Criminal Capitalists:Madoff and Zell

Once again as financial markets collapse they reveal the truth that all capitalism is basically a ponzi scheme.

THE MADOFF AFFAIR: $50-BILLION PONZI SCHEME ALLEGED
Madoff put under house arrest as celebrities, charities, banks disclose exposure

It befits the close of one of the most bizarre years in international finance to look at the collapse of one of its most extraordinary villains, Bernard Madoff, a former chairman of the Nasdaq sharemarket and a Wall Street titan.The crisis in the world financial system has its roots in excessive greed, stupidity, poor regulation and disappearing capital, and the story of Madoff's downfall and a $US50 billion sting bears many of the same hallmarks.

When Enron and World Com collapsed it was revealed that they were in cahoots with their accounting firms, who not only checked their books, but helped them cook those books in order to avoid taxes and to make it appear they were more profitable than they really were. And at the same time the SEC was not doing its job in fact as this recent scandal reveals they acted not as regulators but enablers of Mr. Madoffs criminal scheme.

SEC investigators discovered Madoff violations in 2006: WSJ

We should be surprised by this I think not, after all capitalism began as a joint effort between merchant bankers, pirates and private mercenaries. Why should it be any different four hundred years later.

Bernard Madoff 's $50 billion Ponzi scheme was so breathtaking that investors have been left speechless. But the alleged crook -- universally described as "charming" -- would not have succeeded were it not for the unbelievable gullibility of supposedly sophisticated investors.Madoff knew that just because people were rich it did not not make them smart -- that was the source of his success. All you have to do is talk about an investment philosophy that is vague but sounds really authoritative. Give people nonsensical statements that they glance at quickly. Make sure that the statements indicate steady returns of 10% to 13% a year. Many CFOs, CIOs and portfolio managers were amazed that Madoff produced such steady returns for so long. They were mathematically impossible. Barron's raised questions in 2001 about whether Madoff was "front-running" trades, an allegation he denied. Still, Madoff's rich buddies stood by his side.Maddoff somehow managed to convince a slew of banks and hedge funds, billionaires such as Mets owner Fred Wilpon, Yeshiva University along with charities associated with Steven Spielberg and Nobel Laureate Elie Wiesel that the laws of investing do not apply to them. The odds of anyone getting double-digit returns year after year are laughably small. They, of course, understood that, but figured why fix something that ain't broke. By turning a blind eye to fiscal reality, these victims showed almost as much greed as Madoff.


Madoffs clients are a who's who of the very financial institutions that lined up at the trough to be bailed out, and who claimed if they failed capitalism would collapse. In fact the whole collapse of America's financial market reveals that it was all a ponzi scheme.


After all, Madoff’s scheme -- at least in spirit, if not in its nefarious intent -- wasn’t much different than the business models at some of the nation’s largest failed financial institutions.
Back in May, four months before it collapsed, American International Group Inc. increased its dividend at the same time it unveiled plans to raise $12.5 billion in capital. Later, when its cash ran out, AIG got a government bailout, the size of which has expanded to about $150 billion.
Whether you call that a Ponzi scheme or something less sinister, AIG was paying old investors with money raised from new investors. The same could be said of many banks that blew through billions of dollars in freshly raised capital the past couple of years, continuing to pay large dividends even as their balance sheets quietly imploded. So why have other Ponzi-esque operators emerged scot-free (so far) with taxpayer bailouts, while Madoff gets pinched?

And one of these financial institutions caught up in the Madoff affair is UBS the Swiss banking company recently indited for using its banks in Canada to hide U.S. billionares fortunes offshore in its banks acounts top avoid taxes, which is itself illegal, but just another case of business as usual until we are caught.

Howewver while Mr. Madoff's actions have been declared illegal, another capitalist billionaire Sam Zell is able to do the same thing legally!!! And there really is no difference between them.

Sam Zell, Tribune's billionaire CEO, but rather the thousands of Tribune employees whose stock ownership plan was jerry-rigged to fund the company's buyout last year. Mr. Zell was the architect of the deal, but put up only around $300-million of his own money as a kind of option to later buy financial control of the company for as little as $500-million more. Under the mind-boggling structure Mr. Zell and his advisers came up with, the Tribune ESOP owns 100 per cent of the shares. What happens to them? The Chicago Tribune said it most starkly, quoting an employee conference call with Mr. Zell: “The ESOP, which Mr. Zell said a year ago offered employee “owners” the chance to share richly in Tribune Co.'s eventual success, could be wiped out, leaving thousands of Tribune Co. employees with no company retirement plan besides what they elect to save in a 401(k).”

Tribune’s Chapter 11 filing likely means a court delay for six current and ex-L.A. Times employees who are trying to oust billionaire owner Sam Zell from the board of directors. But in the meantime, they can point to Zell’s bankruptcy-protection filing as Exhibit A in the court of public opinion. “The sort of critique we made in the lawsuit has been borne out,” says plaintiff Henry Weinstein, the Times’ former legal affairs writer and now a professor at UCI’s new law school. In addition to the Times, Tribune’s assets include KTLA-TV, the Chicago Tribune and the Chicago Cubs. In late 2007 Zell took the company private by putting up $315 million and borrowing $8 billion. The class-action suit, filed in September, accused Zell of orchestrating a scam and burying the company in debt. Zell called the suit “a distraction that’s unnecessary.” Says Weinstein: “We are certainly going to try to be heard in the bankruptcy court. There are all sorts of employee interests” ...

The following is an official statement from Teamsters General President James P. Hoffa.
"When billionaire Sam Zell took Tribune private in an overleveraged, doomed deal that swiftly brought down the 161-year-old media giant, the risks involved were placed squarely on the shoulders of Tribune workers. Now, as Tribune's creditors head to bankruptcy court for payback, these workers should go directly to the front of the line.
By transferring 100 percent ownership of the company and some $13 billion of debt to an S-Corp Employee Stock Ownership Plan (ESOP) in the buyout, Zell insulated himself from tax responsibilities and mortgaged the future retirement savings of Tribune employees. Despite owning 100 percent of the company, employees were given no voice in the governance of the company or in the plan itself. They've had no say in the terms of their own debt obligations or decisions related to how best to service that debt.
Tribune contributions to employee retirement savings for employee-owners changed from a defined benefit plan to a defined contribution plan structured as the ESOP. Employees participating in the ESOP can't diversify their holdings until they reach age 55.
The first of the company's contributions to the ESOP was expected to happen in the first quarter, but now -- with the Tribune mired in Chapter 11 bankruptcy -- it's unclear whether that will happen or whether those shares will have any value.
Not everyone lost on the deal. Tribune executives made millions, including CEO Dennis FitzSimons, who engineered the deal with Zell and raked in $17.7 million in severance and other payments and cashed in his stock for $23.8 million. Shareholders traded in stock rated deep into junk territory for cash representing a 21 percent premium over the stock price just before the transaction. The banks that lent Tribune the money shared some $47 million in fees.
Citigroup and Merrill Lynch who advised Tribune on the deal received $35.8 million and $37 million respectively. And billionaire Zell, who put up only $315 million in the deal, is expected to stand ahead of employees in the creditors' line at bankruptcy court.

Unfortunately Mr. Zell will not be sharing a cell with Mr.Madoff nor with another Chicago paper baron; Lord Black. Though he should.

SEE:
Super Bubble Burst
Hedge Funds, Junk Bonds, Ponzi Schemes




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Subsidizing Criminal Capitalism

Why are we bailing these guys out with taxpayers money while they are guilty of being criminal capitalists. Of course hidden in their bad loan charges will be the costs of criminal charges as well. And in order to offset your criminal charges you can use loosy goosy accounting standards to cook the books. Wait a minute isn't that how we got into this mess in the first place? And there is still no real transparency in the operations of Canada's banks. A profit is still a profit and CEO stock options have not been cut back.

Canada Bails out its banks to the tune of over $1650 for every man women and child. Oh, and ATM fees are going up.

Ottawa to buy $50B in mortgages, hopes to spur loans

Royal Bank of Canada agrees to $10.7M settlement
The Justice Department said Tuesday that RBC Mortgage Co., a subsidiary of the Royal Bank of Canada, has agreed to pay the U.S. more than $10.7 million to settle allegations that the company falsified loan documentation.The Justice Department said the allegations concerned 219 federally insured loans for mortgages submitted to the Federal Housing Administration of the Department of Housing and Urban Development between 2001 and 2005.
CHICAGO - A Canadian bank holding company that purchased a former mortgage company in Rockford will pay the U.S. nearly $11 million to settle claims over bad loans. RBC Mortgage, formerly known as Prism Mortgage, had a lending office in Rockford. Three RBC Mortgage loan officers and 22 other people were convicted of knowlingly setting up 219 loans that failed in the Rockford and Freeport areas between February 2001 and April 2004. Each loan resulted in foreclosure causing financial loss to the government.
Bank of America, Royal Bank of Canada to bail out holders of auction-rate securities
Bank of America Corp. and Royal Bank of Canada will bail out customers stuck with $10.3 billion in auction-rate securities and pay fines to settle state and federal claims that they misled investors in selling the products. Bank of America will buy back $4.5 billion of the securities and pay a $50-million fine in agreements with the Securities and Exchange Commission and New York Atty. Gen. Andrew Cuomo that "closely mirror" a deal last month with Massachusetts. The bank will help clients dispose of an additional $5 billion, the SEC said. Royal Bank of Canada said it agreed to buy $850 million of the debt and pay a $9.8-million fine.Companies including Citigroup Inc., UBS and Merrill Lynch & Co. have agreed to repurchase more than $50 billion in debt to settle claims they touted the instruments as safe, cash-like investments.
RBC takes $1.6B hit on bad loans
RBC said it was avoiding even bigger charges by taking advantage of new looser accounting standards to reclassify impaired assets so the losses would not have to be acknowledged.
Charges cut profit, but RBC expects to make $1.1B in Q4
Gordon Nixon • Born, Jan. 25, 1957, Montreal • Chief executive officer, Royal Bank of Canada (TSX: RY)Years at company: 21 • Age: 51
2007 Earns $8,767,229 in compensation and bonus. Realizes gain of $29,033,072 on exercised stock options. “I think the industry, all of us, anticipated the ability of the markets to recover from those events and to move out of it much more quickly than it has actually happened,” Nixon says. “I think we’ve misjudged the severity of the liquidity crisis.”

Toronto Domion Bank Ex-Commerce Bank CEO to pay $4 mln to settle probe
WASHINGTON, Nov 17 (Reuters) - Vernon Hill, former chief executive of Commerce Bancorp Inc, agreed to pay $4 million to settle allegations of unsafe banking practices, regulators said on Monday.
Commerce forced Hill out in June 2007 after regulators complained about dealings between the bank and partnerships controlled by Hill as well as an architectural design firm run by Hill's wife, Shirley.
Under the settlement with the U.S. Office of the Comptroller of the Currency (OCC), Hill must also pay $4 million to TD Bank, which acquired Commerce in March. But the iconoclastic banker incurred no fines or prohibitions in the settlement, paving the way for the launch of Metro Bank, a new venture based on the Commerce model of service and convenience. Meanwhile, a U.S. District Court judge in Camden issued an injunction Tuesday forbidding Hill to use materials reflecting Commerce signage and colors at a banking conference in Orlando, Fla. The injunction was sought by TD Bank, whose Canadian parent bank acquired Cherry Hill-based Commerce in March for $8.5 billion. The OCC said Hill failed to comply with sound corporate governance principles related to real estate purchases, leases and joint real estate development transactions involving Commerce that financially benefited him.The bank announced in August 2007 that Hill would receive an $11 million severance payment, subject to regulatory approval. After resigning, Hill started a private investment group that will invest in financial industry stocks. This past summer, he doled out $6 million to become and investor and consultant in Philadelphia’s Republic First Bancorp, which announced last week that it would be acquired by former Commerce affiliate Pennsylvania Commerce Bancorp of Harrisburg, Pa., for $109 million.
TD's capital ratio fell significantly on Nov. 1 under global banking rules, Basel II, that require it to change the way it counts its stake in TD Ameritrade. The decision to issue equity is a dramatic about-face for Mr. Clark, who told analysts on a conference call just Thursday that “raising common equity would be extremely difficult” at the moment. He signalled that the bank would rather increase its capital levels using other methods, such as issuing preferred shares. As a result, the bank had to count 50 per cent of its $4.6-billion stake in TD Ameritrade in its ratio. “That meant we immediately lost $2.3-billion of Tier 1 capital, and that's what brought our Tier 1 capital ratio down,” Mr. Clark said. TD had already raised $1.25-billion of Tier 1 capital during the quarter, Mr. Mihelic noted.TD still has room to issue “more than a couple billion dollars of preferred shares under the rules,” Mr. Clark said.The decision to issue common shares was made yesterday afternoon, because markets improved since Thursday and investors were signalling they wanted a higher capital ratio, he said. TD last week disclosed a surprising $350-million after-tax writedown from credit losses and further investment declines that will not show up in results because of new accounting rules.

Bank of Montreal Rogue gas trader admits to fraud A disgraced natural gas trader at the centre of Bank of Montreal's $853 million commodity trading scandal has pleaded guilty to intentionally mismarking his trading book in a "criminal scheme" to pad his bonus, Manhattan's district attorney announced yesterday ... The charges stem from a joint investigation by the U.S. Attorney's Office for the Southern District of New York and the New York Office of the FBI into Bank of Montreal's natural gas trading losses, which topped $850 million
BMO net rises 24%; dividend is frozen
BMO's high yield should set off warning bells Globe and Mail
First, those results weren't as good as they looked. The headlines say earnings were up 22 per cent to $1.06 a share. Nice, but considering, for example, that the tax rate was not low, not zero but negative, you have to take that with a grain of salt. Reclassifying assets as available for sale added $123-million to the bottom line. Only a very recent rule change allowed that - thank you regulators. Trading revenues were abnormally high too. And here's another reason: no one understands how a modern bank works. During yesterday's conference call, analysts were scratching their heads trying to understand the repercussions of the Apex commercial paper trust, which the bank sponsors; BMO has about $1.6-billion on the line there. If the investments and its attendant risks are hard for professional and experienced analysts to follow, they're practically incomprehensible for the average retail investor - and even some professional investors - to understand as they salivate over a juicy yield.
Bank of Montreal profit climbs The Gazette (Montreal)
Quarterly profit rose 24 per cent at the Bank of Montreal, helped by tax recoveries, higher profit at its Canadian retail banking unit and new accounting rules,
Bank of Montreal Profit Rises on Consumer Banking
Bank of Montreal, Canada’s fourth- biggest bank, said higher revenue from consumer banking helped boost fourth-quarter profit by 24 percent from a year ago, when it had debt writedowns and trading losses. Canadian consumer-banking profit rose 20 percent to C$344 million from a year earlier as personal loans rose 21 percent and it added more mortgages. Commercial loans and credit-card revenue also rose from a year earlier. Investment-banking profit soared to C$285 million from C$46 million a year earlier, when the firm had C$275 million in losses from trading, bad bets on natural-gas options contracts and writedowns on debt investments.
BMO head urges Ottawa to act decisively
Bank chiefs on Bay Street are urging Ottawa to commit to making a major injection of cash into the economy to help stem a rising tide of bad loans, after internal bank figures showed Canadians were increasingly struggling to make payments on money they've borrowed. Bill Downe, chief executive of BMO Financial, said strong and timely fiscal stimulus was needed from government, arguing it would be "positive for employment" and facilitate "constructive investment," while reviving growth for banks.

Let's not bank on the banks
Given this risk and the serious economic consequences of the banking crisis, it may be appropriate that premiere events at the Air Canada Centre are becoming notable for the scarcity of bank executives, who earn up to 500 times more than arena staff. Mark Carney, governor of the Bank of Canada, said yesterday he had been somewhat troubled by the nature of his conversations with chief executives during the last five years. He suggested in a BBC interview that bank chiefs should perhaps have spent more time reviewing their loan portfolios and less time thinking about the "opera or the ski slopes."
Carney signals more rate cuts
In a sign that the global credit crisis is seeping across Canada's borders, Bank of Canada Governor Mark Carney warned yesterday that the country "has been importantly affected by global events" and hinted that another interest rate cut may be in the offing. Pointing to "a tightening in credit conditions," Carney said in a speech to the Canada-United Kingdom Chamber of Commerce in London that "the risks to growth and inflation in Canada identified (in October) appear to have shifted to the downside." He said the crisis has essentially ended for Canada's banks, and short of a complete global market failure, he expects financial and credit markets to improve in Canada
Canada Purchases C$1.05 Billion of Non-Mortgage Debt (Update1)
By Alexandre Deslongchamps and Greg Quinn
Nov. 24 (Bloomberg) -- The Bank of Canada bought C$1.05 billion ($839 million) of securities from investors, less than the C$2 billion it offered to purchase, in an effort to restore normal trading in credit markets.
The central bank will hold the non-mortgage loan portfolio assets as collateral for 28-day loans. The bank has offered to buy C$8 billion or more of such securities by Dec. 9.
Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty said last week in separate speeches that they will take whatever steps are needed to shore up the economy and help mitigate the global credit crisis. The central bank has another program under which it will inject up to C$35 billion into the financial system this year through loans to major bond dealers.
Tomorrow, the Bank of Canada will offer loans of C$6 billion to major bond dealers, instead of the minimum of C$4 billion it announced on Nov. 3. On Nov. 27, the central bank will sell C$1.45 billion of treasury bills, to offset the increased value of assets on its books from its special loans

Sympathy slight for banking blues
The Royal Bank of Canada (RBC), for instance, announced yesterday that its estimated profits for the last three months plunged a frightful $200 million from a year ago. That left the nation's largest bank with a paltry profit of only $1.1 billion -- for its worst quarter of the year.
Putting it another way for those of us who can't quite fathom a billion of anything, the so-called credit crisis engulfing the globe has reduced the Royal to making a little over $12 million a day, including weekends when its branches aren't even open for business. One can only imagine the terminal indigestion all this must be causing in the bank's executive dining room these days.
Only a year ago, the Royal was boasting "a record-busting profit of almost $5.5 billion (for 2007), achieving the highest annual income ever for a Canadian bank despite global capital-market turmoil that has engulfed the entire industry." The Royal, for instance, reports a tidy $330-million increase in revenues over the past three months from an improved credit spread.
Turns out that while most public and media attention has been focused on the near-collapse of the financial system in the U.S. and overseas, the highly regulated Canadian big banks have escaped relatively unscathed. No matter. Nothing like a good global banking scare to sneak through a bit of consumer gouging here at home.
It started in the middle of the recent federal election when the Bank of Canada unexpectedly cut its key lending rate by a full half-percentage point after the first wave of the market meltdown.
The move was intended precisely to get the Canadian banks to cut their lending rates to consumers and businesses in an effort to keep the economy rolling.
But a funny thing happened on the way to the banks -- they decided to cut their rates by only a quarter-point, and keep the rest.
This was not an isolated bit of banking robbery.
According to Bank of Canada figures, its key lending rate has declined 45 per cent from a year ago, from 4.5 per cent to 2.5 per cent. But the prime business rate that banks lend money to their best commercial customers has only dropped 33 per cent -- from six per cent to four per cent.
But no one is getting burned more than consumers and, in particular, homeowners.
In the year that the central bank rate has dropped 45 per cent, the banks have passed along to consumers a tiny fraction of the savings.
For example, according to the Bank of Canada, the average five-year conventional mortgage that was 7.39 per cent a year ago, was being offered to homeowners in October at 7.20 per cent.
Even the average one-year mortgage dropped barely 12 per cent in the year, from an average 7.2 per cent to only 6.35 per cent in October.
All of which clearly helps to explain why Stephen Harper's government has generously provided the big banks with $75 billion of public money with which to further gouge, um, the same public. Finance Minister Jim Flaherty said the move would help average Canadians by "making consumer and mortgage loans more affordable."

SEE:
UBScandal
Casino Capitalism
Money Laundering Canadian Style
Bank Theft
Credit Card Fraud
The Cone of Silence Bank Presidents and the RCMP
RBC Centre
Greedy Banks
BMO More ATM's Less People
A Day in the Life of Corporate Criminals

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UBScandal

As capitalism melts down the rich always find a way to hide their taxable income. In the best of times and the worst of times. If they don't get the tax cuts they demand c'est lavie. They can always hide their money in Swiss bank accounts courtesy of the Gnomes of Zurich.In this case courtesy UBS. As we found with Enron, capitalism breaks down because those who play in the market know that rules are made to be broken and so they break them.


UBS executive indicted in US

UBS executive charged with aiding tax evasion

The Swiss Banker and 'Toxic Waste'

Gee could that have anything to do with this;

Top Executives at UBS Will Not Get Bonuses

Or maybe its actually because of this;

UBS warns earnings will be squeezed for rest of year

After being Europe's first major credit crunch victim, writing down $37.0 billion in the first two quarters of the year, there has been a shift in focus in the concerns that investors have about UBS. Its balance sheet is looking decidedly less frightening, now that it has shifted $60.0 billion of illiquid mortgage-backed securities into a vehicle created by the Swiss national bank, while it managed a profit in the third quarter.

And before we get all warm and fuzzy about those poor bankers UBS will still pay em heaping amounts of gold, just not all at once....

UBS said its new compensation model would be "focused on the long-term" and "closely aligned with the value creation of the firm." Executive board members whose bonuses had depended on annual performance alone will now be paid according to the new system that tracks their performance and the bank's share price over a three-year period. The two variable parts of their compensation--in cash and equity--will both be performance linked and the chairman of the bank will no longer get so-called "variable compensation."

And like that other Republican Investment Banker; Dan Quayle, who works for Cerebeus, lookee here UBS has one in their pocket too.

Phil Gramm: A Deregulator Unswayed
RGE Monitor, NY - , he left Capitol Hill in 2002 to work as an investment banker and lobbyist for UBS, a Swiss bank that has been hard hit by the market downturn,

You remember Phil he advised the McCain campaign until last summer when he called Americans concerned about the meltdown appearing on the horizon a bunch of 'Whiners'.

In an interview with the Washington Times,

Phil Gramm, a former Texas senator who is now vice chairman of UBS, the giant Swiss bank, said he expects Mr. McCain to inherit a sluggish economy if he wins the presidency, weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.
"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said. "

Now he says the push to deregulate the market had nothing to do with the current meltdown.

<'>The retired Texas senator claims that deregulation “played virtually no role” in the current economic turmoil engulfing the globe, nor the housing collapse or the credit crisis. The exempting of any regulation of derivatives, including state insurance supervision, reserve requirements or clearing information was not significant to the crisis. The nonfeasance of the Fed in supervising all of the non-bank lenders that lay at the heart of the housing boom and bust was not the cause either (it was “Predatory Borrowing”). And the payola scandals at the ratings agencies — Moodies, S&P, and Fitch — that slapped triple AAA ratings on paper that turned out to be junk would not have been prevented via better oversight.
Gramm said placing any blame on deregulation was simply “an emerging myth.”

The whole UBS scandal comes home to Canada where we specialize in White Collar Crime....Corporate Captialist criminals get away with murder in Canada. We have no single national regulator liie the SEC, and clearly our bank laws are not enforced effectively, if UBS can set up a secret offshore account for wealthy Americans called the 'Canada Desk' because the deals were done on Canadian soil.

Top Firm Accused Of Having Illegal 'Secret' Desk


This scandale has caused the Montreal Gazzette to pick up on the popular slogan of the Communist Party of Canada Marxist Lenninist in its latest editorial; Make The Rich Pay.

Government has obligation to make the rich pay, too
Raoul Weil, a senior executive of the Swiss bank UBS, has been indicted by the U.S. Department of Justice on charges of helping his U.S. clients hide some $20 billion in assets from the taxman. Americans will be glad to see their government pursue this sort of case aggressively.
In Canada, however ....
The Globe and Mail reported last week that Weil was also in charge of a secretive team of senior bankers whose job was to help Canadians hide as much as $5.6 billion from the Canada Revenue Agency, this country's tax collector.
So what has that agency, and the rest of the Canadian government, been doing about these allegations, the outlines of which have long been known? Nobody knows. Maybe nothing. And that's not nearly good enough.
Nothing is more corrosive to the sense of fairness and transparency that society needs to function well than the idea that there are two standards - one for the wealthy and one for everyone else


And in light of this scandal this failure to collect what is due the people of Canada or to prosecute UBS for breaking our banking laws, what does the Government and Revenue Canada do? Wait for it....

Ottawa targets online merchants who pay no taxes

Canada Revenue Agency to focus on so-called 'power sellers' on eBay

Pound foolish, pennyt wise.



SEE:

Crime Pays If You Are Rich

Whining and Dining with the Irvings

Hedge Funds, Junk Bonds, Ponzi Schemes

Criminal Capitalism Business As Usual

Tax Cuts For All

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Conservatives Clemency For Canadian Criminal Capitalist

While the our Law and Order Government is planning to extradite Karlhaus Schrieber to Germany to face charges of swindling and fraud they are lobbying for the return to Canada of another criminal swindler. Who just so happens to be a millionaire. And they want to transfer him to a Canadian prison to serve out his sentence.

His family fears he faces death in the Bulgarian prison. Luckily for him, Bulgaria like Canada no longer has capital punishment. Wait a minute didn't they deny a clemency appeal for a Canadian on death row in the U.S. and any hope he had of transfer to prison in Canada.Oh yeah he ain't a millionaire and he ain't a white collar criminal. Spot the contradiction.

Europe condemns Canada over change in clemency stance

Bulgaria is one of the post soviet kleptocracies, a mafia-capitalist state bent on the privatization of everything. Our Canadian capitalist took advantage of that situation and got himself in trouble. And unlike Canadians on death row, or Karlhaus Schrieber, he has friends in the Harper government.

And of course Kenney and Harper being from Alberta are familiar with crony capitalism and the One Party State. Just like Michael Kapoustin understood that Bulgaria was a kleptocracy and took advantage of the crony capitalism occurring in that country to make a profit.

Prime Minister Stephen Harper and two of his most trusted ministers have for more than a year been quietly pressuring the Bulgarian government to transfer home to Canada a former millionaire Canadian businessman jailed overseas since 1996 on charges of fraud and embezzlement, CanWest News Service has learned.

Despite numerous diplomatic efforts - including a meeting in Sofia last year between Bulgaria's top prosecutor and Secretary of State Jason Kenney, at which Kenney pleaded for the return of 55-year-old Michael Kapoustin - Bulgaria refuses to transfer a man it once labelled an international swindler.

As a result, Canada is turning up the heat, invoking for the first time an international treaty that forces the unco-operative Bulgarian government into mediation talks.

On Thursday, a Canadian delegation will square off against Bulgarian officials in Strasbourg, France, headquarters of the Council of Europe - a European human rights body created in the wake of the Second World War to oversee, among other things, prisoner-transfer rules among the countries of Europe, Canada and the United States.

The mediation process follows months of failed intervention by Kenney and Harper - who has lobbied the Bulgarian president on the Kapoustin case - and by Public Safety Minister Stockwell Day, who is responsible for prisoner transfers to Canada and is also the MP for Kapoustin's British Columbia-based family.

Such efforts are a marked contrast to the Harper government's treatment of some other Canadians imprisoned abroad.

Since last year the Conservatives have denied the transfers of at least 17 Canadian citizens jailed in the U.S., even though their transfers to Canadian prisons were approved by U.S. authorities.

The government is also refusing to advocate against the death row sentence of Ronald Smith, an Albertan convicted of murder in Montana.

Kapoustin's repatriation, however, is "a priority for our government," said Kenney in a letter last December to Bulgaria's prosecutor general, adding, "Our government is determined to robustly defend the interests of Canadian citizens abroad."

Kapoustin was born in Yugoslavia but grew up in Toronto and Vancouver after his family immigrated to Canada in the 1950s. He became a high-profile entrepreneur in Bulgaria during the 1990s, as capitalism replaced communism following the breakup of the Soviet bloc.

"Michael was a very high flyer in Bulgaria in the post-Soviet period," says Gar Pardy, Canada's former director general of consular affairs, who has taken up Kapoustin's case in retirement. "He was running a bunch of companies and there was a lot of money on the go.

Bulgarian officials charged him with tax evasion, money laundering, fraud and embezzlement. Authorities shut down Kapoustin's companies and seized assets he claims were worth more than $11 million.

In 1996, he was arrested during an airport stopover in Germany and extradited to Bulgaria.

In 2002, after six years in detention, a Bulgarian court finally convicted Kapoustin on a new charge of embezzlement and sentenced him to 17 years in prison.

Pardy says that for years he and other Canadian diplomats worked hard to secure Kapoustin's transfer to a Canadian prison, where he would soon be eligible for parole - but never got anywhere with Bulgarian officials.

On Tuesday, Canadian law firm Amsterdam & Peroff announced that it has produced a website about its pro-bono client Michael Kapoustin, a citizen of Canada who has been languishing in a Bulgarian prison since he was convicted to 17 years in prison on what his defense team insists were false charges of embezzlement, fraud, tax evasion, and money laundering.

The website has been created to coincide with a new level of government talks about the prisoner transfer treaty between the two nations.

Article 23 of the Council of Europe's Convention on the Transfer of Sentenced Persons to initiate mediation has been invoked by Canadian Prime Minister Stephen Harper who, after over a year of constant contact, has not been able to secure Kapoustin's release and extradiction to Canada.

The website allegedly shows violations of Kapoustin's basic due process and fundamental rights in the trial, torture, solitary confinement, cruel and unusual treatment in prison, and the irresponsible conduct of a number of former government officials.

"For so many years, the family has been told to keep quiet about these injustices while numerous promises to bring Michael home were repeatedly broken. The time has come to speak up," said international lawyer Dean Peroff of Amsterdam & Peroff.

Michael Kapoustin's wife, Tracy, has been raising their 14-year-old son alone for most of the boy's life as a result of the imprisonment.

Kapoustin, now 55, was a millionaire entrepreneur. He became very influential in Bulgarian business circles in the early 1990s as Communism collapsed and Capitalism began to flourish in the Eastern European nations.

Bulgaria: A Hard But Lucrative Place for SMEs
03.08.2007 For the past seven years, Swiss entrepreneur André Felder has been working in Bulgaria. Despite some unpleasant experiences, he does not regret his decision to move there. At a forum during the latest Credit Suisse field trip to Bulgaria, he warned investors and business people against having unrealistic expectations.

What was Bulgaria like seven years ago?
Chaotic. The mafia were also rampant. The gray economy was bigger than the "regular" economy. But it was a time of optimism and a new direction, and perhaps a dose of "Wild West" capitalism is simply part and parcel of that sort of pioneer era.

What exactly do you mean by Wild West capitalism?
We lived by the laws of the jungle. My original partners very nearly forced me out of the business, for example - without providing any form of compensation. And institutional sloppiness and arbitrariness nearly drove me to bankruptcy.

Do you think that would still be possible today?
Organized crime remains active - but it's in retreat. And obviously corruption is still an issue. But recently in particular, a lot of things have changed for the better. The reform process is beginning to take effect, and there is broad agreement among people about the need for reforms in the administration and justice system.

ROMANIA AND BULGARIA

The EU's Unpopular Expansion

In its latest progress report, issued in December, the European Parliament expressed shock at the "audacity of organized crime" in Bulgaria. According to Western observers, the economy is pretty much controlled by shady insider dealing. Recently, Susette Schuster, a judge from Cologne, was sent to Bulgaria on an EU mission and came back with "alarming" findings: The legal system is tangled, judicial reform is chaotic, the trust of the citizens in the state is weak, and corruption is widespread.

In addition, officials at Eurojust, the EU body that coordinates the member states' judicial systems, have also discreetly contacted parliamentarians in Brussels. They are afraid that their fight against terrorism and the trafficking of drugs, weapons and children would be made more difficult once Bulgaria's criminal gangs' informers in government gain access to all of the files. People who once dealt in drugs at the behest of the Communist state apparatus, now hold key positions in the police, the judiciary and politics. The same people will soon find themselves in control of €2.3 billion that the Bulgarians are due to receive in subsidies from Brussels over the next three years.

23.01.06
Кристиян Кирчев
The so called people's representatives - the politicians onf Bulgaria are just business men people in suits working in the parliament, geting payed by the national taxes collected off the people. Those Bulgarian businessmen - called Government Deputies (GD) - are trading with national goods. Whenever money come from the European Union (EU), the GD's are spreading them amongs themselves. They think and act as they think: "Those are money for our associates, their firms, and our companies. Let's split them, and screw the republic. This Is Capitalism!" Post-communistic looting of the the country. All closed factories, all farms forced to bancrupcy, all MAIN sectors of transport, comunication, and energy are privatised, and/or sold out to foreign investors in suspicious secret deals, are dooming a nation to be the employer of his own looter.

Luchezar Boyadjiev interviewed by Geert Lovink

The first interview was conducted during the opening of Hybrid Workspace in June 1997, the temporary media lab in the margins of the big art show Documenta X in Kassel (Germany).

> Could you explain us the current situation in Bulgaria from your point of view? For a long time, the Bulgarian communists have stayed in power, after having changed their faces. Recently, a lot has happened in South-East Europe... student demonstrations in Serbia, the first non-communist government in Romania, anarchy in Albania... What is the reason of the apparently unique position of Bulgaria?

The more time passes after 1989, the more differences there are between each country in Eastern Europe. In the past, Bulgaria had a privileged position, in terms of being one of the closest allies of the Soviet Union. The country enjoyed an almost free supply of raw materials, crude oil, electricity. A utopian situation, having no worry about how to produce and make a living for its citizens. Now, it looks as if time has stopped after 1989. We realized this only recently. On the surface, a democratic reform took place. A free-market economy was introduced, of which I am not a fan, but which seemed to be the only way out of the deadlock. As it turned out, there is no capitalism, so consequently, there is no opposition to capitalism. This applies also to the social situation. A redistribution of the old money of the regime is now taking place among its loyal followers who are now top bankers or mafia leaders. This is not capitalism, it is Monte-Carlo money. Easy come, easy go, no re-investments.

Bulgaria

Violina Hristova of Sofia, senior reporter for Standart News specializing in reporting on organized crime:

What distinguishes my country are the extortion rings controlled by groups of ex-athletes, especially wrestlers. They also control narcotics traffic, smuggling, counterfeiting and prostitution. They call it the "Wrestlers mafia. " The wrestlers' weapons are always baseball bats, and they use "security organizations" (protection agencies) as their cover.

Although many people talk about connections between the Bulgarian and Italian mafia, there's no proof. Some experts estimate 4,000 people are involved in this kind of organized crime. These groups launder money and bribe public officials and police. The businessman who does not go along may be beaten severely or even murdered. Sometimes the wrestlers make mistakes. For example, last summer in Sofia they kidnapped a businessman's mother-in-law instead of his wife. Many of these wrestlers are former members of government security forces.

Some people estimate the wrestlers control 50% of the nightclubs, 70% of the gambling and 80% of the cigarette and alcohol trade in Bulgaria, and are partners or owners of six casinos. The Wrestlers mafia originated after the change of the political system, as big groups of shady operators began employing the ex-weightlifters, ex-wrestlers, ex-boxers. Also employed were former police officers and the security services. Many believe these profits from illegal activities are being invested in the privatization process and legitimate businesses will emerge from them.

Crime and Democracy in Bulgaria
By Robert Kaplan | Saturday, June 23, 2001

In Bulgaria, I found a society that was regarded as a democratic success abroad, but was really under siege from criminal clans. Organized crime is, of course, a common feature of former Soviet bloc societies.

Romanians seem to be adapting to global capitalism in the same aggressive manner they once adapted to communism.

By the 1980s, communist parties had evolved largely into large-scale mafias which, when the system collapsed, simply divided into smaller mafias that purchased politicians in all those new and weak democracies. Common, too, are allegations of a new Russian imperialism by way of European-wide crime connections and energy monopolies like Gazprom.

Quasi-legitimate enterprises

Nowhere, however, were such phenomena so transparent as in Bulgaria when I visited in 1998. Is is a poor, small country in which democratic institutions have been fighting valiantly against Russian attempts at "re-satellitization" by criminal stealth. Bulgaria illustrates how the potential evils of the new century are ominous precisely because of their ambiguity. It is no accident that here the word "groupings" is used instead of mafias.

These networks include legitimate enterprises — audited by Western accountants and, increasingly, linked to Western multinationals — as well as legitimate entities. They engage in activities such as compact-disk pirating, illicit-drug activity, money laundering and extortion. One foreign diplomat told me, "These groupings engage in violent intimidation and corrupt politicians. Yet, their genius is to cover their tracks to an extent that they are quasi-legitimate."

Transition economy crime stories

The breakdown of Bulgaria's Communist state provided numerous opportunities for people close to power to cash in.

Bulgarian crime has no centuries-old tradition like Italy's, or even one of heroic thieves and warrior clans as in Russia, Serbia, or Albania. Nor is there the colorful ethnic ingredient here that distinguishes criminal circles in the Caucasus, particularly in Georgia and Chechnya, with their family mafias and highwaymen. The Bulgarian groupings essentially are the result of the transition from communist totalitarianism to parliamentary democracy.

Cashing in

The breakdown of the Communist state provided numerous opportunities for people close to power to cash in. Some Olympic wrestlers, for example, gained control of motels along Bulgaria's international highways and at border checkpoints.

These motels provided revenues from prostitution and currency dealing and helped give them access to the car-theft business. This involved the theft of both local vehicles and those stolen in Western Europe, which passed through Bulgaria to the former Soviet Union by ship across the Black Sea.

A Russian satellite for crime?

In Bulgaria, Russians as a people are very much liked, even if Russian communism is not.

Not surprisingly,a strong bond exists between Bulgaria's groupings and Russia. Political party connections evolved into economic connections when Bulgaria was still a subservient satellite state. Strong links between the KGB and Bulgaria's communist-era security service became crime connections. And the countries' similar Slavic languages helped nourish social connections among criminals.

But what makes Bulgaria particularly vulnerable to Russian organized crime is that unlike other formerly communist states such as Hungary and Romania, here — for linguistic and historical reasons — Russians as a people are very much liked, even if Russian communism was not.

Not all that glitters is gold

Thus, even with a stable democracy, Bulgaria may not become a civil society if it continues to be undermined by this new and subtle Russian imperialism. As former president Zhelyu Zhelev told me, "The political parties could easily evolve into masks for mafia structures, with crime groups financing election campaigns."

The West could then leave Bulgaria to its fate by declaring it a "democratic success story." Since the Washington establishment typically prefers to simplify its problems by accepting official truths this seems a possibility. Bulgarians are right: They are in danger of being forgotten.

Hope and misconceptions in Romania and Bulgaria

What the man on the street fears

Many Bulgarians and Romanians fear, however, that prices will rise after 2007 and that they will no longer be able to afford the basics, such as a heated apartment, a kilo of pork and a cinema ticket. Nothing sets of older people, farmers, and other ordinary citizens like the concept of EU accession. They worry that the EU will interfere too much in agriculture and that home-brewed schnapps will be made illegal.

Less than two years before they are due to join the EU, the feared rise in the cost of living is already beginning. At the end of September, a new tourism law was passed in Sofia: from now on the prices for Bulgarians and for foreign visitors should be comparable. Up until now, as in many other Eastern European countries, foreign tourists in Bulgaria paid many times more than domestic tourists for taxis, hotels, or museums. Thus the average Bulgarian fears that EU accession spells the end of annual holidays to the Black Sea. With an average income of €140 a month, Bulgarians cannot compete with tourists from the rest of the EU.

Faith in the EU-friendly political classes also suffers on account of corruption and crony-capitalism, both alive and well in Bulgaria and Romania. The biggest Bulgarian weekly paper, 168 chasa (168 hours) broke the news at the end of September that the young and ambitious Minister of State, Nikolai Vassilev, has, it is alleged, virtually exclusive control over the distribution of the money from EU Structural Funds. Meanwhile, according to the Romanian English-language daily paper Nine O’Clock, the Romanian President, Traian Basescu, has suggested a year long “abstinence from corruption” to his people at the end of September. This is theoretically supposed to wipe out corruption…

The Mafia is delighted

In the midst of this, Bulgarian and Romanian politicians are breaking into a sweat in order to fulfil their election promises: primarily, the longed-for EU accession in the year 2007. Bulgaria is behind in law reform, with 22 draft bills still waiting to be passed. Similarly, according to the Associated Press, the Romanian Prime Minister, Calin Tariceanu, pointed out at the end of September that his parliament had “still around 100 bills” that needed to be passed before EU accession.

The Mafia is delighted at the delays. The volume of human trafficking in the region is alarming, reports Richard Danziger from the International Organisation for Migration (IOM) in this year’s report on South Eastern Europe. General Boyko Borissov was, until recently, the General Secretary of the Bulgarian Ministry of the Interior and “Enemy No.1” of organised crime. In an interview with the Bulgarian magazine Egoist, he says that the fight against trafficking in drugs and people, money laundering and credit card fraud, as well as extortion, has had more success over the past few years. But unfortunately, he often finds that his hands are tied by the contradictory legal environment. Bulgarians and Romanians alike hope that these things will change with EU accession

Two Types of Post State-Socialist Capitalism
Following the disintegration of state socialism, a market system based on private ownership and production for profit has been constructed in all but three of the former state socialist societies.

There is no chance of a return to state socialism. The measures of reform have secured a high level of irreversibility: the planning mechanism has been destroyed, and the lynchpin of the political system, the Communist Party apparatus, dissolved. Whether these countries have moved to a modern capitalist system is open to question. The consequences of transformation have led to three blocks of post state socialist countries: two of which are market orientated and have large private sectors and one small cluster of countries which preserve statist economies (Uzbekistan, Belarus and Turkmenistan, which are ignored in the following discussion). Despite the significant policies of destatisation, the post-communist societies all share in common a higher level of state control than market capitalist countries and most have stock market capitalization at the levels of very low income countries. In terms of social development, the post-communist states have fallen in the world rankings of human development.

Weber’s claim that modern capitalism is distinguished by ‘the pursuit of profit and forever renewed profit, by means of continuous, rational, capitalistic enterprise’ applies more to the first group than to the second. The first includes the central European countries – Slovenia, Czech Republic, Poland, Hungary, Slovakia and Estonia – all new members of, and having borders with, the European Union. These countries are approaching the levels of OECD countries with respect to marketisation and privatisation, they also have a very positive participation in the global economy. This group is closest to the continental type of market capitalism, though it is more state led. They all have a low level of stock market capitalization and more developed welfare states, making them distinct from the Anglo-American countries. What is particularly important, from the point of view of the transition to a self-sustaining capitalist system, is that a high level of accumulation of capital is sustained. The figures cited above (Fig 3-2 and Table 3- 3) is the exceedingly low levels in all the former state socialist societies. Some, but not all, have very high exposure to the global market which acts as an exogenous source of economic change.

They resemble, and are likely to identify with, the continental European system as they all have embedded welfare states derived from the state socialist period. Economic coordination here is not through stock exchange capitalism, but is dependent on the state and also on companies with an international presence. Tutored by the conditionality requirements of the EU and the IMF, they have developed not only the economic preconditions of capitalism, but also the political and societal: an appropriate type of government, a civil society and an emerging bourgeois class structure.

A second model is that of a hybrid state/market uncoordinated capitalism. This is a relatively economically poor group which has had an unsuccessful period of transition: Russia, Ukraine, Kazakhstan, Georgia, and Moldova. These countries have exceedingly high income differentials, and high levels of poverty and unemployment. They have the characteristics of low income, primary sector exporting countries, with a very low integration into the global economy. They have particularly low levels of domestically sourced investment, though those with a large energy sector (such as Russia) have significant and disproportionate foreign direct investments.

The form privatisation has taken may lead to relatively few owners in extractive industries, such as oil, giving rise to great wealth on the one hand and, because of relatively low employment rates and ineffective redistribution policies, to poverty on the other. Economic policy should be concerned not only with efficiency, but also with equity. The move to the market and private ownership has significantly diminished equity in the post-communist states – though less so for those bordering on the European Union.

Bulgaria

Country Reports on Human Rights Practices - 2005
Released by the Bureau of Democracy, Human Rights, and Labor
March 8, 2006

Bulgaria is a parliamentary democracy of approximately 7.7 million persons, and is ruled by a coalition government headed by Prime Minister Sergei Stanishev. Multiparty parliamentary elections in June were deemed generally free and fair despite some reported irregularities. While civilian authorities generally maintained effective control of law enforcement officers, there were some instances in which law enforcement officers acted independently of government authority.

The government generally respected the human rights of its citizens; however, there were problems in several areas. The following human rights problems were reported:

• police abuses, including beatings and mistreatment, of criminal suspects, prison inmates, and members of minorities
• harsh conditions in prisons and detention facilities
• arbitrary arrest and detention
• impunity
• limitations on freedom of the press
• some restrictions on freedom of religion
• discrimination against certain religious minorities
• widespread corruption in executive and judicial branches
• violence and discrimination against women, children, and minority groups, particularly the Roma
• trafficking in persons
• discrimination against persons with disabilities
• child labor

SEE:

Crime Pays If You Are Rich

Bulgarian Women Abused

Albania's Hero

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Tainted Trial

These guys were not just acquitted they were declared innocent. Something the court did not do for Stephen Truscott.

Superior Court Justice Mary Lou Benotto ruled yesterday that New Jersey-based Armour Pharmaceutical Co. and the four doctors, including a former top Canadian Red Cross official, behaved responsibly in distributing HT Factorate.

"There was no conduct that showed wanton and reckless disregard. There was no marked departure from the standard of a reasonable person," she told a packed University Ave. courtroom. "On the contrary, the conduct examined in detail for over 1 1/2years confirms reasonable, responsible and professional actions and responses during a difficult time.

"The allegations of criminal conduct on the part of these men and this corporation were not only unsupported by the evidence, they were disproved," she said. "The events here were tragic. However, to assign blame where none exists is to compound the tragedy."

While in other countries corporate officers and politicians went to jail over the tainted blood scandal in Canada the government passed legislation to forgive government ministers and politicians and bureacurats responsible for the tainted blood scandal. So the Judge ruled accordingly. What is good for the goose is good for the gander. And the rest of us be damned.

In his 1997 report on the country's tainted blood scandal, Justice Horace Krever strongly criticized Canada's reaction to the AIDS crisis. Krever said the decision by Red Cross officials to exhaust their supply of untreated blood products before switching fully to safe heat-treated concentrates in 1985 was especially careless.

Victims of tainted blood reacted with seething disbelief. "People were infected and people died," John Plater of the Canadian Hemophilia Society said outside the courthouse, his voice rising in anger.

"How that could possibly be considered reasonable behaviour is beyond us."

Mike McCarthy, who contracted hepatitis C from tainted blood, went further, saying the judgment was a "miscarriage of justice." He called on the Crown attorney to appeal the acquittals.

But David Scott, a lawyer for a senior Health Canada official who was acquitted, said "these charges should never have been laid. It was a mistake from the beginning and people's lives have been brutally affected by them."

Eddie Greenspan, lawyer for the former head of the Red Cross blood program, described the ruling as "absolute vindication and complete exoneration" on a scale that is rarely seen.

"The bottom line is that there was no criminal conduct by anyone who was in charge. The bottom line is that Canada was well served by people who made these decisions."

Defence lawyers said that, given the exoneration, they will seek to have the legal fees of the accused reimbursed and may even launch lawsuits for malicious prosecution.

Proving once again that the courts in Canada uphold the state and business interests against the public interest.

In our free enterprise system, there is no legislation to oblige an employer to remain in business and to regulate his subjective reasons in this respect . . . . If an employer, for whatever reason, decides as a result to actually close up shop, the dismissals which follow are the result of ceasing operations, which is a valid economic reason not to hire personnel, even if the cessation is based on socially reprehensible considerations.

If Conrad Black had been put on trial in Canada he would have been acquitted.



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