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}}}>Begin San Antonio Business Journal - December 17, 2001 http://sanantonio.bcentral.com/sanantonio/stories/2001/12/17/story1.ht ml Exclusive Reports >From the December 14, 2001 print edition Torpedoed G-man unit rising like phoenix from its ashes Bill Conroy A former Internal Affairs agent for the U.S. Customs Service has come forward to shine a light on a sordid tale of alleged law-enforcement corruption, cover-ups, drug trafficking and suspected murder. The former agent, Steven Shelly, is going public with his story because, he claims, no one in a position of power within law enforcement is listening. Shelly's story sounds like a bad rerun of history -- a repeat of the rampant police corruption that wracked gangland Chicago during the height of Prohibition. In fact, Shelly traces his troubles to his involvement in a corruption-busting task force whose members were dubbed by its founder as modern-day "Untouchables." In Shelly's version of the story, though, it is the G-men, not the crooks, who take it on the chin. The Customs Internal Affairs Special Agent in Charge (SAC) who spearheaded the formation of the task force, John William Juhasz, claims that it was shut down abruptly because it got too close to the truth. The task force, called Firestorm, included members of the U.S. Customs Service, the Department of Justice's Office of Inspector General, the IRS, the FBI and the U.S. Attorney's Office. Firestorm, prior to being dismantled, was actively investigating some 19 cases of alleged law- enforcement corruption in Arizona, according to public records obtained by the Business Journal. Juhasz asserts in a statement made under oath during a legal proceeding that all of the key players in the torpedoed Firestorm task force were subsequently targeted by the government for retaliation and had their careers ruined -- including Shelly. Shelly's story begins in early 1990 in Arizona, with the inception of the Firestorm task force. Although rooted in history, the tale has an edge to it that cuts a direct path into the present. Shelly claims that the corru ption uncovered by the Tucson, Ariz.-based task force, which he asserts has been left unaddressed for years, now poses a real threat to our national security in the wake of the 9/11 terror attacks. Shelly alleges that a former Customs Internal Affairs supervisor committed perjury as part of the effort to silence him in the wake of Firestorm's demise in late 1990. Shelly was forced to resign involuntarily in 1994, he contends, and has been seeking ever since to reclaim his job and to spur the government to clean up the corruption. However, Customs argues that Shelly resigned from his job due to personal factors and that there is no evidence that he was subjected to reprisal by supervisors for whistleblowing activity. The judge hearing a legal chall enge Shelly brought against Customs agreed. Shelly maintains that justice has not been served in his case or in the case of the task force, which has led him to step forward as a whistleblower. Documents provided to the Business Journal by Shelly show that the Firestorm task force had unearthed evidence linking two Customs inspectors working along the Arizona border to drug traffickers. The documents also allege that a supervisor with the Department of Justice's Office of Inspector General (OIG) -- who was suspected of having ties to drug traffickers -- worked to derail the investigation into the inspectors' activities. Both the Customs inspectors and the OIG supervisor still work for the government, according to Shelly and other sources. Also outlined in the documents obtained by the Business Journal are the details of the task force's investigation into the mysterious death of a former Customs supervisor in Douglas, Ariz., who Juhasz suspected might have been "involved in a circle of corruption in Douglas. ... ," according to an affidavit Juhasz submitted to the Department of Treasury's OIG. The documents obtained by the Business Journal include testimony, notes and records provided to the House Commerce, Consumer and Monetary Affairs Subcommittee in 1992. Other documents include workers' compensation hearing testimony, Merit Systems Protection Board depositions, internal reports of investigation, various legal affidavits, statements and Customs Service memorandums. The story that follows is based on those documents, which total hundreds of pages, as well as interviews with numerous former and current Customs agents. Border politics In the drug trafficking game, death is not a random card, explains one Customs agent who did his time on the border. In the wake of one seizure of drug-cartel assets in Arizona, the agent recalls, 18 people were murdered; 13 of the bodies were discovered at the bottom of a well -- some with a finger missing. "They (the drug traffickers) were trying to find the informants," the agent explains. A missing finger is a sign of a snitch. The investigators on the case also received death threats, the agent says. "These people play for real," the agent stresses. In that context, it is not surprising that Juhasz and the Firestorm task force in Arizona would cross paths with a case involving a suspicious death. Douglas, Ariz., is a desert border town of about 15,000 people located some 120 miles south of Tucson and just north of Agua Prieta in Mexico. By all accounts, Jake Price was a well-known and well-connected public figure who had lived in the small town for more than a decade. He served as the resident agent in charge of the U.S. Customs Office of Enforcement in Douglas before retiring in the late 1980s to become a city magistrate. Among Price's connections was real-estate speculator and Douglas Justice of the Peace Ronald J. Borane, according to documents provided to the congres sional subcommittee. In February 1990, Price took ill, mysteriously. He was transported to Tucson Medical Center after falling into a coma, congressional records state. James "Breck" Ellis, a Customs Internal Affairs group supervisor and a member of the Firestorm task force, was dispatched by Juhasz to investigate the situation. Ellis, who had worked in the Douglas Customs office with Price prior to becoming a Customs Internal Affairs agent in Tucson, found Price at the hospital under the watch of "two to three Douglas police officers" who appear ed to be guarding him and who had "apparently traveled with him," congressional records state. Price's son, Justin "Clay" Price also was at the hospital. Then, things got stranger. Price died in the Tucson hospital. At the time, Price's son, Clay, allegedly promised Customs agent Ellis access to his father's papers, congressional records state. But instead, Clay Price later hooked up with a Douglas Customs officer and together the two burned Jake Price's papers in the furnace at the Douglas Port of Entry. Congressional documents indicate that those papers, "including probable bank records, would have helped expose (words blacked out) involvement in the drug trafficking and public corruption in Douglas." When interviewed by DEA Internal Affairs about the destroyed papers, Clay Price "reportedly told them that he just destroyed some of his father's personal records, like checks, but nothing that was relevant to Customs," d ocuments submitted to the congressional subcommittee state. The records were not the only disappearing act associated with Jake Price's death. His body was shipped to Texas, according to congressional documents. No autopsy was performed. Borane confirmed that he knew Price, when interviewed by the Business Journal by telephone. However, Borane said he had never heard anything about Price's death being "mysterious." The strange circumstances surrounding Jake Price's death, though, led Juhasz to a dark conclusion. "I believe, that the former agent in charge of the Douglas office was murdered by -- by political figures in the Douglas area. ... ," stated Juhasz when queried about Price's death in a legal deposition related to a worke rs' compensation case filed by Shelly. Underground economy The trail of coincidences didn't end with Price. About three months after Price died in February 1990, Customs investigators unearthed an underground tunnel stretching from Agua Prieta in Mexico, to Douglas, Ariz. The tun nel, it was ultimately discovered, connected a suspected drug trafficker's house in Mexico to his warehouse in Douglas. The land where the warehouse was located, according to Arizona Assistant Attorney General John R. Evans, was sold by Borane to the suspected drug trafficker, Mexican businessman Francisco Rafael Camarena-Macias. Evans add s that Borane is the godfather of one of Camarena's children -- a fact Borane confirmed as well. Borane also rented space to Customs for its Douglas office while Price was the resident agent in charge, according to congressional documents. Borane explained that he owns a lot of real estate in Douglas. He added that it was a real estate agency in town that actually handled the sale of the land to Camarena. "I owned the land and leased it to a ready-mix plant, and I think they had a trailer on it," Borane said. "Later on the warehouse was built, if I recall." In addition to the land acquired in Douglas by Camarena, he also owned a residence in Agua Prieta. The tunnel connected his home in Mexico to the warehouse on his Douglas property. According to a statement released by Cus toms, Camarena is believed to have hired an architect to design the tunnel. Sources within Customs told the Business Journal that the initial investigation into the drug- running tunnel was launched in November 1989. The concrete-lined, air-conditioned 200-foot- long tunnel, which was used to smu ggle tons of cocaine from Mexico into the United States, was finally found and shut down in May 1990. Camarena was indicted in 1995 -- some five years after the tunnel was discovered in the spring of 1990 -- but he soon disappeared in Mexico, according to the Customs Service. The long arm of the law finally caught up with him this past summer, when he was turned over to U.S authorities by the Mexican government to face conspiracy and cocaine trafficking charges. The Business Journal was unable to determine where Camarena is being held, or the status of his case, at deadline. Although law enforcement officials did investigate the property transaction between Borane and Camarena after the tunnel was unearthed, no charges were ever brought against Borane, according to Evans and other sources. However, Borane was arrested years later, in 1999, on drug-running, money laundering and traffic-ticket-fixing charges. Evans, who coordinated that prosecution, says Borane was ultimately convicted of two felonies related to the ticket-fixing charges and served 90 days in jail. "He (Borane) is still on probation and is no longer a justice of the peace," Evans adds. Borane, for his part, said his three-year probation is nearly completed. Although he is no longer the justice of the peace in Douglas, he said he still owns a significant amount of real estate in the area. "When you're in a small community and you're considered politically active, which I was, and you own a lot of real-estate holdings, they (the authorities) tend to look at you," Borane explained, when asked why he was subj ected to so much law-enforcement scrutiny. Looking inward Not all of the task force's cases revolved around mysterious circumstances and missing evidence. Sometimes, the evidence became the problem. Among the initial cases the Firestorm task force took up centered on one of its own: Javier Dibene, special agent in charge of Arizona for the Department of Justice's OIG. It is the OIG's job to investigate cases of alleg ed corruption within the Department of Justice's ranks. However, Dibene, who was based in the Tucson office, was himself being eyed for having alleged links to drug trafficking operations. "I suspect that ... Javier Dibene ... (is) involved in narcotics activities," states Juhasz in a 1991 affidavit provided to a Treasury-OIG investigator. The FBI had investigated Javier Dibene in 1990 and cleared him; however, the FBI agent on the case admitted, according to congressional records, that he had been given such narrow investigative parameters by his superviso rs that the "investigation had no chance of success." Further suspicion was drawn to Dibene when tapes surfaced fingering two Customs inspectors in Nogales for allegedly allowing loads of dope to pass across the border through an arrangement with a drug trafficker. The tapes, which were in Spanish, were provided to the DEA initially through an attorney for a defendant seeking to cut a deal for a client. Congressional testimony from the assistant U.S. attorney who served as coordinator for the Firestorm task force indicates that Dibene -- who speaks Spanish -- was provided with copies of the tapes for review in the fall o f 1990. However, a few days later, DEA agent Alejandro Vasquez was told that Dibene had found nothing of value on the tapes. Vasquez, who also had listened to the tapes, became suspicious as "he realized the tapes referred to large-scale narcotics trafficking ... " congressional records state. The two tapes were made when one drug smuggler kidn apped another drug smuggler and interrogated him at gun point to determine how the competition was moving drugs across the border, Juhasz states in the Treasury-OIG affidavit. Several days after turning copies of the tapes over to Dibene's office, Vasquez passed the original tapes onto Customs agent Shelly, who also speaks Spanish. Shelly then brought the tapes to Juhasz' attention. "The tapes contained the unequivocal identification and implication of Customs border inspectors, by name, in corruption that involved the deliberate `passing' of large (600 pounds) and numerous periodic (alleged to be we ekly) loads of cocaine by the inspectors ... ," Juhasz states in a letter sent to the Commissioner of Customs in 1991. Dibene's lack of interest in the tapes also led Juhasz to begin to suspect that Dibene was obstructing the investigation. "To fully and properly evaluate Javier Dibene's actions and statements in this matter, it is important to know that he was born in Mexico, moved to Douglas, Ariz., at age 10, and later moved to Nogales, Ariz., where he gr ew up with the Customs inspectors named in the tapes, and therefore arguably knew them intimately," Juhasz writes in the letter. "For him to state that there was nothing of value on the tapes was at best ludicrous, and mo re probably criminally obstructive. I feel that Javier Dibene's actions concerning the audio tapes serve to confirm my nagging fear that he was actively suppressing corruption investigations." Turf war Juhasz' efforts to expose the alleged corruption related to the tapes -- as well as his pursuit of other cases -- sparked a major turf war among the federal agencies cooperating with or participating on the task force, ac cording to documents submitted to the congressional subcommittee. Juhasz was labeled by the FBI special agent in charge in Phoenix as "a loose cannon who was only trying to build an empire," the congressional documents st ate. Juhasz retired from Customs in 1994; the Business Journal was unable to locate him for comment for this story. His statements have been drawn from public records. Former federal agents interviewed by the Business Journal who know Juhasz, though, described him as an excellent agent of impeccable integrity who had no tolerance for corruption or political games -- kind of like the Eli ot Ness of Customs. And it appears the comparison to Eliot Ness is not out of bounds, based on statements Juhasz himself made during the workers' compensation deposition: "As the depth and breadth of corruption within the government agencies, and especially within Customs, was becoming in focus, being uncovered ... I think that there were a lot of people that were very afraid of us -- beca use we, in effect, were the untouchables." However, Juhasz would soon discover that he and the task force were far from "untouchable." The interagency tiff set off by the tapes as well as other ongoing case-related tensions among the task force members prompted th e U.S. Attorney's Office to withdraw from Firestorm in early December 1990, according to documents submitted to the congressional subcommittee. By the end of the month, the task force was dead in the water. In February 1991, Juhasz was relieved of his duty as special agent in charge of the Customs Internal Affairs office in Tucson and subsequently transferred out of Arizona without explanation. "It became quite evident that it was purely political (the task force being shut down), that we were too effective, that we were getting too close," Juhasz states in the workers' compensation deposition. "We'd already top pled the Justice Department's Inspector General's office for covering up drug trafficking by Customs Inspectors. And I think that they were terrified as to what we were going to find." In addition to Juhasz, others on the task force also were subjected to retaliation by their employers in the wake of Firestorm's demise, according to documents submitted to the congressional subcommittee. Those individual s included Shelly, his wife (also a Customs agent and task force member), DEA agent Vasquez, an unnamed FBI agent, a special agent with the Department of Justice's OIG office in Tucson, and the assistant U.S. attorney who served as coordinator for the task force. "The careers of all the people on the task force have been either damaged or destroyed," Juhasz states in the workers' compensation deposition. As for Dibene, he, too, was transferred out of Arizona -- ultimately taking a job with the Immigration and Naturalization Service (INS) in California, according to congressional records. The Business Journal attempted to contact him at the investigations division of the San Diego District of INS -- where he currently works. Dibene did not return phone calls. And as for the two Customs inspectors identified in the tapes, according to Shelly and other sources, they are still on the job, patrolling the same stretch of border in Arizona. Shelly considers their continued presence there a threat to national security. "If I wanted to sneak some kind of bioterror or other weapon into the country, I'd go to the dope smugglers to get it across the border, because they have the connections," Shelly explains. "The individuals involved in th e smuggling don't know what's in those cars or packages, and they don't care." The fallout With the demise of the Firestorm task force in December 1990 and the jettison of Juhasz about a month and a half later, Group Supervisor James "Breck" Ellis took on the top-dog role in the Customs Office of Internal Affai rs in Tucson. At that point, Shelly says, the cases opened by Firestorm were allowed to go cold. Juhasz claims that Ellis used his new-found power to undermine investigations that had been launched by the task force. "Now from the point -- the time that I left, no significant investigation was conducted. And I believe, based on what I'm aware of, that it was sabotaged from within and principally -- starting with Breck Ellis," Juhasz s tates in the workers' compensation deposition. Ellis retired from Customs unexpectedly last spring, according to Shelly and other Customs sources. The Business Journal was unable to reach him by telephone, but did attempt to contact him by mail. There was no response by the paper's deadline. Customs insiders familiar with the task force's operations in Arizona in 1990 say the whole affair was effectively buried by the agencies involved. Juhasz did file complaints through Treasury Department channels. They went nowhere. Juhasz even testified in 1992 before the House Subcommittee on Commerce, Consumer and Monetary Affairs about the circumstances surroundin g the demise of the task force. However, the congressional investigation was never crystallized into a final report for the full House committee. A letter was written in November 1992 by the chairman of the House subcommittee to Warren Christopher, head of President Clinton's transition team, urging, among other things, that a special-prosecutor investigation be launched into the alleged law- enforcement corruption in Arizona. An investigation never occurred. An agent with Treasury OIG did attempt to investigate the Arizona corruption charges, but "his investigation was shut down by the U.S. Attorney's office in Phoenix, as well as the (Treasury) Inspector General's Office in Washington," Juhasz states in the workers' compensation deposition. Shining on Although the Firestorm task force and the questions it raised may have been effectively swept under the rug of history, the controversy surrounding Customs' operations in Arizona did not go away. In fact, they grabbed the national spotlight again earlier this year in an Associated Press story about the death of a Customs agent stationed in Douglas. As head of Customs Office of Internal Affairs in Arizona, Ellis oversaw the initial investigation into the 1998 auto accident that killed agent Gary Friedli. Friedli was riding as a passenger in a Jeep Cherokee, being driven by fellow Douglas Customs agent Allan Sperling, when the vehicle slammed into a turning truck while attempting to pass on a dirt road just outside of Doug las. At the time, the two agents were responding to a report of possible smuggling activity. Sperling had a track record of bad driving, according to Friedli's widow, Dorene Kupla-Friedli -- who also works for Customs as a senior analyst. However, the initial investigation into Friedli's death found that Sperling had done nothing wrong, and Sperling was allowed to return to work without disciplinary action. Friedli's family, including his widow, helped to spur on two subsequent investigations that were concluded last year -- one by Treasury OIG and another probe by Customs Internal Affairs. Both concluded: "(Sperling) had operated his vehicle in an unsafe manner that `significantly contributed' to Friedli's death," states the Associated Press article about the case, which was published in April 2001. "They also concluded th at Sperling's supervisors in Arizona had given misleading statements to Customs agents probing the accident." Both investigations made note of Sperling's prior bad driving record. "From 1992 to 1997, while employed by the USCS (U.S. Customs Service), Sperling was involved in five documented vehicle accidents, four of which were on duty," states a report of investigation prepared by Treasury OIG in 2000. "In one accident, which occurred at night on Geronimo Trail Road (also the location of the Friedli accident), Sperling was traveling at approximately 80 mph when he struck a cow." Kupla-Friedli said no further action was taken against Sperling in relation to her husband's death because after the second and third investigations were opened, someone in Customs issued Sperling a letter of reprimand, w hich precluded the agency from pursuing further discipline. Sperling declined to comment for this story. "All this stuff going on at the time (of my husband's death), it just sickens me that it's only starting to come out all these years later," Kupla-Friedli says. "I think Gary's death is only the tip of the iceberg." The Friedli case did spur a congressional inquiry earlier this year by Sen. Chuck Grassley, R- Iowa. However, Grassley's office has since backed off the case. "Senator Grassley has pretty much closed his involvement with the Friedli case, unless there are any new developments that warrant his attention," says Jill Gerber, a spokeswoman for the senator. U.S. Rep. Frank Wolf, R-Va., also has made inquiries of Customs with respect to Friedli's death, but likewise has backed off the case, pending any new developments, according to Judy McCary, director of constituent servic es for the congressman. However, McCary concedes that she remains puzzled about why Customs appears to have gone to such great lengths to protect a field agent like Sperling -- when other agents around the country have received harsh discipline for far less serious offenses. "I always thought there was something odd about this case," she says. McCary adds that given the current environment, with the war on terror, "to a certain extent, we have to keep people in place" in government. "We can't have a Saturday night massacre," she adds. "But long-term, we have to change the culture and weed out the bad apples." However, former Customs agent Shelly strikes a more urgent note concerning the battle against corruption. "Unfortunately, maybe we can't eliminate all corruption in law enforcement, but we can eliminate the corruption that we know about," he stresses. "Those who know and refuse to act become just as culpable as the crooked co ps. Politics aside, something has to be done." SIDEBAR: Former agent says going public was only option Steve Shelly claims that the battle to ferret out law-enforcement corruption along the U.S./ Mexico border cost him his job. Shelly, a former U.S. Customs Service agent, served as a member of a multi-agency task force called Firestorm that was created to target public corruption in Arizona. The task force was dismantled suddenly in late December 1990. About a month and a half later, Shelly's boss and the task-force founder, John William Juhasz, was removed from his post as the head of Internal Affairs for th e U.S. Customs Service in Arizona and transferred out of state without explanation. Some three years later, in July 1994, Shelly was out of a job -- forced, he claims, into involuntary retirement after suffering years of harassment from an abusive boss. The perpetrator of that hostile work environment, Shelly claims, was James "Breck" Ellis -- the same person who stepped in to fill Juhasz' shoes as top gun for Internal Affairs in Arizona. Ellis had served previously unde r Juhasz as a group supervisor and as a task-force member. Shelly is now alleging that he has uncovered evidence that shows Ellis committed perjury in sworn testimony in a Merit Systems Protection Board (MSPB) legal proceeding. The case Shelly sought to get his Customs job back by bringing suit in 1995 through the MSPB, a quasi- judicial review body set up for federal employees. In his MSPB proceedings, Shelly alleged that he was the victim of a hostile work environment and that he was retaliated against because of his whistleblowing activity -- which included cooperating with a congressional inv estigation into the demise of the Firestorm task force. Shelly claims his supervisor, Ellis, allegedly engaged in a pattern of abusive behavior in an effort to drive him out of his job in the wake of the task force being busted up. Shelly's psychologist -- who testified in a workers' compensation hearing on Shelly's behalf -- in a letter dated March 2, 1994, stated that Shelly was subjected to "constant and unrelenting disparagement and belittlement ... by his supervisors. The psychologist added that "the criticism appeared to be deliberate for the purpose of engendering constant anxiety." "In short, exposure to these conditions ground down Mr. Shelly's morale and coping resources to the point where he became so significantly depressed that he could no longer function," the psychologist's letter concludes. Shelly -- an 11-year veteran of the Customs Service -- ultimately had little choice but to resign from his job, due to the psychological duress, he says. Customs, on the other hand, claims Shelly left his job in July 1994 of his own free will due to "personal factors," which included concern for the health of his parents and other family- related problems. The judge in She lly's 1995 MSPB case agreed with Customs. Shelly appealed, and in 1996 lost again. "What the evidence does reveal in this case ... is that at or about the time preceding (Shelly's) resignation, he was undergoing significant personal stress," states the judge's ruling in Shelly's MSPB appeal. "The eviden ce of record does not support any findings that any agency officials engaged in any reprisals against (Shelly) for any whistleblowing." However, earlier this year, Shelly says he came across evidence that Ellis committed perjury during a 1996 MSPB hearing. The alleged perjury, Shelly claims, played a critical role in the judge's ruling against him. Prior to resigning in 1994, Shelly says he attempted to get transferred out of the Office of Internal Affairs in Tucson, Ariz., which Ellis oversaw. Shelly claims Customs approved that transfer in 1991, agreeing to move h im to the Office of Enforcement (OE) -- which has since been renamed the Office of Investigations. In testimony from the 1996 MSPB hearing, Ellis denied, under oath, that he had knowledge of any such transfer being approved. "I never knew that OE had ... had accepted," Ellis states in the testimony -- in response to a question about Shelly's transfer. "This sounds like an issue that that never occurred." Shelly counters, though, that he has obtained a signed statement indicating that Ellis in fact had a conversation with a senior special agent in Customs about that very transfer. "I recall speaking with ... Ellis regarding ... Shelly's release date (for his transfer)," states senior special agent Louie R. Garcia in a signed statement dated March 29, 2001. "... Ellis provided me with the release da te (for the transfer) ... and instructed me to call ... Shelly ... and confirm the suggested release date recommended by Ellis." Ellis stepped down unexpectedly from his Customs post this past spring, according to Shelly and other sources within Customs. The Business Journal was unable to reach Ellis for comment. Shelly has sent off a series of letters over the past seven months to the U.S. Attorney's Office, the U.S. Office of Special Counsel, the Department of Treasury's Office of Inspector General, Customs Internal Affairs as w ell as to members of Congress attempting to get someone to investigate the perjury charge. "Mr. Ashcroft, is perjury by a high level U.S. Customs manager not a crime?" states Shelly in a letter dated Aug. 1 that was sent to U.S. Attorney General John Ashcroft. "I am not seeking vengeance, nor am I trying to ret aliate. I am simply seeking justice. "... However, in order to protect my family and my integrity and my honor, I will not cease in my quest to right this wrong." No one in the government has done anything about his case, Shelly says. As a result, he has decided to go public with his story. To read other Business Journal coverage of the U.S. Customs Service, go to the following Web link: http://sanantonio.bcentral.com/sanantonio/stories/2001/10/08/story1.html. 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