From: "Catherine Austin Fitts" <[EMAIL PROTECTED]> PURPOSE OF POSTING In the last several days ago I posted a general background piece on HUD and then the first two parts of background on HUD financial fraud. This posting, the third part of background on HUD financial fraud, is the next piece on HUD background. Once I have posted all the background information, I will turn to what Hillary Clinton and Andrew Cuomo are doing in New York and how that may intersect with the drug and money laundering markets in New York City and State and along the east coast. For additional background for what is going on in the NY area drug and money laundering competition, see Mike Ruppert's recent articles in From the Wilderness and whatever else Brian, Kris and you all may recommend. After Mike publishes his next newsletter, I will also post up the latest Edgewood Story from last month's issue. ============================================================================ ================================ CAVEAT I am doing this without a calculator, so forgive me if I make some really obvious, dumb mistake. SOME COMMENTS ON HOW THE MONEY WORKS ON HUD'S FEDERAL HOUSING ADMINISTRATION (FHA) MORTGAGE INSURANCE Before I review the remaining areas of probable fraud, let me review again how the money works on the FHA mortgage insurance operation. I have found that a few rules of thumb about how the money works makes understanding what is going on much easier. If the FHA issues $9 billion of multifamily mortgage insurance during the Iran Contra years, the key question is what is that going to cost? The portfolio's financial performance is a function of the premium charged (that is income) and whether it is charged all up front or over time, reinvestment rates on premium balances if upfront, and costs are the various transaction and servicing/overhead costs that FHA and/or the network of mortgage bankers and services have AND the portfolio's default rate and expected loss rate/recovery rate on those loses. OK, so lets say that FHA's coinsurance has a default rate of 50% and a loss rate of 65% (that is a recovery rate of 35%), that means on each billion dollars of mortgage insurance, FHA will have defaults on $500MM and lose $325MM. So for example, if the Coinsurance portfolio had a default rate of 50% and a loss rate of 65%, the loses on the $9 billion portfolio would have been approximately $3 billion. That means that the General Fund through the Treasury would have presented the appropriators with a net bill to cover $3 billion of loses as they rolled in and by law the appropriators would have to dig up the money to cover it from tax dollars or selling more Treasury debt. Let me explain how much $3 billion dollars is. The average taxpayer makes approximately $35-36,000 per year the last time I looked. So lets say they work about 2,000 hours a year at about $18 per hour. To pay for $3 billion requires about 167,000,000 hours of taxpayers time. Or to translate this into a form of human slavery, 83,500 people will have to work one full year, or paying 25% of their income in federal taxes, 334,000 people will commit all their federal tax payments to coinsurance that year, or assuming that in a 30 year work career a person funds $100,000 in federal taxes, 3,000 people's entire federal tax bill in their lifetime. One of my most frightening meetings with Jack Kemp and Frank Keating is when they refused to do a series of things to prevent loses on the coinsurance portfolio that would save the taxpayers approximately $1/2-3/4 billion. They said not on the basis that it would produce a bad headlines that we were being nice to coinsurers. In retrospect, I believe that it was to make sure that we controlled the files and deals related to Iran-Contra. So let's bring this down closer to home. If FHA issues a $1MM multifamily mortgage insurance policy, a high loss rate and low recovery rate can automatically send one or more American's into a life time of servitude before anyone realizes what is happening. It is for this reason that in 1991, a law was passed requiring FHA and other federal credit programs (Approximately $1.2 trillion a few years back and rising fast)to post appropriations in the amount of their expected loses given their real loss and recovery rates. This was to prevent things like coinsurance and S&L kind of fraud from happening again, where insurance and credit programs became back door slush funds for political patronage and Iran-Contra operations. This also tracks much more how the private insurance industry is run. We also passed additional legislation requiring independent annual financial audits and actuarial analysis to make sure that balances posted as reserves and considered to be retained earnings/equity really were just that and that the operations was not subject to the frog in water getting warmer situation, were our expected loses were going up and the value of our reserves were going down but we did not know it. After the Credit Reform Act of 1991 passed, the pressure was on for the federal credit agencies of what FHA was approximately 35% to lower their default and loss rates, or else substantially reduce the amount of new insurance that they could issue. The various efforts that FHA made between 1993-96 focused on two areas: 1. Underwriting: Good underwriting practices of both people and properties at the time that a policy was issued or transferred would ensure low default rates. 2. Servicing: Improving servicing techniques (from workouts to loan sales, for example) or servicing times (RTC experience showed that a property lost 45% of value every year it sat in inventory) would lower loss rates and improve recovery rates (in the early 90's, our understanding was that Freddie and Fannie had 25% or less loss rates on single family defaults while FHA had 62%) I made a concerted effort to get them to also look at two additional areas, which is described in more detail in the Edgewood stories: 3. Neighborhood Education and Health: Defaults on both single family and multifamily tend to occur when people lack the education and access to knowledge they need to get and maintain jobs or to build businesses. Often time default rates reflected structurally changes in people's ability to support themselves adequately, an issue that no amount of servicing or underwriting could address. 4. Place based underwriting of all FHA or government investment The big costs were not necessarily the program loses or revenues but the overall impact of FHA/HUD or all government investment in a place. Neighborhoods with high flows of government and subsidies throughout the country were unhealthy places (essentially on a soviet style economic model) and were costing taxpayers a fortune. (With all in overhead and capital costs, a woman on welfare with 1.8 children living in HUD housing was costing the American people $35-55,000 a year, a HUD public housing rehab was costing $150-250,000 when single family housing was available next door for $25-75,000) and person in jail $154,000 per year) Tremendous reengineering opportunities were possible if we reengineered investment by place around performance criteria like the Popsicle Index, particularly with new technology which would allow communities to move to private markets which financed primarily with equity in a way that would raise tax revenues and substantially lower taxpayer expenses and liabilities. It turns out that the Clinton Administration wanted to issue substantial (read frightening and unhealthy) amounts of federal credit. Their constituencies tended to get energy from debt volume and churning, as opposed to models that promoted increases in the value of people or real estate equity. Consequently, every effort was made at FHA to get the default and loss rates on the current portfolio down as much as possible, so that OMB and the appropriators would accept very low costs associated with issuing new FHA mortgage insurance. This is how the asset management policies got turned around in the first part of the Clinton Administration. There was little interests in allowing the private markets handle communities in an equity model. This would delete the need for government credit and subsidies and require that the networks of intermediaries that fed politicians like Cuomo would have to switch to performance based activities away from politically based ways of winning fee business and market share. The issue was basically a tug of war between centralization vs non-centralization and performance based systems vs. patronage based systems. The challenge was that government was being used to make a lot of money per person on people deemed not trustworthy to manage and build their own lives in a way that was draining the taxpayers and costing the overall spirit and financial health of our cities and neighborhoods even more, not to mention what it was doing to the people who got processed through welfare, the criminal justice systems, mental health institutions and prisons after doing time in an educational system designed not to work. The financial "rent seekers" were vampiring the economy, and in a wasteful way. $34-55,000 for a woman on welfare when the average American taxpayers were making $36,000. This is political and financial insanity. The amount we were paying to pretend we were doing something legitimate at HUD and HHS and Federal Bureau of Prisons was raising heavily for every $1 Cuomo and Clinton were collecting in political contributions. OVERVIEW OF AREAS OF PROBABLE FINANCIAL FRAUD (CONTINUED FROM PART TWO) AREA #16: ASSET MANAGEMENT After mortgage insurance is issued, the outstanding liability must be tracked and serviced. When insurance policies are exercised, they must be paid off and a mortgage or property taken back. The resulting portfolios of properties and mortgages needed to be serviced. In 1993, HUD had approximately $7 billion of multifamily mortgages and approximately $3-4 billion of single family mortgages and additional inventories of single family properties (the inventories of single family properties was down from a high during the late 1980's of approximately 50,000). It is here in the asset management operation where the issues come up of what is the ideal way of managing each mortgage or property both in terms of what is operationally feasible to do, what makes economic sense, and various issues related to the best interests of the people living in or owning/managing the property and its impact on the surrounding neighborhood. Tenant considerations may be despositive. This is why in 1989 I came across a nursing home mortgage that had a principal amount of $8 million, and yet HUD had spent $20 million on property management and services subsequent to the default. We used to say that HUD real estate was the gift that kept on giving. Rule #1 at HUD was that letting anything come to HUD was a mistake. Jim McTague, in an article in Barons, once said that having HUD service a mortgage was a little bit like leaving your car on the Cross Bronx Parkway for servicing. Again, the RTC found that properties under government ownership and care in a default situation lost approximately 45% of equity value per year. Since the value of a defaulted mortgage reflects the value of the property that collateralizes it, the value slide in mortgage values could be high as well, depending on the market and management particulars. Addressing the issue quickly was usually what made the most sense for tenants and communities, and sometimes for owners and managers to. Nothing is more harmful to a neighborhood than something that is not working properly---for whatever reason. Better yet, not having HUD own anything was desirable as it subjected it to additional legal and regulatory burdens. HUD was not set up to handle the volume of workouts in multifamily asset management and property disposition in single family that would have been required by late 80's and early 90's inventory balances. Inventory backed up and increasingly contractors were hired to deal with more and more of the workflow. The situation could work for or against an owner. Mortgages existed in which owners had not paid any debt service for as much as eleven years, and continued to enjoy ownership and cash flow from the property. When the incoming Clinton Administration arrived at HUD, the HUD Inspector General and the FHA auditors were both saying that the large asset management inventories were HUD's more serious "material weakness" and critical of HUD for not moving to the more sophisticated asset management tools developed and used by the RTC to resolve the S&L inventories, particularly loan sales. The New York Times ran a big headline saying that HUD/FHA was a S&L crisis waiting to happen. The message from the White House was clear. Clean up the mess on the back end and fast, so we can start to issue a ton of new stuff to our friends. What they forgot was the friends on the front end were also on the back end and they would not enjoy doing new deals when the clean up on the back end shut off their access to capital or sent them to jail. And so, with great fanfare, various asset management tools were implemented, including multidisciplinary asset management teams and loan sales and a variety of reengineering efforts. In three years the default rates and loss rates had dropped dramatically. As a result OMB (Office of Management & Budget) and the Congressional appropriations committees agreed to the highly favorable assumptions for purposes of new insurance. Having locked in the new assumption rates while learning that healthy internal financial controls were no fun for the financial fraud boys and traditional HUD constituents, Andrew Cuomo became Secretary and cancelled loan sales, issued substantial new contracts to manage the mortgage and property portfolios (this type of arrangement will often times allow a Secretary to arrange highly political workouts without risk of involving the career staff---this is particularly true as large multifamily asset management operations are outsourced to ARCO--a long time friend of the Cuomo family--I suspect there is much more to find in this area, and cancelled numerous reengineering initiatives in the operations and portfolio and tried to cancel Neighborhood Networks (computer learning centers is HUD properties). Needless to say, Cuomo is enjoying the political benefits of old style workouts and recovery rates. The taxpayer may only be getting 35 cents on the dollar, but that means that the 35-55 cents that the taxpayer is no longer getting is free to be spread around by Cuomo. So the way that HUD and OMB deal with Credit Reform is to just lie, fire everyone who will not lie, and maintain or hire auditors and actuaries who will go along. In this they have full Congressional support. It is the thing that delivers to the HUD constituents who have political clout what they want. My back of the envelope is that HUD since 1994 in the asset management area has foregone $5-10 billion of possible reengineering opportunities and since Cuomo became Secretary has foregone $1/2-3/4 billion of proceeds from higher recovery rates from loan sales, as well as another $1-3 billion from not reengineering the Section 8 portfolio, and instead allowing the private owners to drain the equity out in an inappropriate way. That translates into 350-550MM hours that taxpayers will have to work to fund that when HUD reengineering savings do not happen, because HUD constituents needed the worlds most expensive way to get patronage. I assure you, if HUD had done all the reengineering and set aside a % for political kickbacks, everyone would have been substantially better off--both financial fraud industry and taxpayers and communities. To get a $1 to a friend of Andrews or a friend of Bill's from HUD programs is costing many multiples in one of the highest corruption overheads I have ever seen. It is a lose-lose set up. AREA #17: LOAN SALES The HUD loan sales that HUD executed between 1994 and 1997 were one of many reengineering efforts that Henry Cisneros and his team implemented. The HUD loan sales are very useful and instructive, because the story is so well documented and so documented in terms of mathematical performance that it highlights the venality and corruption in the system in a way that is so often easily obfuscated by qualitative explanations, claims of incompetence and ignorance, burning, blowing up or losing of documents, etc. The story proves that government purposefully denies data and knowledge to the citizens to help ensure elite control of resources, and in fact will go to extraordinarily lengths using taxpayers resources to destroy or stop private parties from providing that access. It also shows the lengths to which elite's have come to lie to themselves about what they are really doing in a way that teases out interesting questions of what would happen if they were to be placed in a situation with serious sunshine and mirrors. The bottom line on this absence of open shared information that is the prerequisite of both democracy and markets is that the US the financial markets have evolved towards the top trading on insider information with government's help and the rest of us trading on essentially little or no information. The first large HUD loan sale was sold in the Spring on 1994, the Southeast sale. The sale auctioned approximately $950 multifamily mortgages colaterialized by properties in the South East US. The average mortgage size was about $5MM, representing fairly significant size apartment buildings for FHA. A meaningful amount of the mortgages had come from the coinsurance portfolio, and were collateralized by apartment buildings that were owned and operated by private owners with no HUD subsidy involved. They tended to be suburban and in decent condition. This sale introduced several significant features that had not been used by government auction before: 1. Design books: Before doing the loan sales, a software development process was used to simulate in writing exactly how the sale would be done. The first design book was 2,000 pages long and facilitated detailed review and comments from field offices, RTC experts and numerous different departments at HUD. It also flushed out all the key design issues that could cause political or market problems, allowing a discussion and consensus to occur with Congressional staff, OMB and others. Design books were provided to HUD who was encourage to post them on the web, and use them for a variety of purposes in asset management or to provide to other federal credit agencies considering loan sales. They made the sales operationally feasible within a large bureaucracy marked by internecine warfare. The auctions success was a big suprise to the industry who had assumed that HUD would not be able to execute mortgage auctions operationally. 2. On Line & Database Due Diligence Packages: During the RTC sales, digesting and pricing the portfolio could cost as much as $150,000 for a bidder. On the HUD loan sales, the various databases, property pictures were created by HUD and made accessible with files essentially for free so that many non-traditional players could learn about the sales and HUD with much less risk of their time wasted. Due Diligence information was made accessible over Bloomberg and through the internet, and when the World Wide Web, was available, through the Web. This accessibility to information combined with a $10 billion or more expected volume was successful in drawing a broad number of bidders, including many non-traditional bidders. 3. Optimiziation Model: Various different markets are usually interested in mortgage auctions: interested individuals, owners, mortgage brokers, lenders, securities firms which want to package and sell mortgage backed securities, as well as investors looking to buy direct. These folks can range from the smallest business in American to the largest investor in Singapore. A major issue in any auction of this kind is how to 'stratify' the portfolio. Are the bids one by one, or for all or nothing, or can you buy in "pools". These issues caused the RTC numerous headaches. Hamilton's recommendation was to let the buyers stratify the pools, so they could bid for one, or create pools, or bid for all or one, generating a substantial number of non-conforming bids, and then chose the combination of bids that would generate the highest proceeds for the taxpayers. To do this, we retained Lucent Technologies (AT&T Bell Labs) to adapt their optimization technology that they developed for optimizing telephone call routing and had also used for airlines and airline crew scheduling. The results was that all parts of the market participated and competing aggressively, shifting market performance by a significant amount. As a result of these three innovations, the performance on HUD loan sales was dramatically above RTC performance and any other predictions. On the first large multifamily loan sales, the SouthEast Sale, $950MM of mortgages were valued for purposes of credit reform by HUD and OMB at $286MM. That meant that if HUD continued to service them, they would be worth $286MM. I had asked the lead team from the HUD IG's office what they thought HUD would get for them. They predicted $350MM. The final proceeds were $710MM, producing approximately $420MM in savings for taxpayers. That is real cash, almost $4.00 per American taxpayer that HUD returned to the Treasury. What was particularly interesting was what the optimization model also told about the market. We had set the deliverables up so that we would be able to tell anyone who insisted that they should be allowed to win for financial reasons, what the cost to the taxpayers would be if we chose their loan and then optimized around it. This was useful for dealing with a variety of concerns and complaints. What the results showed us was that the traditional HUD constituents and owners bids---if optimized alone--bid a total max for the portfolio of $530MM. The regional mortgage bankers bid about $630MM. The large bidders bid $703MM. Then the three markets optimized together bid $710MM---a combination of one large bidder and a few small bidders. The results suprised us because the owners and traditional constituents had substantially more "inside information" on their own properties and portfolios. At the same time, what we saw over time was that the sales were driven by cost of capital. Players with access to stock market capital and "hot money" could bid the most aggressively. The top players brought to bare far superior property management and asset management services as well. Traditional HUD constituents had been living in a protected franchise with little competition for decades. So the loan sales came as a shock to the HUD world. HUD single family loan sales were equally successful and both single family and multifamily sales continued into 1995. As the non-subsidized portfolios diminished, HUD started to address how it would handle partially subsidized and subsidized portfolios, that is mortgage portfolios which were collateralized by properties that were also subsidized by HUD. The first sale involving subsidies was in 1996 and was sold not as mortgage auction, but was sold was debt and equity in a trust structure that owned all the mortgages. This allowed HUD to build into the trust structure servicing requirements that addressed special tenant and neighborhood concerns. The servicing requirements on the first transaction were relatively simple. However they were the "camel's nose under the tent" from the traditional industries view point. Once HUD had mastered the trust structure, a whole new world of players could be called in to bid competitively of HUD portfolios and do so BY NEIGHBORHOOD. The result would be illumination of how the money was really working place by place, and would enable HUD to reengineer enormous waste out of HUD subsidies not just out of HUD mortgages. In the meantime, HUD was making more and more portfolio financial information available through the web and the loan sales were draining off enforcement seizure opportunities (no defaulted mortgages hanging around) and causing outstanding files and documents to be transferred to winning bidders. A variety of political efforts to stop the loan sales had not worked. Consequently, a series of dirty tricks were used to rig an investigation and then drive out all the key FHA appointees, career leadership and Hamilton. The process to destroy loan sales and the people involved is described in detail in my stories on Edgewood in From the Wilderness. The tactics included: 1. File under Seal and ignore legal disclosure requirements 2. Provide substantial and untrue leaks from HUD to the market about both business and personal (for three years the effort to push that I was a lesbian was extraordinary; including getting friendly media to write false stories; arrange similar links from higher levels of government and investment community 3. Drain resources with leaks, investigation, audits, endless subpoenas 4. Falsify documentation (was unsuccessful) 5. Destroy HUD audits that affirmed programs success and $2.1 savings; run auditors out of government 6. Physical harassment and surveillance; seizing office 7. Throw into bankruptcy (was unsuccessful) 8. Destroy documentation (was unsuccessful) 9. Seize receivables 10. Harass family and friends who help, using some of tactics above The game is basically about making sure that no resources are accessible to a person or company and their time is overwhelmed by responding to all the demands created by the legal and regulatory process. The key to making this happen is a coalition of parties: Cuomo: You have a line management leader (the Secretary) who is ambitious and enjoys playing the game this way. His temperament is like Kemp's. He gets pleasure out of hurting people. Financial Fraud Industry: You have the Iran-Contra fraud and money laundering networks eager to return their yield out of HUD, and delighted to do a deal with Cuomo. Real Estate Industry: Folks like the Harvard Endowment, Pug Winokaur and Roderick Heller III. want their money out of the current HUD portfolio and prefer ethnic cleansing to place based trusts as a profit opportunity on urban real estate going forward. The Money Men: Are delighted to play along. Place based financial software is too close to digging out the Bush-Brady-Baker involvement in drugs and organized crime during the 1980's --and right before the 1996 election when Kemp is on the ticket---let alone questions that may arise regarding Brady and Dillon's involvement in Fitts's mind control activities. Besides that would lead back to questions about the Federal Reserve and Treasury's role in money laundering and powershift the Promis software insider trading crowd. A big HUD scandal that results in Fitts going to jail or committing suicide or having a nervous breakdown is the ideal solution. Under no circumstances should Fitts be assassinated. That would give too many people leverage on whoever the top guy was who ok-ed the fix, something some of these guys would never do. Better to use all the tactics used for the last four years, including non-lethal weapons. Folks like Caryle are delighted to help, but the whole affair takes very little thought or time on their part. This can all be done with $35MM of HUD and DOJ and their properitaries efforts. Asset Seizure: A run at $4.7 billion of loan sales won by Goldman Sachs and their bid partners offers lots of potential upside to enforcement operations, informants and "whistle-blowers", all of who can be protected under seal for four years by the False Claims Act and lots of support from Judge Stanley Sporkin, former General Counsel of the CIA under Casey. I have written plenty on the asset forfeiture based on "probable cause" and resulting greenmail aspect, but I love the fact that Hamilton saved the taxpayers $2.1 billion and was paid only what was determined by a competitive contracting process, and the contractor who was doing the old 35 cents deals then cut a deal with the Department of Justice on a behind the scenes negotiated inside basis to get 25% or more of whatever loans sales they could seize back from the winning bidders. The moral of the story is that organized crime is much more profitable than legitimate business, with DOJ and HUD too. The asset seizure and government greenmail business is one of the most amazing scams going in Washington these days, and useful in terms of allocating % to local enforcement so they dance for the feds instead of the local government or citizens. The dead give away on the whole affair may be Dick Ravitch, an old client from New York who was a good friend of Bob Rubin and knew Nick Brady. Dick was in disgrace with the money men for reasons in which I totally side with the money men. I hired him to help with the HUD work we were doing. He was very impressed with the total savings that were generating on the HUD loan sales: $2.1 BB. Suddenly, he did a 180 reverse and started saying that the savings were non-existent, they were phony (A GA0 audit has now affirmed that the savings were real, and the head of the GAO group expressed the concern to me that they were "understated."), and that something was wrong, and maybe we were guilty of something. This was accompanied by leads from high places which had to be the federal reserve network players, possibly Nick Brady. A year later, Dick is sharing offices with Paul Volcker and back inside the club. That is when I realized that Dick had helped put in the fix and that the shadow government guys had decided they need someone who understood HUD to help them cover their flank on an ongoing basis, as well as help with the unions who were important to flipping the model. That is when I realized that HUD was the soft underbelly of the Shadow government. I knew how much they disliked Ravitch. To let him back in meant they had a real problem. Plenty of mystery still remains. The big one was why Cuomo and DOJ's public integrity unit tried to engineer a seizure of Goldman Sachs at a time that could have gotten first Clinton and then possibly Gore impeached or resigned out of office. Clearly, the story is intimately involved in the impeachment politics in a way that I still do not understand. These types of situations are swarms. They happen were lots of different groups need something done, and so very disconnected agendas come together over time in ways that can have little to do with each other. So someone wants to harm Goldman Sachs, and someone else wants documents destroyed, and someone else will do a piece in exchange for a budget increase, and so forth. The way that everyone rationalizes what they are doing is to persuade themselves that the spin is "true". So the loan sale were corrupt, there were no savings, etc. Before you know it they have talked themselves into believing it. That is because they will do anything to not look in the mirror. The difficult four years later is there is an enormous myth built up in the wishful thinking of the top guys that they really had a reason to believe that there was something wrong, when indeed, they just did a lynch mob thing with no basis in fact and everyone knew it at the time. That is because it is easier to persuade yourself that Catherine Austin Fitts is a lesbian who gave inside information to Goldman Sachs on a HUD loan sale bid or in some way messed up, than to face the fact that you are a pedophile who does not want the truth to be known and you make money in a rigged market doing lots of business with organized crime, not because you are smart and brave and true and you are sick of balancing the wishes of everyone from top to bottom wanting to have their cake and eat it too. Too many good men turned old and tired and forgetful of what love and life can and should be. Perhaps the spirit of the reptile has drained the hope and beauty of their spirit, who knows. Ultimately, the loan sales story is a Dorian Gray story..about how making sure there is no sunshine causes people to not look in a mirror for 30 years until they will do anything to avoid looking including forcing false realties and myths on the rest of us in increasingly coercive ways. And this is not to say that I did not mess up. If I understood who really controlled the illegal drug business and money laundering in this country and how that intersected with the HUD portfolio, I would have found a more subtle way to go at the same mission. Sometimes, though, you just have to step on it to find out what is really going on. I did not mean to hurt those whom I love, but I did not want them to promote genocide either. AREA #18: PORTFOLIO REENGINEERING/M2M Portfolio engineering was simply the continuation of the loan sales and disclosure effort into the Section 8 and subsidized portfolio. Naturally, it got stopped. This piece would have covered about 800,000 units with very heavy concentrations in the old industrial cities and cities with heavy organized crime activities traditionally, including New York, Chicago, Detroit, New Orleans and LA. This is the portfolio that was ripe with tax shelters and law firm involvement and Iran Contra activities that would lead back to all the right places. Some of the story is in the Edgewood stories >From the Wilderness that I will post again. The best way to look at this piece of the HUD puzzle in place by place, with New York City being one of the most fascinating. AREA #19; COVERT OPERATIONS HUD transactions have been used for providing financing to covert operations. Rodney Stitch provides some good examples on loan brokering as well as some HUD fraud in his books. I want to focus on on-the-ground opportunities here. Imagine that you have 3,000,000 units of subsidized proprieties all across America in all the major cities and suburbs and will heavy concentrations in the neighborhoods used as retail outlets for illegal drugs. OK, now imagine that you can funnel money in a variety of ways to the property management budgets of all of these operations with relative ease. OK, now then realize that you can also drop a surveillance team into any of these neighborhoods with ease and take numerous enforcement actions. Does that sound like something useful in terms of a nation wide distribution network that can handle all sorts of covert operations in every city in America as well as police the market and kill the competition with ease? HUD can provide funding and air cover for an endless number of covert properitaries or teams parked at property management operations. Every week I receive a few messages that pop in from HUD tenants or community activists dealing with non-lethal weapons and various types of on the ground organized crime or ethnic cleansing. The vast majority are women who have been impacted by the stress of dangerous living conditions in general, and then along comes this stuff. I never check out the merits of any story, and have no way to tell which are legitimate and which are Cointelpro-type disinfo-- but what happens is that over time the volume starts to show system dynamics and patterns. The latest volume is on the movement of HUD housing to the control of gangs in Chicago as the traditional tenants are evicted or somehow encouraged to leave. There is a lot of what I am seeing that is simply just small time petty greed in places, but even when it can be explained this way, the volume reflects a society in which slug management is out of control from top to bottom. The dead give away for me was when the mystery novel Gideon had the assassins parked on the payroll of Astor Management in New York. A combination of the Astor name, New York and parking the covert guys on the property management payroll rang a big bell in my head. If you look at who controls the HUD portfolio (If Stu Webb is right, it is the organized crime syndicates out of Denver that have controlled more and more) then the possibilities for HUD property management operations and enforcement operations give the size of the portfolios and subsidy flows and with Andrew Cuomo running the place without internal financial controls and a corrupt IG, well the possibilities go on and on. That means that some sunshine is bound to inspire some interesting roach running. NEXT I will close with a Part V by Monday followed by a posting of the Edgewood stories. Hope this is useful in helping us see an Achilles heel or two, particularly ones in which we can make some money. --------------------------- ONElist Sponsor ---------------------------- Get great offers on top-notch products that match your interests! Sign up for eLerts at: <a href=" http://clickme.onelist.com/ad/elerts1 ">Click Here</a> ------------------------------------------------------------------------
