Archive for January, 2010

Someone sent this to me today. On first read, it seems like this might help.  I’m getting a lot of interesting emails lately.  Keep on communicating.  GFS 



A friend sent this along to me. I can’t think of a reason to disagree.

I am sending this to virtually everybody on my e-mail list and that includes conservatives, liberals, and everybody in between.  Even though we disagree on a number of issues, I count all of you as friends.  My friend and neighbor wants to promote a “Congressional Reform Act of 2009”.  It would contain eight provisions, all of which would probably be strongly endorsed by those who drafted the Constitution and the Bill of Rights.

I know many of you will say, “this is impossible”.  Let me remind you, Congress has the lowest approval of any entity in Government, now is the time when Americans will join together to reform Congress – the entity that represents us. 

We need to get a Senator to introduce this bill in the US Senate and a Representative to introduce a similar bill in the US House.  These people will become American heroes …


A Fellow American


Congressional Reform Act of 2010

1. Term Limits: 12 years only, one of the possible options below.

A. Two Six year Senate terms

B. Six Two year House terms

C. One Six year Senate term and three Two Year House terms

        Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, serve your term(s), then go home and back to work.

2.  No Tenure / No Pension:

    A congressman collects a salary while in office and receives no pay when they are out of office. 

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, serve your term(s), then go home and back to work.

3.  Congress (past, present & future) participates in Social Security:

    All funds in the Congressional retirement fund moves to the Social Security system immediately.  All future funds flow into the Social Security system, Congress participates with the American people.

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, server your term(s), then go home and back to work.

4. Congress can purchase their own retirement plan just as all Americans.

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, serve your term(s), then go home and back to work..

5. Congress will no longer vote themselves a pay raise.  Congressional pay will rise by the lower of CPI or 3%.

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned  citizen legislators, serve your term(s), then go home and back to work.

6. Congress loses their current health care system and participates in the same health care system as the American people.

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, serve your term(s), then go home and back to work.

7. Congress must equally abide in all laws they impose on the American people.

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned citizen legislators, serve your term(s), then go home and back to work.

8. All contracts with past and present congressmen are void effective 1/1/11.  The American people did not make this contract with congressmen; congressmen made all these contracts for themselves.

    Serving in Congress is an honor, not a career.  The Founding Fathers envisioned  citizen legislators, serve your term(s), then go home and back to work.


A reader sent this in tonight.  It is from some time ago, but still instructive and pertinent. 



From The Seattle Weekly

High-flying crime

Boeing’s latest fine sends its corporate rap sheet soaring to $100 million in the last three years.

Rick Anderson

Published on April 18, 2001

ABOUT THE TIME Seattle was lamenting the planned relocation of Boeing headquarters last month, top company officials were quietly finishing up a settlement for yet another violation of U.S. law.

The resulting $3.8 million fine by the U.S. State Department, for illegally offering protected military technology to Australia and five other countries, brought to more than $100 million the amount of government-related fines and settlements levied against Boeing in just the past three years. In assessing the latest fine, the government alleged Boeing racked up 110 violations of U.S. export-control laws.

Boeing’s corporate rap sheet, which dates back at least three decades, wasn’t among the sentimental regrets of Seattleites mourning the headquarters shift. Nor was it one of the selling points brought up in recent weeks as Chicago, Denver, and Dallas officials fell to their knees in hopes Boeing would dub one of their towns the site of the new home office.

But besides getting the headquarters of the world’s biggest plane maker, the winner of the relocation pageant will also get the ivory tower that has helped make Boeing one of the world’s great achievers in the field of corporate wrongdoing.

Historically, the company has publicly renounced some violations while privately winking at others. Boeing’s unwritten rule that some rules can be broken has resulted in decades of settlements, fines, and penalties sought by individuals and the U.S. departments of Justice, State, and Defense, as well as the Federal Trade and Securities Exchange commissions, for bribery, kickbacks, fraud, and military contract and export law violations.

It’s a legal game played by most big corporations, especially defense contractors, that sometimes costs consumers and taxpayers dearly. But Boeing has outshone most other large companies by having both commercial and military products to market, legally and illegally.

Boeing denies it intentionally sets out to violate the law, and says many disputes and claims result merely from differing interpretations of U.S. law and policy. That was partly its explanation in the most recent case.

STATE DEPARTMENT investigators say Boeing illegally promised to share military technology it was barred from exporting to another country—mainly, in this instance, Australia. In a 1998 team competition, Boeing and partners Northrop Grumman and BAE Systems won a $1 billion contract for an Australian airborne radar system called Wedgetail that included four 737s and options for other planes.

Boeing gave itself the edge in the bidding by offering to provide the data and know-how that could make the Australian system equal to the U.S. AWACS system—technology that by law cannot be exported. Boeing proposed similar deals to Singapore, Turkey, Malaysia, Spain, and Italy, says the State Department, breaking so many U.S. laws it would be hard to overlook them.

But Boeing realized its errors, says Patrick Gill, Boeing’s vice president for 737 Airborne Early Warning and Control, and blew the whistle on itself.

“We had an intense marketing campaign [and] didn’t realize violations had occurred until later. We reviewed the program and discovered potential violations,” he says. “We notified State and took corrective action.”

Under the seven-page settlement agreement signed March 30, the State Department took its main action only on the Australian case. It is allowing Boeing to pay the fine in installments through 2004. The agreement also calls for Boeing to spend $400,000 of the fine on itself, creating a special new office to monitor export law compliance.

Around the time it made the illegal offer to Australia in 1998, Boeing had just been fined $10 million by the State Department for a similar export law violation as part of its Sea Launch program. Shouldn’t that have alerted someone that Boeing was already flunking its export law tests? Gill would say only that despite past violations the company is preventively geared up now, having schooled 1,200 workers on export law etiquette.

Was the ultimate message for Boeing in the Australian case—a $3.8 million fine weighed against a $1 billion contract—that such violations can be cost-effective?

Boeing veep Gill disputes that notion. “You may consider it a small fine in your business,” he tells me, “but I consider this a large fine, and it goes directly against the profits of this company and this program, and it’s definitely not taken lightly.”

But Boeing’s history contains a lot of evidence to the contrary. In 1982, for example, facing criminal charges for failing to disclose $7.3 million in “irregular commissions” given to agents and others to induce overseas plane sales, Boeing’s then Chair T. A. Wilson walked into court, entered a guilty plea, and handed over a check for $450,000.

Within years, unrepentant Boeing was back in court. In 1989, the company pleaded guilty to two counts of trafficking in classified Pentagon documents and was hit with a $5 million criminal penalty; a former exec also got a short prison term for theft of documents. In 1991, two former Boeing execs, then with the Department of the Navy, each got prison terms as part of a major military contract-procurement scandal involving Boeing and other defense contractors who sought an inside edge.

Currently, the company faces lingering bribery claims. In a case on appeal in Florida, $2.8 million has been awarded to a Canadian businessman who claimed Boeing put him out of business by running a $786,000 bribery scheme to grease the $64 million sale of jets to Bahamasair in 1989 (a Bahamian government investigation backed his claim).

WHILE CRIMINAL and civil charges have been mostly about money—ranging from commercial airline kickbacks to foreign royal families in the 1970s to defrauding American taxpayers through defense contracts in the 1990s—sometimes lives are said to be at risk.

One of the latest cases, a $61.5 million Boeing settlement in Ohio, was settled last year by whistle-blower Brett Roby and the Justice Department, who accused Boeing of hiding flawed parts on U.S. military choppers, which the U.S. says led to at least one fatal crash (see “Death by chopper,” SW, 8/17/00).

A similar ongoing $20 million lawsuit by an Arizona whistle-blower—also backed by the Justice Department—alleges Boeing has knowingly delivered Apache choppers to the Army since 1984 with faulty devices that led to more than 2,000 unnecessary landings in recent years (see “Floppy choppers,” SW, 7/6/00). Boeing denies the device is at fault.

Is crossing the line just the cost of doing business for Boeing? After all, the government indicts with one hand but with another offers a new contract. Is a bribe here, an illegal promise there OK if it gets the job done? Some critics charge Boeing has become so emboldened that it effectively extended a bribe offer to all of Congress last fall when CEO Phil Condit, pushing for a Boeing-backed pro-China trade vote, prominently announced in D.C. that “We will be supporting people [politicians] that believe in the direction we do.”

Gill says it’s a mistake to think of Boeing and corruption in the same sentence, at least today, despite the recent fines.

“I really resent the implication,” he offers. “If you’re talking about the ethics of Boeing, the Boeing Company by policy and action adheres to the absolute highest standards. Even things that would not have been considered a violation perhaps in other companies we disclose because we are under the microscope [of oversight agencies]. We stay under the boundaries even if that means walking away and losing a contract. That’s Boeing.”

More information about Toshiba’s serious breech of U.S. technology security, c. 1987



G. Florence-

Too bad the original intent in establishment of Project Exodus and the Defense Technology Security Administration (DTSA), now the Defense Threat Reduction Agency (DTRA), has been so obfuscated by the interests of U.S. defense corporations and their self-serving interests in the expansion of international marketing of increasingly advanced technologies to an ever widening audience.


The Defense Department and U.S. Customs Service established Project Exodus.  Project Exodus was directed against Western firms that tried to dodge the governing rules over the export of sensitive equipment.  In its first three years, the effort seized 2,851 illegal shipments of defense-related equipment (worth $177 million).  Project Exodus aimed at prosecuting smugglers (a small fraction of all exporters), developing new methods to track illicit high-technology flows, and increasing the training of customs agents.

Senior Pentagon officials began to bring up technology security issues at all meetings with foreign officials.  One such meeting was between Secretary of Defense Caspar Weinberger and his Japanese counterpart.  This meeting resulted in the public exposure in 1987 of Toshiba’s role in supplying the Soviets with complex machine-tooling equipment.  The machine-tooling equipment combined with software from Norway allowed the Soviet navy to improve its submarine propellers by reducing their noise and making the subs more difficult for NATO to detect.  The Toshiba case was recognized as a serious breach of technology security.  The case illustrated the complex international dimensions of economic espionage and the illegal transfer of export controlled technologies.

The Pentagon established the Defense Technology Security Administration (DTSA) to provide stronger policy control over technology exports.  DTSA was to be the focal point of Defense Department efforts to keep international transfers of defense related technology consistent with U.S. foreign policy and national security objectives.

Link to: Safeguarding Defense Technology, Enabling Commerce

The GAO’s Director of Acquisition, Ann Calvaresi-Barr is quoted, (in an article by William Matthews), as saying,“Defense Security Service (DSS) agents also lacked basic understanding of complex transactions, such as the security implications of foreign hedge funds buying interests in U.S. defense firms.   That is increasingly common, and it is difficult to know where the money is coming from and who the players are.” 

See the Matthews article:

The whole financial arena is fraught with danger, from a security and oversight perspective, as the tools used by financial fraudsters and criminals are extremely complex and their activities are multi-layered.  With the advent and rapid development of a global technological world, our government oversight employees are hard pressed to keep up with the needed expertise in technology as well as current financial business practices. (We’ve come along way from security merely being physical security.)  DSS is not alone in the struggle; this challenge is shared by all oversight agencies.  The modus operandi of the criminals has become very sophisticated.  It is hard and sometimes impossible to detect where money is coming from and going to.  And many things maybe hidden, such as true owners, stockholders, and recipients of pay-offs for services rendered, as well as the money itself. 

Threads to any particular example of such crime may lead all over the world in multinational webs of secret contracts and accounts.  One such type of secret account, which is gaining in popularity rapidly in corporate circles, is the Hidden Treuhand, (pronounced troy-hawnd).  Although illegal in the US, this type of financial instrument is legally protected in certain countries and marketed by many of those countries throughout the world.  It is necessary to understand what a Hidden Treuhand is and how many ways it may be effectively used to evade accountability to U.S. law and oversight authorities in order to understand the challenges our oversight field people are up against. 

The term Treuhand is often translated over to “Trust” for English speakers.  Author, Shelley Stark, Hidden Treuhand:  How  Corporations and Individuals Hide Assets and Money, states this is not entirely accurate.   If you use your search engine and type in “treuhand,” you will get a great number of pages of links to companies, many in the German language who offer Treuhands, (the open and visible kind). 

Hidden Treuhands are a different kind of trust and may only be accessed in certain countries that have laws, which allow them, or do not have laws that prohibit them, and all the invisibility and secrecy that goes with them.  Ms. Stark discusses this very succinctly in her book.  Her book makes it possible to understand how the Hidden Treuhand, which few in the U.S. know anything about, is used as a financial manipulation tool to accomplish many things, legal and illegal.  Because of the impact and increasing use of Hidden Treuhand accounts by Americans and American/Multinational Corporations, including defense contractors, this book should be required reading for all federal oversight employees. 

Due to growing problems with tax evasion, money laundering, and financing of drug cartels and terrorism, many governments are beginning to try to investigate this arena.  How would a financial instrument that has created problems with tax evasion, money laundering and with connections to drug cartels, organized crime, and terrorists have anything to do with oversight of defense and other contractors?

Hidden Treuhands are not only being used for notorious crime in arenas of violence and intrigue, but are also being accessed quietly by seemingly normal upper income citizens and corporations with seemingly bland missions.  Some European countries have suffered great tax losses due to Hidden Treuhands, which that country’s citizens have set up in neighboring nations who offer them.  But loss of tax monies is really the least of the problems these secret accounts may create in Europe or here in the United States.   

This concern has now become publicly acknowledged in the United States as well.  If individuals, families, or corporations can access Hidden Treuhands, they can not only evade paying taxes here in the US, but can also hide a great variety of things, such as money, property, and other assets, as well as hide people or beneficiaries, specific stock holders or consultants who are paid or are benefitting some other way financially (boats, cars, houses, etc.).  Recently a large number of Americans were discovered to have secret accounts in certain European countries and were using them as illegal tax shelters.  And were it not for an insider (Bradley Birkenfeld) coming forward with testimony and paperwork, in the UBS tax haven scandal, the U.S. government would never have been able to prevail in prosecuting the financial crimes and recovering millions of dollars.  In fact, they probably would not have even been able to recognize the problem.  

The use of a Hidden Treuhand is illegal in America, but that does not stop a person or corporation determined to find a way to hide money, stockholders, or the true owner of an asset from obtaining and using one.  People can be paid through arrangements invisible to an outsider using a Hidden Treuhand.  Payments may be made for services rendered as a consultant or other relationship.  People who may have reasons they cannot maintain a public business relationship because of ‘conflict of interest’ concerns or laws, can be hidden and still profit, using a Hidden Treuhand with no one on the outside being the wiser.

If a corporation has a subsidiary in one of the countries that offer Hidden Treuhands, then they are well on their way to setting up such an account.  Some corporations set up what appear to be subsidiaries, but which conduct no business, do not produce or sell a product and simply are used to transfer money in and out to other locations.  If a corporation has a number of subsidiaries in multiple countries with either Hidden Treuhands, or with banking secrecy, they may devise a complicated pathway for moving funds about, making it more difficult for anyone to follow the trail, even if they could get the proof of the existence of such accounts.   And consider the amplification of this movement of funds using computers and technology and it becomes a momentary twinkle over the Internet. 

Stark clarifies, “A Hidden Treuhand is completely non-transparent, only somewhat legal and operates covertly by owning the asset through a corporate structure, where real shareholder identity remains anonymous in all business dealings.”  She goes on to say that “lawyers are often called upon to act as a ‘trustee’ in a hidden ‘Treuhand.’  There is no law regulating hidden ‘Treuhand,’ only law specifying that the lawyer cannot divulge any secrets pertaining to the client.”

In Austria, the Austrian Lawyers Chamber and its associated lawyers have control over this type of contract.  Stark states that, “This kind of trust is not so much protected by law as protected by lawyers.  If questioned, the lawyer will simply evoke attorney-client privilege.”   The contracts themselves are kept under lock and key with perfect invisibility.  The only way to even be able to investigate such a situation to find out where money is, where it came from or where it went, or in the case of assets, who the real owner is, would be to obtain copies of the original contract or other paperwork proving the existence of such an agreement.  And even then there would be a long battle in court to try to prevail.  Without the insider paperwork, you will most likely have a judge or attorney blandly ask you to show the paperwork to prove that it exists.   Since normal investigations will not turn up the paperwork, you will be quite effectively routed. 

This is possibly one of our biggest challenges in being able to detect and prosecute fraud, and other criminal behavior revolving around ownership, partnerships, stockholders of defense contractors, and others who profit from contracting with the U.S. Government.  It is also potentially an issue from the standpoint of controlling who has access to government proprietary or secret information or technology. 

Streamlining and reducing the number of competently trained security specialists who are experts in this type of oversight is exactly the wrong thing to do if the goal is truly to get a handle on the complex tools criminal individuals and contractor corporations are using to hide money as well as people or other business relationships who might cause them trouble in the contracting oversight world if the U.S. oversight authorities knew of them.  The types of violations occurring now are much more complicated and take even more time to work as cases, even if the oversight employee is fully trained and knowledgeable about the modus operandi of the criminals 

So, you perhaps can see why enforcing our laws about foreign ownership and the movement of money to invisible foreign owners, stockholders, consultants, or those whose primary interest may be espionage, might be quite problematic.  It would in fact be problematic in the best of circumstances where our oversight field people had sufficient levels of employees in fully staffed offices, appropriate and useful training offered all along the journey from neophyte to senior level agent, and solid support and assistance from upper managers and resource specialists in the regional and Washington DC offices. 

Despite what may be officially said by DSS directors and managers, the historical and current practice of crippling offices with lack of sufficient number of well qualified and trained agents, backbreaking workloads, and extreme pressure to turn the numbers (statistics) and not spend the time necessary to fully develop and work the cases is the main problem.  Since the business environment has been changing so rapidly, if the Agency sincerely had the goal of competently overseeing defense contractors, a commitment of resources and adjustment of employees work loads to allow for ongoing training and education in areas of useful purpose that would prepare them to become ever more skillful at finding and identifying fraud, waste, abuse, and other crimes, would be what we should be seeing.  Leaving people essentially with 20th century understanding and skills to deal with 21rst century criminal modus operandi will not be successful.  DSS and other agencies facing the same challenges must wake up and jolt themselves into reality.

All the previous statements apply in the case that there is no corruption or compromise of authority figures within the government and federal oversight agencies.  Consider for a moment, that may not be the case. 

Think about what might happen if industry, with it’s profit driven motives and values were to gain untoward influence and perhaps even control of government oversight, including many of those in positions of power or authority in elected, appointed, or career civil service positions. 

What if people were encouraged to use the revolving door to more effectively serve the interests of their corporate affiliations to the detriment of the American taxpayer and our national security?  

What if this was happening by design and not by accident and some thoroughly corrupted forces within our government and within industry were cooperatively directing the dysfunction? 

Consider human nature, and what would happen if the greed we’ve seen take such a devastating toll on our economic world, should co-opt some federal managers and employees?   What if managers in a federal agency are compromised through their past and present relationships with contractors, or other compromised and corrupted federal employees who’ve worked themselves into positions of authority and power at high levels in our government? 

What if those managers do not really want their field people empowered?  What if they want to be sure the problems are not found, or recognized and take steps to hobble their employees to be sure the work is not accomplished?  What if they want to be sure none of the criminals are brought to justice?  What if the disintegration we’ve been seeing in DSS and other oversight agencies are just that, the malfeasance of upper and middle managers in order to service the wishes of their industry confederates?

What if in this age of corruption and greed, corporations were pressuring our elected politicians and even placing them in their positions through effective campaign and election manipulation in order to make convenient use of their job authority?  (Follow the money, and take a look at the recent Supreme Court case, which now unleashes corporate ability to donate to candidates and campaigns.)

All of these ‘what if’s” must be considered and investigated by someone higher in authority who can audit with integrity, all of our oversight agencies who supervise defense and other contractors.  The chaos that DSS and other federal oversight agencies have been going through with all of the technology and globalization issues, combined with the trend toward outsourcing, and laissez-faire policies pushed by elected leaders, and various ‘Think Tanks,’ advisory groups, and the much discussed culture of corruption and greed could very well lead to the mess we are currently experiencing.  This would be replete with honest employees who are trying to ethically do their jobs, being called non team-players, labeled whistleblowers, and made targets of every type of retribution by the wrongdoers in order to drive them out of their jobs or to an early grave, which ever comes first.  Presently, honest oversight employees are a threat to the corrupted activities that are going on and to those who protect and cover up those activities. 

With these beleaguered federal agents goes the “corporate memory” and expertise of the oversight agency, leaving neophyte employees who will not be up to dealing with the contractors, particularly if the useful and necessary training and education are withheld, and heavy handed negative managers assure an environment of anxiety, fear and utter frustration are the daily environment our federal oversight employees must endure.   So, the extreme dysfunction within our oversight agencies appears to this observer, to be a combination of lack of vision and understanding by management of the current critical issues at hand combined with some systemic problems with corruption, and cover-ups of waste fraud and abuse, sometimes it appears in collusion with contractors.  It is not a pretty thought, but one we must consider upon studying the history of the past few decades which have created a perfect storm of sorts that government oversight has not been prepared to overcome. 

For those of you interested in learning more about Hidden Truehands, what they can do and how they function, read Ms. Stark’s book and also visit the Financial Action Task Force (FATF), that the United States and many other countries have joined, in order to try to successfully deal with these kinds of financial liabilities.  The first is the link to the portion about the FATF:,3417,en_32250379_32236836_1_1_1_1_1,00.html

The next is the link to the FATF’s full Mutual Evaluation Report on Anti-Money Laundering and Combating the Financing of Terrorism, Austria, 26 June 2009. 

This report is 358 pages long.  Hidden Treuhand information may be found throughout, but there are some key issues discussed pages 218-225.  For those of you with knowledge in this area, you will want to read this report.  If this appears to be daunting to you, please read Ms. Stark’s book which has been written to make it an easier read for the average non-career-financial-professional person to absorb.

A reader sent this in recently.  I have already been trying to find out about Kathleen Watson and Richard Lawhorn, of Defense Security Service, and someone who works for Boeing named Timothy J. McQuiggan.  I haven’t had a lot of luck using normal online search tools, but found out today, I’ve been misspelling Mr. McQuiggan’s name. (See comments on earlier posts from the last couple of weeks.)  

This article is disturbing. I will continue to work on this.   I will check with my contacts I have on the east coast and in the Washington DC area to see if I can find out anything specific, particularly about the truth of what has been happening in DSS, (that this reader is intimating at), but did not leave contact information so I can follow up with him or her.  I understand how intimidated and afraid people in the government and working in industry are now, due to the extreme retribution they face if they try to do something about the unethical or criminal behavior they are observing.  If anyone can enlighten us, please comment or email.  -GFS 


G. Florence-

If the officials,  (that can actually do something), only knew the truth about Watson and the DSS.


U.S. Defense Tech Security Called ‘Swiss



Published: 16 Apr 16:51 EDT (12:51 GMT)

     As the value of the U.S. dollar declines, investing in U.S. defense firms

becomes more attractive to foreign companies. That worries Rep. Duncan

Hunter, R-Calif., who fears more foreign ownership will mean more pilfered

defense technology secrets.

     “This is not irrational fear or veiled protectionism, this is a real national

security concern,” Hunter assured his colleagues on the House Armed

Services Committee April 16. “We are in a period where industrial espionage

is on the rise.”

     But globalization of the defense industry seems


     “We’ve got people with lots of cash” in the rest of the

world, and American companies “that are desperate for cash.” The increase

of foreign entities buying U.S. defense companies “is going to be a problem

for years to come,” Hunter said.

     So, how able is the United States to protect its defense secrets from prying

foreign investors, the Armed Services Committee wanted to know.

Not very, said witnesses from the Pentagon and the Government

Accountability Office (GAO).

     A “safety net” of agencies and policies designed to protect classified

industrial information “right now is Swiss cheese,” said Ann Calvaresi-Barr,

the GAO’s director of acquisition and sourcing management.

It’s not as bad as it was two years ago, said Kathy Watson, director of the

Defense Security Service. But improvements are coming slowly.

     The DSS is a little-known agency within the Defense Department that

determines which defense companies qualify for access to classified

information. It awards clearances to company officials and evaluates “foreign

ownership, control or influence” over U.S. defense companies.

When she took over as director in 2006, Watson said the DSS was

underfunded and understaffed. Today, the agency receives an adequate

budget and has been allotted an additional 145 personnel – but so far, only

about one-third of the new jobs have been filled, she said.

     The agency still relies on paper files scattered among 71 field offices, Watson

said. And while it has a computer system and is entering data, “it’s not the

system of the future,” Watson told committee members.

Calvaresi-Barr said a GAO evaluation in 2005 showed that the Defense

Security Service did not systematically collect and analyze information to

assess the effectiveness of its operations. As a result, the agency does not

know whether certain violations are increasing nor can it identify patterns of

security violations and then plan how to keep classified information from

being compromised, she said.

     DSS agents also lacked basic understanding of complex transactions, such

as the security implications of foreign hedge funds buying interests in U.S.

defense firms. That is increasingly common, and “it’s difficult to know where

the money is coming from and who the players are,” Calvaresi-Barr said.

Watson said DSS employees are receiving more training is those sort of


     The GAO has not re-evaluated the DSS since Watson has begun making

reforms, Calvaresi-Barr said. “We are very pleased” to hear that DSS is

working to strengthen defense industrial security, she said.

     DSS is hardly the only weak link. There are numerous agencies, laws,

regulations, policies and processes intended to protect critical defense

technology, and among them “there are alarming gaps,” Calvaresi-Barr said.

Another of my readers has written.  This one has sent a response to Senator Maria Cantwell’s letter, (previously posted today), regarding oversight of the financial sector of our country.  Here is his/her letter.  I have removed names to protect his/her privacy.  GFS


Dear Senator Cantwell,

Congratulations on your forward thinking on regulations on the CFTC.  We need a tight rein on this horse!  I especially like the idea that states should protect themselves against this type of gambling.

A number of years ago, I took a fling in the stock market and did a lot of studying in the process.  Finally decided, that gambling game wasn’t for me as there was just too much “buddy” system working there.  Too many of the same people on various boards.  And with that thought in mind, how about preventing corporations from giving bonuses of stock, where they can control the company to the smaller  stock holders disadvantage.

Also, your ideas are good, but are based on the honesty of the people enforcing the regulations and  this does not seem to be working in other areas of commerce.  I believe it started a number of years ago when people from corporations went to work for the government and rewrote regulations to help corporations and when that was accomplished they went back to work for corporations.  At the time they also managed to hire people and not train them for the oversight jobs they were suppose to do.

This is continuing today. By our not enforcing regulations or changing regulations to not allow people to use the “swinging door” to move back and forth between government and corporations.  We need to change that and provide for a five year hiatus between working for the Feds. and Corporations.  At the same time we need to enact laws that would protect  federal workers in sensitive oversight positions from retaliation from corrupt superiors.  I think this is called the Whistleblowers Protection Act.

I would like to think we live in a world where people that chose to do the right thing in their jobs, can do so without jeopardizing the rest of their lives.  I look forward to seeing you accomplish what you have set out to do.  Keep up the good work.

Sincerely yours,

One of my readers wrote to Senator Cantwell, ((D) Washington State), about the concerns my reader has about the financial area, particularly after reading Shelley Stark’s Hidden Treuhand book.  This is the response Senator Cantwell sent to her that she sent to me to post for the interest of other readers.  -GFS


From: []

Sent: Thursday, January 21, 2010 10:32 AM


Subject: From the Office of Senator Cantwell

Dear _____________,

Thank you for contacting me to express your concerns about the need for regulatory reform of the country’s financial markets.  I appreciate hearing from you on this important matter, and I sincerely regret the delayed response.

The recent crisis in our housing and financial markets has shaken the confidence of the American people.  I recognize the tremendous burden that Washington families and businesses have faced in recent months and I remained concerned about the lack of transparency and oversight in U.S. financial markets.  Like you, I am concerned about the stability of our country’s financial markets and believe that regulatory reform is necessary.  Reckless subprime mortgage lending resulted in people being kicked out of their homes, hurt small banks, and nearly collapsed large too-big-to-fail banks.  Businesses are failing and laying workers off because they cannot access the credit they need.  Community banks are not lending and prospective borrowers are left with few or no options.  It is clear that one of the primary causes of the economic meltdown was the opaque nature of the unregulated derivatives market.

Derivatives are a complex financial tool that, when adequately regulated, can be used to manage commercial risk.  For instance, electric utilities and airlines purchase derivatives to hedge against potential future price increases of natural gas or jet fuel.  Corporations can purchase interest-rate derivatives to hedge against fluctuations in interest rates that can increase input costs.  However, derivatives were also being used by speculators and big banks to make off-book bets on everything from home prices to foreclosure rates, energy prices, and even food prices. Trillions of dollars worth of unregulated derivatives tied to credit markets and complex financial mortgage-based instruments fueled the crisis.

Prior to 2000, no federal law exempted derivatives from being traded on safe, transparent regulated central exchanges overseen by the Commodity Futures Trading Commission (CFTC).  This oversight protected the public from the inherent risk posed by derivatives and from the chaos that could result from unscrupulous or reckless trading.  However, in 2000, major financial firms sought and received an exemption from all regulation of a massive class of derivatives, including preemption from state gambling laws.

The lack of any regulations at the federal level meant that, in effect, the 2000 law changes enabled rampant derivatives speculation that culminated in the economic collapse of 2008.  In 2000, when the deregulation law passed, the derivatives market was already $94 trillion.  After deregulation, the derivatives market ballooned to over $598 trillion by 2008.  Major Wall Street firms grew too big to fail because they were making massive bets on unregulated derivatives with no capital to back up those bets.  When these bets didn’t pay up, it was up to American taxpayers to provide the capital to bail them out.  We cannot allow this to happen again.

That is why I am fighting to ensure that we have the strongest possible reforms over our financial markets.  Last year, I worked with the Administration on proposing strong regulatory controls on these markets, including requiring transparency in derivatives trading and restricting market manipulation.  After numerous conversations with the administration, I was pleased when they announced support for some of the proposals I had called for, including clear support for bringing the unregulated derivatives market under full regulation and oversight.

On September 17, 2009, I introduced the Derivatives Market Manipulation Prevention Act of 2009 (S. 1682), which would make it easier for the CFTC to prevent, deter, and enforce cases of market manipulation in derivatives.  Current law makes it very difficult for the CFTC to effectively meet its mandate to enforce and deter market manipulation.  This is because current law requires the CFTC to meet a more rigorous standard to prove market manipulation than other financial market regulatory agencies such as the Securities and Exchange Commission (SEC), the Federal Energy Regulatory Commission (FERC), and the Federal Trade Commission (FTC). My bill would establish a bright line so that the CFTC can effectively enforce and deter market manipulation in commodity futures and derivatives markets.

On November 10, 2009 I introduced S. 2763, a bill to repeal the state gambling law preemption on unregulated derivatives.  My bill would empower state gambling regulators and attorney generals to examine unregulated derivatives trading and take appropriate action to protect citizens from practices which can harm the foundations of our economy.  As Congress considers comprehensive legislation to close loopholes and exemptions from federal derivatives regulation, states should no longer be prohibited from also protecting their citizens.

I will be working with my colleagues to ensure Congress passes the strongest financial market reform bill possible.  We must ensure that large financial firms serve as a force to create jobs and facilitate entrepreneurship, and prevent reckless use of unregulated financial products that can bring down the entire financial system.

Please be assured that I will continue my efforts in the U.S. Senate to bring transparency to government and to the financial markets by fighting for smart, effective regulation and oversight so we do not face a catastrophe like this again.

Thank you again for contacting me to share your thoughts on this matter.  You may also be interested in signing up for periodic updates for Washington State residents.  If you are interested in subscribing to this update, please visit my website at  Please do not hesitate to contact me in the future if I can be of further assistance.


Maria Cantwell

United States Senator

For future correspondence with my office, please visit my website at

National Whistleblowers Center

3238 P Street NW

Washington, D.C. 20007


Lindsey M. Williams (202) 342-1903


FBI Whistleblower Bassem Youssef Instrumental in Exposing Constitutional Violations That Threaten Our National Security

Washington, DC. January 19, 2010. In response to the front-page article appearing today in the Washington Post, the following statements were released by Stephen M. Kohn, attorney for Mr. Bassem Youssef (Chief of the FBI’s Communications Analysis Unit/Counterterrorism Division) and National Whistleblowers Center Executive Director:

“Since 2005, when he first learned of the abuses reported in today’s Washington Post, Mr. Youssef has attempted to ensure that the FBI complied with the law.  Between 2006-08 he provided extensive testimony before the DOJ Office of Inspector General.  In 2008 and 2009, his counsel provided three detailed letters to the Attorney General of the United States setting forth details on the misconduct committed within the FBI and urging that effective corrective actions be taken.”

“The issues raised by Mr. Youssef and the ongoing investigations concern not only the protection of fundamental civil liberties and Constitutional rights, but also the security of the United States.  ‘Over-collecting’ information on innocent Americans does not make the United States safe from terrorist attacks.  Abusive search tactics unrelated to real terrorist threats significantly interferes with our nation’s security and it undermines properly targeted investigations essential for protecting the American people.”

“Today we are urging every American to TAKE ACTION to protect Mr. Youssef and all other national security whistleblower from retaliation.  We are asking Congress to enact strong legislation (H.R. 1507) protecting whistleblowers in the FBI and other national security agencies.”

 Mr. Bassem Youssef is the highest-ranking fluent Arabic speaking agent in the FBI.  In 1995 he was awarded the Director of Central Intelligence Award for his key role in one of America’s most successful Middle East related counterterrorism operations.  In 1996 he was appointed by then-FBI Director Louis Freeh to serve as the first Legal Attaché for the FBI in Riyadh, Saudi Arabia.   He is credited with establishing unprecedented access and cooperation between the FBI its Saudi counterparts.  After the 9/11 attacks Mr. Youssef alleged that he was discriminated against based on his Egyptian heritage. For more information on Mr. Youssef’s background please click here.

Mr. Youseff’s attorney Stephen M. Kohn is available for comment at 202-342-1903 or

Breaking News: FBI Whistleblower Instrumental in Exposing Constitutional ViolationsTake Action!

In today’s Washington Post, we learned that for years the FBI engaged in systemic, constitutional violations of our civil liberties. After 9/11, FBI officials went outside the law and obtained the phone records of many Americans with no connection to terrorism. This over-collection of data harms our nation’s security and undermines properly targeted terrorism investigations. We know that FBI whistleblower Bassem Youssef was instrumental in exposing and stopping this illegal FBI domestic surveillance program. He should be protected, not punished, for doing the right thing.

TAKE ACTION! Demand Congress protect all intelligence agency whistleblowers!

It is imperative that you contact your senators and congressmen and tell them to support the passage of H.R. 1507, which would protect all intelligence agency whistleblowers. The version currently pending in the Senate would allow FBI director Mueller and other intelligence agency directors, to terminate Mr. Youssef, or any other whistleblower, without judicial review.

TAKE ACTION! Tell your representatives to support H.R. 1507!

Who will have the courage to stand up to civil right abuses like this if they know there will be no judicial remedy if they suffer retaliation?

TAKE ACTION: Tell Congress retaliation against national security whistleblowers is unacceptable!

Mr. Youssef, the highest-ranking fluent Arabic speaking FBI agent, is just the type of loyal American we need in our intelligence services. Mr. Youssef is a highly decorated FBI employee with over 20 years of service to this country, including a 1995 Director of Central Intelligence Award he received for his key role in one of America’s most successful Middle Eastern counterterrorism operations.

Show your support for Mr. Youssef by sending a message to your representatives and then forwarding this message to your friends and family. National security employees are vital to exposing these civil rights abuses and they deserve our protection!

I know other federal agents who have had similar distasteful professional interfacings with the Naval Criminal Investigative Service (NCIS) and the Federal Bureau of Investigations (FBI).  These agents have confided that other criminal investigations have been completely mishandled by these two agencies, thereby severely hampering or derailing investigations that should have proceeded to criminal prosecutions.  GFS

* * * * * * *

 From Harper’s Magazine:

The Guantánamo “Suicides”: A Camp Delta sergeant blows the whistle

 By Scott Horton   January 18, 9:00 AM, 2010 

This is the full text of an exclusive advance feature by Scott Horton that will appear in the March 2010 Harper’s Magazine. The issue will be available on newsstands the week of February 15.

Link to original:

Defense contractors must now

air dirty deeds in public


January 17, 2010 — Ms Sparky

Defense contractors such as KBR can no longer hide behind the closed doors of secret binding arbitration for serious issues such as discrimination, harassment, rape and assault. No longer with KBR and others be able to violate Title VII Laws and then just sweep them under the rug behind closed doors. Those abusive criminal managers who have been in place for years are finally going to cost them some money and Heather Browne, KBR’s Communications Director is going to be working overtime. Well done, Jamie Leigh Jones and thank you Al Franken for taking these issue seriously. Hopefully this is just the first in a series of laws to protect defense contractor employees.

For those who respond to every dispute or disagreement here on with “You signed a contract”. You can’t sign away law

See rest of story here: