Highly Confident

The Book of the Week is “Highly Confident, The Crime and Punishment of Michael Milken” by Jesse Kornbluth, published in 1992. This volume described a situation that lends itself to the hypothetical board game “Survival Roulette: Wall Street Edition” (See “Blind Ambition” post).

There have been countless ultimate winners of this game through the decades: all the people never caught for securities-industry crimes. A million lawbreakers a day go unpunished. That doesn’t mean the crimes didn’t happen.

However, the most famous hypothetical losers of the game in this book were Ivan Boesky (an independent bond trader in New York) and Michael Milken (bond-trading executive at Drexel Burnham Lambert in Los Angeles). Other losers could include Dennis Kozlowski, Bernie Ebbers, Kenneth Lay, Steve Jobs and Richard Scrushy.

The board spaces could include Go To Jail (of course), and describe the financial crimes of: insider trading, Free Parking (or “stock parking”), disclosure failures, material misstatements, accounting irregularities, re-pricing stock options, and fraudulent conveyance, but also specific actions of conscience-salving philanthropy in which Milken engaged– such as throwing money at cancer research, and volunteering to teach math to nine and ten year-olds.

In August 1986, the U.S. Attorney’s Office of the Southern District of New York began an investigation into Securities and Exchange Commission (SEC) violations in the bond industry. By October 1986, the head federal prosecutor there, Rudolph Giuliani, was taping phone calls between Boesky and Milken. This, because Boesky had immediately accepted a plea deal to turn state’s evidence in exchange for a slap-on-the-wrist, country-club jail sentence. Boesky was one of the game’s lesser losers, to be sure. He was the king of lying, cheating and stealing.

Milken was a creative workaholic math genius whose meteoric career-rise allowed him to head an entire bond-research department in his mid-twenties. But he had zero ability for honest introspection.

Milken was a master at controlling his environment and other people, but he deceived himself about his “breaking the rules of the game” in his industry. He thought he was helping people all the time, but didn’t see how others were indirectly hurt by his actions. This kind of hubris syndrome is not uncommon in alpha males.

In 1978, Milken initiated the push to have Drexel underwrite junk-bond deals that financed hostile corporate takeovers. This wasn’t illegal in itself, but Boesky persistently badgered Milken until, by the early 1980’s, the latter was eventually manipulated into breaking the law.

Milken had a history of selfless philanthropy, yet his business actions gave rise to obscenely high fees made by his employer, an obscenely high income for himself, and crushing debt load for his clients. This led to extremely adverse financial and social consequences for thousands upon thousands of laid-off American employees of merged companies, subjected to disrupted lives and untold stresses.

The mood of the securities industry could be described thusly: “… with the election of Ronald Reagan… All that mattered was an ability to make money — without concern for risk, without regard for regulation.”

The investigation and resulting plea deals had the law enforcement agencies patting themselves on the back for convincing the perpetrators (other than Milken and Boesky) to implicate others, but the immunity deals the perpetrators got were a joke, considering that they themselves had serious credibility problems, and serious violations. It was a kangaroo court.

Nonetheless, the following parties launched investigations: Drexel and its attorneys, Milken and his attorneys, the U.S. Attorney’s Office, and the SEC. Those last two, of course, engaged in fierce rivalry. By September 1991, there was an orgy of litigation against Milken. The roll call involved fifty-eight lawyers (!)

Around the same time, Wedtech was another 1980’s scandal borne of out-of-control greed. In that case, a personal injury attorney generated billing documents that purported to show charges for legal services, that were actually for lobbying. Wedtech’s executives bribed politicians for the purpose of influence peddling, and swindled shareholders. This kind of crime is not uncommon.

Along these lines, if, for instance, a real-estate mogul declared business bankruptcy repeatedly throughout his business career, why did investors trust him with their money again and again and again and again and again?? Perhaps there was influence peddling. The politicians were his puppets who eventually passed legislation favorable to them all. It was worth it to them to risk losing all their chump-change investment to get access to future (much more) profitable contacts and politicians who did their will.

Anyway, Milken hired a team of lawyers who were the cream of the crop of Northeastern elitists. Yet, unfortunately for him, the media and law enforcement made him the poster-boy / scapegoat for the greed of the 1980’s.

Ben Stein, a wannabe Hollywood writer, was, according to the author, an individual who fueled public outrage against Milken. He was unwisely hired to write articles for Barron’s (a major Wall Street publication) after Milken was indicted. The nature of his utterances in print were “Shocking, unsubstantiated, never-proven assertions made with absolute certainty.” Stein claimed his taking of the drug Halcion caused him to produce such libelous garbage.

Strangely enough, insider trading wasn’t what Milken was jailed for, but rather, a minor disclosure failure. The judge in his case was ridiculously misguided, considering that the court calculated the dollar value of damages Milken caused was a mere $318,000. But the court saw that the revenues generated by him and his firm were in the hundreds of millions of dollars. So the court fined him $600,000,000.

Read the book to learn of Milken’s prison sentence and numerous other details of the whole tabloid-crazy affair.

Undercover

The Book of the Week is “Undercover, The Secret Lives of a Federal Agent” by Donald Goddard, published in 1988. This was the biography of a New York City undercover drug agent allegedly named Michael Levine.

Born in December 1939 in the Bronx (in New York City) among blacks and Latinos, Levine’s childhood was fraught with fighting and underage drinking. At eighteen years old, he applied to join the Air Force but pursuant to his aptitude test results, was assigned to the Air Police. He, helped only by a German shepherd, ended up guarding American nuclear weaponry in a rural area near the Canadian border. He enjoyed the work, but after a year, got into a fight sparked by racial tension.

In the next several years, he found that intelligence work was his calling. That was the way to put his acting talent and street-Spanish language skills to use for good, to combat evil. He did time at the IRS Intelligence Division, and then the Alcohol, Tobacco and Firearms (ATF) agency, part of the Treasury Department of the federal government.

Sometimes as many as four other government entities (FBI, CIA, IRS, NYPD) were supposed to cooperate to surveil a mafia don in the neighborhood of Little Italy in Manhattan (New York City). The undercover work became a joke because the don knew he was being tailed, and the don’s driver told the spies where he would be going. Working morning, noon and night, Levine frequently got his man, arresting all walks of life of the criminal underworld– possessors of unlicensed guns, drugs, stolen driver’s licenses and credit cards– taking on five or six cases at a time.

From the ATF, Levine was promoted to customs inspector, under the auspices of the State Department, where he got more power than ever. He was able to execute searches without a warrant, and operate internationally. In 1973, he survived the consolidation of entities of law enforcement of cocaine, heroin, hash, marijuana, etc.– into one Drug Enforcement Administration.

Levine’s favorite place to work was on the street. He wasn’t meant to be a paper-pushing bureaucrat in an office. One kind of case he worked might involve a “buy-bust” on the Lower East Side (of Manhattan) in which the informer was an “orange-haired Cuban bisexual who lived with the female Jewish butcher” that resulted in the arrest of three Mexicans who possessed a full kilo of heroin.

Levine acquired more than two decades of experience masquerading as an insider in the New York City drug scene. He witnessed all aspects of it, handling thousands of cases, working harder, and more hours than most other law enforcement personnel. He testified in court as an expert witness countless times. Therefore, he felt he knew the least bad solution to the ever-increasing societal problems stemming from the abuse of drugs.

Levine said the drug users were the problem– they were the ones generating demand for the product. If they disappeared, so would the problems because the sellers would go out of business. He pointed out that the “… dealers weigh the risks against the money they make. They don’t respond to fear of the law.” The users would.

Levine recommended that there be strong deterrents: hard prison time for illegal-drug possession and illegal-drug intoxication of the slightest amounts.

At first glance, that recommendation seems logical. Of course, Levine’s career would get a gigantic boost in the event of such a trend. For, Levine described his undercover work thusly: “We’re paid to lock people up, that’s all. What happens to ’em after that has got nothing to do with us. It’s up to them, their attorneys, our attorneys, public opinion, politics, the media… Juries convict people, not agents… But that’s not to say you won’t face real dilemmas about guilt and justice.”

HOWEVER, considering the consequences, one begins to think, “Oh, that’ll end well.” Harsher punishments would create as many problems as they would solve. The trouble was that many of the users were also dealers. So if the users/dealers were the sole source of income for their families, and the users got locked up for a long time, what happened to their families?

The jails would become overcrowded, and there would have to be a massive hiring effort to build more prisons, and catch, process, judge, guard and legally represent the additional soon-to-be prisoners, not to mention the legal can of worms that drug-testing would open up.

Not only that, such a major change in the legal system would highlight the two-tier justice system in this country. Poor people of all ethnicities possessing drugs would be imprisoned. As always, the troubles of those people (most of whom began their lives in unlucky situations) would be compounded. Just ask any public defender– whose caseload would increase, but his or her budget wouldn’t.

This, while the rich people (such as those in the Hamptons– the summer-vacation region on Long Island in New York State), would skate. Those inheritors of wealth and privilege could afford to hire high-priced attorneys. They would squelch the bad publicity that would result from their indiscretions by paying people to shut up and go away with non-disclosure agreements. Their families might have been just as dysfunctional as those of the poor, but the public would never hear about any of that.

As is well known, addicts hurt themselves and their families, but are usually not a danger to society at large, unless they get behind the wheel of a car, or operate heavy machinery. Or get into a gunfight over a drug deal gone bad. However, as an aside– there ought to be NO inherent unfairness in imposing very harsh penalties on possessors of firearms that were acquired ILLEGALLY. Applying the “broken windows theory” of crime to such possessors would likely prevent countless violent crimes.

For, the kinds of people who get hold of guns when they shouldn’t, are the kinds who use them in not-so-nice ways. So it would seem that they would be much more dangerous to society at large, than addicts.

In recent decades, there has been a media trend to report on human interest stories of mass-shooting victims so as to not glorify the shooters. But the news cycle on them ends, and celebrity non-stories, hysterically reported, grab the headlines again.

There’s no follow-up– NO reporting of punishment, if any, for the shooters subsequent to their pleas or trials, if they weren’t killed at the scene of the crime. Perhaps if the media showed (with harsher, new laws) the serious punishments resulting from the shooters’ actions again and again, there would be less tolerance in society for illegal firearms. This might be a start.

Anyway, read the book to learn the details of Levine’s life.

True Blue – BONUS POST

The Bonus Book of the Week is “True Blue, Police Stories By Those Who Have Lived Them” by Sgt. Randy Sutton, published in 2004.  This was a bunch of first-person anecdotes told by police officers– who recounted the most memorable moments of their careers; several of them NYPD members who survived 9/11.

Robert Brager’s 9/11 story was of confusion. He wrote, “At different times throughout the day, I was told that the Empire State Building, the United Nations Complex, the White House, the Pentagon, and many other places might have been hit. You can’t imagine the distorted information during a time like that: Here we were in the greatest city in the world in the middle of the news capital of the country and we couldn’t find out anything because all cell phone sites were down.”

Read the book to be reminded how dangerous and traumatic, or emotionally fulfilling, police work can be.

As is well known, traumatic is a word that describes the past week in the United States. Pursuant to Wikipedia (which is probably not comprehensive), below is a chronological rundown (month, year and state) from the year 2000 and later, of shooting sprees, in each of which there was at least one death of an innocent person. These do not include: road rage, robberies, burglaries, home invasions or workplaces or any situations of solely targeted murders in which the shooter knew the victims. What they all have in common (besides a temper tantrum with a firearm) is that the shooters were all male (except for one couple– a male and female).

More than half were white males. It’s okay to say “white males” now without sparking outrage among the tabloid set who would associate the speaker or writer with “The Squad” because that news cycle is finished. Luckily, the unwashed masses have short memories.

  • January 2001, CA
  • September 2001, TX
  • October 2002, Washington D.C. area
  • June 2003, MT
  • August 2003, WV
  • May 2004, CA
  • March 2005, MN
  • October 2006, PA
  • February 2007, UT
  • April 2007, VA
  • October 2007, OH
  • December 2007, CO
  • February 2008, IL
  • September 2008, WA
  • April 2009, NY
  • August 2011, OH
  • September 2011, NV
  • October 2011, CA
  • April 2012, CA
  • December 2012, CT
  • June 2013, CA
  • April 2014, KS
  • June 2014, NV
  • October 2014, WA
  • July 2015, TN
  • October 2015, OR
  • February 2016, MI
  • September 2016, SC
  • April 2017, CA
  • May 2017, OH
  • November 2017, CA
  • December 2018, CA
  • December 2018, NM
  • February 2018, FL
  • July 2019, TX
  • July 2019, OH

Kingdom of Lies – BONUS POST

The Bonus Book of the Week is “Kingdom of Lies, Unnerving Adventures in the World of Cybercrime” by Kate Fazzini, published in 2019. This slim volume contained a few anecdotes of people who recently participated in schemes to defraud others or manipulate data on the World Wide Web.

The computer hackers who keep a low profile are better coders and have better technological knowledge than the ones who are attention whores. The latter who are employed in cybersecurity attend conferences and are more talk than action. Some of them think they’re the hero of a movie– do-gooders who are trying to save the world, in a power struggle with evil, arrogant rebels.

Over the decades, individuals and governments from lots of different countries have continually attempted to gain access to certain data through the Internet, usually for intelligence or money. For instance, “Chinese nationals have been stealing proprietary data on [mergers and acquisitions] deals [in America] for years in order to inside trade… The Department of Justice is investigating. The SEC is investigating. But the law firms are clueless. Then the SEC was hacked too, by the same people. The cycle continues.”

A trend that started in the 2000’s that has largely run its course is ransomware. That is, software that steals valuable data that forces the victim to pay a ransom– hundreds of dollars or more to the cybercriminal– to get that data back. In the last seven years or so, information-technology departments of businesses, especially in the financial sector, have thrown a vast quantity of money at specialists in cybersecurity to prevent further attacks in that area.

Probably the country that can crank out the best cybersecurity experts is Israel. Middle schoolers begin learning technology there. That nation’s population is small, enterprising, flexible, militarily trained, and is always thinking defensively.

Voting in United States elections is becoming more and more computerized, and so elections have become vulnerable to interference by hackers. It is not necessary to tamper with the presidential election results of all fifty states in order to significantly affect the outcome. A hacker need only change the data of battleground states (five to ten states) for a specific candidate.

Read the book to learn additional details about the world of cybercrime.

Dummy – BONUS POST

The Bonus Book of the Week is “Dummy” by Ernest Tidyman, published in 1974.

This story describes the unusual situation of a murder suspect whose deafness and muteness raised questions about his ability to stand trial in mid-1960’s Chicago.

Donald Lang, the suspect, had been unable to communicate verbally since birth. He dropped out of school around kindergarten with no legal consequences. With his family’s help, he got along in life sufficiently well to get a job and live relatively happily. There were no witnesses to the murder of which the deaf Lang was accused. However, witnesses saw Lang and the victim prior to finding the victim’s dead body in a stairwell in a bad neighborhood in Chicago.

Fortunately, the attorney assigned to the indigent Lang had been deafened as a child, but read lips and knew sign language. He was the best lawyer in Illinois, that Lang could have gotten.

Read the book to learn how the letter of the law allowed Lang to be indefinitely detained– treated as though he was guilty– because he had no clue about what was happening in the courtroom, and about the arguments his attorney made in determining his fate.

Bitter Scent – BONUS POST

The Bonus Book of the Week is “Bitter Scent, The Case of L’Oreal, Nazis and the Arab Boycott” by Michael Bar-Zohar, published in 1996.

The complicated history that led up to the situation which monster-sized international health-and-beauty-aids company L’Oreal faced in 1989 was most ironic. It dated back to the start of WWII, when two future executives of L’Oreal and Francois Mitterand (future president of France) became good friends, Nazi collaborators– pro-Vichy propagandists and sabotage-plotters, and then, when the tide of the war changed in 1943, allies of the Allies.

In March 1989, Jean Frydman (Israeli and French citizen, Jew, and former member of the WWII French Resistance,) was vice president of Paravision, his film distribution company. Unbeknownst to him, he resigned from the board of directors of Paravision in a fait-accompli by L’Oreal executives. He was ousted in absentia because he had business dealings in Israel.

Various business entities had significant financial interests in others, among them, Paravision, L’Oreal (based in a Paris suburb) and its international subsidiaries, Columbia Pictures, Nestle and Coca-Cola. L’Oreal executives felt the need to comply with a troublesome policy called the “Arab boycott” — considered ethically repugnant by non-Arab industrialized nations. L’Oreal executives were willing to go through a tremendous amount of trouble (most of which they didn’t anticipate) to comply with the boycott to enhance their business interests, but also arguably, because they were anti-Semitic.

The boycott imposed by the Arab League began in 1948 to financially strangle Israel by banning companies that did business with Israel, from doing business with any Arab countries. L’Oreal needed to get Frydman out of the way so it could say it did no business with Israel. But besides, there was a big-name cosmetics company called Helena Rubinstein located in Israel, with which L’Oreal was affiliated. The Arabs were pressuring L’Oreal to dispose of that asset as well, before it allowed lucrative trade with their side.

When Frydman was gobsmacked by his fellow executives and learned that top people at L’Oreal (including its founder) had been Nazi collaborators, hilarity did not ensue. Instead, an orgy of litigation, fishing expeditions, political machinations, palace intrigue, and of course, a propaganda war did.

Read the book to learn the details of this suspenseful, sordid story.

Blood & Ivy – BONUS POST

The Bonus Book of the Week is “Blood & Ivy, The 1849 Murder That Scandalized Harvard” by Paul Collins, published in 2018. This true-crime story described the nature of homicide among elitists in American culture, as well as the Ivy League university Harvard, in the mid-1850’s.

The students to be accepted to Harvard’s undergraduate school, to start in autumn of 1849, were required to report for oral examinations in July. Initially, the applicants were ordered to declare basic information on themselves, including their fathers’ professions. The lucky incoming class numbered 87 students, the largest to date.

The students received demerits for failing to attend morning prayers at dawn, in the chapel. The curriculum consisted of Latin, Greek, mathematics, and the history of Rome.

A handful of professors taught at Harvard Medical School, in semesters that lasted six or seven weeks. A Harvard geology professor was suspected of murdering a medical school professor. The former was arrested the day after Thanksgiving of 1849.

The feature of this criminal case that has endured for more than a century and half is the definition of “reasonable doubt”– explained for laypeople (the jury) by the judge.

Read this suspenseful book to learn the details of the case.