The Market Ticker
Commentary on The Capital Markets- Category [Corruption]
2017-04-22 11:41 by Karl Denninger
in Corruption , 273 references
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You want to talk about gender bias?

Ok, let's talk about gender bias.  Specifically, let's talk about Elizabeth Holmes, the "wonderkind" who founded Theranos.

I wish to point out a few inconvenient facts:

First, had "she" been a black male the company would have never gotten even a first-round venture kick say much less the hundreds of millions it did get.  In other words she traded on her white womanly state and leveraged it -- and that's discrimination.  Sure, it was the sort that got her a benefit instead of a blackball but let's not forget that for everyone who gets hosed by discrimination someone else profits from it.  And profit she did.  Either neither is wrong or both are.

Second, the company was quite clearly misrepresenting -- intentionally -- a material number of facts related to their scientific claims.  These cannot be excused as errors.  That might have been a colorable excuse early on but it isn't any more.  Not only do we now know the company was aware of the inability to reproduce its claimed results (by itself enough to falsify their claimed technology) we also now have discovered that the company apparently used a shell company it owned to buy commercial lab gear and fake results for potential investors.

There's no mistake here assuming the allegations are correct: That's fraud, and apparently this information comes from unsealed depositions of former Theranos employees and directors, which means that it appears that their CEO knew the firm was gaming results and intentionally hid that fact from the board, along with others in the firm.

Finally there's Arizona -- in which the firm agreed to reimburse state residents for all of the testing done by the company of its residents between 2013 and 2016 -- some $4.6 million worth.  In other words the company essentially agreed that the "services" it provided had no value whatsoever.  Now how does that square with them not being aware that their claims were false?  You tell me.

If I tried something like this I'd be in handcuffs so fast my head would spin around.  But I'm a white male.  Elizabeth is a white female, and was much-lauded as an entrepreneurial genius.

Really?

The record seems to suggest something else entirely, and yet as far as I know there have been exactly zero criminal indictments handed up against anyone within the smoking crater of what once was Theranos, especially Holmes.

Now maybe you can simply say but nobody goes to jail if they're a big CEO and you'd be right thus far except...... Theranos wasn't a big or even a public company.  It was an upstart that made a lot of puffy claims, all of which now appear to have gone up in smoke.

So the next you bleat at me about gender discrimination and glass ceilings you're going to get served a giant mug full of shut-the-****-up in reply.

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Oh, so the banks don't just bilk investors and rip off municipalities, they also help Mexican Gangs run drugs?

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

That's nice.  Guns and ammunition cost money - lots of it.  Getting that money requires some means of transporting it and "laundering" it.  For that, we turn to the largest financial institutions in the world, who, it turns out, have never been prosecuted for these felonious acts.

Wachovias blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations, says Jeffrey Sloman, the federal prosecutor who handled the case.

Blatant disregard?  Sounds like something you'd say at a sentencing hearing, right?  Well, no....

No big U.S. bank -- Wells Fargo included -- has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.

No Capacity to Regulate

Large banks are protected from indictments by a variant of the too-big-to-fail theory.

Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

The theory is like a get-out-of-jail-free card for big banks, Blum says.

Theres no capacity to regulate or punish them because theyre too big to be threatened with failure, Blum says. They seem to be willing to do anything that improves their bottom line, until theyre caught.

Indeed.

Facilitating drug-running is just one small part of it.  There's also ripping off municipal governments, such as the Jefferson County sewer deal in Alabama.  There's bid-rigging in the GIC market.  And, of course, there's laundering money for violent Mexican drug cartels, who used that money to buy automatic weapons (no, not from America - from China, Venezuela and even from corrupt Mexican law enforcement officials!) with which they then shoot civilians and government officials who refuse to be corrupted.

Oh, and it's not just Wachovia accused in this story.  It's also Western Union and Bank of America.

Workers in more than 20 Western Union offices allowed the customers to use multiple names, pass fictitious identifications and smudge their fingerprints on documents, investigators say in court records.

In all the time we did undercover operations, we never once had a bribe turned down, says Holmes, citing court affidavits.

Very impressive.

To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. Thats how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says.

They are multinational businesses, after all, says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. And they cannot work without a bank.

Yep.

And we have a banking system that, in the United States, has insulated itself from having to obey the law or be prosecuted for violating the law by threatening the government.

Henry Paulson and Ben Bernanke in 2008, remember?  "Tanks in the streets, martial law"?

Dateline September 21, 2008

Gee, it's not enough to steal from ordinary Americans, it's not enough to rip off state and city governments, it's not enough to rig bids in the municipal bond markets, we must sit still while these institutions literally make possible funding criminal gangs that are committing murder.

There's a name for this folks.

Formally this sort of thing is supposed to be called "Operating A Continuing Criminal Enterprise", or "OCCE":

The FBI defines a criminal enterprise as a group of individuals with an identified hierarchy, or comparable structure, engaged in significant criminal activity. These organizations often engage in multiple criminal activities and have extensive supporting networks. The terms Organized Crime and Criminal Enterprise are similar and often used synonymously. However, various federal criminal statutes specifically define the elements of an enterprise that need to be proven in order to convict individuals or groups of individuals under those statutes.

The Racketeer Influenced and Corrupt Organizations (RICO) statute, or Title 18 of the United States Code, Section 1961(4), defines an enterprise as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."

The Continuing Criminal Enterprise statute, or Title 21 of the United States Code, Section 848(c)(2), defines a criminal enterprise as any group of six or more people, where one of the six occupies a position of organizer, a supervisory position, or any other position of management with respect to the other five, and which generates substantial income or resources, and is engaged in a continuing series of violations of subchapters I and II of Chapter 13 of Title 21 of the United States Code.

WHERE ARE THE ******N COPS AND WHY DO WE AS AMERICANS SIT STILL FOR THIS CRAP?

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