FBI Arrests Importers of Counterfeit Goods

Counterfeit goods have been available in Chinatown in NYC for a long time.  Even John Stewart makes jokes about it on his show.  Of course, someone must import these goods.

The FBI has made arrests in one operation of counterfeit imports, plus money laundering.

This is from the FBI web-site.  The FBI is really busy, and reading their press releases is
quite an eye opener.

click here for link to complete news release

Nine Admit Guilt in Largest Counterfeit Goods Conspiracy Ever Charged

U.S. Attorney’s Office December 13, 2013
  • District of New Jersey (973) 645-2888

NEWARK, NJ—Nine members of a massive, international counterfeit goods conspiracy have admitted their roles in the scheme, U.S. Attorney Paul J. Fishman announced.
Hai Dong Jiang, 37, and Fei Ruo Huang, 37, both of Staten Island, New York; Hai Yan Jiang, 34, of Richardson, Texas; Xiance Zhou, 39, and Jian Chun Qu, 33, both of Bayside, New York; and Ming Zheng, 48, of New York, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court. Dong Jiang, Ruo Huang, and Yan Jiang pleaded guilty to informations charging them each with one count of conspiracy to traffic in counterfeit goods. Xiance Zhou and Qu pleaded guilty to informations charging them each with one count of conspiracy to structure money. Zheng pleaded guilty to an information charging him with a conspiracy to launder money.
Wei Qiang Zhou, 38, of Brooklyn, New York, pleaded guilty December 3, 2013; Patrick Siu, 41, of Richardson, Texas, pleaded guilty December 4, 2013; and Da Yi Huang, 43, of Staten Island, pleaded guilty December 11, 2013, all before Judge Salas in Newark federal court, to informations charging them each with one count of conspiracy to traffic in counterfeit goods.
According to documents filed in this case and statements made in court:
From November 2009 through February 2012, the defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever charged by the Department of Justice. The defendants and others conspired to import hundreds of containers of counterfeit goods—primarily handbags, footwear, and perfume—from China into the United States in furtherance of the conspiracy. These goods, if legitimate, would have had a retail value of more than $300 million.
The counterfeit goods were manufactured in China and smuggled into the United States through containers fraudulently associated with legitimate importers, with false and fraudulent shipping paperwork playing a critical role in the smuggling scheme. Some of the conspirators created and managed the flow of false shipping paperwork between China and the United States and supervised the importation of counterfeit goods, and others controlled the importation of the counterfeit goods into the United States.
Other conspirators managed the distribution of counterfeit goods once those goods arrived in the United States. After importation, the counterfeit goods were delivered to warehouses and distributed throughout New York, New Jersey, and elsewhere. Certain conspirators paid large amounts of cash to undercover law enforcement officers to assist in the removal of counterfeit goods from the port.
Some conspirators acted as wholesalers for the counterfeit goods, supplying retailers who sold counterfeit goods to customers in the United States. Other conspirators were money structurers who arranged for cash to be wired to China in amounts small enough to avoid applicable financial reporting requirements to evade detection of the smuggling scheme and related proceeds.
Law enforcement introduced several undercover special agents (collectively, the UCs) to the conspirators. The UCs purported to have unspecified “connections” at the port, which allowed the UCs to release containers that were on hold and pass them through to the conspirators. The conspirators paid the UCs for these “services.” In total, during the course of this investigation, the conspirators provided the UCs more than $2 million.
UCs recorded dozens of phone calls and in-person meetings with various conspirators. The investigation also utilized several court-authorized wiretaps of telephones and electronic communications.


No, NSA Spying Did NOT Prevent a Terror Attack on Wall Street

In response to the revelation that the NSA has been illegally spying on all Americans for more than a decade, NSA chief General Keith Alexander claimed that the spying prevented a terrorist attack on Wall Street and the New York subway.

There’s only one problem: the claim is completely false.

The Christian Science Monitor notes today:

According to officials at the House Intelligence hearing, this plan was caught when the NSA was using its Internet intercept authority to monitor the communications of a known extremist in Yemen.


This suspect, in turn, was in contact with an individual in the United States named Khalid Ouazzani. Thus warned, the FBI investigated Mr. Ouazzani through traditional law enforcement methods, and discovered a burgeoning plot to bomb the NYSE.


“Ouazzani had been providing information and support to this plot,” FBI Deputy Director Sean Joyce told lawmakers.


However, Mr. Ouazzani pleaded guilty to providing material support – in his case, money – to Al Qaeda, not to terror planning. His May 2010 plea agreement makes no mention of anything related to the New York Stock Exchange, or any bomb plot, notes David Kravets in Wired magazine.


Plus, Ouazzani’s defense attorney said Tuesday the stock market allegation was news to him.


Khalid Ouazzani was not involved in any plot to bomb the New York Stock Exchange,” attorney Robin Fowler told Wired.

How much did this bad guy give Al Qaeda? $23,000 total.

The other publicly-discussed disrupted terror plot – on the New York subway – was also not really due to government’s overbroad spying program.

The Associated Press reports:

Little was offered to substantiate claims that the programs have been successful in stopping acts of terrorism that would not have been caught with narrower surveillance. In the New York subway bombing case, President Barack Obama conceded the would-be bomber might have been caught with less sweeping surveillance.

The Christian Science Monitor notes of the New York subway case:

As to the New York subway plot, it was discovered not by analysis of vast amounts of Internet data of foreign users, but rather by old-fashioned police work, according to The Guardian ….

In addition, the Guardian pointed out:

Lawyers and intelligence experts with direct knowledge of two intercepted terrorist plots that the Obama administration says confirm the value of the NSA’s vast data-mining activities have questioned whether the surveillance sweeps played a significant role ….

Indeed, top security experts say that mass surveillance does not help keep us safe.

Glenn Greenwald notes:

This is just the same playbook that U.S. government officials have been using for the last five decades whenever anything gets done that brings small amounts of transparency to the bad conduct that they do in the dark. They immediately accuse those who brought that transparency of jeopardizing national security. They try and scare the American public into believing that they’ve been placed at risk and that the only way they can stay safe is to trust the people in power to do whatever it is they want to do without any kinds of constraints, accountability or light of any kind.

Postscript: Mr. Ouazzani giving $23,000 to Al Qaeda is indeed a crime. He supported Al Qaeda, and was rightly prosecuted and convicted for that crime. But given that the American government has been providing arms, money and logistical support to Al Qaeda in Syria, Libya, Mali, Bosnia and other countries – and related Muslim terrorists in Chechnya, Iran, and many other countries – Mr. Ouazzani’s support for terrorism seems rather small in comparison.

NSA Admits To Warrantless Wiretapping According To House Judiciary Committee Member

More confusion, or just more lies? You decide.

In an exchange first caught by CNET, Rep Gerrold Nadler, a New York Democrat, questioned FBI Director Robert Mueller late last week about the NSA surveillance programs.

Nadler asked Mueller if a warrant is needed to listen to the content of a domestic phone call. Mueller said a national security letter is needed to get subscriber info and a FISA warrant is needed to get content. Nadler said he was told the exact opposite.

At a closed door briefing earlier, Nadler had been told that  if the NSA wants "to listen to the phone," an analyst's decision is sufficient, without any other legal authorization required "I was rather startled," said Nadler, an attorney and congressman who serves on the House Judiciary committee. Nadler added that he was told that the contents of a phone call could be accessed "simply based on an analyst deciding that."

CNET adds more:

Not only does this disclosure shed more light on how the NSA's formidable eavesdropping apparatus works domestically, it also suggests the Justice Department has secretly interpreted federal surveillance law to permit thousands of low-ranking analysts to eavesdrop on phone calls.


Because the same legal standards that apply to phone calls also apply to e-mail messages, text messages, and instant messages, Nadler's disclosure indicates the NSA analysts could also access the contents of Internet communications without going before a court and seeking approval.


The NSA yesterday declined to comment to CNET. A representative said Nadler was not immediately available. (This is unrelated to last week's disclosure that the NSA is currently collecting records of the metadata of all domestic Verizon calls, but not the actual contents of the conversations.)

Watch the exchange below:

„You Now Have To Assume Everything Is Beling Collected“

Americans who disapprove of the government reading their emails have more to worry about from a different and larger NSA effort. As the AP reports, the program, that snatches data as it passes through the fiber optic cables that make up the Internet's backbone, which has apparently been known for years, copies Internet traffic as it enters and leaves the United States, then routes it to the NSA for analysis. As the name suggests, Prism is merely the intelligent filter, finding discrete, manageable strands of information within this much more massive data stream that is being collected and stored. Prism makes sense of the cacophony of the Internet's raw feed. What is unclear, as more details, interviews and documents become available, is how Prism fits into a larger U.S. wiretapping program in place for years (know as 'Hoovering' at one major internet company).

The government are in active denial, "the perspective is that we’re trying to hide something because we did something wrong. We’re not," but some senators note, "secret programs approved by a secret court, issuing secret court orders, based on secret interpretations of the law," hardly fit the 'transparency' ethic this administration has promoted.

In the meantime, as one former NSA official noted, "You have to assume everything is being collected."

Via AP,

Public statements and the few public documents available, show there are two vital components to Prism's success.

The first is how the government works closely with the companies that keep people perpetually connected to each other and the world. That story line has attracted the most attention so far.


The second and far murkier one is how Prism fits into a larger U.S. wiretapping program in place for years.

But, it is clearly an escalation...

The NSA is prohibited from spying on Americans or anyone inside the United States. That's the FBI's job and it requires a warrant.


Despite that prohibition, shortly after the Sept. 11 terrorist attacks, President George W. Bush secretly authorized the NSA to plug into the fiber optic cables that enter and leave the United States, knowing it would give the government unprecedented, warrantless access to Americans' private conversations.


Tapping into those cables allows the NSA access to monitor emails, telephone calls, video chats, websites, bank transactions and more. It takes powerful computers to decrypt, store and analyze all this information, but the information is all there, zipping by at the speed of light.

And it is all being stored...

The government has said it minimizes all conversations and emails involving Americans. Exactly what that means remains classified.


That means Americans' personal emails can live in government computers, but analysts can't access, read or listen to them unless the emails become relevant to a national security investigation.


The government doesn't automatically delete the data, officials said, because an email or phone conversation that seems innocuous today might be significant a year from now.


What's unclear to the public is how long the government keeps the data.

But Obama voted against this during his campaign in 2007...

Congress approved it, with Sen. Barack Obama, D-Ill., in the midst of a campaign for president, voting against it.


"This administration also puts forward a false choice between the liberties we cherish and the security we provide," Obama said in a speech two days before that vote.


"I will provide our intelligence and law enforcement agencies with the tools they need to track and take out the terrorists without undermining our Constitution and our freedom."

The corporations knew what was coming...

When the Protect America Act made warrantless wiretapping legal, lawyers and executives at major technology companies knew what was about to happen.


One expert in national security law, who is directly familiar with how Internet companies dealt with the government during that period, recalls conversations in which technology officials worried aloud that the government would trample on Americans' constitutional right against unlawful searches, and that the companies would be called on to help.


The logistics were about to get daunting, too.


For years, the companies had been handling requests from the FBI. Now Congress had given the NSA the authority to take information without warrants.

But the workload was becoming onerous so it was centralized

What the NSA called Prism, the companies knew as a streamlined system that automated and simplified the "Hoovering" from years earlier, the former assistant general counsel said.


The companies, he said, wanted to reduce their workload. The government wanted the data in a structured, consistent format that was easy to search.

But denials were carefully worded

Every company involved denied the most sensational assertion in the Prism documents: that the NSA pulled data "directly from the servers" of Microsoft, Yahoo, Google, Facebook, AOL and more.

But PRISM is a filter on what the government is really storing

Prism, as its name suggests, helps narrow and focus the stream.


In that way, Prism helps justify specific, potentially personal searches.

But it's the broader operation on the Internet fiber optics cables that actually captures the data.

"I'm much more frightened and concerned about real-time monitoring on the Internet backbone," said Wolf Ruzicka, CEO of EastBanc Technologies, a Washington software company.


"I cannot think of anything, outside of a face-to-face conversation, that they could not have access to."


Whether the government has that power and whether it uses Prism this way remains a closely guarded secret.

Obama defends the 'intrusion' the only way we would expect:

"You can't have 100 percent security and also then have 100 percent privacy and zero inconvenience,"

And it's no surprise the President continued the eavesdropping

"You can't expect a president to not use a legal tool that Congress has given him to protect the country.


So, Congress has given him the tool. The president's using it.


And the courts are saying 'The way you're using it is OK.' That's checks and balances at work."

But in conclusion:

Schneier, the author and security expert, said it doesn't really matter how Prism works, technically. Just assume the government collects everything, he said.


He said it doesn't matter what the government and the companies say, either. It's spycraft, after all.


"Everyone is playing word games," he said. "No one is telling the truth."

Spying Update

Government Spying on Americans … and then Giving Info to Giant Corporations

You’ve heard that the government spies on all Americans.

But you might not know that the government shares some of that information with big corporations.

In addition, Reuters reported in 2011 that the NSA shares intelligence with Wall Street banks in the name of “battling hackers.”

The National Security Agency, a secretive arm of the U.S. military, has begun providing Wall Street banks with intelligence on foreign hackers, a sign of growing U.S. fears of financial sabotage.The assistance from the agency that conducts electronic spying overseas is part of an effort by American banks and other financial firms to get help from the U.S. military and private defense contractors to fend off cyber attacks, according to interviews with U.S. officials, security experts and defense industry executives.


The Federal Bureau of Investigation has also warned banks of particular threats amid concerns that hackers could potentially exploit security vulnerabilities to wreak havoc across global markets and cause economic mayhem.




NSA Director Keith Alexander, who runs the U.S. military’s cyber operations, told Reuters the agency is currently talking to financial firms about sharing electronic information on malicious software, possibly by expanding a pilot program through which it offers similar data to the defense industry.




NSA, which has long been charged with protecting classified government networks from attack, is already working with Nasdaq to beef up its defenses after hackers infiltrated its computer systems last year and installed malicious software that allowed them to spy on the directors of publicly held companies.




The NSA’s work with Wall Street marks a milestone in the agency’s efforts to make its cyber intelligence available more broadly to the private sector.




Greater cooperation with industry became possible after a deal reached a year ago between the Pentagon and the Department of Homeland Security, allowing NSA to provide cyber expertise to other government agencies and certain private companies.

In March, PC Magazine noted:

“Right now, the ability to share real-time information is complicated and there are legal barriers. We have to overcome that,” Gen Keith B. Alexander, director of the National Security Agency and commander of U.S. Cyber Command, said during a Thursday appearance at Georgia Tech’s Cyber Security Symposium.


[Alexander has been pushing for the  anti-privacy Internet bill known as "CISPA" to be passed.] “It allows the government to start working with industry and … discuss with each of these sector about the best approach,” he said.

CISPA would allow the NSA to more openly share data with corporations in the name of protecting against “cyber threats.” But that phrase is too squisy.  As the Electronic Frontier Foundation notes:

A “cybersecurity purpose” only means that a company has to think that a user is trying to harm its network. What does that mean, exactly? The definition is broad and vague. The definition allows purposes such as guarding against “improper” information modification, ensuring “timely” access to information or “preserving authorized restrictions on access…protecting…proprietary information” (i.e. DRM).

Moreover,  as the ACLU notes, “Fusion Centers” – a hybrid of military, intelligence agency, police and private corporations set up in centers throughout the country, and run by the Department of Justice and Department of Homeland Security – allow big businesses like Boeing to get access to classified information which gives them an unfair advantage over smaller competitors:

Participation in fusion centers might give Boeing access to the trade secrets or security vulnerabilities of competing companies, or might give it an advantage in competing for government contracts. Expecting a Boeing analyst to distinguish between information that represents a security risk to Boeing and information that represents a business risk may be too much to ask.

A 2008 Department of Homeland Security Privacy Office review of fusion centers concluded that they presented risks to privacy because of ambiguous lines of authority, rules and oversight, the participation of the military and private sector, data mining, excessive secrecy, inaccurate or incomplete information and the dangers of mission creep.

The Senate Permanent Subcommittee on Investigations found in 2012 that fusion centers spy on citizens, produce ‘shoddy’ work unrelated to terrorism or real threats:

“The Subcommittee investigation found that DHS-assigned detailees to the fusion centers forwarded ‘intelligence’ of uneven quality – oftentimes shoddy, rarely timely, sometimes endangering citizens’ civil liberties and Privacy Act protections, occasionally taken from already-published public sources, and more often than not unrelated to terrorism.”

Under the FBI’s Infraguard program, businesses sometimes receive intel even before elected officials.

Law enforcement agencies spy on protesters and then share the info – at taxpayer expense – with the giant Wall Street banks

And a security expert says that all Occupy Wall Street protesters had their cellphone information logged by the government.

Alternet notes:

Ironically, records indicate that corporate entities engaged in such public-private intelligence sharing partnerships were often the very same corporate entities criticized, and protested against, by the Occupy Wall Street movement as having undue influence in the functions of public government.

In essence, big banks and giant corporations are seen as being part of “critical infrastructure” and “key resources” … so the government protects them.  That creates a dynamic where the government will do quite a bit to protect the big boys against any real or imagined threats … whether from activists or even smaller competitors. (Remember that the government has completely propped up the big banks, even though they went bankrupt due to stupid gambles.)

And given that some 70% of the national intelligence budget is spent on private sector contractors. that millions of private contractors have clearance to view information gathered by spy agencies – including kids like 29 year old spying whistleblower Edward Snowden, who explained that he had the power to spy on anyone in the country – and that information gained by the NSA by spying on Americans is being shared with agencies in other countries, at least some of the confidential information is undoubtedly leaking into private hands for profit, without the government’s knowledge or consent.

As the ACLU noted in 2004:

There is a long and unfortunate history of cooperation between government security agencies and powerful corporations to deprive individuals of their privacy and other civil liberties, and any program that institutionalizes close, secretive ties between such organizations raises serious questions about the scope of its activities, now and in the future.

Indeed, the government has been affirmatively helping the big banks, giant oil companies and other large corporations cover up fraud and to go after critics.  For example, Business Week reported on May 23, 2006:

President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations.

Reuters noted in 2010:

U.S. securities regulators originally treated the New York Federal Reserve’s bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.

Wired reported the same year:

The DHS issued a directive to employees in July 2009 requiring a wide range of public records requests to pass through political appointees for vetting. These included any requests dealing with a “controversial or sensitive subject” or pertaining to meetings involving prominent business leaders and elected officials. Requests from lawmakers, journalists, and activist and watchdog groups were also placed under this scrutiny.

In an effort to protect Bank of America from the threatened Wikileaks expose of wrongdoing – the Department of Justice told Bank of America to a hire a specific hardball-playing law firm to assemble a team to take down WikiLeaks (and see this)

The government and big banks actually coordinated on the violent crackdown of the anti-big bank Occupy protest.

The government is also using anti-terrorism laws to keep people from learning what pollutants are in their own community, in order to protect the fracking, coal and other polluting industries. See this, this, this, this and this.

Investigating factory farming can get one labeled a terrorist.

Infringing the copyright of a big corporation may also get labeled as a terrorist … and a swat team may be deployed to your house.  See this, this, this and this.  As the executive director of the Information Society Project at Yale Law School notes:

This administration … publishes a newsletter about its efforts with language that compares copyright infringement to terrorism.

In short,


NSA Official: “The Government Is Not Trying To Protect [Secrets About NSA Surveillance] from the Terrorists. It’s Trying to Protect Knowledge of that Program from the Citizens of the United States”

The former head of the National Security Agency’s global digital data gathering program – William Binney – confirms what Glenn Greenwald and other civil libertarians say: the disclosure of widespread spying on Americans doesn’t help terrorists or otherwise hurt national security, but is simply an embarrassment to people in government who have been caught breaking the law:

The terrorists have already known that we’ve been doing this for years, so there’s no surprise there. They’re not going to change the way they operate just because it comes out in the U.S. press. I mean, the point is, they already knew it, and they were operating the way they would operate anyway. So, the point is that they’re—we’re not—the government here is not trying to protect it from the terrorists; it’s trying to protect it, that knowledge of that program, from the citizens of the United States.


Remember, Obama has prosecuted more whistleblowers than all other presidents combined … even though many of those whistleblowers have helped national security by revealing wrongdoing by our government.


Top Spying Experts Explain Why You Should Oppose Spying … Even Though You’ve Done Nothing Wrong

Surveillance Can be Used to Frame You If Someone In Government Happens to Take a Dislike to You … Last Chance to Stop “Turnkey Tyranny”

Top NSA whistleblower William Binney – the former head of the National Security Agency’s global digital data gathering program – has repeatedly explained that just because you “haven’t done anything wrong” doesn’t mean you can’t be severely harmed by spying:

The problem is, if they think they’re not doing anything that’s wrong, they don’t get to define that. The central government does.

Binney explains that the government is storing everything, and creating a searchable database … to be used whenever it wants, for any purpose it wants (even just going after someone it doesn’t like).

And he notes that the government will go after anyone who is on its enemies list:

If you ever get on their enemies list, like Petraeus did, then you can be drawn into that surveillance.


Binney recently held his thumb and forefinger close together, and said:

We are, like, that far from a turnkey totalitarian state

Similarly, in response to the question, “why should people care about surveillance?”, the whistleblower source of the Guardian’s disclosures on phone and Internet spying – Edward Snowden – said:

Because even if you’re not doing anything wrong you’re being watched and recorded. And the storage capability of these systems increases every year consistently by orders of magnitude … to where it’s getting to the point where you don’t have to have done anything wrong. You simply have to eventually fall under suspicion from somebody – even by a wrong call. And then they can use this system to go back in time and scrutinize every decision you’ve ever made, every friend you’ve ever discussed something with. And attack you on that basis to sort to derive suspicion from an innocent life and paint anyone in the context of a wrongdoer.

[If people don't oppose the surveillance state now] it will be turnkey tyranny.

In 1975, Senator Frank Church said about the NSA:

I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision, so that we never cross over that abyss. That is the abyss from which there is no return.

Ron Paul On Government Spying: „Should We Be Shocked?“

From Ron Paul

Government Spying: Should We Be Shocked?

Last week we saw dramatic new evidence of illegal government surveillance of our telephone calls, and of the National Security Agency’s deep penetration into American companies such as Facebook and Microsoft to spy on us. The media seemed shocked.

Many of us are not so surprised.

Some of us were arguing back in 2001 with the introduction of the so-called PATRIOT Act that it would pave the way for massive US government surveillance—not targeting terrorists but rather aimed against American citizens. We were told we must accept this temporary measure to provide government the tools to catch those responsible for 9/11. That was nearly twelve years and at least four wars ago.

We should know by now that when it comes to government power-grabs, we never go back to the status quo even when the “crisis” has passed. That part of our freedom and civil liberties once lost is never regained. How many times did the PATRIOT Act need renewed? How many times did FISA authority need expanded? Why did we have to pass a law to grant immunity to companies who hand over our personal information to the government?

It was all a build-up of the government’s capacity to monitor us.

The reaction of some in Congress and the Administration to last week’s leak was predictable. Knee-jerk defenders of the police state such as Senator Lindsey Graham declared that he was “glad” the government was collecting Verizon phone records—including his own—because the government needs to know what the enemy is up to. Those who take an oath to defend the Constitution from its enemies both foreign and domestic should worry about such statements.

House Intelligence Committee Chairman Mike Rogers tells us of the tremendous benefits of this Big Brother-like program. He promises us that domestic terrorism plots were thwarted, but he cannot tell us about them because they are classified. I am a bit skeptical, however. In April, the New York Times reported that most of these domestic plots were actually elaborate sting operations developed and pushed by the FBI. According to the Times report, “of the 22 most frightening plans for attacks since 9/11 on American soil, 14 were developed in sting operations.”

Even if Chairman Rogers is right, though, and the program caught someone up to no good, we have to ask ourselves whether even such a result justifies trashing the Constitution. Here is what I said on the floor of the House when the PATRIOT Act was up for renewal back in 2011:

“If you want to be perfectly safe from child abuse and wife beating, the government could put a camera in every one of our houses and our bedrooms, and maybe there would be somebody made safer this way, but what would you be giving up? Perfect safety is not the purpose of government. What we want from government is to enforce the law to protect our liberties.”

What most undermines the claims of the Administration and its defenders about this surveillance program is the process itself. First the government listens in on all of our telephone calls without a warrant and then if it finds something it goes to a FISA court and get an illegal approval for what it has already done! This turns the rule of law and due process on its head.

The government does not need to know more about what we are doing. We need to know more about what the government is doing. We need to turn the cameras on the police and on the government, not the other way around. We should be thankful for writers like Glenn Greenwald, who broke last week’s story, for taking risks to let us know what the government is doing. There are calls for the persecution of Greenwald and the other whistle-blowers and reporters. They should be defended, as their work defends our freedom.

Pentagon Papers‘ Ellsberg Says Snowden Saves Us From The „United Stasi Of America“

It is perhaps too early to judge the impact of Edward Snowden's confirmation of conspiracy fact, but in Pentagon Papers' Daniel Ellsberg opinion in today's Guardian, there has not been a more important leak in American history. The "executive coup" against the US constitution that has, at first sercretly but increasingly openly, been under way since 9/11 could finally be stalled by the Whistleblower's efforts. Ellsberg notes Senator Frank Church's 1975 comments on the NSA warning of the dangerous prospect that America's intelligence gathering capability "at any time could be turned around on the American people and no American would have any privacy left," noting 'that has now happened'. That is what Snowden has exposed, with official, secret documents. The NSA, FBI and CIA have, with the new digital technology, surveillance powers over our own citizens that the Stasi – the secret police in the former "democratic republic" of East Germany – could scarcely have dreamed of.


Via The Guardian,



Snowden's whistleblowing gives us the possibility to roll back a key part of what has amounted to an "executive coup" against the US constitution.


Since 9/11, there has been, at first secretly but increasingly openly, a revocation of the bill of rights for which this country fought over 200 years ago. In particular, the fourth and fifth amendments of the US constitution, which safeguard citizens from unwarranted intrusion by the government into their private lives, have been virtually suspended.




The fact that congressional leaders were "briefed" on this and went along with it, without any open debate, hearings, staff analysis, or any real chance for effective dissent, only shows how broken the system of checks and balances is in this country.




In 1975, Senator Frank Church spoke of the National Security Agency in these terms:


"I know the capacity that is there to make tyranny total in America, and we must see to it that this agency and all agencies that possess this technology operate within the law and under proper supervision, so that we never cross over that abyss. That is the abyss from which there is no return."


The dangerous prospect of which he warned was that America's intelligence gathering capability "at any time could be turned around on the American people and no American would have any privacy left."




That has now happened. That is what Snowden has exposed, with official, secret documents. The NSA, FBI and CIA have, with the new digital technology, surveillance powers over our own citizens that the Stasi – the secret police in the former "democratic republic" of East Germany – could scarcely have dreamed of. Snowden reveals that the so-called intelligence community has become the United Stasi of America.




So we have fallen into Senator Church's abyss.




Snowden did what he did because he recognised the NSA's surveillance programs for what they are: dangerous, unconstitutional activity. This wholesale invasion of Americans' and foreign citizens' privacy does not contribute to our security; it puts in danger the very liberties we're trying to protect.

Read more at The Guardian...

White House Defends Its Wiretapping Of Millions Of US Citizens

Blink and you have likely missed Obama's latest Watergate moment, this time following the disclosure that the White House has instructed the NSA to collect millions of daily phone records from Verizon (and likely all other carriers). What is surprising to us is that this is even news. We reported on just this in March of 2012 with “We Are This Far From A Turnkey Totalitarian State" - Big Brother Goes Live September 2013" and then again in April 2012 "NSA Whistleblower Speaks Live: "The Government Is Lying To You" using an NSA whistleblower as a source. Still, no matter the distribution platform, it is a welcome development for the majority of the population to know that the same Stazi tactics so loathed for decades in the fringes of the "evil empire" are now a daily occurrence under the "most transparent administration in history." This is especially true in the aftermath of the recent media scandals involving the soon to be former Attorney General.

So what was the latest largely regurgitated news? Overnight te Guardian's Glenn Greenwald reports that the "NSA is collecting phone records of millions of Verizon customers daily" following a "top secret court order requiring Verizon to hand over all call data shows scale of domestic surveillance under Obama."

Some more from the Guardian:

The National Security Agency is currently collecting the telephone records of millions of US customers of Verizon, one of America's largest telecoms providers, under a top secret court order issued in April.


The order, a copy of which has been obtained by the Guardian, requires Verizon on an "ongoing, daily basis" to give the NSA information on all telephone calls in its systems, both within the US and between the US and other countries.


The document shows for the first time that under the Obama administration the communication records of millions of US citizens are being collected indiscriminately and in bulk – regardless of whether they are suspected of any wrongdoing.


The secret Foreign Intelligence Surveillance Court (Fisa) granted the order to the FBI on April 25, giving the government unlimited authority to obtain the data for a specified three-month period ending on July 19.


Under the terms of the blanket order, the numbers of both parties on a call are handed over, as is location data, call duration, unique identifiers, and the time and duration of all calls. The contents of the conversation itself are not covered.


The disclosure is likely to reignite longstanding debates in the US over the proper extent of the government's domestic spying powers.

No it won't. Because those who care, have known about this for a long, long time. Everyone else... well, they have their soaring 401(k)s to comfort them, sprinkled in with a little class warfare to keep things "fair", and of course Dancing with the Stars.

Finally, the White House was quick to explain why living in a crypto-fascist, totalitarian state is the New Normal: it's for your own good, you see.

From Reuters:

The Obama administration on Thursday acknowledged that it is collecting a massive amount of telephone records from at least one carrier, reopening the debate over privacy even as it defended the practice as necessary to protect Americans against attack.


The admission comes after the Guardian newspaper published a secret court order related to the records of millions of Verizon Communications customers on its website on Wednesday.


A senior administration official said the court order pertains only to data such as a telephone number or the length of a call, and not the subscribers' identities or the content of the telephone calls.


Such information is "a critical tool in protecting the nation from terrorist threats to the United States," the official said, speaking on the condition of not being named.


"It allows counter terrorism personnel to discover whether known or suspected terrorists have been in contact with other persons who may be engaged in terrorist activities, particularly people located inside the United States," the official added.


The revelation raises fresh concerns about President Barack Obama's handling of privacy and free speech issues. His administration is already under fire for searching Associated Press journalists' calling records and the emails of a Fox television reporter as part of its inquiries into leaked government information.


It was not immediately clear whether the practice extends to other carriers.

It does. But what is most stunning in all of this is that the benevolent rulers who are here to "help us" have not made selling of any security illegal and punishable by death. Yet.

Frontrunning: June 6

  • Global Stocks Tumble as Treasuries Rally, Yen Strengthens (BBG)
  • China Export Gains Seen Halved With Fake-Data Crackdown (BBG) - so a crash in the GDP to follow?
  • FBI and Microsoft take down botnet group  (FT)
  • Quant hedge funds hit by bonds sell-off  (FT)
  • Russia's Syria diplomacy, a game of smoke and mirrors (Reuters)
  • Obama Confidantes Get Key Security Jobs (WSJ)
  • BMW to Mercedes Skip Summer Breaks to Keep Plants Rolling even as European auto demand slides to a 20-year low (BBG) - thank you cheap credit
  • Paris threat to block EU-US trade talks  (FT)
  • Special Report: The mother who burned herself to death for Tibet (Reuters)
  • Ancient 3-Inch Creature Holds Clue to Human Divergence From Apes (BBG)
  • North, South Korea move to end rupture in ties (Reuters)
  • 'Dark Pools' Face Scrutiny (WSJ)
  • Danish CoCo Experiment Seen Flopping Before First Bond Sold (BBG)
  • Tables Turn a Bit on Growth as U.S.-China Summit Nears (WSJ)
  • EU Considering Moving Libor Oversight to ESMA From U.K. (BBG)
  • Ninety Cents Buys Safety on $22 Jeans in Bangladesh (BBG)


Overnight Media Digest


* Two Internal Revenue Service employees in the agency's Cincinnati office told congressional investigators that IRS officials in Washington helped direct the probe of tea-party groups that began in 2010.

* The National Security Agency is obtaining a complete set of phone records from all Verizon U.S. customers under a secret court order, according to a published account and former officials.

* Beijing-based e-commerce firm LightInThebox Holding has raised $79 million by pricing its U.S. initial public offering in the middle of its indicative price range, two people familiar with the situation said Thursday, in what would be the first listing by a Chinese company in the U.S. this year.

* The Commodity Futures Trading Commission sued U.S. Bank, a unit of U.S. Bancorp, for not protecting customer money that was at the center of the Peregrine Financial Group fraud.

* Monsanto said it is considering sabotage as a possible cause of the finding of unapproved genetically modified wheat in an Oregon field and that its testing reaffirms the incident is isolated.

* MakerBot, the fast-growing maker of 3-D printers, is in talks with suitors that could lead to the sale of the New York-based company, people familiar with the matter said.



The European Commission is going to suggest stripping London of its control over the scandal-hit Libor lending rate and propose handing over supervision to the Paris-based European Securities and Markets Authority.

The International Monetary Fund said its projections for the Greek economy had been too optimistic during the 2010 bailout, and that debt restructuring should have taken place earlier.

Procter & Gamble, the world's largest household products maker, promoted four executives to head major units, making them the key contenders to replace Chief Executive AG Lafley.

Ousted Chesapeake Energy Chief Executive Aubrey McClendon is trying to raise $1 billion in capital through private equity firms and sovereign wealth funds for his new company, American Energy Partners.

Man Group, the computer-driven hedge fund, reported steep losses at its flagship "black box" fund AHL, sending its shares down as much as 15 percent on the London Stock Exchange on Wednesday



* SAC, the hedge fund which is under investigation for insider trading, told employees in an email that it was stable despite a surge in investor withdrawals.

* The International Monetary Fund released an internal report that sharply criticizes its first bailout program for Greece, saying it seriously underestimated the severity of the country's downturn.

* The Justice Department has claimed that the publishers used Apple Inc as a conduit to communicate with each other; Apple lawyers have sought to portray the conversations as normal business proceedings.

* Procter & Gamble has reorganized its business into four new divisions, the first big change since Alan Lafley returned as chief executive nearly two weeks ago.

* As Congress debates immigration, countries like Canada and Australia are trying to lure foreign entrepreneurs. But there is only one place they want to be.




* Intellectually handicapped people in Quebec are among the most vulnerable and neglected groups in society and the government must do more to improve their care, according to provincial auditor Michel Samson.

* Toronto Mayor Rob Ford is continuing his efforts to move past allegations he was caught on video using crack cocaine, holding four public events in a single day, capped by a speech that sounded like one he might offer on the campaign trail.

Reports in the business section:

* The International Monetary Fund admits it underestimated the damage that austerity would inflict on Greece, offering key evidence in the global debate about cutbacks versus stimulus.

* Penn West Petroleum Ltd is overhauling its finances, chopping jobs and bringing in new leadership, joining a growing list of Canadian energy companies that are rewriting their strategies in an effort to boost flagging returns.


* Mayor Rob Ford won't call it a comeback tour. But after nearly three weeks of headlines that beat down and battered the most prominent mayoralty in the country, the defiant politician spent Wednesday crisscrossing Toronto, shaking hands in a Scarborough Tim Hortons, looking with wonder at a graffiti-combatting mural and visiting tenants in Thorncliffe Park.

* Alberta Minister of Parliament Brent Rathgeber abruptly quit the Conservative caucus late Wednesday, citing the government's "lack of commitment to transparency" in the wake of a dramatic Tory rewrite of his bill to expose the salaries of federal civil servants.


* The Ontario Securities Commission is overreaching in pursuing fraud allegations against the founder and former senior salesman of defunct real estate investment firm First Leaside Group of Companies, a lawyer for David Phillips and John Wilson said in opening statements in the case Wednesday.

* In its last shot at defending the Northern Gateway pipeline, Enbridge Inc says it has produced evidence to boot during the nearly completed regulatory review that the proposed project would generate enormous economic benefits for Canada.




-- State Administration of Taxation and Ministry of Finance are considering levying taxes on e-businesses, said Yao Jian, the spokesman for the Ministry of Commerce.


-- Ministry of Commerce released a draft regulation of financing leasing enterprises, which covers both domestic and foreign enterprises.


-- Refinancing policies for Growth Enterprises Market is estimated to be released as early as the coming month, some insiders told the newspaper.


-- China's four biggest banks lent 208 billion yuan ($34 billion) of new loans last month, the lowest level so far this year, Shenyin & Wanguo Securities said in a report on Wednesday.

-- China's entertainment and media market will grow 12 percent annually over the next five years to $203 billion in 2017, with internet advertising likely to rise the most, an industry report said yesterday.


Fly On The Wall 7:00 AM Market Snapshot



Clovis (CLVS) upgraded to Overweight from Neutral at Piper Jaffray
LRR Energy (LRE) upgraded to Outperform from Market Perform at Wells Fargo
LifePoint Hospitals (LPNT) upgraded to Outperform from Neutral at Credit Suisse
Sibanye Gold (SBGL) upgraded to Neutral from Sell at Goldman
Tenet Healthcare (THC) upgraded to Buy from Hold at Deutsche Bank


Barnes & Noble (BKS) downgraded to Neutral from Buy at Janney Capital
Calavo Growers (CVGW) downgraded to Neutral from Buy at Janney Capital
Coldwater Creek (CWTR) downgraded to Neutral from Buy at B. Riley
Endo Health (ENDP) downgraded to Sell from Hold at Cantor
First Horizon (FHN) downgraded to Equal Weight from Overweight at Morgan Stanley
Knight Transportation (KNX) downgraded to Neutral from Buy at Longbow
Ryman Hospitality (RHP) downgraded to Market Perform from Outperform at Wells Fargo
Vera Bradley (VRA) downgraded to Market Perform from Outperform at Wells Fargo
Vera Bradley (VRA) downgraded to Neutral from Overweight at Piper Jaffray
Werner (WERN) downgraded to Neutral from Buy at Longbow


Cadence (CADX) initiated with a Neutral at Piper Jaffray
Costco (COST) initiated with a Buy at Sterne Agee
Dollar General (DG) initiated with a Neutral at Sterne Agee
Dollar Tree (DLTR) initiated with a Buy at Sterne Agee
Emeritus (ESC) initiated with a Neutral at Goldman
Enbridge (ENB) initiated with an Outperform at Macquarie
ExOne (XONE) initiated with a Buy at Canaccord
Family Dollar (FDO) initiated with a Neutral at Sterne Agee
Five Below (FIVE) initiated with a Neutral at Sterne Agee
Haemonetics (HAE) initiated with an Outperform at JMP Securities
ING Group (ING) initiated with a Buy at Jefferies
J.C. Penney (JCP) initiated with a Buy at Sterne Agee
Kohl's (KSS) initiated with a Neutral at Sterne Agee
Macy's (M) initiated with a Buy at Sterne Agee
Nordstrom (JWN) initiated with a Buy at Sterne Agee
Saks (SKS) initiated with a Neutral at Sterne Agee
Signature Bank (SBNY) initiated with an Overweight at Morgan Stanley
The Fresh Market (TFM) initiated with a Buy at Sterne Agee
The Medicines Co. (MDCO) initiated with an Overweight at Piper Jaffray
Vitamin Shoppe (VSI) initiated with a Buy at Sterne Agee
Whole Foods (WFM) initiated with a Buy at Sterne Agee


PepsiCo CEO Nooyi: “First time I'm hearing” about SodaStream deal talks, Bloomberg reports
Procter & Gamble (PG) reorganized global business units
Las Vegas Sands (LVS) board approved multi-year share repurchase
UBS (UBS) CEO Ermotti told CNBC no need to raise more capital, said higher dividend is a priority
USEC (USU) notified employees of potential layoffs beginning in August
KKR (KKR, KFN) acquired U.K. retail park property, terms not disclosed
Thomson Reuters (TRI) acquired Pricing Partners SAS, terms not disclosed
Endo Health (ENDP) announced strategic alternatives, to reduce workforce by 15%


Companies that beat consensus earnings expectations last night and today include:
FuelCell (FCEL), Greif (GEF), Coldwater Creek (CWTR), Measurement Specialties (MEAS), Vera Bradley (VRA)

Companies that missed consensus earnings expectations include:
Fairway Group (FWM), Dominion Diamond (DDC), Nordion (NDZ), rue21 (RUE), Ascena Retail (ASNA)

Companies that matched consensus earnings expectations include:
Francesca's (FRAN)


  • The Financial Industry Regulatory Authority sent 15 examination letters to operators of "dark pools"—lightly regulated, off-exchange trading venues (GS, CS, BCS) that have been a rising concern for regulators and some investors as more activity shifts away from exchanges, the Wall Street Journal reports
  • Lenovo Group (LNVGY) sees growth opportunities in servers and storage, and plans to enter smartphone markets in developed countries in the next year, said CEO Yang Yuanqing, the Wall Street Journal reports
  • PepsiCo (PEP) is in talks to buy Israel's SodaStream International (SODA), whose machines make carbonated drinks from tap water, for $2B, according to the Calcalist financial newspaper, Reuters reports
  • A portion of the $2.6T money market fund industry would be required to fundamentally change how it prices its shares under proposals issued by the SEC to reduce the risk of abrupt withdrawals, Reuters reports
  • The yuan fell the most in almost a month before data forecast to show export growth halved in May, revealing subdued demand for goods from China, Bloomberg reports
  • Vietnamese regulators will submit a proposal next month to ease restrictions on foreign ownership in companies as they lure more international investors to a stock market that’s 14 times smaller than Singapore’s, Bloomberg reports


Carlyle Group (CG) 11.1M share Secondary priced at $27.00
Giant Interactive (GA) 11M share Secondary priced at $7.25
KAR Auction (KAR) 15M share Secondary priced at $21.25
LightInTheBox (LITB) 8.3M share IPO priced at $9.50
Rosetta Stone (RST) to offer 3.5M shares of common stock for holders
Thermo Fisher (TMO) announces $2.2B common stock offering

Visualizing IRS-Gate: Bureaucratic Blunder Or Political Profiling?

The IRS has a known history of scandalous behavior. With Nixon, Johnson, Hoover, Kennedy, and the FBI using the IRS to intimidate their enemies, it's no surprise that people have their eye on the IRS. Now under President Obama, they're at it again, which begs the question: bureaucratic blunder or political profiling?


IRS: Bureaucratic Blunder or Political Profiling
Source: TopAccountingDegrees.org

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