BUSHWHACKED: HUD Fraud, Spooks and the Slumlords of Harvard

by Uri Dowbenko
Catherine Austin Fitts is still trying to figure out what happened.

Her company, Hamilton Securities, Inc., was the lead financial advisor to the US Department of Housing and Urban Development (HUD).

Hamilton was hired to manage the sales of $10 billion worth of mortgages on houses, apartment buildings and nursing homes.

By all accounts, Hamilton's new program was a resounding success.

In fact, the HUD loan sales program team was even given a Hammer Award for Excellence in Re-engineering Government by Vice President Al Gore's Reinventing Government Initiative. By cutting red tape and improving the resale value of HUD owned mortgages, Hamilton Securities was a case study of a public-private partnership that saved US taxpayers lots of money.

Until...

The firm was ambushed by a series of lawsuits, audits and unsubstantiated rumors which destroyed the business.

Catherine Austin Fitts -- Maverick Banker

In the arcane but stodgy world of investment banking, Catherine Austin Fitts is a revolutionary.

Before founding her own firm, Fitts, a Wharton graduate, was the first woman to be promoted to managing director of Dillon, Read and Co, Inc., the prototypical elitist men's club Wall Street investment bank.

To her credit, Fitts was instrumental in building a new market for Dillon Read. She began underwriting previously unrated municipal bonds, in essence, financing large government projects which other Wall Street firms said couldn't be done.

These novel bond sales helped revive New York City's crumbling subway system, and they provided funding for the City University of New York and other major projects.

The market in unrated and low-rated muni bonds took off, earning Fitts the title of "Wonder Woman of Muni Bonds," in a glowing Business Week article (February 23, 1987).

In 1989, she was asked to become the Federal Housing Administrator under HUD Secretary Jack Kemp. Fitts moved to Washington to undertake the monumental task of reforming the scandal-ridden, fraud-plagued agency.

After her stint in government, she was invited to be a Governor of the Federal Reserve Board. She declined.

Instead she founded Hamilton Securities Group, an employee-owned investment banking firm, which created an innovative system for saving taxpayers billions of dollars in the sale of government-guaranteed mortgage-loan sales from HUD.

By promoting open disclosure in the HUD financial transactions, Fitts undoubtedly, and unknowingly, must have stepped on a lot of toes.

The Crony Capitalists (or Old Boys' Network -- or the Octopus) must have seen Hamilton's program of financial transparency as a major threat to their system of bid rigging and insider trading.

HUD Cost Savings Lead to Hamilton's Demise

In this extremely complex case, newly disclosed evidence indicates that powerful forces conspired to destroy the financial equity of employee-owned Hamilton Securities, as well as the personal life savings of the firm's president, Catherine Austin Fitts.

Why? Because Hamilton Securities had opened up the market for defaulted HUD mortgages. In simple terms, the established network of insiders would be susceptible to -- horrors! -- open competition, not to mention an entire universe of new bidders.

In fact, Hamilton's plan for optimization of sales of defaulted mortgages resulted in a savings of over $2.2 billion for US taxpayers.

The numbers are staggering. Every year HUD issues about $70 billion of mortgage insurance which guarantees the mortgages used to finance homes, apartment buildings, nursing homes, assisted living facilities and hospitals. HUD then pays out about $6 billion on claims for defaulted mortgages, which the agency has to then manage at great cost to taxpayers.

Prior to Hamilton's involvement, HUD was recovering about 35 cents on the dollar of mortgage insurance payments made on defaulted mortgages.

When Hamilton instituted their new program, HUD's recovery rate soared to about 70 to 90 cents on the dollar. How? Hamilton introduced a proprietary optimization bidding software and an on-line database of information, accessible to all investors, so that the defaulted portfolio could be bid upon in an open auction.

In October 1997, the Chairman of one Congressional oversight committee referred to the Hamilton-based loan sales at HUD as generating "eye-popping" yields.

In fact from 1994-97, HUD saved about $2.2 billion in HUD's $12 billion mortgage portfolio. These savings then allowed HUD to issue far more new mortgage insurance at a lower cost.

When Hamilton's successful loan sales-auction program was suspended due to the investigation, the old levels of government inefficiency and fraud were resumed. Call it "Business As Usual."

That means HUD is now losing about $4 billion per year on its $6 billion of defaulted mortgages -- instead of just $2 billion. That's the equivalent of 20,000 taxpayers working their whole lives to pay for this boondoggle for just one year.

Anatomy of a Corporate Murder

Targeted by criminal elements in the Department of Justice (DoJ), Housing and Urban Development (HUD), as well as a cartel of private investment companies, Hamilton Securities has undergone an onslaught of unimaginable harassment and intimidation.

There had been a SWAT-like attack on Hamilton's office in Washington, 19 audits, countless subpoenas as well as ongoing litigation against HUD to force them to pay monies owed on their contract. It's been a 4-year long financially and emotionally draining "investigation." To date, there has been no evidence of any wrongdoing -- just rumors, innuendo, and lots of character assassination.

First, in June 1996, a sealed qui tam lawsuit, a phoney whistle-blower suit, as well as a Bivens action was filed by John Ervin of Ervin & Associates, Inc., a HUD subcontractor, notorious for filing nuisance lawsuits and "bid protests" -- 37 of them in the recent past. In the Bivens suit, he sued HUD itself, as well as several former HUD officials personally.

In fact, Ervin's lawsuits have cost a good-sized fortune in legal fees and overhead, estimated -- from 1995 to date -- to be as high as $40 to $50 million. An insider claims that during that time Ervin had up to 17 in-house personnel working full time on mountains of paperwork regarding this and other cases.

So who's bankrolling Ervin? Nobody has offered any explanations, but for a small time HUD sub-contractor like Ervin, this has turned out to be a serious investment.

Under the False Claims Act, a private party like Ervin, who files suit on behalf of the government, can receive 15-30% of any recovery, if the government's claim is successful. That percentage (15-30%) would have covered asset seizures of up to $4.7 billion of loan sales won by Goldman Sachs and its partners.

Is somebody just playing the odds? In this version of government "greenmail", or state-sponsored extortion, any asset seizures could be part of this 15 to 30% bounty.

The Spooky Life of Stanley Sporkin

Then, it just so happened that the judge presiding over the Hamilton case was the former CIA Counsel -- Federal Judge Stanley Sporkin (recently retired).

According to Rodney Stich, author of "Defrauding America," "Sporkin was involved with the 1980 October Surprise scheme and his judicial appointment was probably his reward by the Reagan-Bush administration for helping carry it out, and to block any judicial exposure or prosecution action."

(The October Surprise was the Reagan-Bush black-ops/covert action to delay the release of the hostages in Iran, resulting in the electoral victory of Reagan as US President.)

Sporkin was appointed to the bench by Ronald Reagan in 1985. His spooky roots, however, go back to the days when he was a director of the SEC's Division of Enforcement, while the infamous Bill Casey was practicing his Wall Street shakedown techniques as Chairman of the Securities and Exchange Commission.

Sporkin's other claim to fame was to encourage Casey to go after the infamous scamster Robert Vesco. Was Vesco more competition -- or just another freelancer?

Casey, who like George H. W. Bush, neglected or "forgot" to put his assets in a blind trust later also became director of CIA. His shares -- controlling stock in Capitol Cities Communications -- were eventually used to take over ABC in a $3.5 billion merger deal.

In the words of Joseph Persico, author of "Casey", "the director of the Central Intelligence Agency was soon to be a substantial shareholder in one of the country's major forums of free expression, with wondrous opportunity for managing the news."

Also according to Persico, Casey further employed Sporkin's specious reasoning by claiming that killing "suspected terrorists" was not murder.

Reagan's infamous Executive Order 12333 which privatized US National Security State dirty tricks was ostensibly the reason.

"Striking at terrorists planning to strike at you was not assassination," wrote Persico referring to Sporkin's logic, "it was 'preemptive self-defense.'"

Then Sporkin became the general counsel for the CIA (1981-86) and his mastery of coverup skills increased dramatically. For instance, in keeping the Oliver North Cocaine Trafficking Operation under wraps, it was Sporkin who invented another ingenious method of lying by omission.

Persico writes that "North's insistence that the oversight committees be cut out troubled the CIA people. But the adroit Sporkin found a loophole. The President was required to inform the oversight committees of a covert action presumably in advance of the action, except when the urgency of the situation required that notification be delayed." Result? Everybody was notified 48 hours after the operation.

According to Persico, Sporkin also perfected the techniques of writing retroactive "findings" for Congress, so that CIA criminality could always be disguised or covered up -- after the fact.

Stich concludes that "to protect the incoming Reagan-Bush teams and many of the federal officials and others who took part in October Surprise, the Reagan-Bush team placed people, including those implicated in the activities, in control of key federal agencies and the federal courts. Some, like attorneys Stanley Sporkin, Lawrence Silberman, and Lowell Jensen were appointed to the federal bench defusing any litigation arising from the October Surprise or its many tentacles... Organized crime never had it so good."

Ironic Postscript Dept.: In Feb. 2000, retired spooky judge Stanley Sporkin (Yale Law School, 1957) joined the global powerhouse law firm Weil, Gotshal & Manges LLP. The company, which boasts 750 attorneys in 12 offices worldwide, is considered one of the leading law firms in the country on bankruptcy.

The Hamilton Bushwhack

In the Hamilton Securities case, Sporkin's claim to fame is that he managed to illegally keep a qui tam lawsuit sealed for almost 4 years. That could be a "judicial" record.

In August 1996, an investigation against Hamilton was initiated by HUD Inspector General Susan Gaffney, serving two subpoenas on the company -- and incidentally failing to tell Hamilton about the existence of the qui tam as required by law. The subpoenas demanded hundreds of thousands of documents, mostly HUD documents that HUD already had, or that had been supplied to them as part of the ongoing work -- a clear case of burying Hamilton in paperwork as more ongoing harassment.

At the same time, a HUD audit team from Denver had completed a favorable audit of Hamilton's program. When Fitts asked HUD IG Gaffney whether she intended to "bury the Denver audit," Gaffney huffed back, "How dare you suggest that I would do any such thing? That would be unethical."

In fact, she did exactly that. Susan Gaffney never allowed the publication of the Denver Audit team's report which exonerated all of Hamilton's methodology and results.

Then, at the same time, a smear campaign against Hamilton was being waged through a "US News and World Report" hatchet-job article about HUD Secretary Henry Cisneros and the loan sales program.

According to Fitts, the lead reporter had been assured "at the highest levels" of the HUD Inspector General's office that Hamilton Securities and Fitts were the subject of a criminal investigation and were guilty of criminal violations.

There was no evidence, however, either offered by HUD or published by the magazine, and these false allegation also died with the passage of time.

In a bizarre double-bind mentality, HUD and DoJ -- in a separate court and with a different judge -- had taken the position that the Ervin lawsuit was without merit -- even while Hamilton's legal costs climbed into the millions of dollars.

The Dirty Fingerprints of Lee Radek

In December 1997, Hamilton wrote a letter to the President's Council on Integrity & Efficiency (PCIE), a committee in the Office of Management and Budget (OMB), to investigate HUD IG Susan Gaffney's conduct.

Hamilton's four-page highly detailed letter to Neil J. Gallagher, Acting Assistant Director of the FBI's Criminal Investigative Division and Chairperson of PCIE was blunt.

"The HUD IG has crossed the line in its investigation of Hamilton, which was begun in response to complaints from Ervin & Associates, a disgruntled HUD contractor," wrote Fitts. "The IG's wide-ranging and unfocused "fishing expedition" against Hamilton has failed to produce findings of wrongdoing and threatens the survival of the firm. The repeated leaking to the press of proprietary and confidential information that only the HUD IG could know and the intervention of other Federal Agencies [IRS, FDIC] into Hamilton's affairs constitute a campaign of smear, slander and intimidation that should be investigated and stopped."

Fitts wrote about many incidents of intimidation and harassment which "demonstrate or suggest that the HUD IG is deliberately leaking information to the press about its investigation of Hamilton. These leaks represent serious and persistent breaches of confidentiality, unethical and unlawful behavior and violations of Hamilton's constitutional rights."

PCIE declined to investigate. In her next letter to Gallagher in February 1998, Fitts wrote that "since the filing of our complaint, the Hamilton Securities Group Inc. and all of its subsidiaries have been rendered insolvent... In the face of eighteen months of Inspector General 'lynch mobbing' we have exhausted our reserves and have no means to continue an investigation that has no end..."

After another refusal by PCIE to investigate, Hamilton filed a Freedom of Information Action (FOIA) for the files.

The files revealed a heavily redacted letter signed by the Lead Coverup Meister himself -- Lee Radek, head of the Department of Justice's ironically named "Office of Public Integrity."

In a letter dated April 3, 1998 addressed to Thomas J. Piccard, Chairman of the Integrity Committee of the PCIE, Radek wrote "C. Austin Fitts, President of the Hamilton Securities Group, Inc. sent the IC a copy of a civil complaint filed by Hamilton Securities against HUD Secretary Andrew Cuomo, Assistant Secretary Nicolas Retsinas and Inspector General Susan Gaffney. The complaint alleged that HUD's OIG investigation of Hamilton and improper media leaks by the OIG about the investigation was causing Hamilton to go out of business... After reviewing the letter and the attachments, the Public Integrity Section concludes that the allegations in the complaint do not provide sufficient information to warrant a criminal investigation."

The rest of the page -- seven inches of what used to be text -- is blacked out.

For the record, US Department of Justice apparatchik Lee Radek has held a virtual stranglehold on DoJ "investigations," consistently covering up the criminal activities of the Clinton Administration. As a linchpin in the corrupt DoJ, he has had many opportunities to coverup crimes and block inquiries -- and he has taken full advantage of his position as a Federal-Mob "enforcer."

It's an ironic twist of fate, then, that Neil Gallagher -- the FBI staff member of PCIE, whose job it was to investigate allegations against Susan Gaffney -- and Lee Radek appeared together in May 2000 before a Congressional hearing -- as antagonists.

Gallagher affirmed in public testimony that Radek was indeed under pressure from US Attorney General Janet Reno to stall any investigation into the Clinton-Gore campaign fund raising scandals.

Unsealing the Lawsuit

Finally in May 2000, US District Judge Louis F. Oberdorfer unsealed the qui tam lawsuit against Hamilton -- and surprise! -- the DoJ decided not to pursue the groundless claims.

The suit was filed in June 1996, and DoJ's decision not to intervene in this case came after a 1,400 day so-called "investigation" -- or 1,340 days longer than the 60 days mandated by the Federal False Claims Act.

Hamilton Securities maintained that the allegations in the complaint were not true, and there was no evidence to support the false allegations.

In fact, HUD security procedures and overlapping levels of review associated with the open bidding process made the alleged bid rigging and insider trading impossible. This was corroborated by HUD's own audits.

The sources for the alleged bid rigging in Ervin's complaint, kept under court seal for almost four years, included Jeff Parker of the Cargill Group, Terry R. Dewitt of J-Hawk (First City Financial Corporation of Waco, Texas, and a Cargill investment and joint venture partner), and Michael Nathans of Penn Capital Corporation.

The Waco-Cargill Connection

In retrospect, Hamilton must have been a major threat to the nation-wide money laundering and financial fraud network which uses government-guaranteed mortgages and other programs to scam US taxpayers. The formerly secret sources of the false allegations against Hamilton have some interesting connections.

SEC documents state that First City Financial Corporation (FCFC) of Waco, Texas started business in 1986 "purchasing distressed assets from FDIC and RTC."

Another subsidiary, First City Commercial Corp. was used to "acquire portfolios of distressed loans" -- another hallmark of the standard money laundry operation.

According to the Houston Business Journal (Sept. 24, 1999), "First City Bancorporation, once one of Houston's largest bank holding companies, was acquired out of bankruptcy in 1995 by J-Hawk Corp of Waco and renamed First City Financial Corp."

"FCFC began its relationship with Cargill Financial Services Corp. in 1991," according to the company's SEC filings. "Since that time, the Company and Cargill Financial have formed a series of Acquisition Partnerships through which they have jointly acquired over $3.2 billion in Face Value of distressed assets. By the end of 1994, the Company had grown to nine offices with over 180 professionals and had acquired portfolios with assets in virtually every state."

But then -- and now comes the sad part --- the mortgage banking subsidiary of First City Financial Corporation, Harbor Financial Group Inc., filed for bankruptcy (Oct., 1999), just as the notorious Denver-based money laundry, M&L Business Machines, had done years before.

The corporate shell game of mergers, acquisitions and liquidation is obviously in full play in this scenario.

The other false accuser listed -- Cargill Financial Services Corp., -- on the other hand, is a subsidiary of Cargill, the Minneapolis-based global agribusiness cartel and the world's largest privately-held company.

Cargill is a mega-corporate international merchant of agricultural, industrial and financial commodities, and it operates in 59 countries, has 82,000 employees, and about $50 billion in annual sales.

The financial subsidiary, Access Financial Holdings Corp., was formed to "manage the housing finance business" and "provide residential real estate mortgages," an unregulated arena in which money laundering is often the real business.

And here's the punch line in this revolving-door-syndrome joke of the Criminal Big Government-Big Business Syndicate.

The lead law firm listed on First City Financial's 1998 registration statement is Weil Gotshal -- former spooky judge Stanley Sporkin's new employer.

Whistle-Blower Stew Webb's Perspective

Federal whistle-blower Stewart Webb thinks he knows why Catherine Austin Fitts and her company, Hamilton Securities, were bushwhacked. In fact, he believes that her operation was a direct threat to the "Denver Boys" -- the Bush Crime Family's money laundering operation based in Denver.

Why was she targeted? "Because she had set up a company which was showing the government how to save money through competitive loan sales programs," explains Webb. "It was a threat to [Leonard] Millman in Denver. Because they were in control of the mortgage program."

Webb is referring to the many HUD low-income housing-based frauds and scandals in Denver. He claims that one of their proxies was John Ervin himself. "He had his own office in Denver," says Webb. "One of the biggest supplies of money to these boys is the money they're stealing from HUD. They are still robbing HUD like nobody's business."

"That's a massive covert revenue stream for them," continues Webb. "As of last year, they became the largest apartment owner in the United States. AIMCO. That's Millman and Company in Denver."

Apartment Investment and Management Co. (AIMCO) is one of the largest real estate investment trusts, or REITs, in the the US with headquarters in Denver, Colorado and 36 regional offices. AIMCO operates about 1,834 properties, including about 385,000 apartment units nationwide in every state except Vermont.

AIMCO is the successor to the Considine Co,. founded in 1975, by Terry Considine. It was then re-organized as a real estate investment trust and became a public company through an initial stock offering in July 1994.

In an article called "HUD, AIMCO Clash Over Housing" (Denver Business Journal, May 8, 1998), AIMCO was excoriated by affordable-housing advocates for taking 90,000 low-income ("affordable housing") apartments -- bought from HUD at below market rates -- and converting them into higher end properties, thereby displacing poor renters.

According to the article, "the revamping also involves upgrading bare-bones properties built with federal funds two decades ago which will allow AIMCO to boost rents."

AIMCO has also gobbled up Washington DC-based apartment manager NHP, Inc., Ambassador Apartments, a Chicago-based REIT, and the apartment portion of Insignia Financial Group.

Since AIMCO is the nation's largest owner of affordable housing and the sole provider of such homes in many markets, the implications are ominous.

More homeless people on the streets are a sure bet

The Harvard-Bush Connection

Since historically the Chinese Opium Trade and the African Slave Trade have provided the financial foundation for the Boston "Bluebloods," it should come as no surprise that the Harvard Endowment Fund and the Harvard Management Corporation are involved in what can be characterized as shady enterprise at best -- or criminal activity at worst.

In 1989, the Harvard Endowment Fund, became the 50% owner of HUD subsidy (Section 8) and non-subsidy apartment buildings through its purchase of NHP, an apartment management firm, headed by Roderick Heller III.

Since their plan was to do an Initial Public Offering (IPO) or a merger for NHP, they tried to run up the value by aggressive acquisition of more apartments, preferably with HUD issued mortgage insurance which could be defaulted on -- with little or no consequence.

Unfortunately for Harvard, HUD had initiated its new open-disclosure and performance-based auction under the direction of Hamilton Securities. When the private market firms battled it out, Harvard was outbid by GE, Goldman Sachs and Black Rock and its sour grapes apparently turned to vengeance.

In 1996, according to Fitts, Rod Heller told her that the government had a "moral obligation" to him and his investors (Harvard Endowment) to renew or roll over the subsidies with them to maintain their profits.

In other words, an open auction-free marketplace was not acceptable to the Harvard Boys, since they were operating their business of HUD-backed corporate welfare-subsidies under what Heller claimed was "an understood handshake."

The HUD portfolio of distressed properties had traditionally been managed to derive profits for private business -- like Harvard Endowment Fund -- and not the US taxpayers. Since Harvard was used to rigging profits through politics, not fair business practices, it started losing income because there were less management fees and the value of its stock started going down.

In 1991, Harvard and Heller asked Fitts to do an investment bank with them. At the last minute, Harvard Management Company honcho Michael R. Eisenson told her he wanted 20% of her new company's stock, and the deal was shattered.

On the first large HUD loan sale, Eisenson complained to Fitts, "I don't like this" --referring to Hamilton's use of optimization software to auction HUD mortgages -- "because the only way we can win is by paying more than our competitors. We prefer a bid process where we can win by 'gaming it' because we are 'smarter.'"

For those unfamiliar with Soviet (or is it Harvard-Mob?) terminology, "smarter" is code language for saying "we can rig it." And "gaming it" means finding a way of manipulating the players to get control of them, rather than using the competitive process of free market capitalism.

Eisenson was obviously quite at home with the proverbial "fix."

And who is Mike Eisenson? He was the lead investor who eventually sold Harvard's share of NHP to the Denver-based AIMCO. His other claim to fame is that he was on the board of directors of the infamous Harken Energy which rigged an insider stock deal on behalf of George W. Bush -- not coincidentally a Harvard grad.

In 1986, a small company called Spectrum 7 (George W. Bush, Chairman and CEO) was acquired by Harken Energy Corp. After Bush joined Harken, the largest stock position and seat on its board was acquired by Harvard Management Co. The oil and gas, real estate and private equity portion of Harvard Endowment also acquired. Warren Buffet's position in NHP, one of the largest owners of HUD Section 8 subsidized properties in 1989.

Then the Hamilton Securities initiated HUD loan sales were slowed down and cancelled, and, of course, Harvard's capital gains were ensured through an IPO of NHP and through a sale to AIMCO.

The Harken Board gave the Junior Bush $600,000 worth of company stock, plus a seat on the board, plus a consultancy worth $120,000 a year -- despite suffering losses of more than $12 million dollars against revenues of $1 billion in 1989.

In 1987 when creditors were threatening to foreclose, the Junior Bush himself made a trip to Arkansas to meet criminal-banking kingpin Jackson Stephens, whose Stephens Inc. arranged financing for the faltering Harken Energy from a subsidiary of the Unon Bank of Switzerland (UBS). Stephens Inc, of course, had ties to the notorious CIA money laundry bank, the Bank of Credit and Commerce International (BCCI), where drug trafficking and arms-smuggling profits mingled freely with looted S&L and fraud-scam proceeds.

Then 1990 Bahrain awarded an exclusive drilling rights contract to Harken and the Bass brothers added more equity to the deal. Six months later George Bush Jr. sold off 212,140 shares grossing him $848,560.

When Saddam Hussein invaded Kuwait the Harken stock dropped suddenly. The SEC was not notified, and no action for insider trading was taken against the Junior Bush. Why? SEC chairman Richard Breeden was a faithful Bush loyalist.

Today Eisenson, formerly one of the lead investors in NHP and Harken and one of the primary portfolio managers of Harvard Management, runs a private equity portfolio called Charlesbank Capital Partners LLC, Boston which manages $1.4 billion in real estate investments for the Harvard Endowment.

One of the partners of a company doing business with NHP, Scott Nordheimer actually admitted to Fitts in June 1996 -- "We tried to get you fired through the White House and that didn't work. So now the Big Boys got together, and you're going to jail." Shortly thereafter the qui tam lawsuit with the bogus whistle-blower charges was filed against Hamilton.

In this complicated story, there's another part of the puzzle which needs exposure. The Hamilton Bushwhack involved Cargill personnel falsely accusing the following companies of financial improprieties: Hamilton Securities, as well as investment bankers Goldman Sachs and Black Rock Financial, a subsidiary of PNC.

Goldman Sachs has been touted as one of the largest contributors to the Democratic National Committee and the Clinton-Gore Presidential Campaign.

Was the Hamilton Bushwhack just another outward sign of a covert power struggle? Because of its implications, it had the potential to lead to Clinton's impeachment on serious fund raising violations -- a much more significant charge than the Monica Lewinsky Sexcapades used in the Ken Starr Coverup.

More Spooky Harvard Connections

The key to the mystery of the Hamilton Bushwhack may ultimately be found in the relationship between 1) government guaranteed/insured mortgages, 2) asset seizure/forfeitures, and 3) the private companies whose profits derive from an inside track with both government programs.

More lucrative than mere corporate subsidies, there are entire segments of mega-business which depend on these government insider deals.

For example, besides Harvard, the other primary investor in apartment management company NHP was Capricorn Investments and Herbert S. "Pug" Winokur, Jr.

Winokur, former Executive Vice President and Director of Penn Central Corp, CEO of Capricorn Holdings Inc. and managing partner of three Capricorn Investors Limited Partnerships, is one of those insiders who may have benefited from the outrageous assault on Hamilton's open bid auction for defaulted HUD mortgages.

Not incidentally, from 1988 to 1997, because of his large investments, Winokur was also the Chairman and CEO of DynCorp, a US government contractor whose customers include Department of Defense, NASA, Department of State, EPA, Center for Disease Control, National Institute of Health, the US Postal Service and other US Government agencies.

Most importantly, according to SEC registration documents (S-1), DynCorp is the prime servicer on the Department of Justice Asset Forfeiture Fund, having procured a five year contract with the Department of Justice worth $217 million from 1993 to 1998. This 1000 person contract required staffing at over 300 locations in the US and involved support of DoJ's drug-related asset seizure program. According to SEC documents, DynCorp's personnel supports "US Attorney Offices that are responsible for administering the federal asset forfeiture laws."

In other words, DynCorp could have profited first from a successful seizure of HUD loan sales. Then, DynCorp could have also profited from HUD "Operation Safe Home" seizures, which target low-income tenants, mortgage holders and apartment owners. And, since the company has the expertise and personnel, DynCorp could also have targeted these communities with private surveillance teams and non-lethal weapons to effect asset seizures using the phoney War on Drugs as a rationale.

By all accounts, there is at least a major conflict of interest in Winokur's investments in HUD low income housing and his role in Department of Justice seizures.

Imagine -- if you're Winokur, you can make money on defaulted HUD mortgages, guaranteed by US taxpayers, as well as by kicking out low-income housing tenants because of drug-related "asset seizures." The criminal-corporate-government scams don't get any better.

In the case of Hamilton's open-bid auction process on defaulted HUD mortgages, the potential $4.7 billion seizure of HUD loan sales would have been a major plum for DynCorp as the prime servicer of the DoJ Asset Forfeiture Fund.

By the way, Winokur also had the "foresight" not to board the ill-fated flight to war-torn Yugoslavia, which took Secretary of Commerce Ron Brown's life.

There are other spooky connections. According to Newsweek (Feb. 15, 1999), Reston, Virginia based DynCorp is a $1.3 billion firm, which also trains police in Haiti and works on coca eradication in Colombia, where three of its American pilots have died since 1997.

Reliable sources allege this shadowy outfit may be a CIA-military proprietary, in other words, a privatized entity useful for "plausible deniability." At any rate, it also provides "Yankee Mercenaries" for the Colombian campaign against drug trafficking. Employing about 30 US Vietnam War veterans, DynCorp has a $600 million contract to run and maintain the planes and helicopters used in "anti-drug" efforts in Peru, Bolivia and Colombia, according to the World Press Review (Nov. 1, 1998).

Postscript: Who says (corporate) crime doesn't pay? According to the Harvard University Gazette, in June 2000, Herbert S. Winokur Jr. was named to join the seven-member Harvard Corporation, the University's executive governing board.

Doing Business with the Feds

Imagine having to wait more than 4 years to get paid on an invoice.

For more than $2 million.

From the US Government.

That, in short, is what happened to Hamilton Securities.

Doing business with the US Federal Government should come with a warning label.

WARNING: Saving money for the taxpayers can be hazardous to your health.

"HUD is withholding about $2 million of funds owed to Hamilton for services performed for HUD," says Hamilton's President Catherine Austin Fitts. "We also understand that this with-holding is at the request of the Justice Department and the HUD Investigator General."

"As the lead investment banker on $10 billion of loan sales, we have been able to preserve the integrity of these transactions. We intend to take whatever steps necessary to recover our shareholders" and employees value as we have done for the US taxpayers. The unsealing of the qui tam lawsuit should free HUD to meet its outstanding contractual obligations to Hamilton as quickly as possible."

Toward a Positive Future

And what is Catherine Austin Fitts doing now?

Besides trying to recover her life, she's moving ahead with her new company called Solari Inc., and her vision, the Solari Investment Model, community-based programs for local equity building and investment.

"Solari is an investment advisory service, which plans to re engineer investment and financial structures at a local level, so that new technology can be integrated into communities to increase jobs and ownership," says Fitts.

"Over the last ten years, we have prototyped a substantial number of transactions, venture capital and portfolio strategy to determine the ideal way to refinance communities in the stock market," she continues. "Our intention is to create a fund which can finance local development -- and maintain local control -- through an investment model geared for breakthrough transformations with individual, organizational and community change."

Her far-reaching vision is an inspiration. "By creating one or two Solari Stock Corporations (one for real estate and one for venture capital) through a community offering, and swapping non-voting stock for outstanding debt," says Fitts, "the community can lower short term debt service and realign interests between numerous constituents who can be positioned in a win-win financial model."

The problem, in one sense, is simple. The old model -- the Soviet-inspired centralized command & control system which rules Washington, its agencies and the beltway bandits feeding at the trough of corporate subsidies -- must give way to the new paradigm of the neighborhood investment model. It's a foregone conclusion: the corrupt system which guarantees profits to insiders will be swept into the ashcan of history, just as the Soviet Union and its proxies' brand of communism has been discredited forever. It's just a matter of time.

In the end -- by building an alignment between spirituality and the material world -- Catherine Austin Fitts believes that "everyone can prosper through actions which integrate our spiritual principles in the material world in which we live and work."

For more information of the Solari Model of Investment and community-based profitability, click on "http://www.solari.com/".