The "Milken Network," Semion Mogilevich, Al Qaeda, Muslim Brotherhood ... "Financial Jihad" -- Patrick Byrne's  DeepCapture site contains what many would refer to as "conspiracy theories," yet given the fact his record on calling the 2008 global economic crisis well before it ever took place is a clear one, it's unclear what one should make of his long list of allegations, which in the past related to Felix Sater.  And in the present, Byrne's purported involvement in the Russia story because of a relationship he had with Maria Butina. 

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To review the entire saga, hit his DeepCapture website to browse later on, or watch the videos linked below -- but the main focus here on this page will be how the information his website, and the journalists he had hired, were publicly making allegations related to Felix Sater. This started around early 2009 and ended by the middle of 2013.  There was nothing at all said regarding Felix in 2011-12.

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Patrick Byrne / DeepCapture: 'The Last Time the Media Told You to Ignore Me & I was Crazy'

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Patrick Byrne / DeepCapture: '“Who is Patrick Byrne?”'

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And this began during the end of Sater's time at Bayrock, but months before he was finally sentenced in 2009 (for the stock fraud scam between 1993-96)..

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For those who may skip over trying to understand the background of Byrne's "war with Wall Street," let's cover a little of it. This is due in part because some of the context therein will tie into Felix's known network later on. 

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So bear with me.

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By mid-2013, Mark Mitchell was reporting via Deep Capture a link between the old players of BCCI -- see links (Washington Post, 1991) BCCI (Foreign Policy, 2020) and the war he and Patrick Byrne had been battling with Wall Street for the past several years.

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Foreign Policy -

"Overseen by autocratic oligarchs abroad, this bank used everything including shell companies, fake foundations, and anonymous real estate purchases to launder billions and billions of dollars. And when Western investigators got wind of its financial fraud, this bank immediately began bankrolling white-shoe law firms and shady PR operators—even going so far as to fund leading U.S. presidential campaigns, corrupt the leading voices in at least one American political party, and even grow close to the American president himself.

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The story is, in many respects, the perfect blueprint for modern kleptocracy—and how autocratic regimes abroad use strategic corruption and financial secrecy tools to swindle billions of dollars while also shifting U.S. policies to their own corrupt ends.

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But there’s one thing: This bank no longer exists. Instead, the story of this bank—the Bank of Credit and Commerce International, or BCCI—takes place decades ago, from the late 1970s to the early 1990s.

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It’s a saga that has been largely forgotten. That’s a shame, because in many ways the unprecedented graft and collapse of BCCI foretold precisely the kinds of transnational kleptocratic practices that would take root around the globe over the past decade—and how wide-open the United States remains when it comes to the infiltration of foreign dirty money.

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In hindsight, it’s almost impossible to believe just how overlooked the BCCI affair now is. The bank, headquartered in the United Arab Emirates and closely connected to ruling regimes in both Pakistan and Saudi Arabia, initially pitched itself as the leading bank for the so-called Third World. It tried to position itself as a non-Western alternative for small-scale depositors across the postcolonial space, from sub-Saharan Africa to South Asia to Latin America.

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And for a while, that scheme succeeded. BCCI ended up operating in over 70 countries—including the United States, Switzerland, France, and the United Kingdom—and at one point boasted over $20 billion in assets (or nearly $50 billion in today’s money). By the mid-1980s, BCCI appeared well on its way to meeting its goal of becoming the world’s largest bank by the year 2000."

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Further down in article - 

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"If anything, the story of BCCI is now more relevant than it’s ever been in the 30 years since the bank’s collapse. The BCCI affair set the example for everything that came since in the world of modern kleptocracy, and that still corrupts the United States today. From setting up anonymous shell companies to purchase American real estate to targeting American auditors that are willing to look the other way, from bilking billions via banking Ponzi schemes to even hiring prestigious law firms that provide everything from legal counsel to media relations to lobbying and political connections, the playbook that BCCI helped create is still alive and well, all in the service of laundering foreign dirty money. With things like “authoritarian influence,” which sees everything from disinformation campaigns to bounty-hunting orders to foreign payments to American politicians hidden behind webs of opaque transactions, or the questionable links between Donald Trump and Deutsche Bank—which has itself been connected to pro-Kremlin forces out of Moscow—still in the news, we overlook the lessons from BCCI’s implosion to our own peril."

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So, to break that down into smaller chunks and hopefully provide a better glimpse into the overall big picture , let's review a short timeline/overview:

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1991 - Sater bar fight; BCCI scandal starting

1993-96 - Sater has role in stock fraud scam (also in jail between June '94 and Sept '95 for bar fight)

1997 - Sater recruited by DIA

1998 - Sater started FBI cooperation

1999 - Byrne founded Overstock.com

2005 - Byrne started his crusade against Wall St

2008 - global financial crisis, DeepCapture website

Jan/Feb 2009 - Byrne's journalist, Mark Mitchell, first linked Sater to Milken network (more on this later) and made an allegation Sater made a death threat against Byrne 

Nov 2009 - Sater sentencing for stock fraud scam; $25k fine

2013 - DeepCapture website started focus on old BCCI network and then linked Sater to Semion Mogilevich (more on this later)

Aug 2019 - Felix Sater's 5k1 letter was released and Patrick Byrne wrote a post on his site saying he didn't believe Sater to be the source of the death threat from the previous decade, or if he was, he no longer cared. He even offered to take Felix Sater to lunch.

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Moving on... 

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Sater’s connection to the so-called Milken network Byrne was fighting against stemmed from his longest Wall Street employment at the firm Gruntal & Co. which was heavily financed by Michael Milken. 

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Fortune magazine interviewed a former Gruntal employee who was quoted as saying, “Gruntal was the Island of the Misfit Toys. But they didn’t care what was going on in our sick, dysfunctional office as long as we were making money. We had no manager, and it’s illegal not to supervise brokers. I remember doing cartwheels down the hall, drinking beer at my desk, smoking pot, having sex in the stairwell. Whatever!”  

 

Interestingly, another Milken associate, Sam Israel, was doing business with Robert Booth Nichols.  Nichols is another person tied into the BCCI-PROMIS scandal which resulted in the death of a journalist named Danny Cassolaro.  Books have been written regarding this scandal and something Danny referred to as OCTOPUS. 

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To give an understanding of why it is interesting Byrne's Deep Capture site would note Robert Booth Nichols, below are provided excerpts from both The Last Circle book written by Cheri Seymour who spoke to Nichols, as well as what the Deep Capture site stated about him.

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Various book excerpts:

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"The proportions of the cover-up are astounding by today's standards.  Investigators from the FBI, U.S. Customs, Judiciary Committee, police, and even the Royal Canadian Mounted Police [RCMP] still fear punitive action if they come forward, despite the fact that many of them are now employed in the private sector.

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Nevertheless, they all left an investigative trail, whether by design or accident.  Danny Casolaro's tragic death essentially opened a Pandora's Box which the DOJ was never able to close.  During the last week of his life, Danny had discovered a connection between Mike Abbell, a former director of international affairs for the Justice Department, the Cali Drug Cartel, and Robert Booth Nichols, an international intelligence operative whom he had been interviewing extensively for months.  Danny's last phone bills indicated he'd spent hundreds of hours on the phone with Nichols, most of the calls averaged one to two hours.  This in effect, was one tentacle of the Octopus.

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Danny had confronted Nichols about Mike Abbell and the Cali Cartel while staying in Martinsburg.  It was the last conversation Danny ever had with Nichols, and with Bob Bickel, a friend whom Danny confided in.  Bickel subsequently confirmed the conversation, but reasons unknown, the Abell - Cali Cartel connection was never published in any of the official investigative reports on Danny's death.  These included the DOJ report of September 27, 1994."

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"Though Nichols has no known source of income in the U.S., the background check within the report stated Nichols resided nine months of the year at a 3.5 million dollar villa in Italy, and his name was 'associated with the illegal transportation of narcotics through the Golden Triangle.'  Once again this tied in with Danny Casolaro's final inquiry of the Golden Triangle.  the FBI report concluded that 'Robert Booth Nichols should be considered armed and dangerous.'"

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"The wiretap had recorded Robert Booth Nichols communicating with Eugene Giaquinto, then president of MCA home entertainment division.  Giaquinto was a board member on Nichols' holding company.  Meridian International Logistics [MIL], under investigation by the FBI as a 'source of funding for the purchasing of narcotics/controlled substances and the allocation and use of the proceeds from its trafficking,' according to the wiretap application.

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MIL was reportedly a NSC cutout, used for the purpose of 'funneling money to pay the board of directors,' according to Nichols' friend who was once on the board.  He explained that the NSC is a 'profit-making entity; funding is unlimited and no accountability is required because of national security.'

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He further explained that all business conducted covertly today relates to two things: 'money and/or drugs.'  Drugs are used as international currency, commonly called 'gold.' Drugs are a business at the highest levels of corporations because there is a huge market and demand for drugs.  Entire countries and banking institutions are now dependent on the drug trade for income, he said.  Presumably these include Colombia, Mexico, Lebanon, Afghanistan, and other drug-dependent economies.

 

Another tentacle of the Octopus involved La Cosa Nostra.  Wrote Gates in his affidavit in support of the wiretap of Giaquinto, Nichols, et al: 'I have become familiar with how some union officials, alleged labor consultants and La Cosa Nostra (LCN) members and associates manipulate, extort, and corruptly influence companies and/or individuals associated with the production of films and television shows and how stockbrokers associated with the LCN, LCN members and associates use deceptive and fraudulent practices in the buying and selling of stocks.

 

The LCN members specifically related to members of the Gambino and Bufalino crime families, many of which were reportedly picked-up in the FBI wiretaps.  Marvin Rudnick, Thomas Gates, and Richard Stavin, a member of the Organized Crime Strike Force, all believed MCA had been penetrated by organized crime, based on the wiretaps.

 

It was reported that the MCA Board of Directors at that time included Howard Baker, a former U.S. Senator, Eugene Giaquinto, Lew Wasserman, and others.  Giaquinto and his partner in MIL, Robert Booth Nichols, both had a close working relationship with the justice Department, according to the wiretaps.  Nichols' friend alluded to this as well."

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"Nichols believed Danny Casolaro had been murdered and wrote a manuscript entitled 'Danny Casolaro's Octopus,' dated November 22, 1991, which he copyrighted at the Library of Congress.  In the manuscript, Nichols relates a meting in which Danny and a man who worked closely with the DIA met [with Nichols] at a restaurant in McLean, Virginia.  Another scenario depicted Danny's demise at the Martinsburg hotel in August 1991.  The last paragraph in the manuscript describes a military man placing a medal at the location of Danny's coffin.  It is noted that the only agency that does this is the NSA [National Security Agency].

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But Nichols testified under oath in a Los Angeles courtroom in March 1003 that he worked quietly and selflessly for nearly two decades on behalf of shadowy CIA keepers in more than 30 nations from Central America to Southeast Asia.  Nichols' friend and former partner explained recently that Nichols adeptly provides 'service for money' to any government agency that requires his services.  He showed a photo of Nichols with Arab leaders during the Gulf War, noting that Nichols is considered a valuable asset and well respected in U..S. intelligence circles. 'He gets the job done,' said the friend.

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The FBI report which Nichols shared with his friend corroborates his ability to move large sums of money around the world as follows: 'RBN assisted Ignacio Paz, Deputy Chief of Staff, Intelligence, Philippine government, with removing large sums of money from the Philippines by investing with RBN who placed the money in Swiss bank accounts.

 

Like a many tentacled octopus, this ties in with what John Cohen, a House Judiciary Committee  investigator on Inslaw, said about the theft of the PROMIS software: 'You see, I've had a side theory about why PROMIS was taken.  It was that PROMIS could be modified to track money laundering.  And it could be used as an active information gathering,or ny active moving software program that can go into other data bases.  And it could be modified to control hundreds of accounts and move money through the international banking system."

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Also, here's a somewhat related interesting passage from the book where the author is talking to Ann Klenn, a "long time friend" of Danny's:

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"... In a September 14, 1994 phone interview, she noted that the last time she talked to Danny, that last Monday before his death, he told her he'd cracked the Inslaw case.

  I asked her, 'Do you think he resolved that?'

  Ann responded, 'Oh, yes. I know he did. He told me he did. He said, 'Ann, I broke Inslaw.' And I said, 'Geez, Danny, that's great!' But, I never asked him what he found because he was very despondent about it.  He said 'You can have it. You and Jack [Anderson] can have the story. I don't even want it.'

  Ann said Danny was disgusted and related their last conversation: 'I said, 'Danny, you worked on this [so long] and now you don't want it?' He said, 'It's just a little piece of the puzzle anyway.'  See, Inslaw led him into this, but Danny quickly became more involved with the drug aspects ... with the CIA aspects, with the Wackenhut aspects.'

  I mused, 'I know what you mean, because I followed the same trail.'"

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And simply to underscore the complete head games Robert Booth Nichols continued to play with this author, Cheri Seymour, who had started to research the story after Danny's death, here is another bizarre excerpt from the book:

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"... At one point during our conversation, and completely out of context with what we were discussing, Nichols played a video tape of the assassination of President John F. Kennedy. The southern wall of Nichols' apartment contained a six-foot wide projection screen on which I watched a blown-up (enlarged) slow motion "uncut" version of the famous Zapruder film.

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I watched what appeared to be the standard media version of the film, seen so many times in film clips over the years, but then Nichols slowed the camera even more, and on the six-foot screen I observed the driver of the limousine turn to his right, first looking at Connolly, then at Kennedy.  The driver's left hand came over his right shoulder, and he was holding a long barreled gun.  Smoke and a bullet emerged from the gun, traveling ever so slowly across the screen into Kennedy's head, blowing brain tissue into the air as he fell back against the seat.

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Stunned, I watched Jacqueline Kennedy open her mouth in horror as she glanced at the driver, then try to climb over the back seat of the car.

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Littman and Zokosky and I stared at the scene in silence, unable to believe what we were seeing.  Nichols then changed the tape and showed what he described as the 'media' version of the Zapruder tape.  In the media version,  the driver continued to drive, unflinching, as the shots rang out.  Then the scene switched to the back part of the limousine.

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At this point, Nichols stopped the frame and pointed with a stick at a tree in the background behind the limousine.  From the middle of the tree to the ground, there was no trunk, just air. The top part of the tree was growing in air!

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I demanded that my husband be allowed to see the film.  I felt I must have been hypnotized.  When he arrived, he viewed both films up close, in slow motion, and saw the same thing.  Nichols played both tapes backwards and forwards as often as we demanded, until the memory of it was was burned forever into our minds.

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I assumed the video had been tampered with.  I asked Nicholds where he had obtained the original 'un-cut' version?  He would not say. I had no idea at that time that his FIDCO partner, Clint Murchison, Jr.'s father, had had instant access to the Zapruder film immediately after the assassination in Dallas, Texas.

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Nichols studied me for a the longest time, then walked over to the window and lit a cigarette.  He finally commented that the CIA can cover up anything it wants, even a president's murder.  He wanted to show me the power of the Octopus. 'Nothing is as it appears to be,' he said."

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Here is where Patrick Byrne, or rather his Deep Capture website,  introduced Robert Booth Nichols to their theory, 25 years later. Her book was published in 1994.  The website page was written in 2009. 

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"A few years later, Israel and Marquez founded the Bayou Group, one of the biggest hedge fund frauds in history. A significant part of the Bayou fraud involved Israel “feeding” his investors’ money into a Ponzi scheme run by Robert Booth Nichols, who has been targeted by authorities as a business associate of the Genovese Mafia family."

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Then again in 2013, the Deep Capture site would write: 

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"After that, Israel had second thoughts and decided to turn himself in. Meanwhile, it emerged that Israel had been in business with Robert Booth Nichols, whom the FBI had identified as a close associate of both the Gambino and Genovese Mafia family and perhaps the key U.S. contact for the Japanese Yakuza. Back in the 1980s, Nichols had been involved with BCCI, and he was tied to a big scandal surrounding a software program called Promis.

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The developers of Promis alleged that the software was stolen from them by the U.S. government, which (according to the developers) modified it so that it included a back door feature that would allow the U.S. government to access information on computers that had installed the software. At the time, the media gave considerable credence to this story, and suggested that the U.S. government had sold Promis software to multiple foreign governments. What has not been widely reported is that Mafia-tied Robert Booth Nichols also managed to gain rights to sell Promis software, and Nichols handed those rights to the famous Saudi arms dealer and market manipulator Adnan Khashoggi, who had been a key figure in the larger BCCI enterprise."

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To bring home the relevance of all of this information, the very same two articles which mentioned Robert Booth Nichols, one from 2009 and other from 2013, also refer to Felix Sater.  The 2009 article is where we learn of this death threat to Byrne which appeared to have occurred early 2006.  

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2009:

 Jan - 

"In January, 2007, Patrick accepted an invitation to meet an offshore investor in a greasy spoon diner in Long Island. They had never met, but over the previous year the man had fed Patrick bits and pieces of information about the workings of the phantom stock scam, and the hope was that he might have something more to say in person.

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But that day at the diner, all he had was a message.

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“I’ll make this quick,” he said, with two other witnesses present. “I have a message for you from Russia. The message is, ‘We are about to kill you. We are about to kill you.’ Patrick, they are going to kill you. If you do not stop this crusade, they will kill you. Normally they’d have already hurt someone close to you as a warning, but you’re so weird, they don’t know how you’d react.”

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In a later phone conversation with an associate of Patrick’s the man described how he received this message. He said he returned home one night and his wife told him there was a package on his desk. “And there was a beautiful little box, and inside was a matryoshka.”

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Matryoshkas are those lacquered Russian dolls – the kind with multiple dolls of decreasing size inside of them.

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“And I opened up the last matryoshka,” said the man, “and inside is an `F’ with a cross on it — which is from Felix.”

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That’s Felix Sater, a Russian immigrant described in a federal complaint as an “unindicted co-conspirator” in a money laundering and stock fraud ring involving organized crime figures from four Mafia families. The New York Times has reported that Sater was once also “embroiled in a plan to buy anti-aircraft missiles on the black market … in either Russia or Afghanistan….” Apparently, Sater offered to buy the missiles from Osama Bin Laden in exchange for amnesty in his Mafia fraud case.

Also, according to the Times, Sater once “grabbed a large margarita glass, smashed it on the bar and plunged the stem into the right side of [a] broker’s face. The man suffered nerve damage and required 110 stitches to close the laceration on his face.”

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Sater seems to have been involved in the feud that raged between the Gambino and Genovese crime families in the mid-to-late 1990s. A soldier in the Gambino family once tried to extort money from Sater, and Sater got a Genovese soldier to intervene on his behalf. This is the same feud that embroiled Carol Remond’s source, Pacific International, and the two stock promoters who were murdered in 1999. It is the same feud that possibly inspired a cast of criminals, some linked to the Genovese (and by extension, the Russians) to develop relationships with that peculiar BusinessWeek reporter, Gary Weiss, who wrote stories pinning various crimes on the Gambinos.

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Gary Weiss, a demonstrable liar and creep whose only job for the past two years has been to author a blog devoted to badmouthing Patrick Byrne and denying that phantom stock is a problem – a former BusinessWeek reporter whom Judd Bagley has shown to have posted on the Internet from within the Black-Box DTCC, a reporter who is a close friend of known crooks, and who controls several phantom stock-related Wikipedia entries with the support of a one-time British intelligence agent who calls herself SlimVirgin – this unconscionably bizarre character has defended Felix Sater on his blog. He wrote, “Sater has every right to turn his life around, as apparently he has done. Good for him.”

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In January 2007, Sater was turning his life around by putting a note in a Russian matryoshka doll. Apparently, Sater had discovered that the man in the greasy-spoon diner had been in contact with Patrick. So Sater sent a message in a doll. Then he delivered a verbal message. “He said, tell [Patrick] if he doesn’t….we’re going to fucking take it private,” the man from the diner says. “You know, they’re not going to mess about with this.”

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“These things don’t happen anymore to me,” the man continues. “I mean, I’ve been out of that world for a dozen years or more. These….there are defined signals here that lead me to believe they [the Mob] have been disturbed. The only way they coulda been disturbed is if they own Rocker or if he is using them for leverage.”

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 Feb - 

"Felix Sater (the man who allegedly sent the matryoshka doll) was ultimately named as an “unindicted co-conspirator” in a Mafia-run stock fraud. One of his friends co-authored a book, “The Scorpion and the Frog,” which suggests that Sater (whom the author of the book gives a pseudonym, “Lex Tersa”) cut a deal allowing him to avoid prosecution if he helped the CIA set up a phony arms deal with Osama Bin Laden. Anything is possible, I suppose.

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At any rate, Sater is now the (silent) proprietor of the Bayrock Group, a real estate investment company. The Bayrock Group has eleven partners. All are of interest, but let’s focus on two of them.

One is The Sapir Organization, which is an organization run by a Russian immigrant named Tamir Sapir. A lawyer for The Sapir Organization said the organization would answer no questions because the organization is “very, very private.” So information about Sapir’s background is spotty.

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Sapir has stated publicly that he once owned a home electronics store that catered to Russian KGB officials living in New York. The name of the store remains a mystery. All Sapir has said is that he was “the Crazy Eddie of Russia” – a playful reference to Sam Antar’s electronics company (i.e., the massive fraud that the Antars were going to take private with those Milken cronies, the Belzbergs – Walter, Sam, and Hymie).

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After electronics, Sapir began trading oil. Then he struck it big in real estate. Now, he is believed to be a billionaire.

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He might also be a Russian Mafia boss. Journalists have danced around this issue. Sapir himself has stated to The New York Times that “I am not Mob.” But he once had Genovese Mafia associates running his real estate empire. So if Sapir is not a Russian Mafia boss, he is at least a Russian boss of Mafia employees.

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By way of example: The man who formerly ran The Sapir Organization’s real estate portfolio is named Frederick J. Contini. In addition to being associated with the Genovese Mafia clan, Contini once entered a secret plea to racketeering.

Also, Contini once stabbed a man in the face with the broken stem of a wine glass.

He said it was just a bar fight.

This was some months after Felix Sater stabbed a man in the face with the broken stem of a wine glass.

Felix said it was just a bar fight, too.

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The second important partner of Felix Sater’s Bayrock Group is Apollo Real Estate Advisors, which is part of the empire controlled by a famous billionaire – Leon Black.

If Michael Milken were to name the ten people who are closest to him, Leon Black would surely be one of them. The two men have known each other since at least 1975, when “prominent investor” Carl Lindner, who was one of Milken’s key junk bond cronies, was acquiring shares in United Brands, formerly known as United Fruit, a company that has been accused of everything from bribing heads of state to funneling money to Latin American drug gangs.

Lindner eventually gained control over the company, but not before Eli Black — United Brands’ CEO and the father of Leon Black — crashed through a thick plate-glass window on the 44th floor of the Pan Am building, and plunged to his death.

They said Black broke through the plate glass window with his briefcase.

They said it was suicide.

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Some years after his father crashed through the window, Leon Black was heading up mergers and acquisitions at Drexel Burnham Lambert, home base of Milken’s junk bond operation. Black was Milken’s most ardent ally at Drexel. After Milken was indicted, Black rallied to Milken’s defense. It was Black, more than anyone, who prevented Drexel from firing Milken. And Black has remained obstinately loyal to the criminal Milken ever since.

After Milken went to prison, Black founded the Apollo Group, an investment partnership that received most of its initial funding from a French aristocrat named Rene Thierry Magon de La Villehuchet.

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Among Black’s first moves as an independent “prominent investor” was to launch a takeover bid for Executive Life, a bankrupt insurance and financial services conglomerate.

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The Black group won the bid after a fierce battle with a group of competing bidders, led by Jack Byrne, who was then the chairman of Fireman’s Fund, a major insurance company.

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Later, though, it emerged that Black’s takeover of Executive Life had been illegal because he had secretly been fronting for certain French investors, including Monsieur Rene Thierry de La Villehuchet. Some of the French investors had illegally parked stock with Black to hide their involvement (“parking stock” being one of the favorite techniques of the Milken-Boesky-Thorp crew, and a recurrent theme in the 98-count indictment that sent Milken to jail).

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There were indictments (though, somehow, not of Black or Monsieur Rene Thierry de La Villehuchet). After the indictments, Jack Byrne, recognizing that he’d been cheated out of a deal, sued Black and won an $80 million dollar judgment, some $30 million of which was ultimately paid to Jack Byrne’s company.

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Jack Byrne, of course, is the father of Patrick Byrne, who a few years later received a vicious death threat, allegedly by way of a Russian matryoshka doll delivered by Leon Black’s Mafia business partner Felix Sater."

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2013:

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"When Cohen was investigated for trading on inside information that he received from Drexel, he was not yet a famous hedge fund manager, but he was among the select traders who effectively ran Gruntal & Company , a Mafia-tied brokerage that received much of its finance from Michael Milken.

 

There were just a few other traders who had special partnership agreements with Gruntal, and who effectively ran the place. I will name most of them, beginning with Maurice Gross, who handled the accounts of the Gambino Mafia family. Gross later founded his own operation with a Pakistani trader and former BCCI figure named Mohammad Ali Khan, who (according to a case filed by the New York attorney general) alighted with some of the Gambino family’s cash. This was no doubt much to the dismay of Gruntal CEO, Howard Silverman, who had come to depend on the Mafia’s good graces.

 

As of 2008, Silverman was running one of the nation’s biggest “dark pool” trading platforms, an outfit that enabled his hedge fund clients to conduct trading in total anonymity. It should be a matter of concern that a guy who once ran a brokerage with ties to the Mafia went on to run a major “dark pool”–especially since experts such as the authors of a report (see Chapter 1 of this series for details) commissioned by the Department of Defense say that such platforms could easily be deployed to do serious damage to the markets.

 

One of the people Silverman brought in to help run his brokerage – another of the select traders with special partnerships at Gruntal – was a fellow named Felix Sater, who was (and is) a Russian mobster and a member of the Mogilevich organization (controlled by Semion Mogilevich, often described as the “most dangerous mobster in the world”). While still at Gruntal, Sater was charged with stabbing a Wall Street trader in the face with the broken stem of a wine glass (actually, it was martini glass, according to a man who witnessed the attack).

 

While still at Gruntal, Sater and several other former Gruntal traders founded a brokerage called White Rock Partners. Most of White Rock’s employees were former Gruntal employees, and there is no doubt that White Rock’s partners all had ties to organized crime. In 1996, the FBI discovered a locker at a Manhattan Mini-Storage in Soho that belonged to Evgeny Klotsman, a White Rock principal who was formerly among the select traders who had effectively run the Milken-financed Gruntal & Company. The FBI announced that the locker contained guns and documents that linked Klotsman and Sater to a “global market manipulation and money laundering network controlled by Russian organized crime.”

 

In 1999, White Rock (renamed State Street Capital Partners) was indicted for orchestrating stock manipulation schemes in league with the above-mentioned D.H. Blair and A.R. Baron (financed by Zev Wolfson) and five members of La Costa Nostra, including a Genovese Mafia soldier named Ernest Montevechi, and Danny Persico, a capo in the Colombo Mafia family (and the son of Alphonse “Allie Boy” Persico, the top boss of the Colombo Mafia family). White Rock’s principals, in fact, included some of the top bosses of the Colombo Mafia family, among them not only Danny Persico (who was arrested, along with Gene Phillips, in Operation Uptick), but also a Colombo Mafia capo named Greg Scarpa, to whom we will return.

 

According to one of Felix’s White Rock partners (and according to The New York Times, which lent credence to the story), Felix escaped indictment (he was named only as an unindicted co-conspirator in the White Rock case) because Felix and his other partner, Evgeny Klotsman , had ties to the Russian intelligence services, and promised the U.S. government that they could work with Russian intelligence to buy Osama bin Laden’s stockpile of Stinger missiles (thereby preventing Al Qaeda from using the missiles to shoot down commercial airlines).

 

It should not be surprising that Felix Sater, a member of the Mogilevich organization, would have ties to Russian intelligence, and it is equally unsurprising that he would be capable of cutting a deal with Al Qaeda. As the White House national security staff made clear in August 2011, when the president announced that organized crime had “penetrated” the financial system (thereby inspiring the president to officially declare an “Emergency Order”), the Mogilevich organization has close ties to both the Russian intelligence services and to multiple terrorist organizations, including Al Qaeda.

 

A 1996 classified FBI report (since made public) noted that the Mogilevich organization was involved in everything from major league market manipulation to prostitution, Afghan heroin, and trafficking in nuclear weapons materials. This is why Semion Mogilevich sits high on the FBI’s list of “Ten Most Wanted” criminals. But, of course, Mogilevich has a good lobbyist (i.e. a former director of the FBI, the outfit that publishes that “Most Wanted” list), and few, if any, members of the Mogilevich organization are presently in jail. Many of them are residents of the United States, and we will see that many of them, including Sater, remain active in the U.S. markets.

 

Multiple reports from law enforcement, the United Nations, non-governmental organizations in Russia, and the mainstream media in London (distinct from the mainstream media in the United States, which has a peculiar reluctance to publish anything interesting) state unequivocally that members of the Mogilevich organization have been selling conventional weapons to Al Qaeda for many years. On at least one occasion, the Mogilevich organization tried to sell highly enriched (nuclear bomb grade) uranium to Al Qaeda. This is a matter of dispute for some “experts”, but European Union officials confirm that it is true, and there is evidence that members of the Mogilevich organization did, at a minimum, claim in meetings with Al Qaeda operatives in Europe that they could obtain the nuclear materials.

 

Felix, through Russian intelligence, was prepared to cut a deal with Osama bin Laden, but the CIA balked when Klotsman demanded that the U.S. government pay him and Felix $3 million for each Stinger missile. Nonetheless, Felix escaped doing jail time, and some of his other associates say that this is because he and his Russian intelligence associates promised that their relationship with Al Qaeda would eventually be put to use for the U.S. government. However, if American officials believe Felix is helping the U.S. government, they are certainly mistaken. Indeed, it is a bit unsettling that this dangerous criminal is still on the loose. Not only was Felix once charged with stabbing a Wall Street trader in the face with the broken stem of a wine glass (actually, a martini glass), but Felix has also threatened to kill multiple other people. For example, Felix Sater has threatened to kill DeepCapture founder Patrick Byrne."

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Before we get further into this, let's backtrack and cover a short timeline which takes us through how all of this started, facts we only know now because of recent personal revelations from Byrne, which may or may not be believed until further corroboration can be provided:

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• Summer 2004 - Lehman Brothers hosted a luncheon for Byrne and a man by the name of "David Rocker" showed up.

  • A retail hedge fund manager in attendance told Byrne he was going to dump his stock, stating: "It does not matter what you do now, once this guy Rocker gets involved there is no way for you to win. He and his buddies will sink you.  They have ways of taking you down" while another person in attendance at the luncheon also suggested to Byrne that Rocker was "Mobbed-up."

• 2004 - Byrne was on a Lehman Bros.-sponsored road show to see dozens of hedge funds attempting to sell $120 million convertible bond in Overstock

  • Millennium offered to take entire $120 million but wanted a board seat which would provide them inside info on Overstock and ability to sell info on Overstock and ability to sell company short without borrowing shares in open market (a common Milken network strategy); a few months after Byrne declined they began a short-selling attack on Overstock including David Rocker

• 2004- ​Google decided to be become the second Dutch Auction IPO as part of their “Don’t Be Evil” ethic

  • They came under intense pressure from Wall Street to back down, but while Wall Street walked away from Overstock, no banker could walk away from Google’s IPO 

  • Due to quiet period restrictions Google was not able to explain their thinking to the world. Byrne received a call from someone on the Google Board of Directors, asking him to explain to the public why Google was making the choice that they were making. He did so extensively, "explaining why the conventional IPO system was corrupt, why a Dutch Auction was more honest, and why Google’s 'Don’t Be Evil' ethic was what had made them choose the Dutch Auction IPO"

• 2004 -SEC contacted Byrne ​about the public criticisms he was making and he "went in to their San Francisco office without a lawyer, went under oath, and told them everything I had learned about the IPO process by doing one. The superb Mark Fickes and his boss Tracy ______ were the ones deposing me, and when the day was over, they told me that I may have been the first CEO in history to do such a thing."

• Sept, 2004 - Byrne was 41 "and working on getting a waiver to join the Army as an 11-Bravo", and started what he refers to as his "mitzvah."

• Early 2005

• Feb, 2005 - Byrne wrote he "understood [by this time] that our settlement system permitted far more slop than the public understood, I recognized that the existence of the settlement slop was allowing the prime brokers and their dirtiest hedge fund clients to loot American pension funds, and I recognized that the settlement slop was going to crash the system"

• Aug 12, 2005 - Patrick Byrne delivered his infamous conference call presentation, The Miscreants Ball

  • "I want to get something off my chest," Byrne announced. Then he launched into a rant about a "miscreants ball" in which he mentioned hedge funds, journalists, investigators, trial lawyers, the SEC, Eliot Spitzer, and a conspiracy led by a character he calls the "Sith Lord." 

  • To the 500 Wall Street honchos who listened in to this conference call, Patrick said that a network of miscreants was using a variety of tactics – including naked short selling (phantom stock) – to destroy public companies for profit. He said this scheme had the potential to crash the financial markets, but that the SEC did nothing because the SEC had been compromised – or “captured” – by unsavory operators on Wall Street

  • The day before that August conference call, his company and one of its shareholders filed a lawsuit against a well-known hedge fund and short-selling firm called Rocker Partners; its two top executives, David Rocker and Marc Cohodes; and a research firm called Gradient Analytics, along with its two founders.

  • In the lawsuit, Overstock alleges that the defendants "orchestrated a wide-scale predatory campaign of knowingly distributing false, and covertly biased, written reports about Overstock in order to disparage Overstock and enrich themselves." All the parties named in the lawsuit deny any wrongdoing, and David Rocker says he is preparing a dismissal motion and countersuit.

• 2005 - 2006 - ​Byrne described this as the period of time in which he went to Washington, DC to try and seek help and actually did receive help from the Senate Judiciary Committee(unknown until 2019): "Just know this: whenever I told the story publicly, I always left something out. I always said that I had gone to DC in 2005-2006 trying to get help exposing Wall Street but had found it captured, “turtles all the way down.” That was never the full truth. The truth is, the Senate Judiciary Committee was fantastic. Members and staff of both parties were great to me. Like me, they were curious not just about the underlying matter I was bringing to them (which is that I thought we had a crack in the national capital market’s settlement system, and it might quake at any moment: indeed, on October 23, 2008, Greenspan identified “settlement” as one of the three main culprits in the crisis). Like me, they were also curious about the reaction (or lack thereof) on the parts of the government that should have been reacting back in 2005-2006."

• Jan, 2006 - Mark Mitchell is working at the Columbia Journalism Review​ magazine as an editor when he calls Byrne to ask about the story and Byrne proceeded to tell him it involved "diabolical billionaires, phantom stock, dishonest journalists, crooked lawyers, black box organizations on Wall Street, and a crime that could very well cause a meltdown of our financial system" and yeah, that the mafia was part of it, too

• May, 2006 - One sleepless night Byrne decided to take as many millions as he could put together ($6m) and flew to Switzerland the next day "and found a bank who would facilitate not only the purchase and storage of physical gold on my behalf, but who would facilitate a deeply out-of-the-money option on the price of gold, good for 36 months, but one that would pay off big if that crisis came within those months"

• Summer, 2006 - Byrne was the ringleader for a hearing outlining to the Senate Judiciary Committee hearing with whistleblowers, documents, and Senator Chuck Schumer (allegedly) tried to stop