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FTR #327 Were We Controlled?

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Continuing the analysis of the 9/11/2001 terrorist blitzkrieg, this program analyzes the suspicious stock market action in the days preceding the attacks.

1. The program begins with discussion of allegedly suspicious insider trading in the stocks of the parent companies of United Air Lines and American Air Lines in the days immediately preceding the attack. (“Airline Stock Deals Under U.S. Probe” by Christian Berthelsen; San Francisco Chronicle; 9/18/2001; pp. A1-A9.)

2. Activity in the trading of United’s stock was 25 times its normal level according to Options Clearinghouse Corporation. (Ibid.; p. A9.)

3. Two online brokerage companies (TD Waterhouse and NFS, a subsidiary of Fidelity of Boston) are assisting with the investigation. (“Brokers Help Probe” by Christian Berthelsen; San Francisco Chronicle; 9/21/2001; pp. B1-B4.)

4. The Chicago Board Options Exchange is helping with the deal. (“New Scrutiny of Airlines Options Deals” by Christian Berthelsen; San Francisco Chronicle; 9/19/2001; pp. D1—D3.)

5. Next, the program highlights a rumor of allegedly suspicious action in the stock of a company controlled by Cantor Fitzgerald, a bond firm that was devastated in the attack. (“Possibly Suspicious Trading Alerts U.S., German Officials” by Floyd Norris and Edmund L. Andrews [New York Times]; San Jose Mercury News; 9/17/2001; p. 4C.)

6. Some German analysts believe that trading of stock in big insurance companies was suspicious as well. (Idem.)

7. In addition to the transactions noted above, German market analysts detected what they believed to be unusual and noteworthy action in oil and gold options. (“Suspicious Trading Seen in Attacks” by William Drozdiak [Washington Post]; San Jose Mercury News; 9/23/2001; p. 4A.)

8. An analysis by the San Francisco Chronicle found that short selling in the stocks of United and American Air Lines “outpaced the rise in short selling for all stocks on the New York Stock Exchange—or other major airline stocks as a group on the Big Board.” (“Data Shows Heavy Airline—Stock Short Selling” by Christian Berthelsen; San Francisco Chronicle; 9/22/2001; pp. C1—C2.)

9a. The airline industry found itself facing a severe crisis as a result of significant changes in insurance coverage in the wake of the 9/11 attacks. (“Airline Chaos Looms as Insurers Cancel War Cover” by the international staff; Financial Times; 9/21/2001; p. 1.)

9b. Ernest Backes is arguably Europe’s top expert on money laundering. He is of the opinion that the profits from the short selling went into the Swiss accounts of an organization founded by the late Francois Genoud. The organization referred to is the Bank Al-Taqwa, as Backes made clear in an e-mail sent to Mr. Emory.

Finan­cial expert Ernest Backes of Lux­em­bourg has [stud­ied] white-collar crime in the field of bank­ing for many years. Accord­ing to him, there are indi­ca­tions of unusual trans­ac­tions with which the groups [asso­ci­ated with] bin Laden could have earned money. ‘You can, for exam­ple, exam­ine whether, within a cer­tain time period there’s been an attack against the secu­ri­ties of a given air­line com­pany. Since these secu­ri­ties are safe in a ‘clear­ing sys­tem,’ you can’t get an over­all view, who the owner was at a given time.’ . . . Accord­ing to Backes’ infor­ma­tion, the trail leads to Switzer­land, to the accounts of an orga­ni­za­tion that ws founded by the late lawyer Fran­cois Genoud and evi­dently still sur­vives. Says Backes, ‘One of the grounds for accu­sa­tion is that this Swiss attor­ney had the clos­est con­nec­tions with the Bin Laden fam­ily, that he was an advi­sor to the fam­ily, one of its invest­ment bankers. It’s known for cer­tain, that he sup­ported ter­ror­ism and was the estate execu­tor for Hitler and part of the ter­ror milieu.’ [Empha­sis added].”

(“Insider Trad­ing Prior to the Ter­ror Attacks in the US?: Spec­u­lat­ing on Terror—Who Prof­ited from the Attacks?” by Rolf Bovier & Pierre Matthias; Bay­erische Rund­funk Online (BR-Online); 9/25/2001.)

9c. The stunning volume of the suspicious trades was detailed in an article in the right-wing National Review, although the author [predictably] pulls his punches at the end of the article. Note that there was a lot of suspicious trading in the Standard & Poor’s 500 put options. Standard & Poor’s is owned by the McGraw family, who are generations-long allies [4] of the Bush family.

Were the Sep­tem­ber 11 hijack­ers insider traders as well as mur­der­ers? The 9/11 Commission’s report has belat­edly put paid to the rumor that Osama bin Laden and his accom­plices spec­u­lated in the stocks and options of vul­ner­a­ble com­pa­nies in the weeks before the attacks. The poten­tial prof­its gar­nered from such manip­u­la­tion would have been in the millions.

Truth to tell, if one looked at the trad­ing fig­ures — espe­cially with the ben­e­fit of hind­sight — for early Sep­tem­ber, there was a lot to be sus­pi­cious about.

Trad­ing in AMR — the ticker for Amer­i­can Air­lines’ par­ent — rang alarm bells, espe­cially in regard to fre­netic put-option activ­ity before Sep­tem­ber 11. A put, in brief, is a con­tract to sell a cer­tain num­ber of shares at a pre­vi­ously agreed upon “strike” price some­time in the future. The price of the put depends on a num­ber of fac­tors, not least of which is the price of the under­ly­ing secu­rity. Cau­tious investors buy puts as insur­ance if they believe a stock they hold might fall, while spec­u­la­tors exploit their high volatil­ity and rel­a­tively low cost to lever­age prof­its if the stock does dive. (A call option is the same, but in reverse, and is ori­ented towards the bullish).

Some 4,516 put con­tracts — which could be poten­tially lever­aged into con­trol­ling more than 450,000 shares of AMR — traded hands the after­noon before the attacks (com­pared to 748 calls). Thus, about 85 per­cent of the day’s options activ­ity involved puts — a mas­sive imbal­ance rarely seen. When the mar­kets opened for the first time after Sep­tem­ber 11, AMR plum­meted by 39 per­cent, which would work out to be $4 mil­lion profit for the holder or hold­ers of those puts (assum­ing the “insid­ers” had bought 4,000 of the con­tracts). Put it this way, on Sep­tem­ber 10, 2001, some­body, some­where, was very, very bear­ish about AMR’s near-term prospects.

Deriv­a­tives trad­ing in UAL (United Airlines’s par­ent) on the Chicago Board Options Exchange (CBOE) on Sep­tem­ber 6 (and into the next day) exhib­ited iden­ti­cal char­ac­ter­is­tics: 4,744 puts on UAL, com­pared to just 396 calls. By Sep­tem­ber 10, short inter­est (essen­tially, a wager that a stock’s price will fall) in UAL jumped by 40 per­cent over its level of a month pre­vi­ously. As for AMR, its short inter­est increased by 20 percent.

The deeper we delve into the murky world of futures the darker the pic­ture appar­ently becomes . . . One hedge-fund man­ager whis­pered to the New York Times that he’d heard that major short-selling had been hap­pen­ing in eSpeed (ESPD), the elec­tronic bond-trading net­work con­trolled by Can­tor Fitzger­ald (whose offices were high up in 1 World Trade Cen­ter). There was prob­a­bly some­thing to this rumor. Between August 7 and Fri­day, Sep­tem­ber 7, ESPD fell by $5.85 (or 42 per­cent) to $7.95.

Or what about the zeal­ous buy­ing of 17,955 short-term S&P 500 index puts at 1,050 points — the “strike price,” essen­tially — on Mon­day, Sep­tem­ber 10, 2001? Those investors were gam­bling that the S&P, which closed at 1,092.54 at 4pm that day, would fall by at least 42 points by Sep­tem­ber 21, when the options were sched­uled to expire. With­out such a sig­nif­i­cant decline, the options would be worth­less. (Hey, options trad­ing is highly risky, but poten­tially very prof­itable). More eerie stuff turned up in Britain and Ger­many. In Lon­don, inves­ti­ga­tors detected what seemed to be huge bets on a decline in air­line stocks, while in the lat­ter, the price of Munich Re, a rein­sur­ance com­pany that would be hit by claims result­ing from the attacks, plum­meted amid a surge of puts-buying. . . .

(“Was There Another 9/11 Attack on Wall Street?” by Alexander Rose; National Review; 7/26/2004.) [5]

9d. There have been studies done [6] since this broadcast was recorded that confirm that there was very unusual activity [7] in the S & P 500 put options.

10. Most of the second half of the broadcast consists of analysis of a book that highlights stock market manipulation in connection with the assassination of President Kennedy.

11. A rare 1967 text discusses a group of hardened international criminals of German/Argentine background, who allegedly used sophisticated mind control techniques to assassinate President Kennedy and collapse the commodities market on the same day. (Were We Controlled? by Lincoln Lawrence; Copyright 1967 [HC]; University Books, Inc.; ISBN 67-15098; pp. 21-23.)

12. The deliberately arranged coincidence of these two events is believed to have earned the group a half-billion dollars—in 1963, that was worth a lot more than it is today. (Idem.) “The Group” described in the account bears a strong resemblance to the Bormann organization [8] frequently discussed in these programs.

13. Utilizing the technique of R.H.I.C./E.D.O.M., the perpetrators manipulated Anthony (Tino) De Angelis, owner of the Allied Crude Vegetable Oil Refining Corporation, order to scandalize the commodities market. (Ibid.; pp. 105-106.)

14. Allied was selected because its collapse would affect more than fifty banks and because of its connection to the Bunge corporation, an Argentine based commodities trading firm that was among the most important in the world. (Ibid.; pp. 107-108.)

15. Next, the program delineates a “grain caper” in which between three and five million dollars was netted by the conspirators. It is believed that this sum constituted the “walking around” money by the conspirators. (Ibid.; p. 117.)

16. The broadcast then sets forth details about the Bunge Corporation, the powerful commodities firm that possessed an ultra-modern communications network that was essential for the split-second financial manipulations necessary to effect the conspiracy. (Ibid.; pp. 118-121.)

17. Following discussion of Were We Controlled, the program highlights the fate of the personalities who brought the story into print. The book was written by radio personality Art Ford, who was used as a “cutout” by “”Lincoln Lawrence” (a nom de plume.) (The Man Who Knew Too Much by Dick Russell; Copyright 1992 [HC]; Carroll & Graf; ISBN 0-88184-900-6; p. 676.)

18. Martin Scheiman, the lawyer used by “Lawrence” to pay out royalties was found shot in the head after the book was published (a supposed suicide.) (Ibid.; p. 677.) Damon Runyon Jr., who wrote the story up in an unpublished article for the National Enquirer also allegedly committed suicide by jumping off a bridge. (Idem.)

19. Researcher Mary Ferrell believed a similarly grim fate ultimately befell “Lawrence” and that Art Ford also felt his life to be in danger. (Ibid.; pp. 677-678.)

20. Next, the program discusses apparent links between the Bin Laden organization and an underworld milieu in Ciudad del Este—an area where Brazil, Argentina and Paraguay meet. (“Paraguay Outpost Seen as Hardliner Hideout” by Thomas Catan; Financial Times; 9/21/2001; p. 8.)

21. Finally, the program concludes with an article about the Republicans’ blocking of a bill introduced by the Clinton administration that would have traced the Bin Laden financial conduits. (“Roadblocks Cited In Efforts to Trace Bin Laden’s Money” by Tim Weiner and David Cay Johnston; New York Times ; 9/20/2001; pp. A1-B2.)