Although the U.S. Defense Department and North American Aerospace Defense Command have speculated publicly that the unidentified contrail of a projectile soaring into the skies off the California coast – and recorded by a KCBS television crew – came from a jet and posed no security threat to the U.S., several experts are raising provocative and disturbing questions about the government’s official response, reports Joseph Farah’s G2 Bulletin.
Two governmental military experts with extensive experience working with missiles and computer security systems have examined the television video and conclude the mysterious contrail originating some 30 miles off the coast near Los Angeles did not come from a jet – but rather, they say the exhaust and the billowing plume emanated from a single source nozzle of a missile, probably made in China.
They further suggest the missile was fired from a submerged Chinese nuclear submarine off America’s coast, and point out that the timing of the alleged Chinese missile shot coincided with an increasing confrontation between the U.S. and China, and was likely meant to send a message to Washington.
Indeed, the Federal Aviation Administration documents that there were no aircraft flying in the area at that time, the night of Nov. 8.
“The question that still must be answered is why NORAD’s muted response was simply that North America was not threatened, and later our government approved the lame excuse that the picture recorded was simply an aircraft leaving a contrail,” said retired U.S. Air Force Brig. Gen. Jim Cash.
A former U.S. Air Force fighter pilot and commander of an F-15 squadron and an F-16 wing, Cash was assigned to NORAD as an assistant director of operations at the Cheyenne Mountain complex near Colorado Springs, Colo., and is fully knowledgeable of NORAD procedures.
“There is absolutely no doubt that what was captured on video off the coast of California was a missile launch, was clearly observed by NORAD, assessed by a four-star general in minutes, and passed to the president immediately,” he said.
Even more ominously, cautioned Cash: “We must question the timing of this shot across our bow. The president was abroad being diplomatic, which means trying to placate China which is becoming overly concerned with our handling a totally out-of-control deficit in spending.”
STARTLING! Experts: Missile was CHINESE – President KNEW IT. Systems Failed. Cover-up!
Wayne Madsen, a former naval officer who has worked at the National Security Agency and the Naval Data Automation Command, said the inability to pick up what he described as a Chinese Jin-class submarine-launched ballistic missile isn’t the first time U.S. Navy anti-submarine warfare sensors have failed.
Madsen, who today is an investigative journalist, said the Pentagon is working “overtime with the media and on the Internet to cover up the latest debacle. However, even some reporters who cover the Pentagon full-time are beginning to question the Pentagon’s version of events … over the skies west of Los Angeles.”
Dr. Lyle J. Rapacki of Sentinel Intelligence Services, LLC, said the contrail incident off the Los Angeles coast is “fraught with peril” due to the defense systems and protocols in place that should have detected the alleged submarine.
“The decision to officially announce that North America was not threatened,” he said, “and all the excitement was due to an aircraft leaving a contrail is a decision that reaches beyond the four-star general level and goes directly to a decision made by the commander-in-chief.”
G2Bulletin calls to the Pentagon and NORAD for comment beyond previous official statements were not returned.
A law enforcement official says the Federal Bureau of Investigation has raided two hedge funds linked to a broader insider-trading probe.
The official says bureau employees searched the offices of Level Global Investors LP, of Greenwich, Conn., and Diamondback Capital Management LLC, of Stamford, Conn. The law enforcement official spoke on condition of anonymity because he was not authorized to discuss an ongoing case.
FBI spokesman James Margolin confirmed that the raids took place. He would not comment further.
Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according to people familiar with the matter.
The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.
The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.
One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide “expert network” services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries.
“I have no comment on that,” said Phani Kumar Saripella, Primary Global’s chief operating officer.
Primary’s chief executive and chief operating officers previously worked at Intel Corp., according to its website.
In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.
Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.
Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information…. We obviously beg to differ, so have therefore declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.” John Kinnucan, of Broadband Research, in an Oct. 26 email to clients
“Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,” the email said. “(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no idea.) We obviously beg to differ, so have therefore declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.”
The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group, Wellington Management Co. and MFS Investment Management.
SAC, Wellington and MFS declined to comment; Janus and Citadel didn’t immediately comment. It isn’t known whether clients are under investigation for their business with Mr. Kinnucan.
The investigations have been conducted by federal prosecutors in New York, the FBI and the Securities and Exchange Commission. Representatives of the Manhattan U.S. Attorney’s office, the FBI and the SEC declined to comment.
Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.
Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.
Some subpoenas were related to trading in Schering-Plough Corp. stock before its takeover by Merck & Co. in 2009, say people familiar with the matter. Schering-Plough stock rose 8% the trading day before the deal plan was announced and 14% the day of the announcement.
Merck said it “has a long-standing practice of fully cooperating with any regulatory inquiries and has explicit policies prohibiting the sharing of confidential information about the company and its potential partners.”
Transactions being focused on include MedImmune Inc.’s takeover by AstraZeneca PLC in 2007, the people say. MedImmune shares jumped 18% on April 23, 2007, the day the deal was announced. A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories in 2009, according to the people familiar with the matter. Advanced Medical Optics’s shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.
A spokesman for AstraZeneca and its MedImmune unit declined to comment.
Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.
Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.
Prosecutors also are investigating whether some hedge-fund traders received inside information about Advanced Micro Devices Inc., which figured prominently in the government’s insider-trading case last year against Galleon Group hedge fund founder Raj Rajaratnam and 22 other defendants.
Fourteen defendants have pleaded guilty in the Galleon case; Mr. Rajaratnam has pleaded not guilty and is expected to go to trial in early 2011.
Among those whose AMD transactions have been scrutinized is hedge-fund manager Richard Grodin. Mr. Grodin, who received a subpoena last autumn, didn’t return calls. An AMD spokesman declined to comment.
Rep. Maxine Waters (D-Calif.) accused the ethics committee of having a weak case that is unraveling after the panel abruptly cancelled her public trial.
“The committee’s decision to cancel the hearing and put it off indefinitely demonstrates that the committee does not have a strong case and would not be able to prove any violation has occurred,” she said in a lengthy statement Friday reacting to the announcement.
She also said she was disappointed the committee once again postponed the hearing and said it showed “a complete disregard for due process and fairness.”
“For over a year, I have cooperated with the investigation and I have consistently asked for a public hearing on this matter,” she said. “I remain eager to present my case and demonstrate to my constituents and all Americans that I have not violated any House rules.”
The House ethics committee announced Friday it has delayed indefinitely Waters trial because the panel had discovered new evidence in the case.
It is unclear from the committee’s statement whether the trial will move forward and what evidence was discovered.
According to a joint statement from Rep. Zoe Lofgren (D-Calif.), who chairs the ethics committee, and ranking member Jo Bonner (R-Ala.), the case is being referred back to the subcommittee investigating the matter. Waters’s trial was set to begin on Nov. 29.
“The committee voted to recommit the matter regarding Representative Maxine Waters to the investigative subcommittee due to materials discovered that may have had an effect on the investigative subcommittee’s transmittal to the committee,” they wrote. “As a result, the adjudicatory subcommittee no longer has jurisdiction over this matter and the adjudicatory hearing previously scheduled for November 29, 2010 will not be held.”
Waters, a member of the Financial Services Committee, is accused of using her position to arrange a meeting between Treasury Department officials and the National Bankers Association regarding OneUnited Bank. At the time, Waters’s husband was a significant shareholder in the bank and had formerly served on its board of directors.
The California congresswoman has strongly denied the ethics charges against her and has repeatedly argued that she was acting on behalf of all small and minority owned banks, not just OneUnited, as she has done for other minority-owned businesses throughout her career.
Waters’s preparations for the public trial stand in stark contrast to Rep. Charles Rangel’s (D-N.Y.) experience this week. Unlike Rangel, who faced a jury of his peers without legal representation, Waters planned to have an experienced legal team by her side and was prepared to mount a vigorous, detailed defense.
Her chief of staff, Mikael Moore, attended the Rangel trial and took voluminous notes during the proceedings. Moore figures prominently in the investigation; the ethics committee has scrutinized his e-mail contacts with the Federal Reserve, as well as One United executives. But Moore, Water’s grandson, also has spent months preparing a legal defense and assisting her attorneys, well-known ethics expert Stanley Brand and his associate Andrew Herman, in preparing the case.
Waters had planned to rely mainly on Brand and Herman to present her defense before the ethics adjudicatory committee, but she and Moore were also planning to serve as witnesses and make their case directly to the panel.
The decision is a setback for the ethics committee, which had hoped to conclude the Waters trial during the lame-duck session of Congress. The announcement comes one day after the committee recommended the House censure Rangel for committing 11 violations of House ethics rules.
In her statement Friday, Waters said the new material in question was a document the committee has had since Oct. 29, and argued that it didn’t provide any new “significant” information. Without spelling out exactly what the document is, Waters said it shows only that she was working to ensure that the bill that awarded the money to OneUnited was drafted to assist small and minority institutions generally.
“The document does not reflect any action on behalf of any specific company,” she said. “Although the Committee continues to insist that the ‘small bank language’ was drafted to benefit only one institution, the facts do not support that assertion; in fact, the documentary record directly contradicts it.”
Waters also said she is puzzled by the committee’s delay.
“If this evidence is so damning, the Committee should present its case before the public, as we asked them to do when I first learned of their desire to postpone the hearing,” she said. “Apparently the Committee now recognizes, as I have maintained, that there was no benefit, no improper action, no failure to disclose, no one influenced, and there is no case.”
The Federal Communications Commission (FCC) has a Christmas gift in store for the phone and cable industry: it may move ahead on its controversial net-neutrality regulations three days before Christmas.
An FCC source confirmed on Friday that the commission plans to push its December meeting back by a week, meaning it will fall on the 22nd of the month. That’s the same meeting in which analysts say the agency may move forward on its controversial net-neutrality proposal.
Though the FCC has not confirmed that it will vote on net neutrality this year, rumors are swirling that it will.
The timing of the meeting is already raising eyebrows. Some see it as a way to move the matter along before the GOP assumes the majority and while Congress is not in session to criticize the effort.
Rep. Cliff Stearns (R-Fla.), ranking member of the telecom subcommittee, questioned the schedule on Friday.
He said “it appears that Chairman [Julius] Genachowski is trying to slip it under the radar and hope no one notices.”
Industry sources also suggested that political calculus is involved with the change of date for the meeting.
“While many Americans will be enjoying their eggnog on that day, I’m sure the broadband providers won’t be pleased to find this piece of coal in their stockings,” an industry source jibed.
Republicans are already mounting a campaign to oppose the potential Internet line regulations, which would aim to rein in how cable and phone companies manage Internet traffic. Nineteen Republicans signed a letter to Genachowski on Friday urging him not to move forward with net neutrality.
“Reigniting the network neutrality debate will only distract us from that work and further jeopardize investment, innovation, and jobs. We ask you not to circulate such an order,” they wrote.
Democrats on Capitol Hill may come to the commission’s defense, however, as the policy has various supporters in the House. Rep. Edward Markey (D-Mass.) said in a statement on Friday that he wants the agency to act this year.
“Preservation of a free and open Internet is essential to protect consumers, spur investment, foster innovation and promote the free flow of ideas,” he said.
An FCC official also remained steadfast on Friday that net-neutrality rules are a sound policy.
“Net Neutrality is about preventing anyone from regulating the Internet. There are some cable and phone companies out there that want to decide which apps you should get on your phone, which Internet sites you should look at, and what online videos you can download. That’s regulating the Internet — and that’s what the FCC is trying to stop,” the official said.
WASHINGTON – Al-Qaida in the Arabian Peninsula is promising more small-scale attacks like its attempts to bomb two U.S.-bound cargo planes, which it likens to bleeding its enemy to death by a thousand cuts, in a special edition of the Yemeni-based group’s English on-line magazine, Inspire.
The editors boast that what they call Operation Hemorrhage was cheap, and easy, using common items that together with shipping, cost only $4,200 to carry out.
Alerted to the late October bomb plot by Saudi intelligence, security officials chased the packages across five countries, trying frantically over the next two days to prevent an explosion that could have come at any moment. The pursuit showed that even when the world’s counterterrorism systems work, preventing an attack is often a terrifyingly close ordeal.
The group says it’s part of a new strategy to replace spectacular attacks in favor of smaller attacks to hit the U.S. economy, according to the special edition of the online magazine, made available by both Ben Venzke’s IntelCenter, and the Site Intelligence Group.
“To bring down America we do not need to strike big,” the editors write. With the “security phobia that is sweeping America, it is more feasible to stage smaller attacks that involve less players and less time to launch” thereby circuventing U.S. security, they conclude.
In the magazine, an author identified as the group’s head of foreign operations says the package attacks were intended to cause economic harm, not casualties. “We knew that cargo planes are staffed by only a pilot and a co-pilot,” the author writes, “so our objective was not to cause maximum casualties but to cause maximum losses to the American economy,” by striking at the multi-billion dollar U.S. freight industry.
The al-Qaida offshoot insists it also brought down a UPS cargo plane in Dubai in September, in addition to the Oct. 29 attempts to bring down a FedEx plane, and a UPS plane bound for the U.S. But U.S. officials insist the Dubai crash was an accident caused by a battery fire, not terrorism.
The editors’ boast that they chose printer cartridges in which to hide the explosive because toner is carbon-based, with a molecular composition “close to that of PETN,” so it would not be detected. “We emptied the toner cartridge from its contents and filled it with 340 grams of PETN,” the writers say.
In another article, the editors bragged of how inexpensive the operation was, listing the cost of the items, including two Nokia mobiles, at $150 each, two HP printers, at $300 each, plus shipping, transportation and other miscellaneous expenses add up to a total bill of $4,200.
Those who monitor Jihadist sites say the publication, posted Saturday, is a radical departure from the shadowy claims of responsibility common to most al-Qaida groups. “We have never seen a jihadist group in the al-Qaida orbit ever release, let alone only a few weeks after, such a detailed accounting of the philosophy, operational details, intent and next steps following a major attack,” says the IntelCenter’s Venzke.
The fact that the group is “able to pump out this propaganda” shows al-Qaida is still able to operate with relative freedom, says the Carnegie Endowment for Peace’s Christopher Boucek. U.S. officials have repeatedly requested that Yemen step up its counterterrorist operations, and share more intelligence and access to terrorist suspects.