PAGE 14
ENRON
THE REAL DEAL
FROM PAGE 13
has access to huge amounts of information, including banking
records and e-mail, for all members of Congress. The suggestion
here is that he is the 21st century’s J Edgar Hoover Everyone
is afraid of him
CAF: Bingo! In later testimony, Winokur asserted ignor
ance of how Enron’s trading strategies were generating so much
profit on the California energy crisis. Winokur never mentioned
that as Finance Chairman he was required by the dictates of
board responsibilities — and the handsome sum of money he
is paid — to understand where significant profits are coming
from He also failed to mention that he has a Ph D. from
Harvard in mathematics specializing in complex systems
theories, so the implication that this stuff was all too complicated
for him and he can’t be bothered to understand it is another dog
that won’t hunt.
DA: I saw a letter on the internet to William Powers from
Congressmen John Dingell and Peter Deutsch dated February 2,
2002 They are not blind to this They do question Powers about
Winokur: “As a member of the special committee now respons
ible for investigating related-party transactions between Enron
and the LJM1/LJM2 and other related partnerships, Mr Winokur
is essentially investigating his own actions and approving or
disapproving the resulting report. You can understand why disin
terested observers might conclude the report's independence, or
at least appearance of independence, has been compromised."
CAF: And throughout his testimony to Congress pleaded
ignorance of everything — and for the most part received only
puffball questions.
DA: In another excerpt from the this same letter, Dingell
and Deutsch clearly place Winokur in the mix with Michael Kop-
per and Andrew Fastow: “Today’s Wall Street Journal reported
that Mr Winokur was also a member of Enron’s executive
committee that approved the financial structure CHEWCO, an
allegedly independent entity which would be run by Michael
Koppers, an Enron executive. The consolidation of CHEWCO’s
debt onto Enron's balance sheet in 2001, due to the fact that it
was actually an affiliated entity, was one of the reasons Enron
had to write down $1.2 billion in equity last October. ” It is curious
Mr Winokur has received so little attention in the mainstream
press. His name is virtually never mentioned anymore
CAF: Pug is a key player, but ultimately he is simply
a member of a syndicate that works together to make money.
Financial fraud — including insider-trading — is the most profit
able business on the planet A fraud of this magnitude can buy
a lot of cooperation in any market Perhaps we will come to
learn more about the syndicate as more links are discovered
between Enron, Tyco, Imclone, Global Crossing, WorldCom and
other failed giants.
Another player who is worth studying is Jerry Hawke,
the leading U.S bank regulator. He worked for Secretary of
the Treasury Robert Rubin, now, as we mentioned, co-chair
of Citibank and a member of the Harvard Corporation. He also
worked for Larry Summers, Rubin’s successor at the Treasury,
who is now President of Harvard Jerry Hawke was promoted to
Comptroller of the Currency in 1998, which is the lead regulator
permitting all this offshore bank fraud to occur uninterrupted by
government regulation.
But having Winokur on the Power's Committee was
like putting the fox in on the early investigation — just in time
to review all the most damning materials and the most damning
employee testimony. It is possible for a process like this to
organize the critical information necessary to perform the “right”
surgery on Enron's institutional memory so that the coverup
design works For example, this stuff gets shredded, this witness
dies mysteriously.
DA: Enron Vice Chairman J. Clifford Baxter
CAF: These other witnesses are now scared to death,
and maybe we make the pretty girl witness a hero and even get
her a book contract These operations get sold and transferred
quickly to the people who need to coordinate the coverup. And
meantime, the cash gets recycled offshore and moved around
as they buy time Such in-house investigations are perfect for
buying time Jt’s not surprising that under oath the chairman of
the Power's Committee, William Powers, admitted in Congress
ional testimony that they took notes for all the testimony they
received from witnesses, then destroyed the notes and produced
a highly controlled written report.
DA: It's not surprising? What do you mean?
CAF: The Powers Committee was SOP — and I will tell
you how I learned that term.SOP stands for “Standard Operating
Procedure.” When my company was targeted regarding our work
for cleaning up HUD programs in a way that was bad for special
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interests including Harvard and presumably big HUD contractors
such as Lockheed-Martin, DynCorp, JP Morgan-Chase and
Arthur Andersen, we had several situations where the DOJ and
their investigators tried to falsify evidence or destroy evidence.
I was dealing with a criminal syndicate.
DA: A fraternity of good old boy government contractors
who ’d been bilking the government for years.
CAF: We got an affidavit documenting the efforts to
falsify — I mean pure criminal falsification of evidence by the
DOJ investigators — and we took it to a court trustee and he
looked at it and he said that this was “SOP." I asked one of the
retired HUD Inspector General auditors, “What is SOP?” He
replied, “That is standard operating procedure — when you have
no evidence of wrongdoing you just try to frame an obstruction
of justice charge and that is how you get an indictment."
I also asked him why the investigators kept trying to
spread false rumors about my personal life, including to
government employ-ees and my employees when they inter
viewed them. The retired auditor said something to the effect of
“When you don’t have any facts to support an indictment you try
to brand the person as personally undesirable, and that is the
fastest way to get an indictment from a DC grand jury.”
DA: Just a straight set-up to discredit you and your
company. When you came in and began to make HUD work the
way it was designed, that was screwing with the system. For this
somebody set the DOJ to work on you.
CAF: Well, if I was to write a book called How To Cover
Up A Financial Fraud, tactic #22 would be to get a white shoe
commission, appoint some serious very respectable guy who is
totally naive about what is really going on, make sure your ringer
like Winokur is on the committee, and do a report.
DA: The court appointed Atlanta lawyer Neal Batson to
be the examiner in Enron's bankruptcy. Apparently, he’s hired
dozens of lawyers and consultants to seriously get into Enron’s
paperwork. Is this a real investigation or does Batson qualify as
the “white shoe commission" you mentioned?
CAF: It’s hard to determine at this point. We’ll have to
watch that unfold. But in general, whether it takes two weeks or
two months — twelve months and counting in the case of Enron
— or two years, what it does is keep everybody busy. It burns up
time and resources, it complicates things, and it muddles things.
Properly handled, it can even help control the information flow.
During the time William Powers has got everybody busy and
entertained, you’ve got Arthur Andersen shredding documents
and you’re transferring the money laundering operation over to
the Swiss bank. So it’s basically a holding action —you’re buying
time while you do all the things you have to do to destroy the
money trail, so that you get to keep the cash.
It is very interesting to look at a chronology of the
Powers Committee investigation relative to the various efforts to
cover up the trail of documents and money, including shredding
of documents, transfer of assets and the mysterious death of
one of the most important witnesses. It is quite possible the
Powers Committee was used by a player like Pug Winokur
to help design and orchestrate the coverup. It is potentially
a chance to review all the evidence and question all the key
witnesses very early on and draw on high powered attorneys
to help you figure out the coverup under the guise of “getting
to the bottom of what happened."
DA: When did you first notice Enron?
CAF: I started to look into Enron in the summer of 2000
because I was looking for $3.3 trillion which is missing at federal
agencies including HUD — agencies that are managed in part
by Pug and his pals. In 1996 a decision was made to run a
covert operation to get rid of all the honest people working for
or at HUD. This included getting rid of my company and me.
Keep in mind that the ultimate internal financial control is to
have honest people running things.This is why they had to get
rid of us. One of the reasons the DOJ can take the seven steps
we've discussed is because they used them on us — even when
we had documentation proving that our own auditors and investi
gators concluded we were clean as a whistle
DA: Are you saying this goes back to your software tool
Community Wizard and what was revealed simply by sorting out
HUD on-line records? Or is this something else?
CAF: It all blends together At this point, however, I was
doing the research myself, and it turned out that the same group
of contractors who run HUD — where billions of dollars are now
missing — Lockheed-Martin, DynCorp, J.P Morgan-Chase,
Arthur Andersen and Harvard turn up running deeply involved
in Enron Let’s look at the list There is Winokur from DynCorp,
as well as a Lockheed board member, Frank Savage, on the
Enron Finance Committee and board. J.P. Morgan-Chase is
an Enron creditor, Enron Online trading partner and investor in
special purpose offshore entities. Arthur Andersen is the auditor
who is shredding documents and cooking books, and Pug’s
partner Dudley Mecum is on the board of DynCorp and on the
board of Citigroup, another Enron creditor and Enron Online
trading partner. Harvard is shorting the stock at the same time
that Winokur, who is a Harvard Corporation member, says he
was not aware of problems at Enron. And Robert Rubin, former
Treasury Secretary, with significant jurisdiction over HUD,
federal credit and banking, is now co-chair of Citigroup and has
become a member of Harvard Corporation within the week that
Winokur’s resignation from Harvard Corporation is announced.
DA: Then you’re clearly saying Enron was part of some
thing much larger. Something that you discovered more or less
by accident, by building place-based databases that brought
sunshine to HUD’s mortgage and cash flows, neighborhood by
neighborhood. That opened a very bad can of very dangerous
worms, resulting in the government's smear tactics to crush you
and your company.
CAF: I wasn’t a whistle blower. I was successfully
reengineering HUD portfolios at the Federal Housing Admin
istration, as I was hired and instructed by the appropriate
officials to do. It’s just that immediately after they fired us and
key government officials, a huge amount of money started
disappearing from the accounts of all these federal agencies —
and it became obvious by 2000. The General Accounting Office
and Inspector General reports and testimony document $59
billion of undocumented adjustments at HUD in fiscal 1999,
and $17 billion in fiscal 1998, and they refused to say how much
in fiscal 2000. DOD has over $3.3 trillion of undocumented
adjustments during the same three years. Donald Rumsfeld
has confirmed that $2.3 trillion was missing in one year alone.
It's incredible when you look at it up close.
The Department of Defense has failed to produce
independent audited financial statements since the requirement
went into effect in 1995. HUD’s Inspector General refused to
certify HUD’s fiscal 1999 financial statements. Since both
agencies have refused to explain these undocumented
adjustments in adequate detail for some years and declined
to report or make public undocumented adjustments, we have
no evidence to document that large amounts of assets or money
are not being stolen.
So I was trying to figure out how you could launder
hundreds of billions of dollars — stolen from the federal govern
ment — starting in the fall of 1997, because that is so much you
can’t just run it through a pizza restaurant. You are talking about
a huge amount of money and you are talking about something
J.P. Morgan, Lockheed-Martin, DynCorp and Arthur Andersen
would have to be part of.
Then I notice that in the fall of 1997 there is an explos
ion of revenues at Enron Online, and nobody can explain where
the revenues came from. They just say it's very complicated,
it’s “derivatives," you know. Well, that's ridiculous. In my experi
ence, if you can’t explain something, then something is wrong.
So I’m looking for the missing money: there is over $3.3 trillion
missing from federal government agencies, starting at the exact
same time, and my big question is, “Is Enron or are some of its
special purpose entities part of the laundromat, and is that why
Congress is covering this up?"
Cannon Beach, Oregon
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