Former Bush Assistant Secretary for HUD Reveals "Ethnic Cleansing"
Connected to CIA Drug Dealing in Los Angeles
Government Spends Millions in Campaign to Silence Former Wall Street Banker,
Cover Up Connections to Dark Alliance Stories & CIA Inspector General Report
on Drug Trafficking
May 1999
by Catherine Austin Fitts
I was ten years old when the combined action of HUD housing investment and
heroin trafficking destroyed my West Philadelphia neighborhood. The combined
real estate and drug play destroyed the equity in our homes and businesses. Many
of us left. Those who stayed were embroiled in the increasing stress of what
happens as neighborhoods deteriorate into crime and decay. I decided that I
would learn how money worked. I was too young to understand fully how the
combination of HUD investment and drugs could move control and ownership from
the many people who lived in a community to a few people who lived outside the
community. -- C.A.F. * * * * *
I'm an investment banker. In the eighties I was a Managing Director and
member of the Board of Directors at the Wall Street investment bank Dillon, Read
& Co., Inc. I managed the firm's large municipal and government clients. My
projects included the financing of billions of dollars of improvements in New
York City's subway, bus and commuter rail systems. I also organized the
financing for hundreds of millions in renovations to the infrastructures of New
York and New Jersey. I regularly handled hundreds of millions of dollars in
transactions.
I also helped to make tens of millions of dollars in profits for my firm and
I raised tens of thousands of dollars for the George Bush Presidential campaign
in 1988. Nicholas Brady, who became George Bush's Treasury Secretary, had been
my partner and boss at Dillon Read.
I was a Wall Street insider and a political insider - or so I thought. I was
successful at Dillon Read because I created new investment models that helped
ordinary people while making a profit. I thought "outside the box." When
Iran-Contra came and went I was oblivious. I had no idea about the drugs. It
never entered my mind. Yet today I am convinced that the illegal drug trade, the
enormous cheap capital it generates, and the CIA's role as enforcer/protector
for the profits of that trade is a dominant factor in the economy of this
country. It is a factor, which is destroying the entire American culture and is
utterly out of control. As an investor and banker and as a former Cabinet level
appointee, I tell you this is true.
My evolution came slowly. In 1989 I was named Assistant Secretary of
Housing-FHA Commissioner under Housing and Urban Development Secretary Jack
Kemp. I managed $300 billion of mortgage insurance, mortgages and properties of
the Federal Housing Administration and, as Commissioner, I advised the Secretary
on another $1 trillion of mortgage financing. I was fired by Jack Kemp in late
1990 because I would not go along with the questionable political practices,
which seem to be built into HUD's machinery and purpose. But still I did not see
the bigger picture.
In 1990, after leaving HUD, I started my own investment company, The Hamilton
Securities Group, and I devised new and creative ways to save taxpayers billions
of dollars. In 1993, Hamilton secured contracts with HUD through Secretary Henry
Cisneros. Hamilton saved taxpayers billions of dollars by taking defaulted HUD
housing mortgages, repackaging them and auctioning them on the private market.
Hamilton began putting wealth back into inner city projects by hiring women
living in HUD housing and teaching them how to use computers to build data bases
on how money works in 63,000 neighborhoods throughout America. Hamilton started
a data processing company with these women in a HUD project (Edgewood Terrace)
in Washington. The women who lived there earned stock in the company. The
company made money and proved the concept of what on-line access in communities
could do to build jobs and businesses. We used the success of that effort to
persuade HUD to fund computer learning centers in other housing projects.
Hamilton was extremely successful. We made millions and we saved the government
billions.
Fulfilling my childhood dream, Hamilton also created new software and money
management tools, which were, for the first time ever, able to map down to the
neighborhood, exactly how HUD and other federal money worked, who profited when
loans defaulted, and how money came into or left a community. For example, we
were often able to see where HUD was spending $100-250,000 per unit on apartment
buildings when there was single family housing available within walking distance
for $25-50,000.
Secretary Cisneros had been extremely supportive of our work. We had
unrestricted access to rich quantities of government financial data that was
supposedly public but hard to understand. We were translating that into useable
information so that people in any community could see how the money flowed
through their neighborhood. We helped HUD get increasing amounts of data up on
its web site. An unforeseen side effect for the women at Edgewood, and for
Hamilton, was that by seeing clearly how the clean money worked, we also began
to see how the dirty money worked.
As an investor for more than twenty years, I believed that it was actually
more profitable for people to own their own neighborhoods and businesses and to
know exactly how the money worked. The MONEY MAPS we made were so simple to
understand that they looked like comic books.
As it turns out we mapped a great deal more than we knew.
In 1996, as reporter Gary Webb was busy writing a series of stories
connecting CIA and the Contras to the crack cocaine epidemic in Los Angeles, I
was busy using the money maps in a way that would help people move people from
government subsidies to home ownership and entrepreneurship.
I was also advocating that U.S. government investment in communities should
be subject to the same public disclosure rules that private companies are
obligated to follow under the Securities and Exchange Commission Rules. If you
are a shareholder in a company, that company is using your money. The law
requires that they use your money legally and that they do their best to protect
your money and make you more. To earn money, and to do so in a fair, honest and
competitive way, federal and state laws require companies to report performance
and key transactions to you, the shareholder. Every citizen is a shareholder in
the government. If governments worked like they require corporations to work,
they would be required to report to you, in the sunshine, exactly how the money
was working, in your neighborhood, and you could either approve - or disapprove
of the fairness and effectiveness of that, based upon your understanding of your
own needs. That is very threatening to those who have used agencies like HUD as
a trough to pay off political cronies.
On August 1, 1996, I gave the keynote address at a Neighborhood Networks
conference in Boston, Massachusetts to 500 owners, managers and tenants in
private HUD housing. As part of the speech I showed a slide of one of our money
maps of Los Angeles (See Figure 1 ). As I put the slide up I made the following
statement:
"One of the products that has been most successful for the first data
servicing sites, Edgewood Technology Services, has been "geo-coding" databases
and mapping. I wanted to show you this map; it's up on the World Wide Web. This
is a map of Los Angeles. Can anyone figure out where south central LA is from
looking at where the HUD properties are on this map? This is the same thing as
the Washington DC map I showed earlier. The little red dots are single family
properties that were financed by (now) defaulted HUD-held mortgages. This map
was geo-coded and designed and programmed by a woman who, four months before,
had been on unemployment compensation and is a tenant in HUD housing"
Figure 1: Geo-coded Map of Los Angeles
If you compare this map with the fact that Freeway Ricky Ross - the crack
cocaine kingpin described in Gary Webb's Dark Alliance was known for buying up
real estate along the Harbor Freeway and selling drugs throughout this exact
area - the mathematical correlation is staggering. Every dot represents a HUD
mortgage where the taxpayers lost money in a defaulted FHA loan and where
somebody else bought the property for pennies on the dollar. Most of those loans
defaulted as the crack cocaine epidemic ravaged Los Angeles. The taxpayers bear
the costs of not only the defaulted mortgages, but also deterioration in
property value, the crime, and ultimately the depopulation due to very expensive
prison warehousing and welfare.
Exactly who bought and traded in properties throughout this area should be
the subject of congressional hearings looking into corrupt HUD practices from
the period and continuing to this day. I suspect that many of the same players
connected to the Savings and Loan scandals, who have also been tied to
Iran-Contra and CIA's drugs will surface yet again. Demographically it is also
easy to see now that the racial composition of South Central has changed
radically and that African-Americans have been geographically and politically
fragmented as, I believe, an intended result. Their political power has been
weakened.
Just days after showing this first map, I received a subpoena from the Office
of the Inspector General of HUD asking for extensive data and records from
Hamilton. Suddenly, the loan sales and Hamilton were under investigation. The
HUD IG’s actions were doubly surprising given their intimate involvement in and
positive feedback about the loan sales program and because a HUD OIG audit team
had just finished an audit of the loan sales program and had informed our
project manager and HUD that our performance was excellent and there were no
problems whatsoever.
At the same time, we got calls from a team of reporters from US News &
World Report. They had been assured "at the highest levels" of the HUD Inspector
General’s office that we were guilty of criminal action and that I and would
soon be indicted. The recent favorable audit disappeared. Investigators started
doing interviews where they did more seed planting than information gathering.
The "investigators" at HUD started suggesting to reporters that bid rigging
had occurred in the loan sales. This was just after members of the HUD IG audit
team had actually sat in on one sale, and concluded that bid rigging was
impossible. They had also concluded that there was no way that "rigging" could
have taken place because in a sealed-bid auction, you cannot favor one bidder
when all bidders have access to the same information. That audit report was
suppressed while the IG investigators pushed the exact opposite notion to
reporters.
On August 10, Bob Dole announced Jack Kemp as his running mate. Meantime, the
Republican appropriations committee, chaired by Republican Congressman Jerry
Lewis of San Bernardino, gave Susan Gaffney, the HUD IG a large appropriations
increase for her program Operation Safe Home, which targeted black communities
for visible media "wag-the-dog" roundups of drug offenders. At the same time,
our model for computer learning and data processing by people who had a stake in
the company that did the work was adopted by Unicorp. Unicorp is the Department
of Justice private business that markets prison labor to federal agencies.
Suddenly, the black people who were apparently not smart enough to do
database and software development near their children and parents were more than
competent enough to do it in prison. The prison investment boom was taking off,
fueled by new and longer mandated sentences. We at Hamilton felt like we were
walking around with a big bullseye on our back because we wanted the communities
of America to know what we knew, which was how to make maps that tracked the
money flow in their own home towns.
I was not the only one dealing with Inspector General inquiries. The HUD
officials working with me were also inundated with an investigation marked by
leaks and dirty tactics. The former Deputy Assistant Secretary for Multifamily
at HUD, Helen Dunlap, was one of the people targeted. She was from California
and had previously run the California Housing Partnership. She had lots of
experience in real estate and community development in Los Angeles. Gary Squier,
the Housing Commissioner of LA, on loan from Los Angeles, who was not involved
in mortgage sales with Hamilton, nonetheless found himself dealing with similar
probes from the HUD OIG. He was later to be turned down for a position by the
White House despite impeccable credentials. No one could figure out why.
Suddenly I was persona non grata to long time friends and business relations
in and around the government. I believe the leak campaign was far more
sophisticated than something the HUD Inspector General could or would do on her
own. It appeared that major economic and political powers had ordered that
Hamilton be destroyed. More importantly, they wanted the evidence of what we
knew - the maps - destroyed. That is also why, to this day, we believe the
Federal government has destroyed many, but not all, of our tools and databases.
We didn't realize it at the time, but I am now convinced that in the summer
of 1996, our software and mapping techniques uncovered evidence of ethnic
cleansing on Los Angeles. Hamilton's map revealed that one of the most
significant effects of the crack cocaine epidemic was that black homeowners,
faced with payments on unlivable and unsellable properties, simply defaulted and
fled the city to get away from the shootings and the drugs. Those properties:
industrial, residential and commercial were scooped up for pennies on the
dollar. Wouldn't it be fascinating to know who bought the properties and how
much money has been made on them since?
Thanks to people like Gary Webb, Peter Dale Scott (Cocaine Politics), Alex
Cockburn (Whiteout), Mike Ruppert, brave DEA Agents like Celerino Castillo - and
now to the CIA's own reports - we can prove that the CIA knew full well what it
was doing. And, as is his particular gift, Mike Ruppert, who gives us permission
to see the obvious, has established that blacks were targeted by CIA and that
the people who control our intelligence agencies are the same ones who control
our economy and Wall Street. Mike has taken great pains to document these things
in previous issues of From The Wilderness.
ETHNIC CLEANSING IN LOS ANGELES
Ethnic cleansing is a bit trickier in South Central Los Angeles than it is in
South Central Europe. It is essential in a "democracy" to have people do it in a
way that makes it look like they're "doing it" to themselves. You need a
socially induced suicide.
So how do you get people to commit suicide? You make it very attractive for
their children to make money doing something illegal.
Then you arrest them for it in a very visible way (Remember the battering
rams and armored cars?). You design stories to make people blame themselves for
what has happened. This is how branding works. Pepsi = tastes good, Black people
= cause illegal drugs and crime. Support all this by a national media owned by
defense contractors and other corporate interests. That way the nightly news has
lots of moneymaking incentives to cover HUD OIG sponsored drug raids in black
communities rather than doing a story on CIA drug trafficking.
The most efficient ethnic cleansing is self-financed or, better yet,
profitable. Drugs and alcohol are excellent tools toward this end, especially
when they are combined with easy access to guns. Sell large amounts of addictive
substances to a group of people in an area you want to take over, then use the
cash flow to buy up their homes and commercial real estate for 10 cents on the
dollar, without much competition, while you enjoy the full value of their cash
flow. You can then afford the long holding period required to make the land
profitable again after the cleansing period is over.
I believe that if the Federal government would make citizens' data (and it is
our data) available, instead of trying to suppress it, it would prove that
taxpayers are losing money to fund ethnic cleansing while the people in South
Central LA are losing their lives. And I believe that it was the effectiveness
of our maps which threatened to expose the deeper financial agendas of the
eighties. I believe our current model, the Solari Investment Model, which I am
still developing, may well tie Iran-Contra, The Savings and Loan Scandals and
the HUD scandals of the late 1980s into one big economic package designed to
benefit a very few. The way to start to do this is to look closely at all the
government investment, credit and regulations in Los Angeles since 1980.
Our maps suggest to me and others that the crack cocaine epidemic, created by
the CIA was, I believe, just as much a program of ethnic cleansing and land
grabbing economic warfare as it was about a bunch of rebels in Central America
who were not the equivalent of our Founding Fathers. But this kind of ethnic
cleansing was hard to contain and it spread to other races and classes. It
reached the rural and suburban neighborhoods of places like Iowa, Ohio and
Tennessee. By the end of the 1980’s it had reached all my friends and relatives
who listen to Rush Limbaugh, voted for George Bush and donated money to Oliver
North - not knowing that, according to CIA's own reports, the networks he
controlled were the key to the supply of drugs flowing to their kids and
communities. As Michael Ventura once wrote, "We all live in the South Bronx
now." White families all across America were hurt by drugs and violence and
their pocketbooks also got drained, even as the media reinforced the notion that
drugs were a black problem.
After the 1996 election, Secretary Cisneros was asked to resign from HUD. The
choice of Cisneros' successor seemed strange and somehow connected to Hamilton's
predicament. The Afro-American mayor of Seattle was widely considered to be a
shoe-in. After the White House floated his name, another investigation by the
HUD OIG into possible misuse of HUD monies in Seattle caused him to be dropped.
Two days later we were assured that an Afro-American woman from Los Angeles,
Yvonne Braithwaite-Burke, was the President’s leading candidate. Then suddenly,
she disappeared from the radar screen and Andrew Cuomo was announced with
surprisingly strong bipartisan support for someone with such a partisan history.
Cuomo moved into the Secretary’s office at HUD from his then current position
as Assistant Secretary for Community Development and Planning. Rumors started to
float around the HUD networks about minorities and people sympathetic to
minorities being moved out. Meantime, the new Secretary made it clear that his
top priority was enforcement and it appeared that the Secretary and the OIG were
going to compete for an ever-growing budget via media-worthy enforcement
actions. So, then came the Urban Fraud Initiative and increased funding for
Operation Safe Home, targeting tenants, real estate owners and managers in black
communities. At the time, we made no connection between these actions and the
promotion of prison privatization by Vice President Gore’s National Performance
Review. New Federal sentencing guidelines helped increase black inmates to
approximately 50% of a rapidly expanding prison population. All this at an
extraordinary cost to taxpayers.
As the audits of Hamilton continued, forcing us to spend hundreds of
thousands on legal fees, Secretary Cuomo and the Inspector General’s staff, who
were later to withhold $2 million in payments, became obsessed with seizing our
data and software. This was software we were planning on giving away via the
web! The critical issue from October 1997 through the following March seemed to
be - our knowledge! In October, great emphasis was placed on our returning all
of our HUD databases, including those that were supposed to be publicly
available, and certifying that we had done so. In the following months, the HUD
OIG tried to seize all of our documents, including originals, with no basis in
law. After demanding physical access to our computers, government employees made
back-ups of our data which, whether intentionally or not, seriously damaged it.
And no one has yet officially accused us of any wrongdoing. We were, and are
to this day, only being investigated. It is clear to us that the intent of this
campaign was to drive the company into bankruptcy. The leak campaign against the
company and me has since reached new heights of absurdity. As the HUD IG keeps
assuring the media that that I am guilty of criminal violations they now have
investigators focusing on my sex life! Worse still, HUD IG agents recently
showed up at the home of my 72 year old uncle with a subpoena for records of a
family owned farm house that doesn't even have indoor plumbing, implying some
kind of fraudulent transaction. Members of my family have reduced or cut off
communications, fearing they could be targeted too.
After court battles and negotiation, in March of 1998 HUD insisted that all
of our computers be scrubbed. We were not going to be allowed to transfer our
own proprietary data and the Federal District Court Judge, Stanley Sporkin,
appointed a Special Master as trustee to manage all our digital and paper
records. Inexplicably, HUD was quite upset when they found we had taken our main
server with us and not sold it, in spite of the government's destruction of its
files. The HUD investigator made it clear that we could not keep the server
because - "We were not allowed to have any of the knowledge". We could not
explain this bizarre position and neither could they.
What I did not know until approximately a year later, after reviewing tapes
of Mike Ruppert's lectures, was that hearings were held on Volume I of the CIA
Inspector General’s report on the Dark Alliance allegations on March 16 of 1998.
At the same moment the government was trying to steal Hamilton's data and
knowledge.
We also did not notice in February when Vice President Al Gore announced that
Secretary Cuomo was bestowing an empowerment zone and $300 million in tax
credits on MaxineWater’s congressional district. That was just before the March
16th hearing where Maxine Waters performed brilliantly against CIA in a show
that nobody watched. We were busy, at the time, moving our computers over to our
law firm to protect the MONEY MAPS from a series of break-ins and other
harassment around my home.
Our growing fear of being set up in an asset forfeiture case, after the
Department of Justice threatened my assets personally, dominated our lives and
does so to this day.
And so we did not notice when the damning Volume II of the CIA Inspector
General's report was released on October 8th, one hour after Henry Hyde's
Committee started the Impeachment inquiry. And we did not notice that Maxine
Waters' voice suddenly fell almost silent as Bill Clinton saved his presidency
by blackmailing the Republicans with Volume II and its contents. I made efforts
to communicate with Maxine Waters in November and December 1998 about possible
connections between our case and CIA drug dealing but, aside from an initial
contact, our calls were not returned. [FTW placed telephone and e-mail requests
to both the LA and Washington offices of Maxine Waters to ascertain whether the
$300 million tax credit award in March, 1998 was spontaneous or the result of a
previously submitted request. As of press time we have received no response. -
ED]
To date we estimate that the HUD Inspector General investigation targeting my
companies and me has cost the American taxpayer $35MM. To date we have not been
successful in getting the Department of Justice or the HUD OIG to tell us what
they are investigating or even who is in charge of the investigation. The
investigation continues with no end in site. We have multiple lawsuits filed
against HUD and are filing more. We continually hear Judge Stanley Sporkin, rule
against us with statements that he disagrees with the law so we should take it
up with Congress.
The company I founded, Hamilton, was liquidated a year ago to pay the bills
of the ongoing campaign to discredit us. As a result of the persecution we have
lost more than one hundred million dollars. I have sold my home, lost millions
of dollars in unpaid HUD contracts, endured eighteen audits, burglaries,
physical harassment and an unending smear campaign which has produced not a
single complaint or indictment after almost three years. I believe this is
because I have the pieces to help prove that what Gary Webb stumbled upon was
ethnic cleansing - American style.
My bottom-line? For those of you pushing for testimony on Volume II, let’s
try another tactic. Let’s push for a Congressional and GAO investigation on how
all the federal investment, credit and regulation worked in Los Angeles from
1980 to 1994. Let’s look at how our government was used, from CIA to DEA to HUD,
to destroy and loot our communities. The key is HUD. Let’s look at how the
Section 8 owners, managers and tax partnership beneficiaries worked along side
the drug traffickers. Let’s look for patterns of loan brokering, money
laundering, cleansing and other relationships between real estate, land, prison
growth and privatization and the kind of investors who control CIA and
intelligence networks. Then let’s look how this ties in to campaign fundraising.
The present economic and political system is not sustainable and must
collapse - or change. New investment models in the information age will show us
that integrity, honesty and win-win investment models, rooted in community and
place based autonomy are actually more profitable than the liquidate and destroy
models currently operating. Like the auto mechanic said to the car owner who
needed repairs, "You can either pay some now - or pay a lot more later." But we
have to solve some problems first. Finding the will to do that is made easier
for me as I recall the words of Bishop Alfred Owens of the Greater Mount Calvary
Holy Church, "If we can face it. God can fix it."
After a lifetime of study, from Wharton to the inner sancta of government, I
believe I have found the solution to a very real corruption which neither
Congress nor Wall Street presently possess the ability to stop. It is a new
investment model, born of the Information Age, which will save both the just and
the unjust alike by turning the current Industrial Age investment model upside
down and making what was once secret - available to all. As the edge of the
precipice approaches and as our economic snake eats its own tail it shouldn't be
long before those who have scoffed at the truth-tellers recognize that we are
the ones with the maps to lead them out of the jungle.
You can learn more about the Solari investment model soon by visiting
www.solari.com.
Catherine Austin Fitts, 48, is a 1978 Graduate of the Wharton School of
Business with an MBA in Finance. From1978 to 1989, at the Wall Street investment
bank Dillon, Read & Co she served in the Corporate Finance, Energy Finance,
Mergers and Acquisitions and Public Finance Departments. From 1986-9 Fitts was a
Managing Director and member of the Board of Directors.
From 1989-90 Fitts served as Assistant Secretary of Housing - Federal Housing
Commissioner at the Department of Housing and Urban Development. From 1991-7 she
served as President/CEO of the Hamilton Securities Group with aggregate revenues
of $50 million, an employee base of 50 and portfolio strategy responsibilities
for $400 billion of financial assets.
She is now President and CEO of Solari, Inc; a Washington consulting firm specializing in equity based neighborhood investment models for the Information Age
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