While he was at Gruntal, Cohen was investigated by the SEC for trading on inside information that was delivered to him by Milken’s shop at Drexel, Burnham.There were just a few other traders who had special partnership agreements with Gruntal, and who effectively ran the place. I will name them all, beginning with Maurice Gross, who handled the accounts of the Gambino Mafia family. Gross later founded his own operation with a Pakistani trader named Mohammad Ali Khan, who (according to a case filed by the New York attorney general) alighted with some of the Gambino’s cash. This was no doubt much to the dismay of Gruntal CEO, Howard Silverman, who had come to depend on the Mafia’s good graces.As of 2008, Silverman was running one of the nation’s biggest “dark pool” trading platforms, an outfit that enabled his hedge fund clients to conduct manipulative trading in total anonymity. It should be a matter of concern that a guy with ties to the Mafia was running a major “dark pool” – especially since experts (such as the authors of the report commissioned by the Department of Defense) say that such platforms could easily be deployed by financial terrorists. And make no mistake: Silverman and all the other principals at Gruntal are, in fact, tied to the Mafia.One of the people Silverman brought in to help run his brokerage – another of the select traders with special partnerships at Gruntal – was a fellow named Felix Sater, who is a high ranking Russian Mafia boss with ties to the Mogilevich organization. (I will refer throughout this story to the “Russian Mafia” because that is the most common term for it and its most notable feature is its ties to Moscow, but experts and government investigators often use the term “Eurasian organized crime” because it includes a number of mobsters from countries that are no longer part of Mother Russia. The Mogilevich organization, for example, is dominated by Ukrainians.).
Felix Sater is a criminal who was once charged with stabbing a Wall Street trader in the face with the brokenstem of a martini glass, and who has threatened to kill multiple people.The man who runs the Mogilevich organization, Semion Mogilevich, is not only the “most dangerous mobster in the world”, but also sits as #2 on the FBI’s list of “Most Wanted” criminals, behind only Osama bin Laden. A declassified FBI report states that the Mogilevich organization is involved in everything from major league market manipulation to prostitution, Afghan heroin, and trafficking in nuclear weapons materials.On at least one occasion, the Mogilevich organization tried to sell highly enriched (nuclear bomb grade) uranium to Al Qaeda. This is a matter of dispute for some “experts”, but European Union officials confirm that it is true, and the evidence is indisputable that members of the Mogilevich organization did, at a minimum, claim in meetings with Al Qaeda operatives in Europe that they could obtain the nuclear materials.After Felix Sater left Gruntal Securities, he and several other former Gruntal traders started their own outfit – a brokerage called White Rock, which was indicted in 2001 for orchestrating stock manipulation schemes in league with D.H. Blair and a whole slew of Russian Mafia and La Cosa Nostra figures including the above-mentioned Genovese Mafia soldier Ernest Montevechi.According to one of Felix’s White Rock partners, Felix escaped indictment (he was named only as an unindicted co-conspirator) because Felix and his other partner, Eugene Klotsman (formerly of Gruntal) had close ties to high-ranking Russian intelligence officials who were dealing with jihadi outfits in Afghanistan.Felix and Klotsman told the FBI that if they were to be spared prison time, they could use their Russian intelligence contacts to buy Stinger missiles from Al Qaeda. This was not long after Al Qaeda had bombed two U.S. embassies in Africa, and the U.S. government was eager to get Stinger missiles (which can be used to shoot down commercial airliners) out of Osama bin Laden’s hands.So, apparently, the FBI passed the deal to the CIA. Felix and Klotsman produced serial numbers proving that they had identified the Stinger missiles that were then owned by Al Qaeda. So the government agreed to grant Felix leniency if he could get his hands on Al Qaeda’s Stingers.Apparently, Felix, through Russian intelligence, was prepared to cut a deal with Osama bin Laden, but the CIA balked when Klotsman demanded that the U.S. government pay him and Felix $3 million for each missile. Nonetheless, Felix escaped jail, and some of his other associates say that this is because he had close relations with Al Qaeda and offered to help the U.S. government monitor the terrrorist group.It is difficult to guage the accuracy of these stories, but various versions of the same story are told by people who are certainly in a position to know. Meanwhile, multiple reports from law enforcement, the United Nations, non-governmental organizations in Russia, and the mainstream media in London (distinct from the mainstream media in the United States, which has a peculiar reluctance to publish anything interesting), state unequivocally that Felix’s colleagues in the Mogilevich organization have been selling conventional weapons to Al Qaeda for many years.There is, moreover, no doubt that Felix has done business with people like former KGB First Deputy Chairman Filipp Bobkov and other people tied to Russian intelligence. So it would not be at all surprising if Felix was, and still is, in touch with people who have relations with Al Qaeda. However, if American officials belive Felix is helping the U.S. government, they are certainly mistaken.Indeed, it is a bit unsettling that this dangerous criminal is still on the loose. Jody Kriss, the former CFO of Bayrock, a real estate outfit owned by Felix, has filed a lawsuit claiming that Felix threatened to have him tortured to death because Kriss had discovered that Bayrock was a massive money laundering operation.Someone close to Bayrock’s former executives, meanwhile, say that Felix has laundered money for Steve Cohen, his former trading partner at Gruntal Securities (and now the “Most Powerful Trader on Wall Street”). This has not been proven beyond a shadow of a doubt, and innocent until proven guilty, but there is no doubt that Cohen remains on close terms with Felix.There are other indications that Felix remains to this day an important figure in the Milken network. For example, his alleged money laundering outfit, Bayrock, has partnerships with several investment funds, nearly every one of which is controlled either by Milken’s former top employees at Drexel, Burnham, or by others among the small band of people who are Milken’s closest associates.One of Felix’s partners, for example, is Apollo, a fund controlled by Leon Black, who is one of the most powerful investors in America.Leon Black is the son Eli Black, who was, in the 1970s, the head of United Brands, formerly known as United Fruit, a company that has been accused of everything from bribing tin-pot dictators to dealing with La Cosa Nostra and funneling money to Latin American narco-terrorists.In 1975, Carl Lindner, another of Milken’s closest associates and a key participant in Milken’s junk-bond merry-go-round scam, used Milken finance to take over United Brands. In the midst of this takeover, Eli Black crashed through a plate glass window on the 44th floor of the Pan Am Building in New York, and fell to his death.After this incident, Leon Black was named head of mergers and acquisitions at Drexel Burnham, the investment bank effectively controlled by Milken. The two men became friends, and after Milken’s criminal indictments, Black insisted that Drexel defend his friend at all costs.Even after Milken’s indictments and Drexel’s defense of the criminal resulted in Drexel’s collapse, Black continued to insist that Milken was innocent, and today the two men are close friends, involved in multiple business ventures together. Milken’s son, Lance, is partner at Apollo, the Leon Black fund that maintains a partnership with Felix Sater.Another of the most powerful financiers in America (and also among Milken’s closest associates) is Carl Icahn. In the early 1980s, Icahn was the head of the options department at Felix Sater’s Gruntal Securities. After leaving Gruntal, Icahn started his own investment outfit, funded mostly by Michael Milken and Zev Wolfson (Wolfson being the guy who funded Mulheren and the above-mentioned Mafia brokerages).As soon as he launched his investment fund, Carl Icahn hired several key employees: Harvey Houtkin, Allen Barry Witz, Gary Siegler, and Alan Umbria. Meanwhile, Umbria, who represented Icahn on the floor of the American Stock Exchange, served as the front-man for the Genovese Mafia in a New York restaurant called Crisci’s, which featured in the movie “Donnie Brasco”—a movie about an undercover FBI agent who infiltrates the Mob. Umbria was also the Mafia’s front-man in another New York restaurant — The Court of the Three Sisters.One day in the late 1980s, Umbria’s close business associate walked into The Court of the Three Sisters and found Umbria presiding over a meeting in one of the restaurant’s private rooms. The business associate was asked to leave before he could hear what was discussed at this meeting, but the businessman knows who was in attendance – namely, Alan Umbria, a collection of Genovese Mafia thugs, and Louis Micelli, who was a stock broker until his untimely death in 2005.In addition to being a stock broker, Micelli was a major league narco-trafficker with deep connections to the drug cartels of Colombia, and to a Paraguay cell of Hezbollah, the jihadi-mafia outfit that takes its directions from the regime in Iran. It was the Paraguay cell of Hezbollah that helped Iran blow up a synagogue in Argentina, and for a long time, this cell trafficked in cocaine from bases in Ciudad del Este and other cities in the “tri-border” region where Brazil, Argentina, and Paraguay meet.That region has since come under greater scrutiny, so Hezbollah’s drug kingpins have moved deeper inside Paraguay, but they continue to traffic coke, working with Hezbollah jihadis resident in North America – especially in Toronto, Detroit, and New York. Hezbollah’s trafficking operation continues to be a partnership with La Cosa Nostra, the Russian Mafia, and (yes) some stock brokers, more of whom we will meet later.Now, back to Gruntal. There were just a few other traders who effectively ran that outfit in the 1980s, and one of them was Andrew Redleaf, whose wealthy family did a lot of business with Milken’s operation at Drexel. Redleaf got his job at Gruntal on Milken’s recommendation, and after leaving Gruntal, Redleaf went into business with some of Milken’s friends.For example, Redleaf invested in Sun Country Airlines in partnership with Tom Petters, who was arrested in 2008 and indicted for orchestrating a massive Ponzi scheme in cahoots with Michael Catain, the son of a famous Genovese Mafia enforcer named Jack Catain. Redleaf currently runs a large hedge fund called Whitebox Partners, one of around twenty hedge funds, including SAC Capital, that regularly trade in unison.Another one of the hedge funds in this network is the massive and eminently powerful Cerberus Capital, run by Stephen Feinberg and Ezra Merkin. In the early 1980s, Feinberg was one of Michael Milken’s top employees at Drexel, Burnham. In the mid-1980s, Milken asked Feinberg to move to Gruntal Securities to help the others (namely, Russian Mafia boss Felix Sater, Gambino Mafia broker Maurice Gross, and Steve Cohen) oversee Gruntal’s operations, which had become important to Milken’s nationwide stock manipulation network.But aside from the SEC’s investigation of Steve Cohen, regulators did not catch on to Gruntal’s criminality until the mid-1990s, when it was forced to pay the largest fines in SEC history after a series of scandals that saw its managers charged with embezzlement and cooking the books. By then, the traders who really ran the place in the 1980s had moved on to much bigger projects, one of which, we know, was Feinberg’s Cerberus Capital.In 2006, Mainichi Shimbum, Japan’s most respected business newspaper, reported that Cerberus was tied to the Japanese Yakuza. Feinberg said it wasn’t true and he sued the Japanese newspaper, but there is no doubt that Mafia outfits worldwide are becoming more closely intertwined, and obviously Feinberg has come into contact with quite a few Mafia outfits, including those that were involved with Gruntal.In addition, Feinberg’s partner in Cerberus, Ezra Merkin, has been charged with civil fraud for his role in the massive Ponzi scheme perpetrated by the infamous Bernard Madoff. One of Merkin’s other funds, Ascot Partners, was the second biggest “feeder” to the Madoff criminal operation.Among the other big Madoff feeders, according to court documents, were some “made” members of the Mafia, such as Ralph Mafrici, who had a joint account with Madoff’s hedge fund in the name of Eleanor Cardile, a relative of Madoff’s right hand man, Frank DiPascali. Mr. Mafrici was a Genovese Mafia capo who allegedly ordered the assassination of another Mob boss named Albert Anastasia. Since Anastasia was getting his hair cut at the time, the assassination was famously dubbed “The Barber Shop Hit.”The last of the traders who effectively ran Gruntal was Sam Israel. He later went to work for Michael Steinhardt, who was (and still is) one of the most powerful hedge fund managers in America. In 1991, Steinhardt’s fund cornered the market for U.S. Treasuries, posing a threat to economic stability until the government threatened to press criminal charges, convincing him to back off.John Lattanzio, the manager of Steinhardt’s hedge fund, was extremely secretive. There wasn’t much information on him until a court case stated that Lattanzio once proposed marriage to a Russian hooker and gave her $289,275 diamond ring.Nothing wrong with that (marriage is a wonderful thing), but the interesting development in this case was that the lovers quarreled, Lattanzio wanted his ring back, and the hooker-wife told the judge that Lattanzio had big-time Mafia connections. She also said that Lattanzio “would not hesitate to use [the Mafia] to harm me.” Which is not surprising because the man who launched Lattanzio’s career, Michael Steinhardt, also has big-time Mafia connections.When it became evident that Steinhardt’s ties to the Mafia might become public, Steinhardt preemptively published a book in which he revealed (as if were no big deal) that his father, Sol “Red” Steinhardt, had done time in Sing-Sing prison because he was, in the words of a Manhattan District Attorney, the “biggest Mafia fence in America.” In fact, Steinhardt’s father was effectively the chief financial officer for the Genovese Mafia family.Of course, the Steinhardts were also among Milken’s closest associates. Nowadays, Michael Steinhardt runs a big exchange traded fund (ETF) outfit called Wisdom Tree Investments. His partner in that operation is Jonathan Steinberg, son of Saul Steinberg, who was a key player in the junk bond scheme that Milken ran in the 1980s. Steinberg used Milken junk bonds to seize Reliance, a giant insurance and financial services firm, which was subsequently looted and destroyed (“busted out”).In his book, Steinhardt admitted that the first and most important investors in the major hedge fund that he ran in the 1970s-1980s were: the Genovese Mafia family; Ivan Boesky (Milken’s most famous criminal co-conspirator); and Milken crony Marc Rich.
When Rich was convicted for trading with Iran during the Iran hostage crisis, Steinhardt testified on Rich’s behalf. Later, Steinhardt, a big contributor to the Democratic Party, pressured then President Bill Clinton to pardon Rich for most of his crimes, and Clinton complied, stirring up large controversy. Although Rich was pardoned, he still owes the U.S. government taxes, so he lives in Switzerland, where his palatial home is guarded by a private army of mercenaries.Rich has done quite a lot of business with companies, such as Highland Capital, that were under the control of Russian Mob boss Semion Mogilevich, and he was linked to the scandal that saw Mogilevich and other Russian Mafia figures launder more than $7 billion through the Bank of New York.The consensus among organized crime experts and FBI investigators is that the Genovese Mafia family brought the Russian Mafia to America – and perhaps the reader is just beginning to understand the importance of the Milken network to both the Russians and the Genovese.At any rate, it should be no surprise to learn that Sam Israel, the Gruntal trader who went to work for Steinhardt, later went into business with Robert Booth Nichols, whom the FBI had indentified as a close associate of the Genovese Mafia family. The business was a criminal hedge fund called Bayou, and Israel was sentenced for his crimes in 2008. When it came time for him to show up for prison, Israel parked his car on a bridge and left a note in the window that said, “Suicide is Painless.” Then he ran away.After that, Israel had second thoughts and decided to turn himself in. But he no longer had his car, so he had to drive to prison on a little red motor scooter, which must have been embarrassing. But at least he was famous – the media was reporting that Bayou was the “biggest Ponzi scheme in history”.Before that, the biggest Ponzi schemers in history had been the above-mentioned Milken and Mafia cronies Fred Carr and Tom Petters. Unfortunately, in December of 2008, the Mafia-tied Milken crony Sam Israel’s Ponzi was topped by the Mafia-tied Milken crony Bernard Madoff, who turned himself in to the FBI and announced that his Ponzi scheme (which absconded with upwards of $50 billion) was, in fact, bigger.But that is only the tip of the icerberg so far as the Milken network’s ties to organized crime are concerned. Upcoming chapters will make this abundantly clear.
