Was the Real Target of the Spy Sting Russian Official #1?

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It appears the White House may have gotten itself caught in the kabuki it played with the press on the Russian spies now swapped for some spies in Russian custody. But the timing of the kabuki suggests the target of the spy sting may not have been the illegals, but two Russian officials working under official cover.

Here’s the relevant chronology:

January 20: Surveillance against Anna Chapman starts

February: NSC, possibly including Obama, briefed on evidence against Russian spies

February 9: On orders from Russia Center, Richard Murphy purchases laptop to bring to Moscow

February 21: Murphy departs for Russia

March 3: Murphy returns from Russia, having swapped laptop for an identical one

March 7: Murphy hands off laptop to Michael Zottoli

April 7: Russian Official #1 aborts laptop chat with Chapman because he identifies surveillance

June 5: Mikhail Semenko’s laptop chats with Russian Official #2 surveilled

June 9: Chapman’s laptop chats with Russian Official #1 surveilled

June 11: Obama briefed about Russian spy swap

June 16: Chapman’s laptop chats with Russian Official #1 surveilled

June 18: Obama chairs NSC meeting on Russian spy swap

June 24: Obama and Dmitri Medvedev go to Ray’s Hell Burger

June 25: Complaint against 9 spies dated

June 26: FBI collects evidence against last two remaining spies; FBI agent says to Chapman, “I know you are going back to Moscow in two weeks.”

June 27: Spies arrested

June 29: Russian Foreign Minister Sergey Lavrov complains about timing of arrest; Obama reported to be miffed about timing of arrest; DOJ attributes timing to pending travel–presumably Chapman’s

Week of July 5: White House almost cancels spy swap because names of proposed spies in Russia leaked

July 10: Two weeks after FBI Agent said Chapman would be traveling to Russian in two weeks

Now, as I noted when the DOJ first pushed the excuse of–presumably–Chapman’s pending travel for the timing of the arrest, the excuse doesn’t seem to make any sense given that FBI had knowingly allowed Murphy to travel to Russia back in February. The excuse is even weirder now given that we know NSC was briefed about the investigation at that time.

Add in the fact that Obama knew of the prisoner swap when he met with Medvedev, and the fact that the complaints against most of the spies were written the day after that meeting, it sure looks like the timing had more to do with Medvedev than anything else.

Now, on Thursday, Rahm pushed back against any indication that Obama might have been involved in the decision to roll up the spies. First, Rahm claims that the decision to arrest the spies now was entirely that of law enforcement and intelligence.

JIM LEHRER: Was the decision on this spy swap the president’s?

RAHM EMANUEL: Well, first of all, what the president does appreciate is the work of the law enforcement community, as well as the intelligence community for their hard work in this case.

It wasn’t the decision of the president. It was the decision, obviously, of the law enforcement community and the intelligence community. But he does appreciate what they did and making America safer and the hard work that they did to get this done.

JIM LEHRER: Did the president — let me rephrase it then. Did the president sign off on this spy swap?

RAHM EMANUEL: The president was briefed about it.

Then when Lehrer presses (sort of), Rahm goes all spooky on his.

JIM LEHRER: Was the president aware that this spy ring existed before it was revealed publicly and these guys — these people were arrested?

RAHM EMANUEL: I think, Jim, it’s important — there will be a lot of postscripts on this.

JIM LEHRER: OK.

RAHM EMANUEL: And I think that what you should take away from this, obviously, the president was informed appropriately, known what was going on.

And they made the decision to go forward on this action. There will be a lot of writing about it, but I think, at this time, let me just say the cautionary note, the less said, the better.

JIM LEHRER: OK.

(CROSSTALK)

RAHM EMANUEL: Or how about, as I always like to say, less is more?

JIM LEHRER: Less is more.

RAHM EMANUEL: Yes.

JIM LEHRER: Yes, sir, whatever you say.

Ix-Nay on the Resident-Pay’s involvement in spy Wap-Say!

But the news of the June meetings was revealed in a background briefing to reporters yesterday–which may suggest Rahm was hushing talk of Obama’s involvement until the swap had been completed.

Perhaps the most interesting aspect of timing, though, has to do with the surveillance on Russian Official #1. Two times, two days after he conducted a laptop chat with Chapman, the NSC met and discussed a spy swap.

June 5: Mikhail Semenko’s laptop chats with Russian Official #2 surveilled

June 9: Chapman’s laptop chats with Russian Official #1 surveilled

June 11: Obama briefed about Russian spy swap

June 16: Chapman’s laptop chats with Russian Official #1 surveilled

June 18: Obama chairs NSC meeting on Russian spy swap

So the meetings at which NSC first got briefed and then discussed in detail a spy swap occurred just after FBI caught Russians working spies in the US.

And while we’re at it, presumably we’ve not just expelled these 10 minor spies, right? We’ve expelled Russian Official #1 and Russian Official #2, right? The ones who were handling Chapman and Semenko directly (Russian Official #2, official the “second secretary” of the Russian UN Mission, has been involved in handling some of the illegals as far back as 2004)?

That is, was it Russian Official #1–who would be working under official cover and therefore be immune from arrest but would nevertheless be identified as a Russian spy through this investigation–that was the target of this kabuki, and not the illegals?

Obama Administration Grants Europeans Rights Americans Don’t Have

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You know what happens when your elected representatives fight for your privacy? Counterterrorism investigators actually grant you some!

At issue is SWIFT–the database that tracked most international money transfers which the Bush Administration mined in its counterterrorism fight. When SWIFT’s server moved to the EU, the US tried to demand the same access as it had had previously. But the EU Parliament–strengthened by the Lisbon treaty–rejected the terms the US initially demanded. And as negotiations went on, the EU insisted on safeguards for its citizens.

Well, the EU finally signed an agreement with the US, and here are the protections the EU won for its citizens (h/t LES):

Elimination of bulk data transfers

The key to the deal for Parliament was the eventual elimination of “bulk” data transfers. In exchange for backing the agreement, MEPs won an undertaking that work on setting up an EU equivalent to the US “Terrorism Finance Tracking Program” (TFTP), which would preclude the need for bulk data transfers, will start within 12 months. Once Europe has a system enabling it to analyse data on its own territory, it need only transfer data relating to a specific terrorist track.

A new role for Europol

Another innovation of the new agreement is that it empowers “Europol”, the EU’s criminal intelligence agency based in The Hague, to block data transfers to the USA. Europol will have to check that every data transfer request by the US Treasury is justified by counter-terrorism needs and that the volume of data requested is as small as possible.

An EU representative in the USA to monitor data processing

The new version of the agreement also provides that the use of data by the Americans, which must be exclusively for counter-terrorism purposes, is to be supervised by a group of independent inspectors, including someone appointed by the European Commission and the European Parliament. This person will be entitled to request justification before any data is used and to block any searches he or she considers illegitimate.

The agreement prohibits the US TFTP from engaging in “data mining” or any other type of algorithmic or automated profiling or computer filtering. Any searches of SWIFT data will have to be based on existing information showing that the object of the search relates to terrorism or terrorism finance.

Right of redress for European citizens

In February 2010, MEPs demanded that under any new version of the agreement European citizens should be guaranteed the same judicial redress procedures as those applied to data held on the territory of the European Union. The new proposal says this time that US law must provide a right of redress, regardless of nationality.

Data retention and deletion

Extracted data may be retained only for the duration of the specific procedures and investigations for which they are used. Each year, the US Treasury must take stock of any data that have not been extracted, and hence individualised, which will no longer be of use for counter-terrorism purposes, and delete them.  Such data must be deleted after five years at the latest.

There will be two checks–at the Europol level and via an EU representative working in the US–to make sure the data is being accessed appropriately. Within a year, Europe will assume the role the US is now playing. And the agreement at least grants redress in court and limits on data retention (though like those in Europe who opposed this deal, I’m skeptical of the efficacy of these requirements).

That’s more than we American citizens get under some of the provisions of the PATRIOT Act.

Then again, some of our representatives tried to win greater protections for US persons last year. But short of doing what the EU did–withdrawing US access to the data–Congress was unable to win concessions from the Administration.

GAO to Have Oversight of Most-Secret DOD Programs?

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Steven Aftergood reports that DOD signed a directive last week allowing for Government Accountability Office audits of Special Access Programs.

[A] Department of Defense Directive issued last week explicitly allows for GAO access to highly classified special access programs, including intelligence programs, under certain conditions.The newly revised DoD Directive 5205.07 (pdf) on special access programs (SAPs) states that:  “General [sic] Accountability Office (GAO) personnel shall be granted SAP access if:  a. The Director, DoD SAPCO [SAP Central Office], concurs after consultation with the chair and ranking minority member of a defense or intelligence committee [and] b. The GAO nominee has the appropriate security clearance level.”

The issue of GAO oversight is one of the two issues over which Nancy Pelosi is holding up the intelligence reform bill. In theory, GAO oversight would make it harder for the President to sneak through entire programs via appropriations and harder for corrupt members of Congress to do what Duke Cunningham did–put through appropriations that benefit themselves.

But I’m less sanguine than Aftergood that this directive–as welcome as it is–will do the trick.

To a significant extent, considering the dominance of defense intelligence agencies within the intelligence community, one could say that it now has been so recognized.  Only the details remain to be negotiated.

After all, this gives both key members of Congress (the leadership of either an intelligence or defense committee) and the President (because the GAO nominee would require a security clearance–remember that Bush postponed oversight of his illegal wiretap program by denying members of the Office of Professional Responsibility security clearances) veto power over GAO oversight on a program by program basis. Furthermore, it’s not clear that requiring the leadership of “a” committee to approve will do the trick, since many programs have been put through on defense appropriations without revealing them to the intelligence committees.

Finally, this follows a favorite Obama tactic: to negotiate changes Congress wants by implementing them in such a way that the Executive Branch retains the ability to reverse those changes. The whole point of GAO oversight would be to impose a check on the Executive. Whereas, done in bad faith, this could create nothing more than the illusion of a check on the Executive, one that the President might use to try to get Congress to wield on its efforts to impose real oversight.

So while this might bring more transparency and oversight to programs which all parties agree can withstand such oversight, I’m not sure it does much to the address the way in which separation of powers has been manipulated to conduct all sorts of mischief in taxpayers’ names.

Did Adrian Lamo Have Two Days Worth of IM’s with Bradley Manning on May 25?

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As I noted in my earlier post on Wikileaks leaker Bradley Manning’s charging document, there’s an apparent discrepancy between the timing Wired gives for Manning’s arrest and what the charging document shows. Wired said that the FBI told Adrian Lamo on May 27 that Manning had been arrested the previous day–that is, May 26.

At their second meeting with Lamo on May 27, FBI agents from the Oakland Field Office told the hacker that Manning had been arrested the day before in Iraq by Army CID investigators.

But the charging documents actually says Manning’s alleged activities continued until “on or about 27 May 2010,” and it says his pretrial detention started on May 29 (though see scribe’s comments on a possible explanation).

And as I pointed out in comments, there’s also a problem with the story Lamo gave Wired as to why he turned in Manning. He claimed he turned in Manning because he had told him he had already leaked 260,000 cables to Wikileaks.

Lamo decided to turn in Manning after the soldier told him that he leaked a quarter-million classified embassy cables. Lamo contacted the Army, and then met with Army CID investigators and the FBI to pass the agents a copy of the chat logs from his conversations with Manning.

But the charging document only accuses Manning of leaking [more than] 50 cables; it alleges he got information from [more than] 150,000 cables, but did not even load the cables onto his own computer. Now, Wired has repeatedly published a quote from Manning telling Lamo that he had leaked the quarter-million cables.

But the most startling revelation was a claim that he gave Wikileaks a database of 260,000 classified U.S. diplomatic cables, which Manning said exposed “almost-criminal political back dealings.”

“Hillary Clinton and several thousand diplomats around the world are going to have a heart attack when they wake up one morning, and find an entire repository of classified foreign policy is available, in searchable format, to the public,” Manning told Lamo in an online chat session.

But they didn’t include that quote in their publication of what they claimed to be all the chat logs, save those that revealed personal information about Manning or classified information. Note, WaPo published a longer version of the same quote after Wired first published it. It appears that such a quote would have fit in the chat logs on May 22 (Manning says, “Everywhere there’s a U.S. post, there’s a diplomatic scandal that will be revealed”–note the WaPo includes an ellipses here Wired does not that may indicate IM breaks–and in the May 22 log Lamo asks “what kind of scandal”), but for some reason, Wired didn’t include it there. He may well have said it and said it on May 22, but out of context, we don’t know whether Manning was talking about around 50 cables–what he is accused of leaking–or all 260,000, or the [more than] 150,000 that he is accused of having accessed. And we don’t know whether Manning really did claim to have already leaked the cables–the context doesn’t say he did (though Manning’s list of things he leaked in the very last IMs seem to include some State Department cables).

Which is why I find another oddity of the Wired publication of the chat logs so funky.

Look at the chat logs for May 25–according to Wired, the day before Manning was arrested. They start at 2:03:10 AM (you can tell from the May 23 chat logs that the times are for Lamo, presumably in CA) and go through 2:32:53 AM. They start again at 2:26:01 PM, then go through 3:12:16 PM. Then–at least as Wired presents them–they start again at 1:52:30 PM and go in spurts through 4:46:29 PM. That is, though Wired has presented the IM logs for all other days in straight chronological order, they have no done so for May 25. The chronology starts, goes through 3:12:16 PM, then goes back in time and starts again at 1:52:30. The time sequences overlap.

Now even assuming there’s nothing funky about that, if Lamo were in CA, an IM he received at almost 5 PM on May 25 would be 3 AM Iraq time on May 26, very early on the day Lamo says Manning was arrested.

But the only way that would be true is if Wired segmented and rearranged the IM chats for some reason of narrative. I’ve shown what all the overlapping IM logs in question would look like below the fold (the “parts” refer to the order in which they first appear in the Wired post). But the following chunks of IM discussion–combining the section that Wired presents 5th with that it presents 2nd–would be combined as follows (everything from part 2 is underlined):

Part 2 (underlined)/Part 5 continued

(02:26:01 PM) Manning: i dont believe in good guys versus bad guys anymore… i only a plethora of states acting in self interest… with varying ethics and moral standards of course, but self-interest nonetheless

(02:26:18 PM) Manning: s/only/only see/

(02:26:18 PM) Manning: because another state would just take advantage of the information… try and get some edge

(02:26:47 PM) Lamo: the tm meant i was being facetious

(02:26:55 PM) Manning: if its out in the open… it should be a public good

(02:26:59 PM) Manning: gotchya

(02:27:04 PM) Manning: *do the

(02:27:23 PM) Manning: rather than some slimy intel collector

(02:27:47 PM) Manning: i mean, we’re better in some respects… we’re much more subtle… use a lot more words and legal techniques to legitimize everything

(02:28:00 PM) Manning: its better than disappearing in the middle of the night

(02:28:19 PM) Manning: but just because something is more subtle, doesn’t make it right

(02:29:04 PM) Manning: i guess im too idealistic

(02:29:18 PM) Manning: im crazy like that

This order is not implausible–everything sort of flows. But there are signs that Part 5 and Part 2 did not happen simultaneously. Manning’s good versus evil comment at 2:26:01 is not entirely out of place, but it’s a big non sequitur from the comment less than 2 minutes earlier. This order would require Manning to have typed two IMs in one second at 2:26:18 which seems unlikely if not impossible for reasons of computer speed and human typing skills. Lamo’s “tm” comment at 2:26:19 appears to refer to a comment Wired didn’t replicate in any case. Furthermore, elsewhere Manning always corrects typos in the IM directly after the one in which he makes an error. But the typo “it should be a public good” at 2:26:55 and the correction “it should do the public good” at 2:27:04 would be split by the interjection “gotchya.” Plus those two comments with the interjection “gotchya” at 2:26:59 are quicker–all three in nine seconds–than almost any other series that Wired published (aside from the two IMs in one second already noted).

In other words, I can’t prove it, but it is likely those 2 chunks of IM were not simultaneous, suggesting those 5 chunks of text did not happen on the same day or their timestamps are wrong. Which in turn suggests they didn’t all come from May 25. And if they didn’t, one likely possibility is that Wired did publish the IM chats in sequence, but simply didn’t label ones from a different day–most likely, either the first series came form May 24 or the second series came from May 26–with that different day.

Now, that introduces two problems into the narrative as captured by CJR. If the IMs starting with what I’ve labeled as part 1 were actually sent May 24, it would mean Lamo was asking whether Manning suspected Army CID of investigating before–apparently–he ever talked to Kevin Poulsen about Manning. That’s not fatal for the story–but it does seem to show Lamo asking probing questions in the service of law enforcement before he first talks to Poulsen about Manning.

The other alternative is even more problematic for their story. If the second series of IMs labeled as May 25 actually came from May 26, it would mean the latest ones–which appear to have reached Lamo in late afternoon on May 26–would have been sent in Iraq in the early hours of May 27, suggesting that the story that Manning was arrested on May 26 was not correct (though that does seem to correlate better with the charging document).

All this may not be a big deal. It may be that the full series of the IMs make sense in full context. It may be that the apparent discrepancy between the Wired report and the charging document are either not discrepancies at all or not very interesting to the story.

But there does appear to be something funky here.

Update: “More than” added to references to numbers of cables per scribe.

Read more →

Wikileaks Leaker Bradley Manning Finally Charged

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The government has finally charged Bradley Manning, the Wikileaks leaker. He is charged with two counts of violating the UCMJ, one related to loading onto his own unsecure computer a set of information and adding unauthorized software to a military network computer, and the other related to accessing and passing information onto someone not entitled to have it.

I find the charge sheet particularly interesting for two reasons. What the government says that Manning did with the material he accessed, and an apparent discrepancy between the government’s depiction of the timing and Wired’s depiction of it.

What the government knows about what Manning did with the information

First, it describes the information he accessed differently as follows:

  • The video of the July 12, 2007 Apache killing of Reuters journalists (obtained via unauthorized access, loaded onto his unsecured computer, transmitted to someone unauthorized to receive it)
  • The Rejkjavik State Department cable leaked by WikiLeaks (obtained via unauthorized access, transmitted to someone unauthorized to receive it)
  • 50 State Department cables (loaded onto his unsecured computer, transmitted to someone unauthorized to receive them)
  • 150,000 State Department cables (obtained information from them via unauthorized access)
  • A classified Microsoft Powerpoint presentation (obtained via unauthorized access, loaded onto his computer)

Now, these details are interesting for more than the way they add up to what might be a 52-year sentence if convicted of all of them. They may reflect what the government knows about Manning’s activities.

Note, first of all, the absence of any reference to the Gharani video, which Wikileaks also claims to have but has not yet released, and which Manning claimed to have passed onto Wikileaks. That may suggest that the government doesn’t have evidence tying Manning to the leak of that video (as opposed to the Iraqi one). It may suggest someone entirely different leaked it to Wikileaks. Or it may simply suggest the video wasn’t successfully leaked (which I raise because of the possibility that the government may have managed to sabotage an attempted leak).

Next, note how the charge sheet treats the diplomatic cables differently. The charge sheet traces the Rekjkjavik cable via Manning’s alleged unauthorized access, loaded onto his computer, and transmitted to someone unauthorized to receive it. It alleges 50 State Department cables (which may or may not include the Rejkjavik one) were loaded onto Manning’s computer and transmitted to someone unauthorized to receive them.That means the government has some kind of proof that 50 cables were transmitted. That’s particularly curious given that, on May 22, Manning told Adrian Lamo that he would have to ask Julian Assange to learn if he had leaked anything beyond the Rejkjavik cable.

(1:44:11 PM) Manning: you missed a lot…

(1:45:00 PM) Lamo: what kind of scandal?

(1:45:16 PM) Manning: hundreds of them

(1:45:40 PM) Lamo: like what? I’m genuinely curious about details.

(1:46:01 PM) Manning: i dont know… theres so many… i dont have the original material anymore

(1:46:18 PM) Manning: uhmm… the Holy See and its position on the Vatican sex scandals

(1:46:26 PM) Lamo: play it by ear

(1:46:29 PM) Manning: the broiling one in Germany

(1:47:36 PM) Manning: im sorry, there’s so many… its impossible for any one human to read all quarter-million… and not feel overwhelmed… and possibly desensitized

(1:48:20 PM) Manning: the scope is so broad… and yet the depth so rich

(1:48:50 PM) Lamo: give me some bona fides … yanno? any specifics.

(1:49:40 PM) Manning: this one was a test: Classified cable from US Embassy Reykjavik on Icesave dated 13 Jan 2010

(1:50:30 PM) Manning: the result of that one was that the icelandic ambassador to the US was recalled, and fired

(1:51:02 PM) Manning: thats just one cable…

(1:51:14 PM) Lamo: Anything unreleased?

(1:51:25 PM) Manning: i’d have to ask assange

So if the government charged that Manning leaked 50 cables, it presumably didn’t come from his own confession, unless he leaked those cables to someone after May 22. That means they either got proof from Wikileaks that it received the cables, Manning leaked the cables after May 22, or someone else (Lamo?) received the cables and therefore offered proof they got leaked.

So there are 50 cables that got leaked, which have not yet been released to the public yet which the government is sufficiently certain have been leaked so as to charge Manning with that leak.

Then the charge sheet alleges that Manning obtained information from 150,000 State Department cables. Read more →

“Creative” Wall Street and Money-Laundering

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I have long maintained that we will eventually learn that Citibank took over where BCCI and then Riggs Bank left off: serving as a money laundering vehicle used by drug cartels and other organized crime, terrorists, and spooks. But this article (h/t scribe) on the role of big banks in laundering Mexican drug money reports that–while Citibank has been implicated in money laundering (but took the appropriate regulatory steps in response)–there are a number of other banks deeply implicated:

  • Wachovia (now owned by Wells Fargo)
  • Bank of America
  • American Express
  • HSBC
  • Banco Santander

Most of these banks were implicated in Mexican legal filings. But in March, Wachovia entered into a Deferred Prosecution Agreement with the government that reveals some of the details behind its money laundering.

The DPA lays out the means by which Wachovia enabled money laundering as follows:

  • Allowing Mexican Casas de Cambio (exchange houses) to wire through Wachovia. From May 2004 through May 2007, Wachovia had processed at least $373 billion in CDC wire activity.
  • Offering a “bulk cash” service, in which Wachovia would arrange physical transport of large amounts of US dollars collected by the CDCs into the US. From May 2004 through May 2007, Wachovia processed over $4 billion in bulk cash for the CDCs.
  • Providing a “pouch deposit” service, in which CDCs would accept checks and travelers checks drawn on US banks, aggregate them into a pouch, and then forward them to Wachovia for processing. By May 2005, Wachovia had set up a digital scan system for this service. From May 2004 through May 2007, Wachovia processed $47 billion in digital pouch deposits for all its correspondent banking customers, including what it did for the CDCs.

The DPA also describes how Wachovia helped telemarketers steal directly from victims’ accounts–the subject of an unrelated lawsuit going back some years.

So here are two key details of this.

First, it appears that Wachovia deliberately got deeper into money-laundering for CDCs in 2005 even as the government issued more alerts about the way drug cartels were using CDCs.

As early as 2004, Wachovia understood the risk that was associated with doing business with the Mexican CDCs. Wachovia was aware of the general industry warnings. As early as July 2005, Wachovia was aware that other large U.S. banks were exiting the CDC business based on [anti-money laundering] concerns.

Despite these warnings, Wachovia remained in the business. And in September 2005, Wachovia purchased the right to solicit the international correspondent banking customers of Union Bank of California (“UBOC”). Wachovia knew that UBOC was exiting the CDC market due to AML problems. Wachovia hired at least one person from UBOC who had a significant role in the CDC business at UBOC. After UBOC exited the CDC business, Wachovia’s business volume increased notably.

September 2005 was definitely before most people realized the giant shitpile–of which Wachovia held more than its fair share–was going to explode. But Wachovia was already deep into it.

So $373 billion in wire services (some of which were surely legal), $4 billion in bulk cash services, and some portion of $47 billion in digital pouch services (again, some of which is surely legal and may pertain to remittances). Compare those numbers to the $40 to $60 billion or so in Wachovia subprime losses Wells Fargo ate when it took over Wachovia. Was Wachovia laundering money for drug cartels because it was so badly exposed in mortgage-backed securities, or was it so heavily involved in products that could be used for money laundering just for fun?

Now, for all of this, DOJ made Wells Fargo pay $160 million: $50 million that is an outright fine, and $110 million for what DOJ said it had identified as clear drug proceeds laundered through Wachovia. Now, granted, DOJ is fining Wells Fargo (beneficiary of huge amounts of free money from the Fed in recent years and the recipient of huge tax deductions for taking over Wachovia), not Wachovia. And granted, this was the largest fine ever for money laundering. But as the Bloomberg story notes, that’s less than 2% of Wells Fargo’s profits last year. And isn’t even as much as Wachovia got in deposits–$418 million–from the fraudulent telemarketing scheme.

Then there’s the bigger question. Who else was using these vehicles? Banks that enable this kind of money laundering tend to be indiscriminate about their client base. And as I noted when I started this post, money laundering for drug cartels tends to go hand in hand with money laundering for other organized crime, terrorists, and spooks. Given the scale of what Wachovia was doing, where are the other busts?

And while we’re looking for those other busts, note that the investigation of Wachovia started in May 2007, 17 months before the government brokered the Wells Fargo takeover. Is there any chance that Treasury, which would have been involved in this, was unaware of the massive amounts of money laundering Wachovia had been engaged in when they brokered that deal? Recall, too, the weirdness over the competition between Citi and Wells Fargo for the privilege of taking on the Wachovia shitpile. The Federal government was at one point prepared to take on a portion of Wachovia’s shitpile to allow Citi to take over the bank for a dollar a share. And when Citi CEO Vikram Pandit lost out on the deal, Andrew Ross Sorkin reported in Too Big to Fail, he told Sheila Bair, that “This isn’t just about Citi … There are other issues we need to consider. I need to speak to you privately. … This is not right. It’s not right for the country. It’s just not right!”

I don’t want to get too tinfoil about this. But it strikes me that the efforts to keep Wall Street and all its celebrated creativity intact serves to make it easier for banks like Wachovia to engage in widespread money-laundering. That is, it’s not just shadow banking as it is politely understood, but banking for entire shadow networks, both our own and our enemies.

Update: Aaron v. Andrew fixed–thanks SaltinWound.

Update: Here’s the full Bloomberg story.

Cowboys, T. Jeff’s Declaration, Bond Bitchez and Teh Porn Stash

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Hi there buckaroos and buckarettes. Sometimes a man has gots to do what a man has gots to do. Now is one of those times. Marcy up and penned this most awesome cutting, biting, truth to power wonderful post. And then she went and buggered the pooch with a sandpapered, plain vanilla, non confrontational milquetoast title.

Bleeeccchhh.

Responsible blog wingman and all that I am, I immediately pointed out the title should be “The Declaration of Independence, Obama’s Presidential Kill Cards and the Porn Stash”. Same old story; same old song and dance. Nobody ever listens to good old bmaz. Instead we went with the Wolf Blitzer/Jonas Brothers/Disney Lite title of “Keep Your Declaration of Independence Right Next to Your Assassination Cards”.

Yawn.

Come on, you just know that Michael Leiter, the designated human kill switch of the Obama Administration, keeps those two critical reference materials – the Declaration of Independence and the US Government’s deck of snuff cards – in the safest, most discreet and yet accessible, location to his bedroom. You know, right where he keeps his porn stash.

Now what is really odd about this report, and does not register at first blush, is that Leiter has mentally honed in and lasered his focus on the Declaration of Independence rather than the Constitution. Seriously; think about it. It is an incredibly telling difference.

Here is the opening text of the aggressive and intentionally somewhat in your face Declaration of Independence, the forward cry and belligerent marking of territory by a new nation staking its claim in the world:

When, in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

Then ponder the respectful, moral and enlightened reach of the Preamble to the Constitution, the hallowed document that Leiter and Obama ought to be paying attention to when deciding to remotely snuff human lives (including, by all reports, those of American citizens) without the protection of due process and by the cold mechanical death by drone:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The Declaration is an affirmative statement of manifest authority; the Constitution is a self imposed restriction of manifest authority and protection of due process in the face of it. So, there are a lot of issues with this whole gig surrounding Leiter and his nighttime is the right time to kill thing. And people were worried about Hillary getting a 3 am call; seems all so quaint now.

Oh, and by the way, T. Jeff it has now been concluded made a mistake in drafting the Declaration of Independence, and had it even more authoritarian than anybody ever knew:

Preservation scientists at the Library of Congress have discovered that Thomas Jefferson, even in the act of declaring independence from England, had trouble breaking free from monarchial rule.

In an early draft of the Declaration of Independence, Jefferson wrote the word “subjects,” when he referred to the American public. He then erased that word and replaced it with “citizens,” a term he used frequently throughout the final draft.

The Library released news of the struck word for the first time on Friday.

Jeebus, even dead presidents and founders are going rogue.

The other quite random thought I cannot pry from my beady little mind is the slathering coverage of the super hot, most awesomest, Redhead Rooskie Spy Babe, Anna Chapman. At first I could not figure out the singular fascination of the press with this chick who is being billed as the new “Bond Babe”.

Then it dawned on me. Chapman is hot, red, sultry and enticing. And she looks eerily like a young and come hither Maureen Dowd. Come on, you just know Howie Kurtz and his penis er the media is thinking that.

Well, that is yer friendly Friday Night Emptywheel Trash Talk. New and improved with no sports! Eh, it will be Favre season soon enough, so do not despair. Tonight’s musical interlude is a little slice of the old west I know and love. Actually, I like both kinds of music, country and western. The incomparable Phil Lynott and Thin Lizzy with The Cowboy Song. Oh, and the Boys Are Back.

Happy trails pardners!

Keep Your Declaration of Independence Right Next to Your Assassination Cards

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Call me crazy, but this is probably not exactly the kind of treatment Thomas Jefferson was thinking the Declaration of Independence would receive 234 years after he wrote it.

Many nights an item prompts a call to wake the NCTC director, Michael Leiter, 41, the junior member of the nighthawks. He displays a copy of the Declaration of Independence, next to a deck of baseball-style cards of high-value terrorist targets: “I keep the ones who are dead on top. It’s a little macabre, but that’s the world we live in.” When the NCTC calls in the middle of the night, he is often half-awake.

Among those cards, after all, is probably the one that signifies that the President has approved, with no due process, an order to assassinate US citizen Anwar al-Awlaki. That’s the kind of thing that Jefferson objected to when he called the following “Despotism”:

He has affected to render the Military independent of and superior to the Civil power.

[snip]

For Quartering large bodies of armed troops among us:

For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:

[snip]

For depriving us in many cases, of the benefits of Trial by Jury:

[snip]

For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:

While I’m making wildarsed Fourth of July guesses, let me also suggest that this kind of security porn–a 24-style terror play in 9 acts–is probably not exactly what Thomas Jefferson imagined as the role of the free press when he so furiously defended it.

DOJ Blows Smoke on Timing of Russian Spy Bust

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Earlier Tuesday, I did a post aiming to understand the timing of Monday’s bust of 11 alleged Russian spies. Later in the day, Mark Hosenball did a post–heavily reliant on DOJ press spokesperson Dean Boyd–that doesn’t make any sense.

First, Boyd states on the record that the reason DOJ had to move now on the busts was because someone–who must be the woman posing as Anna Chapman, who was going to go to Russia next week–was about to leave the country.

Several of the reasons remain classified, U.S. officials say, but one contributing factor has now been disclosed: at least one of the suspects was about to leave the country. “These arrests had to be carried out Sunday for several critical law-enforcement and operational reasons,” Justice Department spokesman Dean Boyd tells Declassified. “Among these reasons was the fact that one of the suspects was scheduled to depart the United States and had to be arrested before departure. These operational considerations were the only factors that dictated the timing of the arrests.

Either Chapman is a more intriguing arrest than most of the other 10 defendants, or this is a load of bull. After all, the defendant posing as Richard Murphy was allowed to travel to Russia in February. And not only have they had Murphy under surveillance since at least 2004, but he seemed to serve as a bit of a sub-handler for the Seattle couple. By contrast, the FBI agent posing as a Russian handler for Chapman described the task he set her–passing money to another alleged spy ring member, the same role Murphy served with the Seattle couple–as “the next step.”  In other words, Murphy was already doing what Chapman was apparently being falsely tasked to do.

Now granted, maybe Chapman is more important than Murphy. But then that’s the reason they rolled up the network, right?

Then there’s the odd claim–one repeated widely in reporting on this story–that the defendants weren’t charged with a “real” spy charge.

As we previously reported, charges issued so far against the alleged “illegal” long-term Russian penetration agents do not accuse them directly of espionage—stealing or attempting to steal U.S. intelligence or defense secrets. Instead, court documents portray them as talent spotters, alleging that they were assigned to identify and ingratiate themselves with influential Americans who had access to U.S. policymakers or government secrets, the idea being that those individuals could then be targeted for more aggressive recruitment by other Russian spies.

Sure, these defendants appear not to have passed classified information. But they were charged with something that other notable spy defendants have been charged with recently: acting as an unregistered agent for a foreign power. Both the Venezuelan-Americans convicted of carrying a payment from Chavez’ government in Venezuela to Kirchner’s in Argentina and the cousin of Andy Card were charged with the same charge (though in the latter case, the charge was eventually dropped). (There’s also an Israeli alleged spy similarly charged, though I don’t have a ready link for it.)

There’s a narrative evolving about this bust that doesn’t make any sense.

Why Roll Up the Russian Spy Network Now?

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As a number of you have commented, DOJ announced the arrest of 10 alleged Russian spies yesterday (with one person, based in another country, remaining at large). The alleged spies are basically people living under false identities tasked to network with influential Americans to learn specific information.

One of the most interesting questions about the bust is the timing. It’s clear from one of the complaints that the FBI has been tracking some of these alleged spooks for a decade. That suggests the government had been content, up to now, to simply track what Russia was tracking. But then, last week, they decided to roll up these alleged spies.

The timing and content of the two complaints adds to the interest of the question. The complaint describing the long-term surveillance, named Complaint 2 by DOJ, includes the following details from this year (showing the level of activity of the investigation with these longer-term suspects):

  • A March 7 intercept from the Boston couple’s townhouse
  • A search from the female Boston defendant’s safe deposit box conducted in April (one which implied there had been earlier searches of the box)
  • Discussion of the male New Jersey defendant’s travel to Russia in February to pick up a laptop (reflecting intercepts, physical surveillance, and business records)
  • Details describing the New Jersey defendant handing off the laptop he picked up in Moscow to the Seattle male defendant in early March
  • January intercepts capturing discussions of Russian handlers encouraging the New Jersey female defendant to take a job tied to lobbying

In other words, at least from what appears in this complaint, none of the surveillance on these eight long-term alleged spies was all that recent.

The date on this complaint–named Complaint 2 but reflecting the decade of surveillance these defendants have been under–was Friday, June 25.

Then there’s Complaint 1, which pertains to two additional defendants, Anna Chapman and Mikhail Semenko, and which is dated Sunday, June 27. The earliest dates in that complaint date back only to January 2010 (and June 2010 for Semenko), perhaps suggesting the FBI has had these two defendants under surveillance for a much shorter period of time. In addition, unlike the other complaint, this one does not provide details about the cover of the defendants (though there may be a number of reasons why this would be true).

Complaint 1 describes how FBI agents posed as Russian handlers and set up meetings with the two defendants on June 26–that is, the day after the complaint covering the eight other defendants was signed. In Semenko’s case, the FBI agent asked the defendant to carry out a drop which–the complaint explains–he did.

In Chapman’s case, the FBI agent asked her to hand off some money to another person purported to be another member of the same Russian network. Rather than carry out the task, Chapman bought an international cell phone (trying, unsuccessfully, to cover her tracks), suggesting she called overseas for direction. She did not carry out the designated task. All of this suggests, of course, that by late on June 26 (that is, Saturday) the Russians presumably would have known someone pretending to be a Russian agent was onto Chapman.

The way these two complaints work together suggest DOJ decided on or before last Friday to roll up a spy network it had been tracking for a decade. Then, after having set that process into motion, it attempted to implicate two additional members of the network (Chapman and Semenko) in the following days. Doing so with Chapman probably alerted the Russians to FBI pursuit on Saturday.

After the Chapman call, FBI probably had to roll up the network. But the FBI had already made the decision to arrest the others. So why did DOJ decide to roll up this spy network now? Why not continue tracking what the Russians are tracking?

I can think of three potential reasons:

  • To disrupt US-Russian relations
  • Because the Russians had detected US (or third party) sabotage
  • Because of other changes in DOJ personnel

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